Look for Ethanol Market to Find Support

June 17, 2011 10:00 AM

This information is provided by Archer Financial Services, Inc. 800-933-3996.


It was a rather ugly week in the grain markets, as July corn traded over $1 lower for the week before closing over 85¢ below last Friday’s close. One person’s misery is another person’s gain however, as the cattle producers saw one of the biggest weekly price moves higher in 15 years.

The corn markets simply found a price level in which demand began to be trimmed as exports once again have been sluggish and corn used in the production of ethanol slipped to its lowest level in five weeks. As we ended the week, the markets were finding it difficult to confirm a bottom, but look for demand to begin to surface at these levels.

This week’s markets were also dogged by global economic concerns as liquidation hit many markets as the U.S. dollar soared on worries about the Greek debt. In addition, a futile late-week effort by the United States Senate to eliminate the tax subsidies for ethanol blenders also made it difficult for new buyers to enter the market. Look for this market to find support next week and begin to work back toward the middle of its recent trading range in anticipation of the critical month end stocks and acreage report.

We used this week’s weakness to lighten up on current hedges and to establish long option strategies in which to use to sell in to on the next demand/weather-related rally. It is critical to use the next week and a half to review your marketing plan, as the markets will enter an emotional period following the June 30th report. 



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