Bloomberg News

Ethanol Falls to Two-Week Low on Ample Supply and Cheaper Corn

April 13, 2012

Ethanol futures fell to the lowest level in more than two weeks in Chicago as supply outpaced demand amid lower production costs.

Futures dropped for the first time in three days after an Energy Department report this week showed stockpiles were 6.1 percent higher than a year earlier at 21.8 million barrels in the seven days ended April 6. Refiners used 824,000 barrels a day of ethanol to blend into fuel last week, 4.4 percent more than the year before, the department said.

“There’s a lot of people selling and only a few buyers,” said Jim Damask, a manager at Biofuelsconnect, a Jupiter, Florida-based alternative energy broker. “There’s a lot of ethanol for sale.”

Denatured ethanol for May delivery declined 2.4 cents, or 1.1 percent, to settle at $2.217 a gallon on the Chicago Board of Trade, the lowest price since March 29. Futures have gained 0.6 percent this year.

Corn, the primary ingredient used to make the biofuel in the U.S., decreased on speculation rain in the Midwest will boost crops.

Ethanol production last week averaged 896,000 barrels a day, the Energy Department said, equal to about 13.7 billion gallons on an annual basis. That’s above the 13.2 billion gallons required under a 2007 energy law.

In cash market trading, ethanol in the U.S. Gulf sank 2.5 cents, or 1.1 percent, to $2.25 a gallon. In Chicago, the biofuel decreased 1.5 cents, or 0.7 percent, to $2.20, according to data compiled by Bloomberg.

Ethanol in New York slipped 1 cent, or 0.4 percent, to $2.28 a gallon, and on the West Coast the additive dropped 0.5 cent to $2.355.

Corn for May delivery fell 8.25 cents, or 1.3 percent, to $6.2925 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

To contact the reporter on this story: Mario Parker in Chicago at

To contact the editor responsible for this story: Dan Stets at

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