Ethanol futures flip to a premium over gasoline but how long it will last is unknown

In Illinois, the period of healthy margins for Midwest ethanol producers may be coming to an end as ethanol futures shift over to a premium over gasoline. Corn prices are holding fairly steady this year but gasoline prices have fallen to a 6.5 year low this week, pushing ethanol from a discount to a premium over gasoline. Though ethanol has only traded at a premium a handful of times over gasoline since 2010, second month futures are already trading at a premium. Short term premiums shouldn’t impact buying demand much but if the trend becomes more than just a blip in the market, blenders may choose to reduce ethanol purchases.