In February, US ethanol prices fell due to weaker near-term fundamentals, although there was some optimism about biofuel policy reform. Price pressures were due to lower production levels, caution with domestic blending, and seasonal demand weakness. There were some price offsets from modest inventory drawdowns and a good export volume. At the same time, there has been increasing lobbying for year-round availability of higher ethanol gasoline blends, which is important for stimulating demand and stabilizing prices. Participants in the market expect to see continued near-term pressure with improved long-term outlooks based on exports and potential legislative movement on E15.
