Despite upcoming seasonal demand support, prices turn lower

By Rick Kment, Telvent DTN | May 02, 2017

During the last half of April, aggressive pressure developed in ethanol and RBOB gasoline futures trade. At the time of this writing, RBOB gasoline futures had fallen 20 cents per gallon since hitting market highs during the middle of April. This continued to increase overall wide market pressure at a time when support traditionally builds as summer driving demand starts to take hold. Prices should be solidifying, not moving lows not seen since fall of 2016. The focus on growing supplies and global trade concerns is creating some buyer uncertainty in the ethanol complex, too. Ethanol prices have not tumbled as drastically as RBOB gasoline, dropping just 10 cents per gallon in the same period. Current ethanol prices within one penny of gasoline give very little discount for blending based on price spreads between products. Corn prices are expected to remain stable through most of the spring and summer, leaving production costs low, and making ethanol competitive with other energy prices heading into the summer months.

 

Ethanol Prices (By Region)

REGION

SPOT

RACK

West Coast

$1.7200

$1.8500

Midwest   

$1.5700

$1.8052

East Coast

$1.6300

$1.7850

Front Month Futures Price (AC) $1.5690

 

Gasoline Prices (By Region)

REGION

SPOT

RACK

West Coast

$1.7698

$2.0946

Midwest   

$1.6805

$1.8088

East Coast

$1.5498

$1.7675

Front Month Futures Price (RBOB) $1.5447