Ethanol Falls Versus Gasoline

Ethanol fell against gasoline on speculation the corn harvest that’s under way will help companies boost production of the biofuel.

The spread, or price difference, expanded 1.85 cents to 93.91 cents a gallon. Corn is the primary ingredient used to make ethanol and 12 percent of the crop was harvested as of Sept. 27, according to the U.S. Agriculture Department. More recent data isn’t available as a result of the partial government shutdown.

“We are starting to see the harvest,” said Julie Ward, an assistant vice president at R.J. O’Brien & Associates, a broker in Des Moines, Iowa. “It certainly bodes well for good ethanol numbers.”

Denatured ethanol for November delivery was unchanged at $1.687 a gallon on the Chicago Board of Trade. Prices have dropped 23 percent this year.

Gasoline for November delivery rose 1.85 cents, or 0.7 percent, to $2.6261 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 production has averaged 836,000 barrels a day this year through Sept. 27, down 4.1 percent from the same period a year earlier, data from the U.S. Energy Information Administration show.

Stockpiles in the week ended Sept. 27 were at 15.5 million barrels, 19 percent a year ago, according to the Energy Department’s statistical arm.

Drought Damage

Last year’s drought damaged corn yields and forced ethanol companies to temper operations. Farmers responded by planting record acres of the grain.

Corn for December delivery added 6 cents, or 1.4 percent, to $4.4925 a bushel in Chicago. The December crush spread, a measure of profit for turning corn into ethanol, was minus 2 cents, down from break-even on Oct. 4.

In cash market trading, ethanol in New York held at $2.20 a gallon; in Chicago prices declined 1.5 cents to $2.035; in the U.S. Gulf the additive lost 0.5 cent to $2.12; and on the West Coast the biofuel gained 2.5 cents to $2.05 a gallon, data compiled by Bloomberg show.

New York Harbor’s premium to Chicago expanded 1.5 cents to 16.5 cents, while the West Coast’s discount to the Gulf narrowed 3 cents to 7 cents.

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