Ethanol futures rose for the first time in three days as gasoline prices increased and production stayed at a record low.
Futures gained as gasoline surged to the highest level in more than a week as U.S. refinery shutdowns threatened supplies. Ethanol production tumbled 3 percent in the week ended Sept. 28 to 785,000 barrels a day, the least since the Energy Department began publishing weekly data in June 2010.
“The strong gasoline market is helping ethanol a little bit,” said Mike Blackford, a consultant at INTL FCStone Group in Des Moines, Iowa. “The underlying fundamentals of the ethanol market have been altered with cutbacks in production.”
Denatured ethanol for November delivery rose 1.2 cents, or 0.5 percent, to settle at $2.408 a gallon on the Chicago Board of Trade. The more active December contract increased 0.4 percent to $2.395.
In cash market trading, ethanol on the West Coast was unchanged at $2.575 a gallon, data compiled by Bloomberg showed. In the U.S. Gulf, the additive increased 1.5 cents to $2.465. Ethanol in Chicago gained 2 cents to $2.405 a gallon, and, in New York, the biofuel advanced 1.5 cents to $2.495.
Gasoline for November delivery climbed 6.56, or 2.3 percent, to $2.9587 a gallon on the New York Mercantile Exchange, the highest settlement since Sept. 28. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Crude oil for November delivery rose $3.06, or 3.4 percent, to end at $92.39 a barrel.
Corn for December delivery was unchanged at $7.42 a bushel in Chicago.
Based on December contracts for ethanol and corn, plants are losing about 35 cents on each gallon of the biofuel produced, according to data compiled by Bloomberg. That doesn’t include profit from the sale of dried distillers’ grains, a byproduct of ethanol production that can be fed to livestock.