Ethanol tumbled to the lowest price in almost four months after a government report forecast an increase in corn supplies.
Futures fell after the Agriculture Department said that the 2012 crop may rise 20 percent to a record 14.79 million bushels and that world inventories on Oct. 1, 2013, will total 152.34 metric tons, the largest stockpile since 2001. The grain is used to produce ethanol in the U.S.
“That sent ethanol lower with the corn,” said Matt Janney, a trader at Citigroup Global Markets Inc. in Chicago.
Denatured ethanol for June delivery dropped 5 cents, or 2.3 percent, to settle at $2.119 a gallon on the Chicago Board of Trade, the lowest price since Jan. 18 and the steepest drop since March 29.
In spot market trading, ethanol in New York decreased 5 cents, or 2.2 percent, to $2.18 a gallon and in Chicago the additive lost 3.5 cents, or 1.6 percent, to $2.11, according to data compiled by Bloomberg.
Ethanol on the West Coast slid 3.5 cents, or 1.5 percent, to $2.305 a gallon and in the U.S. Gulf the biofuel fell 2.5 cents, or 1.1 percent, to $2.175.
The Agriculture Department left its estimate on the amount of corn to be used to make ethanol in 2013 unchanged from the 2012 estimate of 5 million bushels, signaling that demand for the biofuel may be weak, Janney said.
“Projected corn use for ethanol is unchanged on the year as weak gasoline consumption limits domestic blending opportunities,” according to the report.
Corn for July delivery plunged 19.75 cents, or 3.3 percent, to $5.875 a bushel in Chicago.
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