Ethanol prices surge on higher corn futures

The scope of both the ethanol and grain markets changed significantly in October, with corn futures soaring 86 cents higher on the December futures market through October. This has sparked intense buying activity in ethanol markets, pushing prices 20 to 40 cents higher through the month in all markets.

Ethanol producers are struggling to keep margins in positive territory, but buyers are aggressively looking for product and seem to be willing to pass the higher production cost on through the system. The strong rally in corn prices has placed a significant premium in the ethanol market once again while RBOB gasoline prices have remained stable over the past several days and weeks.

Even though ethanol prices have seemed to move through the roof due to the skyrocketing cost of production associated with corn price gains, energy markets have remained stable over the past month with both the gasoline and crude oil market stuck in a narrow trading range. This lack of fundamental speculative buying support in the market has created stability in the market not seen in several months. This continues to keep energy markets nearly flat lined at the end of the month of October in spite of the sharp gains in the ethanol market price.

source: ethanolproducer