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Ethanol Tumbles Most in Two Weeks as Corn Plunges on Lower Use

Ethanol futures fell the most in two weeks in Chicago as corn declined for a fourth day on speculation that higher prices will curb consumption.

The alternative fuel followed corn lower on concern that an 11 percent rally this year will slow demand for the grain. Prices touched a 31-month high of $7.4425 on Feb. 22. Ethanol in the U.S. is brewed from corn.

“It was a big crash in the corn and ethanol just followed,” said Don Salfi, a trader at BiofuelsConnect, a Heathrow, Florida-based alternative energy broker.

Denatured ethanol for April delivery fell 3.4 cents, or 1.3 percent, to $2.561 a gallon on the Chicago Board of Trade. Futures hit $2.618 a gallon on March 4, the highest price since July 14, 2008, and have risen 7.7 percent this year.

In cash market trading, ethanol in Chicago decreased 2 cents, or 0.8 percent, to $2.585 a gallon and in New York the additive slipped 1.5 cent, or 0.6 percent, to $2.67, according to data compiled by Bloomberg.

Ethanol in the U.S. Gulf declined 1 cent, or 0.4 percent, to $2.655 a gallon and on the West Coast the biofuel was unchanged at $2.69.

Corn futures for May delivery slid 12 cents, or 1.7 percent, to close at $7.055 a bushel in Chicago, the third consecutive decline and the longest such streak since Nov. 12. One bushel of the grain makes about 2.75 gallons of ethanol.

An average ethanol mill in Iowa is breaking even on every gallon produced, while a plant in Illinois is pocketing about 3 cents after losing 1 cent last week, according to Ag Trader Talk

(Bloomberg)

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