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gasisoutrageous

Ethanol skyrockets on CBOT

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I've been following futures the past few days, noticing that futures have risen sharply on Nasdaq, and futures are up for all months being traded on CME group. I know that the API is launching another attack campaign on Ethanol, but could that be why the price is rising so sharply when we're looking at such an abundant and successful corn crop?

 

I was talking about this with Joe the other day. If some of you recall, Standard and Poor's downgraded the US credit rating in 2011. Now political views and beliefs aside, people flocked to buy US bonds, putting faith in them. Not sure if that was to thumb their noses at S&P, but I seem to see a parallel with this situation. Are people flocking to ethanol to shove it in API's face?

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I have a feeling it's a couple of things..  (I'm probably about to show my ignorance in the commodities market...)

 

#1 - E85 sales surged 43% last quarter..  Investors might be flocking to it as they see a huge jump in demand.

 

#2 - Syria - We're about two weeks from launching a pretty intense air campaign against them, and maybe they are worried there's going to be interruptions in the Oil Markets (Especially if Iran jumps into the fray) thinking that may also increase the demand for Ethanol

 

#3 - Iowa's corn crop is getting stressed from the lack of rain and with a full week of 100 degree temps ahead of us, it's not going to get any better at least here in central Iowa.

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We have to be careful about stock increases. Flocking to it in the face of a sharp increase in demand, causing prices to increase, can choke off some of that demand. For the most part, I think I agree with that analysis. Even though this summer has overall been dry here in the mitten, we had a very wet spring and almost seem to have had a perfect alternation between times of rain and dryness. We have not had a hot summer, certainly not anywhere near what 2012 was. I've seen repeated scenes where the corn towers over my car and myself (I'm almost exactly 6 feet tall). It's also worthy of note that corn prices have also skyrocketed. In a way, that proves your case and disagrees with my analysis.

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It's also worth pointing out that futures have increased across the board... for all months that currently have volume. In particular, I've been watching February futures. February is when gas hike season begins, and that's when we see some of our best spreads. Not too long ago, we had futures for February at $1.62. Now they're above $1.74. No futures below $1.70 to be found. So I'm taking an optimistic spin on this. I say, from my own judgement, that people are flocking to ethanol futures.

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I have a feeling it's a couple of things..  (I'm probably about to show my ignorance in the commodities market...)

 

#1 - E85 sales surged 43% last quarter..  Investors might be flocking to it as they see a huge jump in demand.

 

#2 - Syria - We're about two weeks from launching a pretty intense air campaign against them, and maybe they are worried there's going to be interruptions in the Oil Markets (Especially if Iran jumps into the fray) thinking that may also increase the demand for Ethanol

 

#3 - Iowa's corn crop is getting stressed from the lack of rain and with a full week of 100 degree temps ahead of us, it's not going to get any better at least here in central Iowa.

 

Point #2--could also means traders are going to jump on the oil purchases now if war breaks out and then oil trading prices will skyrocket.  Is oil trading prices moving in any direction?

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And so the fun begins! E-10 is hiking to $3.799 here in Michigan. After some modest falls yesterday, futures are hiking today. Good and bad to ethanol prices going up.

 

Checking oil futures, the general trend appears to be upward. WTI, NYMEX, RBOB, etc. Can't find one going down.

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