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Ethanol Gains With Stockpiles at Record Seasonal Low

Ethanol advanced for the eighth time in 10 days as the government reported record-low seasonal inventories of the biofuel and corn rose.

Ethanol gained and narrowed the discount to gasoline after the U.S. Energy Information Administration said stockpiles were 15.4 million barrels on Oct. 11. That was the lowest level for this time of year since the EIA began keeping weekly records in 2010 and up 29,000 barrels from the previous week.

“There’s a pretty good bid in the market,” said Jim Damask, a manager at StarFuels Inc. in Jupiter, Florida. “The stockpiles weren’t as significant as what people were expecting. They’re certainly coming after it and if they thought that there was enough inventory, they wouldn’t have to do so, they would just wait.”

Denatured ethanol for November delivery advanced 1.8 cents to $1.828 a gallon on the Chicago Board of Trade. It has gained 8.4 percent in two weeks and dropped 17 percent this year.

Ethanol’s discount to gasoline narrowed 3.74 cents to 82.58 cents a gallon. November-delivery gasoline fell 1.94 cents to $2.6538 a gallon on the New York Mercantile Exchange, following a decline in domestic crude benchmark West Texas Intermediate. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

Corn for December settlement gained 2.5 cents, or 0.6 percent, to $4.44 a bushel in Chicago. Prices have slumped this year as the U.S. is harvesting a record crop estimated at 13.8 billion bushels. The ethanol crush spread based on December contracts was little changed at 7 cents a gallon.

Corn-based Renewable Identification Numbers were unchanged at 29 cents. The government uses the tradable RINs, which are connected to each gallon of ethanol, to track compliance with rules requiring ethanol use. Advanced RINs, which cover biodiesel and sugarcane-based ethanol, fell 2 cents to 42 cents.

In cash market trading, ethanol fell 3 cents a gallon to $2.23 in New York, 2 cents to $2.075 in Chicago, 2 cents to $2.165 on the Gulf Coast and 0.5 cent to $2.315 on the West Coast, data compiled by Bloomberg show.

To contact the reporter on this story: Eliot Caroom in New York at ecaroom@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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