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Ethanol Futures Jump to Four-Month High on Foreign Demand

Ethanol futures rose for a fifth day, narrowing the discount to gasoline, amid signs of demand in the export market.

Ethanol for January settlement rose as much as 6.4 percent. The biofuel narrowed its discount to gasoline to 86.5 cents a gallon from 96.07 cents yesterday. U.S. shipments reached 43,000 barrels a day in September, the highest level since March, data from the Energy Information Administration show. Brazilian ethanol has cost more than the U.S. version since early September.

“The market is totally ignoring gains of production to focus on what’s going on in the export market,” Renan Pimenta, an analyst at Intl FCStone Inc., said in a telephone interview from Campinas, Brazil. “U.S. ethanol is competitive versus Brazil, its main competitor.”

Denatured ethanol for January delivery gained 11.2 cents to $1.875 a gallon, the highest price for a most-active contract since July 19. The difference between the cost of corn and the price of a gallon of ethanol, known as the corn crush spread, was 93 cents a gallon based on December contracts, up from 82 cents yesterday, data compiled by Bloomberg show. The December contract, which expired today, soared 13 cents, or 5.5 percent, to $2.48 a gallon.

January-delivery gasoline gained 1.63 cents, or 0.6 percent, to $2.74 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

Ethanol production fell 1.5 percent and inventories rose 0.7 percent in the week ended Nov. 29, the EIA said today. The U.S. hasn’t made any imports since Sept. 27.

Corn for December delivery rose 3.5 cents, or 0.8 percent, to $4.255 a bushel in Chicago.

Advanced Renewable Identification Numbers, or RINs, gained 1 cent to 30 cents a gallon. RINs are certificates attached to each gallon of biofuels that are submitted to the government and can be traded among companies.

To contact the reporter on this story: Lucia Kassai in Houston at lkassai@bloomberg.net

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

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