Ethanol Falls to Lowest Level in a Week on Record Stockpiles

Source: Mario Parker • Bloomberg  • Posted: Friday, March 9, 2012

Ethanol futures in Chicago fell to a one-week low a day after the Energy Department said stockpiles swelled to a record.

Prices slipped after a government report showed inventories reached a record 22.1 million barrels even as margins for producing the fuel are negative, according to data compiled by Bloomberg.

“We saw heavy producer selling,” said Jim Damask, a manager at Biofuelsconnect, a Jupiter, Florida-based alternative energy broker. “There’s definitely a lot of ethanol for sale.”

Denatured ethanol for April delivery fell 0.2 cent to $2.246 a gallon on the Chicago Board of Trade, the lowest settlement price since Feb. 27. Prices have gained 2 percent this year and dropped 12 percent in the past year.

In cash market trading, ethanol was unchanged in New York at $2.29 a gallon and on the West Coast the additive increased 3.5 cents, or 1.5 percent, to $2.40, according to data compiled by Bloomberg.

Ethanol in the U.S. Gulf slid 1 cent, or 0.4 percent, to $2.305 a gallon and in Chicago the biofuel added 0.5 cents to $2.25.

Distillers are losing 6 cents per gallon of ethanol, based on current prices for corn and the biofuel and assuming a bushel of corn generates 2.75 gallons of ethanol, according to data compiled by Bloomberg.