Ethanol Rises After Output Gain Fails to Fill Stocks
(Corrects Aventine’s location and number of ethanol plants in 11th paragraph of story published yesterday)
Ethanol gained for a sixth straight session after a government report showed that rising U.S. output wasn’t enough to boost supplies.
Ethanol increased 0.5 percent as inventories declined 12,000 barrels to 15.2 million barrels in the week ended Nov. 8, the Energy Information Administration said today. Production jumped 2.8 percent to 927,000 barrels a day, the highest level since Feb. 10, 2012,
Ethanol’s discount to gasoline widened 4.67 cents to 90.57 cents after stockpiles of the motor fuel dropped, sending gasoline prices to a four-week high.
“Demand is outpacing output, leaving little room to replenish stockpiles,” Renato Dias, a Campinas, Brazil-based analyst for Intl FCStone Inc., said in a telephone interview.
Denatured ethanol for December settlement extended its longest winning streak since May, advancing 0.9 cent to close at $1.778 a gallon on the Chicago Board of Trade. Prices have dropped 19 percent this year.
Ethanol output will rise to 900,000 barrels a day next year, the EIA said yesterday in its monthly Short-Term Energy Outlook. That compares with a previous forecast of 890,000 barrels and the outlook for 860,000 this year, the agency said.
Gasoline for December delivery advanced 5.57 cents, or 2.1 percent, to settle at $2.6837 a gallon on the New York Mercantile Exchange, the highest close since Oct. 16. The contract covers reformulated gasoline made to be blended with ethanol before delivery to filling stations.
Prices for corn, the main feedstock used to make ethanol, declined 0.8 percent. Corn for December delivery dropped 3.25 cents to $4.265 a bushel in Chicago.
The profit for making ethanol, the so-called crush spread, rose to 23 cents from 21 cents yesterday.
“Farmers are starting to move some more corn,” Jeff Duckworth, a corn buyer for ethanol producer Aventine Renewable Energy Holdings Inc. (AVRW), said today in a telephone interview from Pekin, Illinois. “Growers are disappointed with corn prices and are starting to give up holding onto the corn.”
The harvest in Illinois is about 90 percent complete, he said. Aventine, based in Pekin, owns six ethanol plants.
Corn growers in the U.S., the world’s largest producer, are expected to harvest a record 13.989 billion bushels, according to the U.S. Department of Agriculture.
The Environmental Protection Agency uses Renewable Identification Numbers, or RINs, tracking certificates attached to each gallon of biofuel to track compliance with regulations.
Corn-based RINs gained 3 cents to 22 cents, while advanced RINs, which cover biodiesel and Brazilian sugarcane-based ethanol rose 4 cents to 26 cents.
In cash market trading, ethanol advanced 1 cent to $2.26 a gallon in New York and 10.5 cents to $2.08 on the West Coast, data compiled by Bloomberg show. Prices fell 2.5 cents to $1.925 a gallon in Chicago and 1.5 cents to $2.025 on the Gulf Coast.
West Coast ethanol’s premium to the Gulf was 5.5 cents, compared with a discount of 6.5 cents yesterday, while Chicago’s discount to New York expanded 3.5 cents to 33.5 cents.
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