Bloomberg News

Ethanol Rebounds From Two-Day Skid on Signs of Production Drop

May 03, 2012

Ethanol futures rebounded from a two- day skid in Chicago on concern that money-losing margins will lead to lower production.

Futures climbed as the loss for making the fuel from a bushel of widened to 18.54 cents a gallon, assuming one bushel yields at least 2.75 gallons of the biofuel, according to data compiled by Bloomberg. A loss of 18.81 cents on May 1 was the steepest since at least December 2009.

“Things are pretty tight from a margin perspective,” said Mike Blackford, a consultant with INTL FCStone in Des Moines, Iowa. “Maybe the trade is fearful that we’ll get a slowdown in production.”

Denatured ethanol for May delivery climbed 0.6 cent, or 0.3 percent, to settle at $2.181 a gallon on the Chicago Board of Trade. Prices are down 1 percent this year.

In cash market trading, ethanol in New York slipped 1 cent, or 0.4 percent, to $2.24 a gallon and in Chicago the additive decreased 1 cent, or 0.5 percent, to $2.175, according to data compiled by Bloomberg.

Ethanol on the West Coast dropped 1 cent, or 0.4 percent, to $2.305 a gallon and in the U.S. Gulf the additive decreased 0.5 cent to $2.23.

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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