Early 2014 brings greater ethanol price stability

Jan.20—Ethanol production continued to increase through the end of 2013 and ethanol producers are expected to continue this trend through the first quarter of 2014. With no signs of corn prices moving outside the current range of $4.20 to $4.35 per bushel, however, there is not expected to be much long-term shift in either production levels or buying interest. Seasonal strong demand has passed and currently most buyers have not started to entertain strong summer demand support. This could allow ethanol prices to wander between $1.75 and $1.90 per gallon in the futures market through most of the spring. The fact that ethanol producers are posting moderate to strong margins and little volatility now exists in either the corn or energy markets during early spring months is creating a calming effect for most ethanol buyers. It is expected that short-term market shifts will continue to be the main focus in early 2014. Weekly Energy Information Administration reports continue to create the most aggressive shifts in the market, as traders use the figures in their short-term views of the market, affecting commercial interest moving in and out of the market. The biggest factor so far in ethanol markets will be projections of corn planting and building strength in the economy. Any economic strength seen through the first quarter of the year is expected to result in increased gasoline demand, sparking higher ethanol usage.