The Jan Ethanol futures continue to strengthen versus Feb, moving to a full 5 cent/gallon premium. This is a pretty steep backwardation for 1 month on the calendar, though we have seen this kind of action in ethanol for several months now. So far this "squeeze" hasn't been powerful enough to drive ethanol higher relative to corn, but it seems to me that we will likely see that eventually. For the past few months the corn market has been so strong that it is tough for any commodity to outpace it, but if (when) we see a pullback there, the ethanol market may finally outperform.
A similar kind of narrative may also describe the oats market. While oats are close to their highs, there hasn't been the speculative or institutional interest to drive oats to new highs in the way we have seen corn chased higher. With wheat, and especially Spring Wheat, much stronger along with corn and beans, it is hard to make a case for oats "winning" many acres at current prices. So with current stocks allowing Dec10 to trade up to a premium to March11, it seems that tightness will continue. As with ethanol, this should eventually lead to an improvement in the ratio against corn. (While corn inventories may be tight in 6 months, the nearby calendar spread shows little immediate concern.)
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