Commodities: Ethanol supplies, prices prepare for summer demand

By Rick Kment, DTN | May 21, 2014

It appears ethanol and gasoline markets will be contained in a moderate trading range through the end of May, with traders focusing on uncertainty about summer demand support. Choppy movement in the stock market and other economic factors seen this spring have led to a cautious attitude among traders trying to project just how strong summer driving demand will be. Typically the gasoline market peaks right around Memorial Day weekend, but it may be that spring market peak was established in the middle of April. There is growing focus on ethanol supply and production growth through the first two weeks of May. The concern is that if demand for ethanol and gasoline does not significantly improve during and after the Memorial Day weekend, commercial buyers may quickly liquidate short-term positions and erode current prices.

June ethanol futures were trading at $2.24 per gallon in mid-May and may continue to trade in an extremely wide range between $2 and $2.40 per gallon. This could add even more volatility to the market through early summer. 

Gasoline Prices (By Region)

REGION

SPOT

RACK

West Coast

$3.0951

$3.1854

Midwest   

$3.0067

$3.0954

East Coast

$2.8267

$3.1819

Front Month Futures Price (RBOB) $2.9735

 

Ethanol Prices (By Region)

REGION

SPOT

RACK

West Coast

$2.6100

$2.8500

Midwest   

$2.4400

$2.8500

East Coast

$2.3500

$2.9100

Front Month Futures Price (AC) $2.2400