March 21—Ethanol prices began to stall in late March, but markets ended the quarter confounding the more dire predictions of oversupply. Blending demand for ethanol remained strong with new discretionary markets poised to open.

Chicago spot ethanol trading prompt reached more than $2.50 per gallon around mid-March as near-term material tightened. Any-month ethanol deals traded into the high $2.40s per gallon, up some 25 cents from late February. By late March, spot prices backed off to the $2.38 to $2.40 per gallon range for material available into early April. At the same time, any-April ethanol at around $2.35 gallon and second quarter material talked $2.32 by $2.34 per gallon also backed off several cents.

A lot of volatility in gasoline markets often had ethanol trading turning silent while generating widely differing bids and offers. For example, Gulf Coast unleaded, at $2.53 per gallon late in the month, rebounded from its low end but traded at a range of about 30 cents through the week. Double-digit swings in NYMEX RBOB futures were not uncommon either.

Ethanol blending was encouraged by healthy economics. By mid-month, weekly government numbers showed discretionary blending into conventional gasoline at record highs, nearly doubling year-ago levels. That was bolstered by a lineup of oil majors telling marketers they were moving ahead with expansions on E10 blending.
Ethanol remained on an upward track at most Midwest racks. Splash blenders in Iowa paying $2.44 per gallon at the average top-off location found postings up some 21 cents since the end of February.

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