Ethanol springs on new blending

May 9, 2008

April 11—Spot ethanol markets gained ground in the early part of spring amid indications that even though new production was coming on line at a good clip, new blending markets may be outpacing that production.

By mid-April, Chicago spot ethanol trading in the upper 2.50s per gallon for prompt and near-prompt material picked up as much as 20 cents from month-to-month. Any-April ethanol nosed over the middle $2.50s per gallon, with trades touching $2.56 per gallon. While market players found April ethanol availability snug, active forward trading also pushed higher. May ethanol traded up to $2.54 per gallon, while June material garnered up to $2.50 per gallon for a time.

At the rack, average prices in Iowa also started to flatten out by mid-April, but on a month-to-month basis added some 12.5 cents to $2.565 per gallon.

East Coast spot ethanol prices popped up earlier in the month, but appeared to stall and hold steady by mid-month. New York Harbor barge deals for April at $2.65 per gallon held that level for several days in a row.

Strong petroleum prices, with crude and gasoline markets again at or near new highs in April, helped keep ethanol blending economics healthy. Though at least six new plants with some 550 MMgy of added capacity have come on line since January, the U.S. DOE revealed consecutive weeks of record-high conventional gasoline blending with ethanol, up 80 percent or more year-on-year.

For more information, contact OPIS Ethanol & Biodiesel Information Service at (888) 301-2645.

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