Ethanol fell after an analyst said corn planting may exceed U.S. estimates. The biofuel’s discount to gasoline tightened for a third day.
Ethanol slipped as corn tumbled 1.6 percent after Christopher Narayanan, a Societe Generale analyst in New York, said the grain used to make ethanol in the U.S. may be planted on more than the 88.8 million acres reported by the Agriculture Department’s Farm Service Agency. The ethanol-gasoline spread narrowed 0.4 cent to 73.85 cents a gallon.
“Ethanol is really falling along with corn today,” said Will Babler, a broker in Galena, Illinois, for Atten Babler Risk Management LLC. “The market is still looking for direction on total acres, yield prospects and weather outlooks. There’s a lot of debate going on about the different factors.”
Denatured ethanol for September delivery slipped 1.3 cents, or 0.6 percent, to settle at $2.229 a gallon on the Chicago Board of Trade. Futures are up 3.9 percent this week.
Gasoline for September delivery fell 1.7 cents, or 0.6 percent, to $2.9675 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Corn for September delivery retreated 7.75 cents, or 1.6 percent, to $4.7375 a bushel in Chicago. The more actively traded December contract fell 8.75 cents to $4.635.
Narayanan said yesterday that planted acres for grains and soybeans may be higher than forecast because the FSA “tends to underestimate planted acreage throughout the growing season.”
The FSA projects that 3.411 million corn acres were left unplanted this year. Weather risks will still persist as crops near maturity, Narayanan said.
The loss pared September corn’s advance to 1.7 percent this week. Ethanol gained 3.9 percent.
“The drop that we’re seeing today isn’t nearly as big as the rally that’s happened over the last few days,” said Chase Malcolm, ethanol broker at Starfuels Inc. in Jupiter, Florida. “Today is probably a little bit of correction from the rally.’
The corn crush spread, or the difference between a gallon of ethanol and the corn needed to make it, was 51 cents, versus 49 cents yesterday.
In cash market trading, ethanol fell 9 cents to $2.47 a gallon on the West Coast, the largest move among U.S. regions. Prices slid 6.5 cents to $2.535 in New York, 1 cent to $2.345 in Chicago and 0.5 cent to $2.445 on the Gulf Coast.
The government uses tracking certificates, known as Renewable Identification Numbers, or RINs, to determine compliance with mandates to use the fuel.
Corn-based ethanol RINs gained 1 cent to 79 cents. Advanced RINs, which cover biodiesel and Brazilian surgarcane-based ethanol, added 3 cents, climbing to 88 cents, data compiled by Bloomberg show.