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Ethanol Futures Drop on Concern High Prices Will Attract Imports

Ethanol futures fell for the first time in six days, snapping their longest streak of gains since July, on that concern the rally will attract imports.

Ethanol dropped as the highest prices in two weeks may attract foreign sellers to a market where supplies are already 8.4 percent higher than a year ago. An Oct. 3 Energy Department report showed the U.S. didn’t make foreign purchases of the fuel last week for the first time since June 15.

“There might be a concern that if the flat price rallies too much more we could attract more imports, which is part of the reason we’ve had a glut in supply,” said Ian Jackson, a trader at SCB & Associates.

Denatured ethanol for November delivery dropped 1.3 cents, or 0.5 percent, to settle at $2.40 a gallon on the Chicago Board of Trade. The decline was the first Sept. 27.

In cash market trading, ethanol on the West Coast declined 0.5 cents to $2.57 a gallon, according to data compiled by Bloomberg. In the U.S. Gulf, the additive fell 3 cents to $2.46. Ethanol in Chicago declined 2.5 cents to $2.40 a gallon. In New York, the biofuel slipped 2 cents to $2.48.

Corn for December delivery fell 9 cents to $7.48 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

Based on December contracts for ethanol and corn, plants are losing about 33 cents on each gallon of the biofuel produced, 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.

Crude oil for November delivery declined $1.83, or 2 percent, to $89.88 a barrel on the New York Mercantile Exchange.

Gasoline for November delivery climbed 0.96 cent, or 0.3 percent, to $2.9525 a gallon in New York. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

To contact the reporter on this story: Joshua Falk in New York at jfalk19@bloomberg.net

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