Ethanol futures declined for a third day in Chicago on ample supply and lower demand for the corn-based biofuel.
Prices dropped on speculation consumption isn’t robust enough to wilt stockpiles that at 19.2 million barrels are 12 percent higher than a year earlier, Energy Department data show. Ethanol is blended with gasoline to stretch supply and meet federal mandates.
“You still have a heavy market in general,” said Chris Wilson, an analyst at Atten Babler Risk Management LLC in Galena, Illinois.
Denatured ethanol for November delivery slipped 3 cents, or 1.3 percent, to $2.31 a gallon on the Chicago Board of Trade, the lowest price since Sept. 27. Futures have advanced 4.9 percent this year. The contract expired today.
In cash market trading, ethanol in the U.S. Gulf tumbled 4.5 cents, or 1.8 percent, to $2.45 a gallon and in New York the additive dropped 2 cents, or 0.8 percent, to $2.465, data compiled by Bloomberg shows.
Ethanol in Chicago decreased 1.5 cents, or 0.6 percent, to $2.37 a gallon and on the West Coast the biofuel added 1.5 cents, or 0.6 percent, to $2.54.
The futures price for the biofuel also sank as corn declined, Wilson said.
“They’ve been trading pretty close day to day,” he said. “It’s seemed to have found a sweet spot with corn.”
Corn for December delivery sank 4 cents, or 0.5 percent, to $7.355 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
Based on December contracts for ethanol and corn, producers are losing about 34 cents on each gallon of the biofuel made, 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.
Gasoline for December delivery increased 4.66 cents, or 1.8 percent, to $2.6202 a gallon in New York. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Ethanol’s discount to the motor fuel increased to 31.02 cents from 23.36 cents Nov. 2. Gasoline traded at a premium of 99.8 cents to ethanol as recently as Sept. 28.