Bloomberg News

Ethanol Falls After Two Days of Gains on Signs of Oversupply

August 16, 2012

Ethanol fell for the first time in three days on speculation the market is oversupplied.

Prices slipped a day after the Energy Department said inventories in the week ended Aug. 10 were 18.4 million barrels, up 4.9 percent from a year earlier. Output rose a third consecutive week to 819,000 barrels a day, the longest string of increases since May 18.

“Production was up,” said Ian Jackson, a trader at SCB & Associates LLC in Chicago. “That’s going to keep pressure on the market until we see some serious shutdowns.”

Denatured ethanol for September delivery fell 0.2 cent to settle at $2.587 a gallon on the Chicago Board of Trade. Prices have gained 17 percent this year.

In cash market trading, ethanol in New York was unchanged at $2.64 a gallon and in Chicago the additive lost 0.5 cent to $2.56, according to data compiled by Bloomberg.

Ethanol in the U.S. Gulf increased 0.5 cent to $2.63 and on the West Coast the additive dropped 1 cent to $2.745.

Production has fallen 15 percent from a record 963,000 barrels a day as companies temper operations because of more expensive corn prices caused by drought.

Corn for December delivery jumped 3.5 cents, or 0.4 percent, to $8.075 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 mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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