Commodities: Ethanol markets stabilize despite corn slide

By Rick Kment, DTN | July 29, 2014

Through late summer, the ethanol complex has remained extremely stable, unlike most commodity markets around it. Corn prices through the month of July have fallen 55 cents per bushel due to nearly ideal growing conditions in many areas of the Corn Belt. RBOB gasoline futures posted a 21-cent loss during the month of July, which is creating uncertainty about the market's ability to rebuild stability through the rest of the year. Crude oil futures fell $3.28 per barrel during July.

However, ethanol prices increased 2 cents per gallon in the same time period. Traders are anticipating stable production levels and firm demand support for ethanol through the end of the year. This will likely keep the gasoline-to-ethanol market spread at a moderate level, which will help to sustain overall demand. Ethanol futures are currently holding a 72-cent-per-gallon discount to the RBOB gasoline market. This level is where the industry seems most comfortable and will likely spur discretionary blending where possible over the next couple of months. 

Gasoline Prices (By Region)

REGION

SPOT

RACK

West Coast

$2.8525

$2.9901

Midwest   

$2.7475

$2.9452

East Coast

$2.7045

$2.8373

Front Month Futures Price (RBOB) $2.8653

 

Ethanol Prices (By Region)

REGION

SPOT

RACK

West Coast

$2.2800

$2.4500

Midwest   

$2.1450

$2.3759

East Coast

$2.2500

$2.4093

Front Month Futures Price (AC) $2.1450