Market and product

Ethanol and gasoline markets have continued to make significant counter-seasonal surges in October. A strong drawdown in crude oil supplies in the last few weeks of the month drew support and has been the driver of these recent rallies.

Gasoline supplies have eroded lower through much of October, putting the focus not as much on current demand, but on the need to gain access to product through the upcoming holiday season and well into 2017. Spot month RBOB gasoline contracts are trading at the highest level since August 2015, with prices at $1.53 per gallon after moving 20 cents per gallon in the last month.

The support seen in RBOB gasoline markets combined with demand-driven buying interest in the corn market has helped to push ethanol futures to $1.60 per gallon, just 3 cents under summer highs set in June 2016. Seasonal pressure is expected to develop in ethanol and RBOB gasoline markets, although markets are expected to remain bullish given expected strong, long-term demand and slipping supplies. - Ethanol Producer