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Ethanol Producers buy Ethanol to satisfy customer commitments

“Some of the producers are out here buying to get stuff that they already sold,” Damask said.

Damask said some producers are in the market to buy the fuel in order to satisfy customer commitments and replace supply after tempering output.

Ethanol futures rose to the highest price in eight months in Chicago as a heat wave threatened further damage to U.S. corn crops, cutting margins for fuel producers.
Above-normal temperatures are forecast to stretch from the corn-rich Midwest to the East Coast this week, according to the Climate Prediction Center in Camp Springs, Maryland. Drought and higher corn prices have prompted ethanol producers to cut output to 821,000 barrels a day, the lowest level since July 2010.
“With corn going up every day, ethanol is becoming more expensive,” said Jim Damask, a manager at BiofuelsConnect, a Jupiter, Florida-based alternative energy broker. “That makes their costs going out the door that much higher.”
Denatured ethanol for August delivery rose 11.3 cents, or 4.4 percent, to $2.669 a gallon on the Chicago Board of Trade, the highest settlement price since Nov. 16. The futures have gained 21 percent this year.

Valero Energy Corp. (VLO), the third-biggest U.S. ethanol producer, shut output last month at its plants in Linden, Indiana, and Albion, Nebraska, citing “economic reasons.”
Nedak Ethanol LLC said June 15 that it temporarily suspended production at its Atkinson, Nebraska, mill because of poor margins.

Green Plains Renewable Energy Inc. (GPRE), the fourth-biggest U.S. ethanol producer, slowed output at two of its “smaller plants” by 30 percent in February, Jim Stark, a company spokesman, said in an e-mail.

Damask said some producers are in the market to buy the fuel in order to satisfy customer commitments and replace supply after tempering output.

“Some of the producers are out here buying to get stuff that they already sold,” Damask said.

Corn for December delivery surged 32.25 cents, or 4.4 percent, to close at $7.725 a bushel in Chicago. Earlier, the futures reached $7.78, the highest price for a most-active contract since Aug. 29. One bushel makes at least 2.75 gallons of ethanol.

http://www.bloomberg.com/news/2012-07-16/ethanol-rises-to-eight-month-high-as-heat-threatens-midwest-corn.html