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Ethanol Unchanged Amid Abundant Supply and Lower Consumption

Sept. 13 (Bloomberg) -- Ethanol futures were unchanged in Chicago after four days of declines amid abundant supplies and a drop in consumption.

Futures matched yesterday’s two-month low after an Energy Department report showed that the amount of U.S. gasoline that contained ethanol was the smallest in more than eight months while stockpiles climbed to a six-week high and imports surged.

“There is no activity here,” said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa. “You’re well-balanced in terms of always having supply out there and demand that fluctuates on domestic gasoline consumption.”

Denatured ethanol for October delivery was unchanged at $2.42 a gallon on the Chicago Board of Trade. Futures have gained 9.9 percent this year.

In cash market trading, ethanol in New York decreased 2.5 cents, or 1 percent, to $2.48 a gallon and in Chicago the biofuel climbed 0.5 cent to $2.41, data compiled by Bloomberg shows.

Ethanol on the West Coast was unchanged at $2.56 a gallon and in the U.S. Gulf the additive lost 0.5 cent to $2.47.

Gasoline demand last week slid 5.3 percent, Energy Department data show, while refineries in the U.S. Gulf Coast restart after shutting for Hurricane Isaac.

Ethanol, made mostly from corn in the U.S., is blended with the motor fuel to stretch supply and meet federal mandates to reduce dependence on fossil fuels.

Gasoline Spread

Gasoline for October delivery slid 3.94 cents, or 1.3 percent, to $2.9622 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 54.22 cents from 58.16 yesterday, making the biofuel less attractive to blend for refiners, which stand to pocket the difference between the two.

Corn for December delivery rose 4.25 cents, or 0.6 percent, to $7.7375 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

The value of Renewable Identification Numbers, known as RINs, fell 5.2 percent to 2.75 cents, data compiled by Bloomberg show. They are credits that help the government track whether refiners are meeting 2012 federal ethanol use mandates.

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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