Ethanol fell in Chicago to the lowest price in nine weeks as corn costs eased and on burgeoning stockpiles and imports.
Futures followed the grain lower after the U.S. Agriculture Department reported farmers will harvest 10.727 billion bushels of corn, compared with the average of 10.42 billion predicted by analysts surveyed by Bloomberg. The Energy Department said today that ethanol inventories climbed to a six-week high in the week ended Sept. 7 and imports jumped to the second-highest amount this year.
“Ethanol production was down and stockpiles were up,” said Julie Ward, assistant vice president at R.J. O’Brien & Associates, a broker in Des Moines, Iowa. “There just isn’t a lot of positive news for ethanol. The correlation between ethanol and corn is so strong.”
Denatured ethanol for October delivery dropped 3.5 cents, or 1.4 percent, to $2.42 a gallon on the Chicago Board of Trade, the lowest price since July 6. Futures have gained 9.9 percent this year.
In cash market trading, ethanol in Chicago sank 6.5 cents, or 2.6 percent, to $2.405 a gallon and in the U.S. Gulf the additive decreased 6 cents, or 2.4 percent, to $2.475, according to data compiled by Bloomberg.
Ethanol in New York declined 6 cents, or 2.3 percent, to $2.505 a gallon and on the West Coast the biofuel slipped 4 cents, or 1.5 percent, to $2.56.
Imports averaged 89,000 barrels a day last week, up from 34,000. The 93,000 barrels a day imported in the period ended Aug. 10 was the most since the Energy Department began reporting weekly data for ethanol two years ago.
Stockpiles gained a fourth week to the highest level since July 27 even as production slipped 1.6 percent to 816,000 a day, the lowest since July 27, Energy Department data show.
Corn for December delivery decreased 8.25 cents, or 1.1 percent, to $7.695 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
Gasoline for October delivery slid 4.19 cents, or 1.4 percent, to $3.0016 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.
The drop in gasoline narrowed its premium to ethanol to 58.16 cents from 58.85 yesterday, making the biofuel less attractive to blend as refiners stand to pocket the difference between the two.