Ethanol’s Discount to Gasoline Widest Since September on Supply

Ethanol’s discount to gasoline expanded to the widest in 10 months after stockpiles climbed for three consecutive weeks.
The spread expanded by 3.9 cents to 83.1 cents a gallon at 10:47 a.m. New York time, the steepest since Sept. 28. A July 24 Energy Information Administration report showed that inventories reached the highest level since April 19 in the longest streak of gains since December.
“There seems to be a little more stuff out there than thought,” said Mark Ruyack, a manager at StarFuels Inc. in Jupiter, Florida.
Denatured ethanol for August delivery fell 3.1 cents, or 1.4 percent, to $2.194 a gallon on the Chicago Board of Trade. Prices are little changed this year.
Gasoline for August delivery rose 0.8 cent to $3.025 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Corn for September delivery decreased 1 cent to $4.95 a bushel in Chicago. The more actively traded December contract slipped 1.5 cents to $4.7725.
The corn crush spread, or the cost difference between a gallon of ethanol and the corn needed to make it, based on September contracts, was 28 cents, down from 33 cents yesterday.
“The crush is just getting stepped on,” Ruyack said.
Ethanol Certificates
A law known as the Renewable Fuels Standard requires refiners to use escalating amounts of ethanol in gasoline. Compliance is tracked by Renewable Identification Numbers, or RINS, that are attached to each gallon of biofuel and that can be traded among companies.
Corn-based ethanol RINs were unchanged at 99 cents, while advanced RINs, which cover Brazilian sugarcane-based ethanol and biodiesel, were steady at $1, data compiled by Bloomberg show.
Ethanol stockpiles climbed 4.1 percent last week to 17.3 million barrels, the Energy Department’s research arm said in the July 24 report.
Production declined 2.6 percent to 853,000 barrels a day, the lowest since May 3, it said.
Imports have averaged 21,000 barrels a day this year, double the rate a year earlier, according to EIA.
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