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Ethanol Futures Cap Second Weekly Advance

Oct. 18 (Bloomberg) -- Ethanol futures rose, capping a weekly advance with corn as rain delayed the U.S. harvest and with supplies at a record low. The biofuel’s discount to gasoline widened.

Ethanol increased 1.1 percent today and 5.4 percent this week, the second straight advance. Corn, the biofuel’s primary component in the U.S., gained 1.9 percent for the week as western and northern areas of the Midwest received at least an inch (2.5 centimeters) of rain, possibly slowing the harvest. Ethanol stockpiles were at a record low 15.4 million barrels in the week ended Oct. 4, according to the U.S. Energy Information Administration, which is scheduled to release new data Oct. 21.

“Generally speaking, end users are going hand to mouth in ethanol. They buy a week out, they don’t buy a month out,” said Jerrod Kitt, an analyst at Linn Group in Chicago. “So when they come in to the market, they come in to the market, and they drive this price up.”

Denatured ethanol for November delivery advanced 1.9 cents to settle at $1.81 a gallon on the Chicago Board of Trade. Ethanol’s discount to gasoline widened 0.63 cent to 86.32 cents a gallon.

November-delivery gasoline rose 2.53 cents, or 1 percent, to settle at $2.6732 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 December settlement fell 1.5 cents to $4.415 a bushel in Chicago, paring the weekly gain. Prices have slumped this year as the U.S. is harvesting a record crop estimated at 13.8 billion bushels. The ethanol crush spread based on December contracts rose to 7 cents a gallon from 5.4 cents.

In cash market trading, ethanol gained 3.5 cents to $2.32 on the West Coast, data compiled by Bloomberg show. It fell 0.5 cent to $2.095 a gallon in Chicago. The price was unchanged at $2.185 on the Gulf Coast and $2.26 on the East Coast.

To contact the reporter on this story: Eliot Caroom in New York at ecaroom@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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