Ethanol Declines to Eight-Week Low as Supply Outstrips Demand

Ethanol futures declined to an eight-week low in Chicago as supplies outstripped demand.

Prices fell a day after an Energy Department report showed the amount of the biofuel blended into U.S. gasoline slipped to the lowest since the week ended Aug. 17 while production surged to a nine-week high and supply jumped the most since July 27.

“Increases in the DOE production and inventory numbers this week have left many market participants a little skittish,” said Mike Breitenbach, an analyst and trader at Blue Ocean Brokerage LLC in New York.

Denatured ethanol for October delivery fell 2.4 cents, or 1 percent, to $2.512 a gallon on the Chicago Board of Trade, the lowest price since July 11. Futures have gained 14 percent this year.

In cash market trading, ethanol was unchanged in Chicago at $2.53 a gallon and on the West Coast the additive sank 4 cents, or 1.5 percent, to $2.655, data compiled by Bloomberg shows.

Ethanol in the U.S. Gulf slid 2.5 cents, or 1 percent, to $2.595 a gallon and in New York the biofuel lost 1 cent, or 0.4 percent, to $2.605.

Corn for December delivery gained 1 cent to $7.995 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

Gasoline for October delivery jumped 2.86 cents, or 1 percent, to $3.0196 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.

The value of Renewable Identification Numbers, known as RINs, climbed 3.6 percent to 2.9 cents, data compiled by Bloomberg show. They are credits that help the government track whether refiners are meeting 2012 federal ethanol use mandates.

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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