Ethanol Little Changed as Discount to Gasoline, Credit Spur Use

Ethanol futures were little changed in Chicago as the biofuel’s discount to gasoline and the possible elimination of a blender’s tax credit buoy demand.

The gasoline alternative was steady as refiners use more of the additive to capture ethanol’s 35.75-cent discount to the motor fuel and the 45-cent tax credit for each gallon of the two blended together. A group of U.S. senators is seeking to end the incentive July 31.

“We’ve been continuing to see a lot of strong demand for ethanol, whether it’s from people getting out ahead of legislation, the blender’s spread or potential exports,” said Will Babler, a broker at First Capitol Risk Management Inc. in Galena, Illinois.

Denatured ethanol for August delivery rose 0.6 cent to settle at $2.713 a gallon on the Chicago Board of Trade. Futures have gained 70 percent in the past year.

In cash market trading, ethanol on the West Coast gained 7.5 cents, or 2.6 percent, to $2.915 a gallon and in Chicago the additive increased 1.5 cent, or 0.5 percent, to $2.775, according to data compiled by Bloomberg.

Ethanol in New York slipped 0.5 cent to $2.855 a gallon and in the U.S. Gulf the biofuel lost 2 cents, or 0.7 percent, to $2.745.

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