Sept. 17 (Bloomberg) -- Ethanol gained a second day against gasoline as prices near three-year lows spurred buying.
The spread between the two narrowed 5.75 cents to 87.61 cents a gallon. Ethanol has declined 25 percent this month, compared with an 12 percent drop for gasoline.
“The market’s taken quite the nosedive and along the way people are going to take a shot and catch a falling knife,” said Justin Dirico, manager of the biofuels desk at Eagle Energy Brokers LLC in New York.
Denatured ethanol for October delivery rose 0.2 cent to $1.785 a gallon on the Chicago Board of Trade. Futures have dropped 18 percent this year.
Gasoline for October delivery tumbled 5.55 cents, or 2 percent, to $2.6611 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
The Energy Information Administration is scheduled to release the latest production and supply data for ethanol and petroleum fuels tomorrow at 10:30 a.m. in Washington. The report may push ethanol further down, Dirico said.
“If we don’t get a decline in production, stocks and imports, there won’t be anything to support this market,” he said.
Ethanol production in the week ended Sept. 6 rose 3.5 percent to 848,000 barrels a day, 12 percent lower than the record 963,000 a day in December 2011, data from the EIA, the Energy Department’s statistical arm, show.
Stockpiles were at 16.3 million barrels, down 14 percent from a year earlier, according to the EIA. Imports tumbled 59 percent to 15,000 barrels a day.
Ethanol is made mostly from corn, and the fall harvest will soon begin to boost output, Dirico said.
Corn for December delivery slipped 2.5 cents, or 0.6 percent, to $4.54 a bushel in Chicago. The December crush spread of corn to ethanol was minus 4 cents a gallon. All of the crush spreads through 2015 were negative.
Tracking certificates called Renewable Identification Numbers, or RINs, are attached to each gallon of biofuel to help the U.S. and refiners track compliance with federal consumption targets.
Corn-based-ethanol RINs fell 3 cents to 54 cents, while advanced RINs, which cover biodiesel and Brazilian sugarcane- based ethanol, dropped 5 cents to 60 cents, data compiled by Bloomberg show. The prices are the lowest since February.
In cash market trading, ethanol climbed 25.5 cents to $2.29 a gallon in Chicago, 24 cents to $2.36 on the Gulf Coast, 23 cents to $2.355 on the West Coast and 3.5 cents to $2.135 in New York, data compiled by Bloomberg show.
Chicago traded at a 15.5-cent premium to New York, compared with a discount of 6.5 cents yesterday, while the West Coast traded 0.5 cent lower than the Gulf.
--Editors: Charlotte Porter, Richard Stubbe