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Ethanol Strengthened Against Gasoline May Spur Demand

Ethanol strengthened against gasoline on speculation the biofuel’s discount will spur increased blending.

The grain-based additive was 58.33 cents cheaper than gasoline, based on February futures for both commodities. That compares with 60.07 cents yesterday.

Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa, said:

That blend spread has gotten out there I’ve got to think we can buy into some demand.

Denatured ethanol for February delivery fell 1.6 cents, or 0.7 percent, to settle at $2.181 a gallon on the Chicago Board of Trade. January futures, which expired today, dropped 0.4 percent to $2.17 a gallon. The front-month futures are down 2.6 percent in the past year.

Gasoline for February delivery slid 3.34 cents, or 1.2 percent, to $2.7643 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.

In cash market trading, ethanol in Chicago decreased 1 cent, or 0.5 percent, to $2.18 a gallon and in the U.S. Gulf the additive decreased 1 cent, or 0.5 percent, to $2.235, data compiled by Bloomberg shows.

Ethanol on the West Coast declined 1 cent, or 0.4 percent, to $2.34 a gallon and in New York the biofuel climbed 0.5 cent to $2.28.

Corn for March delivery tumbled 9 cents, or 1.3 percent, to $6.8025 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

more at Bloomberg