Ethanol Declines With Corn at Lowest Level Since 2010

Ethanol dropped as corn touched a three-year low, reducing costs for distillers.

The biofuel fell on speculation that rain in South America will aid corn planting and help boost global supplies of the grain. U.S. ethanol production rose to the highest level since June 2012 last week, according to data from the Energy Information Administration. A bushel of corn yields about 2.75 gallons of ethanol in the U.S.

“They’re making money, but the price of ethanol is falling,” said Wallace Tyner, an agricultural economist at Purdue University in West Lafayette, Indiana.

Denatured ethanol for December delivery declined 0.7 cent, or 0.4 percent, to $1.649 a gallon on the Chicago Board of Trade. The front-month November contract, which expires Nov. 5, lost 1.4 cents to $1.77. Futures are down 19 percent this year.

Gasoline for December delivery dropped 4.16 cents, or 1.6 percent, to $2.5454 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 gasoline, based on December contracts, narrowed 3.46 cents to 89.64 cents a gallon.

Stockpiles of the additive last week dropped 3.5 percent to a record low 15 million barrels, data from the Energy Department’s analytical arm show.

Corn for December delivery slipped 1 cent to $4.2725 a bushel, the lowest level for a most-active contract since August 2010. The December crush spread of corn to ethanol was 9.5 cents a gallon, little changed from yesterday, data compiled by Bloomberg show.

In cash market trading, ethanol declined 13 cents to $1.875 a gallon on the West Coast, 10.5 cents to $1.90 on the Gulf Coast, 0.5 cent to $1.82 in Chicago and 2 cents to $2.035 in New York, data compiled by Bloomberg show.

The Gulf’s premium to the West Coast stretched to 2.5 cents from parity yesterday, while Chicago’s discount to New York Harbor narrowed 1.5 cents to 21.5 cents.

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