U.S. ethanol slumps to 9-year low on record supply spike

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Published: January 14, 2015

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CHICAGO, Jan 14 (Reuters) – U.S. ethanol futures fell to the lowest levels in nearly a decade on Wednesday after government data showed the largest supplies of the grain-based fuel additive in about two years, traders said.

The U.S. Energy Information Administration said ethanol stockpiles surged 1.38 million barrels to 20.23 million barrels in the week ending Jan. 9.

The week-on-week spike in supplies of more than seven percent was the largest since EIA started tracking the data in 2010 while average daily ethanol production increased 29,000 barrels per day to 978,000 bpd.

The ballooning supplies come as ethanol continued to trade at a rare premium to gasoline, which is helping to keep a lid on biofuel demand. The slump in crude oil and gasoline also taken a toll on the alternative fuel industry, experts say.

Chicago Board of Trade ethanol futures for February delivery slumped 8.4 percent, or about 11 cents, to $1.29 per gallon, the lowest level since June of 2005.

Ethanol’s premium to gasoline futures shrank to about four cents per gallon, smallest in three weeks.

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