<p>Ethanol demand slowly grew at the end of February, even as supplies continued to expand. Corn futures of $3.80 per bushel allowed ethanol production to remain strong, even though margins were extremely limited to negative. However, the focus continues to be on support through the spring and summer, not on immediate demand. It is typical at this time for production and inventory to well outpace demand. The expectation is that low gasoline prices and increased driving as the weather warms could spark aggressive product movement in the coming months.</p>
<p>Ethanol continues to carry a large premium over RBOB gasoline futures, currently 44 cents per gallon. With front-month March RBOB futures still under $1 per gallon, the wide spread limits additional buyer support for ethanol. Crude oil futures hover at $30 per barrel. Looming uncertainty in financial markets makes it extremely unlikely buying will move back into the energy sector. But prices will not move significantly lower unless a total economic meltdown occurs, which at this point does not seem likely.&nbsp;</p>
<table border="0" cellspacing="0" cellpadding="0" width="329">
<colgroup><col span="3" width="64"></col> <col width="137"></col> </colgroup> 
<tbody>
<tr height="22">
<td class="xl67" colspan="4" width="329" height="22">Regional Ethanol Prices ($/gallon)</td>
</tr>
<tr height="22">
<td colspan="4" height="22">Front Month   Futures Price (RBOB) $1.3500</td>
</tr>
<tr height="22">
<td height="22">REGION</td>
<td>SPOT</td>
<td>RACK</td>
<td>&nbsp;</td>
</tr>
<tr height="22">
<td height="22">West Coast&nbsp;</td>
<td class="xl68" align="right">1.560</td>
<td class="xl68" align="right">1.600</td>
<td>&nbsp;</td>
</tr>
<tr height="22">
<td height="22">Midwest&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td class="xl68" align="right">1.390</td>
<td class="xl68" align="right">1.585</td>
<td>&nbsp;</td>
</tr>
<tr height="20">
<td height="20">East Coast&nbsp;</td>
<td class="xl68" align="right">1.470</td>
<td class="xl68" align="right">1.702</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
<p>&nbsp;</p>
<table border="0" cellspacing="0" cellpadding="0" width="289">
<colgroup><col span="2" width="64"></col> <col width="107"></col> <col width="54"></col> </colgroup> 
<tbody>
<tr height="22">
<td class="xl67" colspan="3" width="235" height="22">Regional Gasoline Prices ($/gallon)</td>
<td width="54">&nbsp;</td>
</tr>
<tr height="22">
<td colspan="4" height="22">Front Month   Futures Price (RBOB) $0.9675</td>
</tr>
<tr height="22">
<td height="22">REGION</td>
<td>SPOT</td>
<td>RACK</td>
<td>&nbsp;</td>
</tr>
<tr height="22">
<td height="22">West Coast&nbsp;</td>
<td class="xl68" align="right">0.756</td>
<td class="xl68" align="right">1.286</td>
<td>&nbsp;</td>
</tr>
<tr height="22">
<td height="22">Midwest&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td class="xl68" align="right">0.887</td>
<td class="xl68" align="right">1.159</td>
<td>&nbsp;</td>
</tr>
<tr height="22">
<td height="22">East Coast&nbsp;</td>
<td class="xl68" align="right">0.941</td>
<td class="xl68" align="right">1.476</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>

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Ethanol demand slowly grew at the end of February, even as supplies continued to expand. Corn futures of $3.80 per bushel allowed ethanol production to remain strong, even though margins were extremely limited to negative.

Commodities: Ethanol demand starting to rise

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