Since the end of June, spot ethanol CBOT futures for October delivery have surged 43% on the back of a strong export market along with substantial spikes in corn and sugar feedstocks.
The corn market in Chicago has been the fourth best performer (rolling contracts) over the last three months on the S&P GSCI, up 31.7% as of last night (Thursday).
Strength in this market is motivated by new estimates from the USDA. In short, the crop yield forecast has been lowered and the volume dedicated to ethanol output has been raised. On Wednesday, the contract for December delivery closed the gap at 490.00 from October 2008 and finished last night, 496.00, within 13 ticks of our 499.25 weekly top (reference Biofuels section in today’s issue of The Schork Report).
Meanwhile, dry weather and strong global demand for sugar has ignited a firestorm in the New York futures market. For the three months ended last night, this market has been the strongest performer, up 62.6%, on the S&P GSCI.