Bloomberg News

Ethanol Gains on Speculation Plants to Cut Output

August 03, 2012

Ethanol futures gained in Chicago on speculation that plants producing the biofuel will cut output because it’s not profitable.

Prices rose as distilleries stand to lose 36 cents on each gallon of ethanol they make, according to data compiled by Bloomberg. The figure is based on the assumption that one bushel of corn produces 2.75 gallons of the renewable fuel. Companies have tempered ethanol output by 16 percent to 809,000 barrels a day from a record on Dec. 30, because of surging corn costs.

“There’s worry that there’s not going to be a lot of product out there,” said Ian Jackson, a trader at SCB & Associates in Chicago.

Denatured ethanol for August delivery advanced 4.9 cents, or 1.9 percent, to $2.614 a gallon on the Chicago Board of Trade. Prices gained 2.3 percent this week.

In cash market trading, ethanol on the West Coast increased 6.5 cents to $2.80 a gallon, according to data compiled by Bloomberg. The additive gained 5.5 cents to $2.585 in Chicago.

Ethanol in New York jumped 5 cents to $2.665 a gallon. In the U.S. Gulf, the biofuel added 4.5 cents to $2.635.

Corn for December delivery rose 1.5 percent to $8.075 a bushel in Chicago, capping a 1.8 percent weekly increase.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net;

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus