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Ethanol Gains on Gasoline With Stocks in Midwest Near Record Low

September 11, 2013

Ethanol gained against gasoline on concern that inventories will be near record-lows until the corn harvest brings more of the feedstock and allows manufacturers to boost production.

The spread, or discount, narrowed 0.95 cent to 83.12 cents a gallon at 11:50 a.m. New York time after the Energy Information Administration said supplies in the Padd 2 region, which covers the Midwest, rose 0.9 percent to 4.91 million barrels last week from an all-time low the previous week.

"Once new-crop ethanol starts pumping, supply will go up over time," said Justin Dirico, manager of the biofuels desk at Eagle Energy Brokers LLC in New York. "Everyone knows Chicago is empty, so it’s no surprise."

Denatured ethanol for October delivery gained 0.1 cent to $1.896 a gallon on the Chicago Board of Trade. Futures have dropped 13 percent this year.

Gasoline for October delivery slipped 0.85 cent, or 0.3 percent, to $2.7272 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 rose 3.5 percent to 848,000 barrels a day in the week ended Sept. 6, the most in four weeks, data from the EIA, the Energy Department’s statistical arm, show.

Output is down 12 percent from the record 963,000 barrels a day in December 2011, according to EIA data.

Stockpiles increased 0.3 percent to 16.3 million barrels last week, it said. That’s record low for this time of year, data compiled by Bloomberg show.

Corn for December delivery slid 0.75 cent to $4.6825 a bushel in Chicago. September corn decreased 0.75 cent to $4.74.

Ethanol imports last week sank 59 percent to 15,000 barrels a day, today’s EIA report showed.

Anhydrous ethanol in Sao Paulo rose 2 percent last week to $2.06 a gallon, the highest since the week ended Aug. 2, data compiled by Bloomberg show.



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