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Ethanol Falls First Time in Two Weeks as Demand Subsides

December 30, 2013
POET ethanol plant
Denatured ethanol for January delivery slipped 2 cents to $1.94 a gallon on the Chicago Board of Trade at 11:54 a.m. New York time. Prices are down 11 percent this year.  

Dec. 30 (Bloomberg) -- Ethanol fell for the first time in more than two weeks on speculation that demand for the biofuel will subside as higher production refills stockpiles.

Futures declined as much as 1.5 percent as spot prices in each of the major U.S. trading hubs slid. Ethanol in New York Harbor reached $3.60 a gallon on Dec. 6, the highest price in more than seven years, on below-average supply, data compiled by Bloomberg show.

"The physical market has kind of stalled out," said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa. He said demand for motor fuel may drop after the Christmas and New Year holiday travel period.

Denatured ethanol for January delivery slipped 2 cents to $1.94 a gallon on the Chicago Board of Trade at 11:54 a.m. New York time. Prices are down 11 percent this year.

Gasoline for January delivery dropped 2.92 cents, or 1 percent, to $2.7869 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 narrowed 0.92 cent to 84.69 cents a gallon.

In cash market trading, ethanol tumbled 8 cents to $2.17 a gallon in Chicago, 7.5 cents to $2.325 in New York, 6.5 cents to $2.28 on the Gulf Coast and 4 cents to $2.56 on the West Coast, data compiled by Bloomberg show.

 

Corn Prices

 

Corn futures for March delivery fell 3.75 cents, or 0.9 percent, to $4.2375 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

The corn crush spread, or the difference between the cost of corn and the price of ethanol, was 23 cents, up from 22 cents on Dec. 27, data compiled by Bloomberg show.

"There’s still decent margins at this point," Blackford said.

Ethanol production has averaged above 900,000 barrels a day since Oct. 25, Energy Information Administration data show, compared with 839,000 barrels a day this year through Oct. 18.

The EIA, the Energy Department’s statistical arm, is scheduled to release the latest ethanol production and supply data 11 a.m. on Jan. 3 in Washington.

 

--Editors: Charlotte Porter, David Marino

 

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

 

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

 

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