Ethanol futures fell for a third day in Chicago on concern that higher prices for the biofuel would entice Brazilian imports.
Prices declined after an Energy Department report showed the U.S. imported 19,000 barrels a day of ethanol last week, compared with none a year ago. Refiners bought an average of 122,000 barrels a day from foreign sellers in the week ended Oct. 12, the highest amount since the agency began reporting weekly data on the additive in June 2010.
“There’s always the threat that Brazilian supply could come back into the market,” said Jerrod Kitt, an analyst at Linn Group in Chicago.
Denatured ethanol for November delivery declined 0.4 cent to $2.402 a gallon on the Chicago Board of Trade. Futures have gained 9 percent this year.
In cash market trading, ethanol was unchanged in New York at $2.47 a gallon, in Chicago at $2.40 and in the U.S. Gulf at $2.455, data compiled by Bloomberg shows. Ethanol on the West Coast added 0.5 cent to $2.55 a gallon.
Anhydrous ethanol in Sao Paulo, where the fuel is made from sugar cane, fetched $2.09 a gallon in the week ended Oct. 19, data compiled by Bloomberg shows. The fuel is made primarily from corn in the U.S.
Corn for December delivery dropped 1.5 cents to $7.545 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
Gasoline for November delivery decreased 0.2 cent to $2.603 a gallon in New York. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Ethanol’s discount to the motor fuel expanded to 20.1 cents from 19.9 cents yesterday. Gasoline traded at a premium of 99.8 cents to ethanol as recently as Sept. 28.
Based on December contracts for ethanol and corn, producers are losing about 36 cents on each gallon of the biofuel made, according to data compiled by Bloomberg. That doesn’t include profit from the sale of dried distillers’ grains, a byproduct of ethanol production that can be fed to livestock.
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