Bloomberg News

Ethanol Falls to Eight-Week Low on Imports and Adequate Supply

September 05, 2012

Ethanol fell to an eight-week low in Chicago on signs of adequate supply and more imports.

Futures declined with stockpiles in the most recent Energy Department report at 18.5 million barrels, up 3.4 percent from a year earlier, and as imports this year have averaged 16,000 barrels a day, up from 6,200 a day for all of 2011.

“We did some selling out the gate in ethanol and it didn’t have a chance to recover,” said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa. “You’ve never really been forced this year to go out and really scramble for ethanol.”

Denatured ethanol for September delivery fell 3.5 cents, or 1.4 percent, to $2.528 a gallon on the Chicago Board of Trade today, the lowest settlement since July 12. Futures have gained 15 percent this year.

In cash market trading, ethanol slipped 5.5 cents, or 2.1 percent, to $2.62 a gallon and in the U.S. Gulf the biofuel fell 5 cents, or 1.9 percent, to $2.595, data compiled by Bloomberg shows.

Ethanol in New York sank 5.5 cents, or 2.1 percent, to $2.62 a gallon and in Chicago the additive slid 4.5 cents, or 1.7 percent, to $2535.

Blackford said demand may be tempered as refineries in the U.S. Gulf start production after being forced to close because of Hurricane Isaac.

The biofuel is blended with gasoline to stretch supply and meet federal mandates. Refiners also mix the fuel in an effort to capture the spread between the two.

Ethanol traded at a 42.18-cent discount to the motor fuel today, up from yesterday’s 38.92 cents.

Gasoline for October delivery fell 0.24 cent to $2.9498 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.

Corn for December delivery tumbled 14.25 cents, or 1.8 percent, to $7.9075 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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