Bloomberg News

Ethanol Declines to Three-Week Low on European Debt Crisis

November 09, 2011

Nov. 9 (Bloomberg) -- Ethanol futures declined to a three- week low in Chicago on concern Europe’s debt crisis will sap demand for fuel.

Futures followed crude oil and gasoline lower after Italian bond yields reached a euro-era high of 7.25 percent and after Handelsblatt reported that German Chancellor Angela Merkel wants to make it possible for countries to exit the euro.

“It’s Italy,” said Peyton Feltus, president of Randolph Risk Management Inc. in Dallas. “If the sword falls on us it’s going to mean less demand. Less demand for our energy markets, for ethanol, for any of them.”

Denatured ethanol for December delivery fell 2.3 cents, or 0.9 percent, to $2.651 a gallon on the Chicago Board of Trade, the lowest price since Oct. 20. The futures have increased 11 percent this year.

In cash market trading, ethanol in Chicago slumped 12 cents, or 4.2 percent, to $2.73 a gallon and in New York the biofuel decreased 9 cents, or 3 percent, to $2.92, according to data compiled by Bloomberg.

Ethanol on the West Coast declined 4 cents, or 1.3 percent, to $3.045 a gallon and the fuel was unchanged in the U.S. Gulf at $2.955.

Crude oil for December delivery sank $1.06, or 1.1 percent, to $95.74 a barrel on the New York Mercantile Exchange. Futures are up 4.8 percent this year.

Gasoline for December delivery slipped 6.22 cents, or 2.3 percent, to $2.6442 a gallon in New York. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.

--Editors: David Marino, Charlotte Porter

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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