Dec. 30 (Bloomberg) -- Ethanol futures capped the first yearly loss since 2008 amid ample production and as a 33-year- old tax credit expires.
Futures fell 7.4 percent this year as output reached a record 962,000 barrels a day in the most recent Energy Department report and as the 45-cent tax credit provided to refiners for each gallon blended into gasoline expires tomorrow. The biofuel, down 11 percent this quarter, had the worst such period since March 2010.
“You had two contracts expire in an inverted market,” said Jerrod Kitt, an analyst at Linn Group in Chicago. “The market’s kind of priced it in, the sense that discretionary demand could be lower. The tax credit went out with a whimper and not a bang.”
Denatured ethanol for January delivery rose 0.1 cent to settle at $2.203 a gallon on the Chicago Board of Trade.
Under a law signed in 2007, U.S refiners are required to utilize 15 billion gallons of renewable fuels such as ethanol by 2015 and 36 billion gallons, including the cellulosic variety and biodiesel, by 2022.
Corn for March delivery rose 8.5 cents, or 1.3 percent, to close at $6.465 a bushel in Chicago. Prices climbed 2.8 percent this year. One bushel makes at least 2.75 gallons of ethanol.
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