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Ethanol Declines on Concern European Crisis to Threaten Demand

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Sept. 24 (Bloomberg) -- Ethanol declined in Chicago, dropping along with other energy markets, on concern the European debt crisis will curtail demand for fuel.

Prices slipped after the Ifo institute in Munich said German business confidence tumbled to the lowest level in more than two years and Chancellor Angela Merkel and French President Francois Hollande disagreed at a Sept. 22 meeting on a timetable to introduce joint oversight of Europe’s banks.

“Energy commodities keep trading lower because demand is faltering,” said Peyton Feltus, president of Randolph Risk Management Inc. in Dallas. “Germany is the European Union’s gold-star economy.”

Denatured ethanol for October delivery fell 0.9 cent, or 0.4 percent, to $2.251 a gallon on the Chicago Board of Trade. Futures have gained 2.2 percent this year.

In cash market trading, ethanol in New York slumped 8 cents, or 3.4 percent, to $2.28 a gallon and in Chicago the biofuel decreased 6.5 cents, or 2.9 percent, to $2.21, data compiled by Bloomberg shows.

Ethanol in the U.S. Gulf fell 6.5 cents, or 2.8 percent, to $2.275 a gallon and on the West Coast the additive lost 1.5 cents, or 0.6 percent, to $2.375.

Gasoline for October delivery tumbled 2.49 cents, or 0.9 percent, to $2.9176 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.

Gasoline narrowed its premium to ethanol to 66.66 cents, from 68.25 Sept. 21.

Corn for December delivery dropped 3.5 cents, or 0.5 percent, to settle at $7.4475 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

The value of Renewable Identification Numbers, known as RINs, rose 2 percent to 2.6 cents, data compiled by Bloomberg show. RINs 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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