DTN Daily Ethanol Comments

DTN Daily Ethanol Comments

Corn futures remained extremely subdued through most of the Monday trading session with nearby contracts closing mostly higher but limited to gains of 2 cents per bushel or less across all nearby and most deferred contracts. The focus on yield estimates continues to be the main uncertainty through most of the market, which will not only impact nearby contracts and potential harvest pressure price levels. However, if overall yields do follow recent patterns of increased production levels, the corn availability may limit seasonal price spikes through next spring and summer. September corn closed down 3/4 cent per bushel at $3.83 and December corn was up 1 1/4 cents at $4.06 1/2. The earliest indication of U.S. corn harvest is coming from the south, with Louisiana likely to reach more than 60% harvested and Arkansas moving close to 20% harvested. Early indications of Delta corn yields are running well above a year ago levels. The announcement last week by Brazil’s supply company CONAB, revised their estimate of Brazil’s corn crop upwards by 5 million metric tons (mmt) to 137 mmt (5.4 bb). That is also 5 mmt (197 mb) above the most recent USDA estimate. With 90% of the harvest done in Brazil, there are even some private analysts saying the crop could reach as high as 143 mmt (5.6 bb), compared to just 119 mmt a year ago. Argentine is also expected to show an increase of corn area by 15% to 20%. “On Monday morning another new corn sale was announced — 4.9 mb sold to unknown destinations. Demand remains solid on the export front along with corn used for ethanol. Weekend rain fell in the Northern Plains, Upper Midwest, with more rain early Monday for parts of Nebraska, Iowa and into Minnesota and Wisconsin. Funds remain net-short the corn market. DTN’s National Corn Index is $3.65 and 19 cents under the September futures,” said DTN Analyst Dana Mantini.

Ethanol futures posted positive moves as traders returned to the complex Monday. Although gains were fractional across the entire complex, the ability to break away from selling activity in the corn market during early week trade helped to create slightly more positive market direction across the entire complex. August futures are holding a 0.25 cent per gallon gain, moving to $1.76 a gallon, while the rest of the complex remains 0.25 to 0.5 cent per gallon higher. August and September contracts remain at the same price level of $1.76 per gallon, indicating continued late summer and early fall demand support through the complex, before the seasonal demand slump starts to develop for the upcoming months. Nearby contracts continue to hold a 15 to 20 cent price premium over early 2026 contracts, which is typically the seasonal low for ethanol prices based on overall demand expectations. The expectations of higher corn yields have already impacted summer 2026 price levels, with traders currently expecting readily available corn for ethanol production weighing on long term futures prices.

Cash ethanol prices shifted slightly higher in the latest national average rack prices released Monday afternoon. National average rack prices increased 0.99 cent per gallon, moving to $2.0241 a gallon. State average prices were mixed and most of the markets posted moderate-to-firm gains, several states posted price shifts of 1 to 3 cents per gallon higher. Spot ethanol prices are higher Monday afternoon. East Coast markets posted gains of 2 cents per gallon, while Midwest prices added 1.5 to 2.25 per gallon. Prices are $1.7425 to $1.7425 per gallon in the Midwest, and $1.8525 per gallon on the East Coast. RIN price levels are higher, gaining 0.75 cent per gallon in 2024 markets and 1.87 cents per gallon in 2025 markets. Current 2025 RIN prices are at $1.0917 per gallon, and 2024 RIN price levels at $1.0725 a gallon.

Crude oil futures trickled higher Monday with uniform buying support slowly but steadily developing across the crude oil complex. September contracts posted a 55 cent per barrel price boost, moving prices to $63.35 per barrel. Although prices still remain well above contract low levels set in early May, the inability to move prices significantly away from two-month market lows is limiting additional buyer support through the entire complex. Traders expect stable short-term demand over the coming months with seasonal patterns still developing. However, with prices at current levels, moderate-to-firm pressure in economic factors would likely need to be seen to bring additional aggressive selling into the complex.

RBOB gasoline led the market higher Monday with 2-cent gains seen across the complex. September RBOB gasoline futures posted a 2.71 cent per gallon rally, moving to $2.0996 a gallon. The ability to sustain prices above $2 per gallon in spot month contracts continue to add underlying support to the entire RBOB gasoline, at least for the short term. The remainder of RBOB gasoline contracts are trading below $2 per gallon, with late 2025 and early 2026 contract months nearing the $1.80 per gallon level. This price spread is not totally unexpected given normal seasonal market patterns. For now, traders seem to have ruled out any major supply issues over the next 6- to 9-months, while demand levels are expected to follow seasonal patterns.