Ethanol Futures Slide Lower Following Gasoline Softness, Strong Corn Losses

Source: By Rick Kment, DTN/Progressive Farmer • Posted: Tuesday, June 13, 2017

The softness in ethanol market limited to 1.5-cent losses on Monday following moderate pressure in RBOB gasoline weakness early in the week. This has pulled back from market highs seen late last week. The strong pressure in corn prices has been the main focus of weaker ethanol trade on Monday.

Ethanol futures eroded slightly as traders slowly returned to the complex Monday morning with prices falling 1.5 cents per gallon in all contract months. This moved front-month July futures to $1.535 per gallon at contract settlement with prices falling back from last week’s market highs of $1.56 per gallon. The overall pullback in the market has more to do with the strong 10-cent loss in corn prices than any other factor early in the week.

Ethanol production and demand continues to remain generally strong which is likely to keep prices stable during the next several weeks. With prices trading at a premium to the gasoline market now that strong market liquidation has developed in energy markets, traders could once again start to focus on long-term market stability in nearby and deferred contracts. All contracts through November are trading above $1.50 per gallon, and with a 2-cent trading range.