Can ethanol distillers make it up on volume?
Over the last five sessions, agricultural feedstocks for the transportation sector have been the darlings of the commodity sector.
Sugar futures in New York have been the strongest performer in the S&P GSCI, up 16.8% and corn in Chicago has been the second strongest, up 16.5%. On Tuesday corn for December delivery hit $5.840. It was the highest price for spot bushels in more than two years. In New York, sugar for March delivery has hit five consecutive life-of-contract highs.
In other words, both markets have gone parabolic on crop yield concerns and strong global demand.
The rally in corn futures has also helped fuel strength in the ethanol market… and that was even before the EPA approved an E15 waiver yesterday (gasoline with 15% ethanol) for the 2007 vehicle model year and beyond. Meanwhile, according to yesterday’s monthly outlook from the EIA, fuel ethanol demand from the transportation sector rose 14% 2009 to 264.8 MMbbls (9.15×1014 Btus).