Ethanol Futures Fall Most in Six Months on Larger Corn Crop

Source: Mario Parker • Bloomberg  • Posted: Friday, January 13, 2012

Jan. 12 (Bloomberg) — Ethanol futures fell the most in more than six months after a government report showing that supplies of corn were higher than forecast sent futures for the grain down the exchange-imposed limit.

Ethanol tumbled 5 percent after the Agriculture Department said corn inventories on Dec. 1 were 9.642 billion bushels, compared with 9.439 billion forecast in a Bloomberg News survey of analysts. Ethanol is expected to use 5 billion bushels of corn this year and the lower corn price might ease expenses.

“The big story is the surprising USDA report, which was really pressuring ethanol,” said Dan Flynn, a trader at PFGBest in Chicago.

Denatured ethanol for February delivery tumbled 11.3 cents to $2.154 a gallon on the Chicago Board of Trade, the steepest decline since June 30 and the lowest price since Dec. 20. Futures have slipped 8.3 percent in the past year.

In cash market trading, ethanol in New York slid 8 cents, or 3.4 percent, to $2.245 a gallon and on the West Coast the additive declined 5 cents, or 2.2 percent, to $2.275, according to data compiled by Bloomberg.

Ethanol in Chicago fell 4.5 cents, or 2.1 percent, to $2.15 a gallon and in the U.S. Gulf the additive slipped 2.5 cents, or 1.1 percent, to $2.25.

Corn for March delivery plummeted 40 cents, or 6.1 percent, to $6.115 a bushel in Chicago. One such unit makes at least 2.75 gallons of ethanol.