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PEIX: Ethanol supply up on increased imports.

http://www.bloomberg.com/news/2014-04-03/ethanol-falls-most-this-year-as-imports-add-to-supply.html

Ethanol Falls Most This Year as Imports Add to Supply
By Mario Parker Apr 3, 2014 12:49 PM ET

Ethanol futures fell the most since December on speculation that foreign purchases of the fuel are helping to ease supply tightness.

Prices plunged as much as 16 percent. The Energy Information Administration said yesterday that imports averaged 11,000 barrels a day last week, the first time it has reported a weekly inflow since September. Production also increased and stockpiles expanded to the highest level in three weeks. Ethanol reached $3.517 a gallon on April 1, a seven-year high.

“It’s in a free fall,” said Will Babler, a broker at Atten Babler Risk Management in Galena, Illinois. “It’s just a market stretched beyond belief and any little thing can lead to a panic.”

Denatured ethanol for April delivery, which expires today, fell 50 cents to $2.70 a gallon at 10:48 a.m. on the Chicago Board of Trade. Prices have gained 41 percent this year. The more actively traded May contract sank 12.9 cents to $2.37.

Gasoline for May delivery advanced 3.37 cents, or 1.2 percent, to $2.9005 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to blended with ethanol before delivery to filling stations.

Ethanol’s discount to gasoline, based on May contracts, expanded 16.27 cents to 53.05 cents a gallon.

Prices for the biofuel surged as winter weather clogged railroads, by which about 70 percent of ethanol is shipped, according to the Energy Department’s statistical arm.

While the agency showed imports for the first time last week since September, a separate report that it publishes monthly and says is more comprehensive shows the U.S. made foreign purchases of the additive during that time period.

Yesterday’s report showed inventories rose 1.4 percent to 15.9 million barrels, while production increased 4.2 percent to 922,000 barrels a day, the biggest gain since Jan. 17 and the highest rate since Dec. 20.

To contact the reporter on this story: Mario Parker in Chicago at [e-mail]