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Ethanol Advances First Time in More Than Week on Fed Stimulus

Ethanol advanced for the first time in more than a week after the Federal Reserve announced measures to help stimulate the world’s largest economy.

Prices rose with other commodities after the Fed said yesterday it would make additional purchases of debt in a third round of so-called quantitative easing. Separately, unrest in the Middle East and North Africa sparked concern that oil shipments will be disrupted.

“Commodities are up because the Federal Reserve has committed another act of desperation,” said Peyton Feltus, president of Randolph Risk Management Inc. in Dallas. “Of course the Mideast is all stirred up. You certainly get a boost to all transportation fuels and that includes ethanol.”

Denatured ethanol for October delivery rose 0.2 cent to $2.422 a gallon on the Chicago Board of Trade, the first advance since Sept. 6. Futures have gained 9.9 percent this year.

In cash market trading, ethanol advanced 1 cent to $2.49 a gallon in New York, 0.5 cent to $2.415 in Chicago, 1.5 cents to $2.485 in the U.S. Gulf and 1 cent to $2.57 on the West Coast, according to data compiled by Bloomberg.

Gasoline for October delivery jumped 5.34 cents, or 1.8 percent, to $3.0156 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 gain in gasoline expanded its premium to ethanol to 59.36 cents, the highest since June 15, from 54.22 cents yesterday, making the biofuel more attractive to blend for refiners, which stand to pocket the difference between the two.

Corn for December delivery rose 8.25 cents, or 1.1 percent, to $7.82 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

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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