Steep output drop sends ethanol prices up

The price of ethanol rose for the first time in three days Wednesday after a government report showing a record production decline last week.

Futures jumped as much as 2.2 percent after the U.S. Energy Information Administration said output tumbled 5.6 percent to 868,000 barrels a day, the lowest level since Oct. 4 and the steepest drop in records going back to June 2010. An arctic blast of cold air and snow last week delayed trains and cut terminal operations.

“There have been a lot of rail delays and rail car shortages,” said Michael Slider, director of business development at Fauser Energy Resources in Oregon, Ill. “It has probably caused some of that production to cut back.”

Denatured ethanol for February delivery advanced 0.9 cent to $1.927 a gallon Wednesday on the Chicago Board of Trade. Futures have fallen 18 percent in the past year.

Ethanol stockpiles slipped 0.4 percent to 16.1 million barrels, data from the Energy Information Administration, the Energy Department’s statistical arm, show.

Business, Pages 28 on 01/16/2014

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