Ethanol Declines Against Gasoline on Signs of Increasing OutputMario Parker
Ethanol declined against gasoline as the futures slid to a 14-month low on speculation that the September corn harvest will allow companies to boost output of the biofuel.
The spread between the fuels expanded 5.64 cents to 80.25 cents a gallon a day after the Agriculture Department said domestic corn output will set a record. Ethanol for September delivery closed at a 25.6-cent premium to the October contract on the Chicago Board of Trade.
“The steep carry in September and October has producers emptying tanks of any material,” said Justin Dirico, manager of the biofuels desk at Eagle Energy Brokers LLC in New York.
Denatured ethanol for September delivery fell 1.8 cents, or 0.8 percent, to $2.14 a gallon on the Chicago Board of Trade, the lowest price since June 22, 2012. Futures have declined 2.3 percent this year.
Gasoline for September delivery rose 3.84 cents, or 1.3 percent, to $2.9425 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 decreased 16.75 cents, or 3.6 percent, to $4.5525 a bushel in Chicago. The more actively traded December contract dropped 16.75 cents to $4.4725.
The corn crush spread, or the cost difference between a gallon of ethanol and the corn needed to make it, based on September contracts, was 48 cents, up from 44 cents yesterday, data compiled by Bloomberg show.
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 rose 2 cents to 72 cents, the highest since Aug. 7, while advanced RINs, which cover biodiesel and Brazilian sugarcane-based ethanol, added 1 cent to 79 cents, data compiled by Bloomberg show.
Ethanol production rose 2.5 percent to 853,000 barrels a day in the week ended Aug. 2, data from the Energy Information Administration show. Stockpiles increased 1.6 percent to 16.7 million barrels, the highest since July 19 and 8.2 percent higher than the record low of 15.4 million barrels in June, according to the EIA, the Energy Department’s research unit.
Imports have averaged 22,000 barrels a day this year through Aug. 2, up from 12,000 barrels daily during the same period a year earlier.
The agency is scheduled to release the latest production and supply figures at 10:30 a.m. tomorrow in Washington.
In cash market trading, ethanol climbed 8 cents to $2.48 a gallon in New York, 4 cents to $2.49 on the West Coast, 2 cents to $2.265 in Chicago and 2 cents to $2.365 a gallon on the Gulf Coast, data compiled by Bloomberg show.
West Coast ethanol’s premium to the Gulf widened by 2 cents to 12.5 cents while Chicago’s discount to New York Harbor expanded 6 cents to 21.5 cents.