Ethanol Futures Little Changed as Corn, Inventories Hold Steady

Ethanol futures were little changed in Chicago as corn prices and U.S. inventories of the fuel additive were steady.

The grain-based additive declined 0.2 percent after corn pared early losses on speculation that rain may boost crops in Brazil and Argentina, the world’s biggest exporters after the U.S. Ethanol stockpiles remained unchanged at 19.6 million barrels, while production fell 0.8 percent to 893,000 barrels a day last week, the Energy Department reported today.

“There’s been talk of a slowdown here in the last couple of weeks and margins have been tight for the ethanol producers,” said Matt Janney, a trader at Citigroup Global Markets Inc. in Chicago. “Hopefully, there will be a pickup in gasoline demand and there’s been a buildup of gasoline stocks recently.”

Denatured ethanol for March delivery fell 0.4 cent to $2.440 a gallon on the Chicago Board of Trade. It has risen 42 percent this year.

Ethanol, made from corn in the U.S., is blended with gasoline to stretch supply and meet federal mandates.

Production of conventional gasoline blended with ethanol rose 0.1 percent to 4.66 million barrels a day. Refiners receive a 45-cent tax credit for every gallon of ethanol blended into the motor fuel.

Cash Market Trading

In cash market trading, ethanol in the U.S. West Coast gained 0.5 cent, or 0.2 percent, to $2.55 a gallon, and in Chicago the additive increased by 1 cent, or 0.4 percent, to $2.43, according to data compiled by Bloomberg.

Ethanol in New York gained 1 cent to $2.545 a gallon and on the U.S. Gulf the biofuel was unchanged at $2.505.

Corn futures for May delivery were unchanged at $7.01 a bushel on the Chicago Board of Trade. On Feb. 14, the price touched $7.21, the highest since July 2008, after bad weather reduced global production and as demand rose.

Average ethanol mills in Iowa and Illinois are losing 9 cents and 6 cents, respectively, on every gallon produced on a spot basis, according to Ag Trader Talk, an online grains information service in Clive, Iowa.

(Source: http://www.bloomberg.com/news/2011-02-16/ethanol-futures-little-changed-as-corn-inventories-hold-steady.html)