Ethanol Declines on Speculation Imports Will Increase

Ethanol dropped to the lowest price in more than six weeks on speculation that import contracts signed when prices were near a seven-year high will add to stockpiles of the biofuel.

Futures fell 3.3 percent. Imports averaged 24,500 barrels a day over the two weeks ended April 4, and prices have dropped 36 percent since April 1, a day before the U.S. Energy Information Administration reported the first weekly purchases since September of foreign supplies of the additive.

“The market couldn’t sustain that run-up,” said Mark Ruyack, a manager at StarFuels Inc. in Jupiter, Florida.

Denatured ethanol for May delivery fell 7.7 cents to settle at $2.265 a gallon on the Chicago Board of Trade, the lowest since Feb. 27. Prices have gained 19 percent this year.

Gasoline for May delivery rose 0.37 cent to $3.0421 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 widened 8.07 cents to 77.71 cents a gallon.

Prices also slumped in cash market trading, falling 27.5 cents to $2.45 a gallon in New York, 12.5 cents to $2.70 in Chicago, 34 cents to $2.50 on the Gulf Coast and 10.5 cents to $3.17 on the West Coast, data compiled by Bloomberg show.

Supply Report

Stockpiles of the additive increased three consecutive weeks to 16.4 million barrels as of April 4, data from the Energy Department’s statistical arm show.

The agency is scheduled to release the most recent ethanol production and supply data at 10:30 a.m. tomorrow in Washington.

A separate monthly report that the EIA says is more comprehensive has shown that the U.S. has been making foreign purchases of the fuel.

Corn for May delivery gained 0.75 cent to $5.0375 a bushel. One bushel makes at least 2.75 gallons of the additive.

The corn crush spread, or the price difference between corn and ethanol, was 43 cents, unchanged from yesterday.

Corn-based ethanol Renewable Identification Numbers for 2014, used by the government and refiners to track consumption targets, were at 41.5 cents while 2013 RINs were at 43 cents, data compiled by Bloomberg show.

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