By Michael Hirtzer
CHICAGO, Nov 19 (Reuters) – U.S. ethanol futures
tumbled more than 7 percent on Wednesday after the Energy
Information Administration pegged production of the grain-based
biofuel last week at the second highest level on record.
The EIA said ethanol production in the week ending Nov. 14
averaged 970,000 barrels per day, the highest rate since the
record production of 972,000 bpd in the week of June 13.
Biofuel makers have ramped up operations three weeks in a
row amid plentiful supplies of corn in the wake of a
record-large harvest. Comparatively low corn and high
ethanol prices resulted in the best profit margins in months for
ethanol producers such as Archer Daniels Midland Co and
Green Plains Inc.
“Everybody thought you were going to get a production
response out of that (the high profit margins), and here it is,”
said Jerrod Kitt, broker at the Linn Group in Chicago.
Ethanol futures for December delivery fell nearly 15
cents to $1.92 per gallon, with the percentage decline the
largest in the life of the contract.
However, slow U.S. rail transportation is keeping biofuel
prices elevated for blenders and exporters located near U.S.
Coasts – far away from most ethanol plants in the Midwestern
crop belt. Prices for New York Harbor ethanol of $2.43 per
gallon were the highest since May as of Friday, the most
recently available data.
Stocks of ethanol also declined last week by 370,000 barrels
to 17.34 million barrels, indicating good demand, EIA data
showed. “There’s still a sense that prompt supply is tight,”
Kitt added.
(Reporting by Michael Hirtzer; Editing by Diane Craft)