From the January 01, 2007 issue of Futures Magazine • Subscribe!

Laughing all the way

More and more corn is being allocated for ethanol production, and the proof is in the USDA’s ending stocks report, which came in at 935 million bushels. “Anything under a billion is friendly,” says Steven Davis of RJO Futures. “Look for a continued influx of commodity index funds. The fundamental story is still legitimate: shrinking U.S. and global stocks.”

David M. Fiala, president and chief analyst for Futures One, says that despite shrinking margins for ethanol producers, stocks are tighter, prices are higher and yet demand estimates are consistent, with no rationing or pullback. “We just have to buy acres to get the supply.” He says support should hold at $3.60, with a top at $4.40.

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