Supply concerns accelerate buying interest

By Rick Kment, DTN | November 24, 2014

Commodities--Short-term evidence that overall ethanol supplies started to slip lower from summer and early fall highs has sparked some increased and widespread support through the ethanol complex. That has led to a buying frenzy which has been hard to contain. Since the end of September, ethanol futures have rallied nearly 65 cents per gallon, sparked by concerns about long-term availability of product. In addition, buyers faced challenges in securing enough spot product to keep demand in check. While ethanol futures prices have surged higher, gasoline prices and the entire energy complex have remained under pressure. This has quickly changed the dynamic between ethanol and gasoline markets and placed ethanol prices at a premium to RBOB gasoline futures. The volatile start to the winter season may only be the tip of the iceberg as far as where prices may venture through the next several months. It is likely to be a rough and turbulent ride.

Regional Gasoline Prices ($/gallon) 

Front Month Futures Price (RBOB) $2.0565

REGION

SPOT

RACK

West Coast 

2.013

2.232

Midwest    

1.988

2.627

East Coast 

2.083

2.647

 

 

 

Regional Ethanol Prices ($/gallon)

 

 

Front Month Futures Price (AC) $2.0900 

 

REGION

 

West Coast 

SPOT

RACK

 

Midwest    

2.710

2.700

 

East Coast 

2.650

2.557