Bloomberg News

Ethanol Slips After Report Shows Ample Inventories and Imports

November 07, 2012

Ethanol futures slipped in Chicago after a government report showed ample inventories and an increase in imports.

Prices dropped after an Energy Department report showed that stockpiles of 18.1 million barrels in the week ended Nov. 2 were 10 percent higher than a year earlier, while imports averaged 60,000 barrels a day, compared to none a year earlier.

“There seems to be plenty of ethanol,” said Jim Damask, a manager at BiofuelsConnect, a Jupiter, Florida-based alternative-energy broker. “We have a lot of ethanol for sale.”

Denatured ethanol for December delivery fell 0.1 cent to $2.344 a gallon on the Chicago Board of Trade, down 12 percent from a year ago.

In cash market trading ethanol in Chicago dropped 3 cents, or 1.3 percent, to $2.34 a gallon and in the U.S. Gulf the additive decreased 3 cents, or 1.2 percent, to $2.42, data compiled by Bloomberg show.

Ethanol on the West Coast declined 2.5 cents, or 1 percent, to $2.495 a gallon and in New York the biofuel slid 1 cent, or 0.4 percent, to $2.455.

Corn for December delivery rose 3.25 cents, or 0.4 percent, to $7.4425 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 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.

Gasoline for December delivery tumbled 11 cents, or 4.1 percent, to $2.5889 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 narrowed to 24.49 cents from 35.39 cents yesterday. Gasoline traded at a premium of 99.8 cents to ethanol as recently as Sept. 28.

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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