Commodities: Ethanol priced at premium to gasoline

Source: By Rick Kment, DTN • Posted: Thursday, October 1, 2015

Ethanol supplies continued to erode through September, creating a tighter stocks situation than many had expected. Even though data for the week ending Sept. 18 showed a boost in inventory levels, the previous few weeks steadily decreased overall supply levels.

At this point ethanol stocks are 1.7 percent over year-ago levels, which puts more focus on future demand and fourth quarter production levels. RBOB gasoline markets, on the other hand, continue to trend lower, faced with aggressive crude oil supplies and slowing seasonal demand. The expectation is that additional pressure will be seen in gasoline prices during the last quarter of the year, allowing ethanol prices to remain at a strong premium to the gasoline complex.

Currently ethanol prices are trading at a 14-cent premium to RBOB gasoline prices. Recent premiums are at the highest levels seen since January 2015, and continue to focus on current and future market strength, in order to capitalize on the eroding energy market.

Gasoline Prices (By Region)
REGION SPOT RACK
West Coast $1.6566 $1.7424
Midwest $1.7934 $1.5518
East Coast $1.3751 $1.4756
Front Month Futures Price (RBOB) $1.3864
Ethanol Prices (By Region)
REGION SPOT RACK
West Coast $1.7100 $1.8000
Midwest $1.6050 $1.7156
East Coast $1.6400 $1.9617
Front Month Futures Price (AC) $1.5290

 

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