Ethanol Little Changed Amid Uncertainty on Tax Credit Extension

Ethanol futures were little changed in Chicago amid uncertainty on whether Congress will extend the blenders tax credit.

The grain-based additive was steady one month before the expiration of the 45-cent tax credit and 54-cent import tariff that supports the industry. Refiners receive the tax credit for each gallon of ethanol blended into gasoline.

“It’s in a bit of policy limbo,” said Will Babler, a broker at First Capitol Risk Management in Galena, Illinois. “With the blenders credit up in the air, that creates some gridlock here.”

Denatured ethanol for December delivery fell 0.5 cent to settle at $2.14 a gallon on the Chicago Board of Trade. Futures have gained 10 percent this year.

In cash market trading ethanol was unchanged in New York at $2.255 a gallon and in the U.S. Gulf at $2.275, according to data compiled by Bloomberg.

Ethanol on the West Coast dropped 3 cents, or 1.3 percent, to $2.225 a gallon and in Chicago the additive slipped 0.5 cent to $2.155.

Growth Energy, the ethanol lobby that last year asked the U.S. to raise the allowable limit of the fuel in gasoline, in July requested the incentives that support the industry be shifted to help build distribution infrastructure.

Production of biodiesel has ground to a near-halt since its $1-a-gallon incentive expired at the end of last year, according to the National Biodiesel Board, an industry trade group.

An average ethanol mill in Iowa is pocketing 4 cents on every gallon produced while an Illinois plant is earning 9 cents a gallon on a spot basis, according to Ag Trader Talk, an online grains information service in Clive, Iowa.

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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