July 18—With petroleum markets finally appearing to end its 2008 bull run and corn also coming back down to earth, any supportive sentiment for ethanol seemed to disappear as July ethanol markets turned sharply lower across the country.

The post-Independence Day reversal was most severe in New York Harbor. Driven by cargo delays, empty tanks and immediate blending needs, spot ethanol prices for July shot up to $3.25 per gallon going into the long holiday weekend. However, by late July, Harbor ethanol threatened to break below $2.70 per gallon—a 55 cent reversal in a little more than two weeks.

Market sources explained that once rail problems were worked out from the vestiges of Midwest flooding along with arrival of overseas material, big buying turned to big selling, reportedly led by a petroleum major before others joined in.

Still, losses were not confined to New York. Chicago ethanol for July traded to the lower $2.40s per gallon heading into the latter part of the month, representing a price drop of 40 or more cents since June. August and fourth-quarter prices mirrored prompt-month losses, often several cents under July.

At Midwest racks, ethanol prices also started to come down but remained generally higher than at the end of June. Iowa ethanol racks, averaging $2.90 per gallon by late July, dropped about 7 cents from its highpoint over the month, but still held a 3 cent advantage versus the end of June.

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