Ethanol futures declined in Chicago as supply outpaced demand for the biofuel.
Futures slipped following an Energy Department report that supply rose for an 11th consecutive week to a record 22 million barrels in the week ended Feb. 24. Production of conventional gasoline blended with ethanol, a proxy for blending beyond government requirements, climbed to 5.2 million barrels a day, the highest since Dec. 23.
“We’re blending as much as we can, but we’re still building stocks,” said Mike Blackford, a consultant with INTL FCStone in Des Moines, Iowa.
Denatured ethanol for March delivery fell 0.4 cent to $2.26 a gallon on the Chicago Board of Trade. Prices have gained 2.6 percent this year.
In cash market trading, ethanol in Chicago added 2.5 cents, or 1.1 percent, to $2.245 a gallon and in New York the additive decreased 1 cent to $2.30, according to data compiled by Bloomberg. Ethanol in the U.S. Gulf dropped 1 cent to $2.285 a gallon and on the West Coast the biofuel declined 0.5 cent to $2.345.
The U.S. is required to use 13.2 billion gallons of renewable fuels such as ethanol this year. Production (DOETFETH) at 896,000 barrels a day as of last week is equal to 13.7 billion gallons of the fuel on an annualized basis.
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