Ethanol Advances Against Gasoline on Higher Export Consumption

Ethanol rose against gasoline on higher export demand for the biofuel.

The spread, or price difference, tightened 7.26 cents to 91.93 cents a gallon at 11:47 a.m. New York time, based on February contracts for the two fuels. Foreign purchases averaged 41,000 barrels a day in October, compared to a low of 27,000 barrels a day in July, data from the Energy Information Administration show.

“The export market is strong and that’s moving the prompt,” said Chris Wilson, a broker at Atten Babler Risk Management LLC in Galena, Illinois. “These ethanol plants are making a lot of money on spot gallons.”

Denatured ethanol for February delivery increased 2 cents, or 1.1 percent, to $1.814 a gallon on the Chicago Board of Trade. The January contract, which expires Jan. 6, added 1.9 cents to $1.93 a gallon.

Gasoline for February delivery declined 5.26 cents, or 1.9 percent, to $2.7333 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 exports have averaged above 40,000 barrels a day for both September and October, according to the EIA, the Energy Department’s analytical arm.

Imports Slow

Imports of the additive have slowed. The U.S. hasn’t made any foreign purchases of ethanol since the week ended Sept. 27, EIA data show.

The fuel is made mostly from corn in the U.S. and a record harvest for the grain has made the additive more competitive, Wilson said.

Corn for March delivery increased 1.5 cents, or 0.4 percent, to $4.235 a bushel in Chicago. One bushel makes at least 2.75 gallons of the renewable fuel.

The corn crush spread, or the difference between the cost of corn and the price of ethanol, was 22 cents, up from 21 cents on Dec. 31, data compiled by Bloomberg show.

In cash market trading, ethanol fell 6.5 cents to $2.115 a gallon in Chicago, 4 cents to $2.30 in New York, 4 cents to $2.24 on the Gulf Coast and 2.5 cents to $2.375 a gallon on the West Coast, 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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