Ethanol Rises Against Gasoline on Tight Supply Ahead of Harvest

Ethanol advanced versus gasoline on concern that distilleries will face challenges in obtaining corn before the harvest is finished.

The spread, or price difference, narrowed 8.12 cents to 73.7 cents a gallon. A Sept. 18 Energy Information Administration report showed ethanol stockpiles in the Midwest region were 20 percent lower in the week ended Sept. 13 than a year earlier.

“Product continues to be tough to come by in the short term,” said Justin Dirico, manager of the biofuels desk at Eagle Energy Brokers LLC in New York. “There’s not much of it around and volumes will be low until we get some new-crop ethanol.”

Denatured ethanol for October delivery climbed 2 cents, or 1.1 percent, to $1.886 a gallon on the Chicago Board of Trade. Futures have declined 14 percent this year.

Gasoline for October delivery slipped 6.12 cents, or 2.3 percent, to $2.623 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

The U.S. corn harvest is usually from September through November.

Corn for December delivery added 2.25 cents, or 0.5 percent, to $4.5325 a bushel in Chicago. The December crush spread of corn to ethanol was break-even, down from 1 cent Sept. 20. All other crush spreads through 2015 were negative.

Ethanol Stockpiles

Total ethanol stockpiles have fallen 16 percent in the past year to 16.2 million barrels, data from the EIA, the Energy Department’s analytical arm, show. Production has dropped 5.3 percent to 838,000 barrels a day from this year’s high in June.

Imports have also dropped, plummeting 96 percent to 3,000 barrels a day from the high in January, according to the EIA.

In cash market trading, ethanol rose 5 cents to $2.45 a gallon in New York and 5 cents to $2.325 a gallon on the West Coast, data compiled by Bloomberg show. Prices in the U.S. Gulf sank 4.5 cents to $2.33 and in Chicago fell 2.5 cents to $2.975.

The Gulf’s premium to the West Coast shrank by 9.5 cents to 0.5 cent, while New York’s premium to Chicago slipped 7.5 cents to 52.5 cents from a record.

A 2007 energy law known as the Renewable Fuels Standard requires the country to use 13.8 billion gallons of ethanol this year. Tracking certificates called Renewable Identification Numbers, or RINS, are attached to each gallon of biofuel to help monitor compliance.

Corn-based-ethanol RINs fell 1 cent to 54 cents and advanced RINs, which cover biodiesel and Brazilian sugarcane-based ethanol, declined 1 cent to 63 cents, data compiled by Bloomberg show.

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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