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Ethanol-Gasoline Spread Narrows as Corn Gains on Crop Report

August 15, 2013
ethanol pumps
  

Ethanol’s discount to gasoline narrowed as the biofuel followed corn higher after the government reported an increase in the number of acres farmers weren’t able to plant.

The spread between the fuels trimmed 3.67 cents to 74.03 cents a gallon. Growers filed insurance claims on 3.411 million acres of corn they were unable to plant due to wet weather in May and June, up from 262,467 last year, USDA data show.

"Trading today is tied to the corn market," said Jerrod Kitt, an analyst at Linn Group in Chicago. "The acreage data for corn was more than what the market was looking for."

Denatured ethanol for September delivery gained 3.9 cents to $2.245 a gallon at 12:21 p.m. New York time on the Chicago Board of Trade. Futures are up 2.5 percent this year.

Gasoline for September delivery rose 0.23 cent, or 0.1 percent, to $2.9853 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 rose 17 cents, or 3.7 percent, to $4.7225 a bushel in Chicago. The more active December contract gained 17 cents to $4.72.

The corn crush spread, or the difference between a gallon of ethanol and the corn needed to make it, was 53 cents, versus 51.6 cents yesterday.

 

Fall Maintenance

 

Ethanol is also getting a boost as plants approach fall maintenance that may "eat into supplies," Kitt said.

Nationwide stockpiles of ethanol fell 1.7 percent to 16.4 million barrels in the week ended Aug. 9, the lowest level since July 5, according to the U.S. Energy Information Administration.

Ethanol-blended gasoline made up 94 percent of the total U.S. gasoline pool last week, up from 90 percent the previous period, the EIA, the Energy Department’s statistical arm, said.

In cash market trading, ethanol increased 5 cents to $2.60 a gallon in New York, the largest regional gain. Prices climbed 3.5 cents to $2.56 on the West Coast, 1 cent to $2.42 on the Gulf Coast and 1 cent to $2.32 in Chicago.

West Coast ethanol’s premium to the Gulf widened 2.5 cents to 14 cents. Chicago’s discount to New York expanded 4 cents to 28 cents, the widest since 2011.

 

 

 

 

 

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RELATED TOPICS: Marketing, Biofuels, USDA, Ethanol

 
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