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Ethanol Declines on Speculation Harvest to Help Boost Production

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Oct. 22 (Bloomberg) -- Ethanol declined on speculation that the corn harvest will help distillers boost production.

Futures fell 0.6 percent a day after the Agriculture Department said 39 percent of the harvest has been completed. An Energy Information Administration report yesterday showed ethanol production jumped 13 percent as of Oct. 11 from a record low in January.

“The corn harvest is in full swing,” said Mike Blackford, a consultant at Intl FCStone in Des Moines, Iowa. “We’re going to see an increase in production as we move forward.”

Denatured ethanol for November delivery decreased 1.1 cents to $1.817 a gallon on the Chicago Board of Trade. Prices have fallen 17 percent this year.

Gasoline for November delivery slipped 3.71 cents, or 1.4 percent, to $2.6167 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

Ethanol’s discount to the motor fuel narrowed 2.61 cents to 79.97 cents a gallon.

Blackford said ethanol prices have been buoyed by a lack of imports. The U.S. hasn’t made any foreign purchases of the fuel since Sept. 27, data from the Energy Department’s statistical arm show.

Corn is the primary ingredient in U.S. ethanol, with one bushel of the grain making at least 2.75 gallons of the renewable fuel.

Crush Spread

Corn for December delivery fell 5.75 cents, or 1.3 percent, to $4.3825 a bushel in Chicago. The crush spread, based on December contracts for corn and ethanol, was 8 cents, unchanged from yesterday, data compiled by Bloomberg show.

In cash market trading, ethanol declined 6.5 cents to $2.25 a gallon on the West Coast, 2.5 cents to $2.14 on the Gulf Coast, 0.5 cent to $2.07 in Chicago and 5 cents to $2.18 in New York, data compiled by Bloomberg show.

Chicago’s discount to New York narrowed 4.5 cents to 11 cents, while the West Coast’s premium to the Gulf slimmed 4 cents to 11 cents.

The EPA tracks compliance with the federal ethanol-use mandate with Renewable Identification Numbers, or RINs, tradable certificates that are attached to each gallon of biofuel.

Corn-based RINs fell 1 cent to 28 cents, while advanced RINs, which cover biodiesel and Brazilian sugarcane-based ethanol, decreased 1 cent to 41 cents, data compiled by Bloomberg show.

To contact the reporters 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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