Chart of the Week: Ethanol

About this chart: This is the continuation chart of weekly ethanol. You can see the last major low in the fourth quarter of 2018 at $1.20. From that low, prices went sharply higher into the second quarter of 2019. That is when ethanol hit a major high at $1.64 per gallon. Since then, the ethanol market has been in a trading channel with support at $1.25 and resistance at $1.55. Over the last six weeks, ethanol prices have dropped by over 20 cents per gallon, with nearby futures testing support at $1.30 this week. Now critical support is at the June 2019 low at $1.25.

What this means for you:  The 30 cent drop in ethanol prices has taken ethanol crush margins from a positive 50 cents per bushel to a negative 20 cents per bushel. If ethanol prices stay at this level (or move lower), then it is a bearish factor for the corn market.