Ethanol Discount to Gasoline Widens for First Time in Five DaysDan Murtaugh
Ethanol’s discount to gasoline narrowed for the first time in five days after a forecast favorable to corn crops.
The spread, or price difference, between ethanol and gasoline widened 0.68 cent to 38.66 cents a gallon as both fuels fell on a report that Chinese economic growth slowed. Ethanol futures fell further after Commodity Weather Group forecast that cold weather later this week probably won’t damage most crops. Corn is used to make ethanol in the U.S.
“It’s a little bit of the corn market being under pressure,” said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa. “A better weather forecast for planting season is pressuring corn, and that’s spilling over into ethanol.”
Denatured ethanol for May delivery fell 5.1 cents to $2.371 a gallon on the Chicago Board of Trade. Prices have gained 8.3 percent this year.
Gasoline for May delivery slid 4.42 cents, or 1.6 percent, to $2.7576 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Energy commodities declined as China’s first-quarter gross domestic product increased 7.7 percent from a year earlier, the National Bureau of Statistics reported in Beijing. That’s less than the 8 percent forecast in a Bloomberg survey of economists and the 7.9 percent expansion in the fourth quarter.
Corn for May delivery fell 11.75 cents, or 1.8 percent, to $6.4675 a bushel in Chicago. The corn crush spread, representing gains or losses from turning corn into ethanol and based on May contracts, was 2 cents a gallon, down from 3 cents April 12 and up from minus 35 cents at the end of 2012. The amount doesn’t include revenue from the sale of dried distillers’ grains, a byproduct of ethanol production, which can be fed to livestock.
In cash market trading, ethanol fell 0.5 cents to $2.74 on the West Coast, 4 cents to $2.495 on the Gulf Coast, 4 cents to $2.43 in Chicago and 9.5 cents to $2.535 in New York. New York Harbor’s premium to Chicago narrowed 5.5 cents to 16 cents. The Gulf Coast’s discount to the West Coast grew by 3.5 cents to 24.5 cents.
Renewable Identification Numbers, or RINs, for corn-based ethanol decreased 5 cents to 70 cents today, data compiled by Bloomberg show. Advanced RINs, which cover biodiesel and Brazilian sugarcane-based ethanol, sank 6 cents to 77.5 cents.