Ethanol futures fell for the first time in five days following a government report showing production jumped the most since April.
Prices sank after the Energy Department said output last week increased 3 percent to 825,000 barrels a day, the highest level since Sept. 14, Ethanol-blended gasoline made up about 91 percent of the total U.S. gasoline pool, down from 93 percent the previous week.
“Obviously, the report doesn’t help,” said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa. “The bigger picture has to come from demand. With Hurricane Sandy and the Northeast down this week, that’s not going to happen.”
Denatured ethanol for November delivery fell 4.1 cents, or 1.7 percent, to $2.395 a gallon on the Chicago Board of Trade, the biggest decline since Oct. 15. Futures have advanced 8.7 percent this year.
In cash market trading, ethanol on the West Coast surged 10.5 cents, or 4.3 percent, to $2.565 a gallon and in the U.S. Gulf the additive jumped 4 cents, or 1.6 percent, to $2.50, data compiled by Bloomberg show.
Ethanol in Chicago added 2 cents, or 0.8 percent, to $2.415 a gallon and in New York the biofuel climbed 1.5 cents, or 0.6 percent, to $2.485.
Stockpiles of the renewable fuel swelled 2.4 percent to 19.2 million barrels last week, the biggest weekly gain since June 15, the Energy Department reported. Imports surged to 58,000 barrels a day, up from 19,000 the previous week.
Producers need higher exports to help lift prices for the biofuel, Blackford said.
Ethanol exports in August, the most recent month for which data is available from the Energy Department, averaged 39,000 barrels a day, the lowest since November 2010.
Corn for December delivery dropped 4.75 cents, or 0.6 percent, to $7.51 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
Based on December contracts for ethanol and corn, producers are losing about 33 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.
Gasoline for December delivery advanced 0.33 cent to $2.6336 a gallon in New York. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
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