Ethanol Declines as Report Shows Output Rose Most in Seven Weeks

Ethanol futures declined after the government reported output rose the most in seven weeks.

Futures sank after the Energy Department said production climbed 1.6 percent to 809,000 barrels a day, snapping a record string of weekly declines. Stockpiles jumped 2.1 percent to 19.4 million barrels, the biggest gain since June 15.

Producers, including Valero Energy Corp. (VLO), the third-biggest U.S. ethanol company, had tempered output amid drought in the Midwest that raised corn prices and curtailed margins.

Denatured ethanol for August delivery fell 3.4 cents, or 1.3 percent, to $2.596 a gallon on the Chicago Board of Trade, the steepest decline since July 24. Prices gained 18 percent in July, the most since June 2008.

In cash market trading, ethanol in New York sank 1 cent, or 0.4 percent, to $2.655 a gallon and in Chicago the additive slumped 1 cent, or 0.4 percent, to $2.56, according to data compiled by Bloomberg.

Ethanol in the U.S. Gulf fell 1.5 cents, or 0.6 percent, to $2.62 a gallon and on the West Coast the biofuel was unchanged at $2.755.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net;

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net

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