Dec. 4 (Bloomberg) -- Ethanol futures rose for a fifth day, narrowing the discount to gasoline, amid signs of demand in the export market.
Ethanol for January delivery rose 5.6 percent. The biofuel narrowed its discount to gasoline to 85.82 cents a gallon from 96.07 cents yesterday. U.S. shipments reached 43,000 barrels a day in September, the highest level since March, data from the Energy Information Administration show. Brazilian ethanol has cost more than the U.S. version since early September.
“The market is totally ignoring gains of production to focus on what’s going on in the export market,” Renan Pimenta, an analyst at Intl FCStone Inc., said in a telephone interview from Campinas, Brazil. “U.S. ethanol is competitive versus Brazil, its main competitor.”
Denatured ethanol for January delivery gained 9.8 cents to $1.861 a gallon. The difference between the cost of corn and the price of a gallon of ethanol, known as the corn crush spread, was 93 cents a gallon based on December contracts, up from 82 cents yesterday, data compiled by Bloomberg show. Ethanol for December, which expired today, soared 13 cents, or 5.5 percent, to settle at $2.48.
January-delivery gasoline lost 0.45 cent, or 0.2 percent, to $2.7192 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 exporters “overbooked” sales in September and October and that explains the inability to build inventories, said Sean Wever, a biofuels broker at Green Key Markets LLC.
“We’ve been unable to build decent stocks because of export demand coming from pretty much everywhere,” he said in a telephone interview from Chicago. “I wouldn’t be surprised to see demand to continue through December, too.”
Ethanol inventories rose 0.7 percent to 15.1 million barrels in the week ended Nov. 29, the EIA said today. Stockpiles would need to get to about 16 million before traders start feeling comfortable, Wever said.
Production fell 1.5 percent in the week of the Thanksgiving holiday, to 913,000 barrels a day, the EIA said. The U.S. hasn’t imported ethanol in the past nine weeks.
Corn for December delivery rose 3.5 cents, or 0.8 percent, to close at $4.255 a bushel in Chicago.
Advanced Renewable Identification Numbers, or RINs, gained 1 cent to 30 cents a gallon. RINs are certificates attached to each gallon of biofuels that are submitted to the government and can be traded among companies.
Ethanol rose in major cash markets today. Prices climbed 12.5 cents to $3.10 a gallon in New York, 5.5 cents to $2.605 in Chicago, 4.5 cents to $2.695 on the Gulf Coast, and 8.5 cents to $2.60 a gallon on the West Coast, data compiled by Bloomberg show.
Chicago traded at a 49.5-cent discount to New York versus 42.5 cents yesterday. The West Coast’s discount to the Gulf narrowed 4 cents to 9.5 cents.
--Editors: Richard Stubbe, Bill Banker