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Ethanol Volatile as Corn Prices Fall

NEW YORK ( TheStreet) -- Ethanol futures were volatile Monday, at one point the biggest gainer in commodities, amid mixed information on ethanol stocks and corn prices.

Ethanol futures were the top commodities gainer, popping 3.6% to $2.65 a gallon for the June contract, as ethanol stocks dropped 808,000 barrels amid an increase in gasoline usage, according to MaxYield Cooperative. In addition, ethanol plants have been running at 97% of capacity as they take their annual maintenance shutdown, according to MaxYield.

Still, it wasn't long before June ethanol contracts fell 0.3% to $2.643.

"While this is positive," said MaxYield Cooperative analyst Karl Setzer of the drop in ethanol stocks, "U.S. gasoline demand on a whole is down 1.6% from a year ago."

This, as the markets prepare for possible gains in corn, which could impede on ethanol producer margins and output.

"Market structure in corn suggests more upside," said Waverly Advisors strategist Andrew Barber.

According to Benson Quinn Commodities, the eastern portions of the Midwest are expected to receive some periodic moisture over the next couple of weeks -- over-moist soil could render it more difficult for farmers to sow new seeds. The western corn belt on the other hand, is expected to present better sowing opportunities this week.

According to ANZ Research, net long speculative positions for corn increased by 10,000 contracts for the week ending Apr. 26.

Still, "the 10,000 contract increase in corn net longs is the smallest increase in a month and may well indicate investor enthusiasm for grains is running out of steam," ANZ Research cautioned in an investor note.

Corn futures for July delivery were falling 1.1% to $7.48 ¼ a bushel.

Oil and gas giant Chevron (CVX - Get Report), a buyer and blender of ethanol, was flat at $109.49. Royal Dutch Shell (RDS.A - Get Report), an ethanol producer, was up 0.6% to $77.92. Pacific Ethanol (PEIX - Get Report) was falling 5.2% to 45 cents. Ethanol play, The Andersons ( ANDE ) was falling 0.5% to $49.40.

Grains processor Corn Products International (CPO) was rising 2.5% to $56.47, grains transporter Archer Daniels Midland Company (ADM - Get Report) was flat at $37.04 and corn processor MGP Ingredients (MGPI - Get Report) was down 1.5% to $8.60.

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-- Written by Andrea Tse in New York.

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Copyright 2011 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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ADM $48.61 0.83%
ANDE $43.34 -0.21%
CVX $109.70 -0.15%
MGPI $14.10 -3.10%
PEIX $11.86 -1.40%


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