The latest Consumer Price Index (CPI) shows drivers are seeing motor fuel prices up 58% at the pump compared to a year ago. In total, the new data released Friday shows U.S. inflation jumped 6.8% in November, the fastest rate in 39 years.
Despite crude oil prices seeing the biggest weekly gain since August this week, U.S. crude oil prices are still down 16% from their late October highs. AAA reporting drivers seeing a slight reprieve, with gas across the country now at $3.34 for a national average, down from the $3.42 last month.
And climbing oil prices is typically supportive of corn prices. Arlan Suderman of StoneX Group says with higher fuel prices, ethanol demand has been strong.
“we’ve had some good ethanol production numbers. We’d like to have them higher. Certainly, we need to get export numbers up. One of our problems is fuel consumption,” points out Suderman. “We have fuel consumption up towards the levels that we saw in 2019. We’re having trouble getting in higher than that we still a lot have people working from home not traveling quite as much a few restrictions in some parts of the country and more of an emphasis on fuel efficient car.”
Suderman says the push to electrify the auto industry isn’t good for ethanol demand, but the Biden Administration’s support of sustainable aviation fuel and renewable diesel is creating some optimism in both soybean and corn demand.
The Biden Administration also released updated RFS blending requirements for 2020, 2021 and 2022 this week, a long awaited announcement. However, Matt Bennett of AgMarket.Net said it had little impact on prices this week.
“You didn’t really see a huge reaction. I mean, obviously, we all saw the reductions for 2020 and 2021. And then 2022, at around the 15 billion bushel mark,” says Bennett. “I guess, bottom line for me is that whenever I look at the way the corn market reacted, it’s it was either priced in or people just weren’t all that surprised. And quite frankly, I don’t think there were any huge surprises. And so, you know, ethanol grinds been awfully good here this year. But I think for most of us, we have to understand that, you know, the administration hasn’t been overly rosy about, you know, how they’re going to, I guess support biofuels moving forward.”
The trade also had little reaction to the latest WASDE report released Thursday. Suderman and Bennett give their reaction during U.S. Farm Report marketing roundtable this weekend.
