Morgan Stanley recommended buying October ethanol contracts while selling December as higher prices are required to encourage production amid rising corn.
“We see ethanol prices needing to move higher to keep producers motivated in light of rising corn prices,” Hussein Allidina, a New York-based analyst at the bank, wrote in a July 19 report. The spread between October and December ethanol prices was 6 cents a gallon, according to the report. The bank recommends taking profit when it reaches 15 cents.
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