CHICAGO, Nov 28 (Reuters) – Prices for U.S. ethanol fell to the lowest levels in 13 years on Wednesday, pressured by bigger-than-expected output and larger supplies of the corn-based biofuel, traders said.
Weekly U.S. Energy Information Administration data showed that ethanol production last week was up 6,000 barrels per day, to an average of 1.048 million bpd while stockpiles increased 139,000 barrels to 22.93 million barrels.
Some traders had anticipated a decline in output, as many producers were struggling to make money due to low ethanol prices and comparatively higher costs for the corn and natural gas necessary to make it.
“With all the talks of slowdowns, the market expected to see continual drops in production but they haven’t materialized, and margins have taken a further beating,” an ethanol trader said.
In the physical market, shipments in Chicago fetched $1.15 per gallon, the lowest since June of 2005, traders said. Chicago Board of Trade ethanol futures dropped to a low of $1.215 cents per gallon in midday trading on Wednesday, before trimming losses slightly to $1.218, a decline of 0.004 cent.
Excessive supplies and heavy selling in the Chicago market have weighed on ethanol prices for much of 2018.
Waivers issued by the U.S. Environmental Protection Agency for refiners to be exempt from federal laws mandating biofuel to be blended into the U.S. gasoline supply have also pressured ethanol makers.
President Donald Trump’s administration has temporality halted the EPA waiver program, two sources familiar with the matter told Reuters, prompting ethanol fuel credits to rise on Wednesday.
Reporting by Michael Hirtzer in Chicago; Editing by P.J. Huffstutter and Will Dunham