Ethanol Tumbles Second Day as Corn Harvest Pace Accelerates

Source: By Mario Parker - Oct 29, 2013 3:56 PM CT, Bloomberg • Posted: Wednesday, October 30, 2013

Ethanol futures tumbled for a second day as the government said farmers accelerated the pace of the corn harvest.

Prices fell 1.6 percent after the Agriculture Department said 59 percent of a record corn crop was collected as of Oct. 27, up from 39 percent the previous week. The grain is the primary ingredient in U.S. ethanol. Production has jumped 15 percent from a record low in January, according the Energy Information Administration.

“The weather was good and it was a pretty hefty jump in harvest,” said Mike Blackford, a consultant at Intl FCStone in Des Moines, Iowa.

Denatured ethanol for November delivery fell 3 cents to $1.801 a gallon on the Chicago Board of Trade. Futures are down 18 percent this year.

Gasoline for November delivery sank 2.11 cents, or 0.8 percent, to $2.6098 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 the motor fuel widened by 0.89 cent to 80.88 cents a gallon, the largest differential since Oct. 21.

Blackford said increased corn supplies probably allowed the ethanol industry to boost production capacity by 100 million gallons over the past two weeks.

Pratt Energy said last week it has restarted operations at a 55 million-gallon-a-year plant in Kansas that had been idle for five years.

Corn Futures

Corn for December delivery added 1.25 cents to $4.32 a bushel in Chicago. The December crush spread of corn to ethanol was 9 cents, down from 11 cents yesterday, data compiled by Bloomberg show.

Ethanol production jumped 3.2 percent to 897,000 barrels a day in the week ended Oct. 18, the highest level since June 2012, EIA data show.

Inventories were at 15.5 million barrels, down 17 percent from a year ago, according to the EIA, the Energy Department’s analytical arm.

The agency is scheduled to release the latest production and supply data at 10:30 a.m. tomorrow in Washington.

The Environmental Protection Agency tracks compliance with the federal ethanol-use mandate with Renewable Identification Numbers, or RINs, tradable certificates that are attached to each gallon of biofuel.

Corn-based RINs rose 1.5 cents to 22.5 cents, data compiled by Bloomberg show.

In cash market trading, ethanol sank 12.5 cents to $2 a gallon on the Gulf Coast, 10.5 cents to $1.93 in Chicago, 11 cents to $2.045 in New York and 15 cents to $2.035 on the West Coast, data compiled by Bloomberg show.

West Coast ethanol’s premium to the Gulf widened by 2.5 cents to 3.5 cents, while Chicago’s discount to New York Harbor expanded 0.5 cent to 11.5 cents.