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gasisoutrageous

Government shutdown appears to be having more of an effect on ethanol

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Your political views aside, one of the bigger problems of a shutdown is the economic impacts. Fewer people, due to lack of services or work, are spending money on fuel. Gasoline is taking a tumble at retail, but not so much on stocks. Ethanol, for October delivery, is down to $1.79 as of 12:30 pm. Not too long ago, it was around $2.20/gallon. $0.11 was during today's trading alone.

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I suspect the fall in ethanol prices is far more tied to new crop corn which is now rolling into ethanol plants at a far lower cost than old crop. Dec corn (new crop purchase/sell price is based on that month right now) has fallen about 20 cents over last 3-4 days- basis may have also fallen a lot with new crop. I am a bit out of touch on grain and ethanol markets as compared to the past but this would be normal. Keep in mind also that some ethanol plants have been shut down waiting for new crop- this includes the plant I used to work for which is now owned by Ace.

 

If the govt shutdown was affecting the market-I would think it would also be affecting gasoline which has moved back up the last 2-3 days.

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would be nice to see a drop in e85 prices at the pumps out of this...  cheaper corn, cheaper ethanol, cheaper gas, and increased RIN values...  e85 price unchanged... just a 5 cent drop over the last month or more...

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Right, the crop has been a lot better this year, and there has been a delayed effect between the tumble of corn and the tumble of ethanol. We're now looking at a more complicated picture, as Tropical Storm Karen could potentially strike the gulf coast. Certainly no Katrina, but BP has already announced they are shutting down affected rigs, and oil/gasoline prices will probably surge. With Karen, a small severe weather outbreak in the plains, and a winter storm in the mountains, the NWS is stretched quite thin.

 

The reason I'm saying this all is that major stocks such as the DOW and HSI are down. Ordinarily, energy stocks would fall a little bit later (at least relying on how 2008 went)... but if Karen causes some impact, gasoline prices will halt their slide.

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The Federal Government must have called the same support hotline I called when I had a problem with my computer. You know the one where the first thing they tell you to do is to shut it down, wait a while and start it back up. By doing nothing different maybe you'll get a different result this time.

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