Ethanol Slips Second Day as Blending Plunges Most Since 2010
January 05, 2012, 6:59 PM ESTBy Mario Parker
Jan. 5 (Bloomberg) -- Ethanol futures fell for a second day in Chicago to the lowest level in more than a week as corn declined and the government reported the biggest drop in blending with motor fuel in a year.
Futures slid on speculation that rain in South America will reduce demand for U.S. corn crops and temper production costs for distilleries. The U.S. Energy Department said conventional gasoline blended with ethanol slipped 9 percent to 4.77 million barrels a day, the lowest level since Feb. 11 and the steepest decline since Dec. 31, 2010.
“That is an awful looking number,” said Matt Janney, a trader at Citigroup Global Markets Inc. in Chicago. “Wow, looks like it fell off a cliff. It will be interesting to see if it lasts.”
Denatured ethanol for January delivery fell 4.3 cents, or 1.9 percent, to settle at $2.185 a gallon on the Chicago Board of Trade, the steepest decline since Dec. 14. Futures have fallen 5.2 percent in the past year. The contract expired today.
In cash market trading, ethanol on the West Coast and in New York both sank 6.5 cents, or 2.7 percent, to $2.34 a gallon, according to data compiled by Bloomberg.
Ethanol in Chicago decreased 5.5 cents, or 2.4 percent, to $2.21 a gallon and in the U.S. Gulf the additive slid 2 cents, or 0.8 percent, to $2.355.
--Editors: Charlotte Porter, Richard Stubbe
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
