UPDATE 1-Gasoline blenders buy RINs as prices fall

* RINS prices peaked late last week

* Some ethanol plants could fail due to high corn prices (adds quotes)

By Janet McGurty

NEW YORK, June 16 (Reuters) - The high price of corn and low price of ethanol have some gasoline blenders and refiners contemplating buying RINS and banking them in the event that ethanol becomes scarce.

Late last week, after data showed the U.S. corn harvest was expected to be 2 percent lower than previously forecast, corn prices soared, ethanol prices fell and prices of RINS moved up to the 4.30 cent per gallon level.

RINs stands for Renewable Identification Number and is assigned by the importer or producer of a gallon of renewable fuels like ethanol bought by others.

A fall off in prices this week are making the levels more economically attractive to blenders, importers and refiners who are bound by the Environmental Protection Agency mandates to track their usage.

"We are seeing some of that buying," said one Midwestern trader. RINs for 2011 are in the 3 cent (a gallon) area."

A trader with a large ethanol maker said that D6 Cal 11 ethanol traded for 3.25 cents per gallon earlier Thursday, with demand for RINs ebbing a little as this week's fall in corn prices improved margins.

Each refiner and blender has a yearly quota of renewables that needs to be used in gasoline. Current environmental production standards call for one out of every ten gallons to be renewable. RINS are the currency for crediting, trading and use by blenders and refiners.

"They are not exportable. I would estimate about 1 billion of RINS are banked," said one industry source.

Blenders and refiners can save up and carry over RINS from the previous year.

Some smaller, destination ethanol plants may be at risk of closing from the high corn prices but most located in the Midwest farmbelt are owned and operated by large companies with sophisticated trading and risk management.

"Our plants have not slowed down. They are running at 100 percent," said Jim Stark, company spokesman for Green Plains Renewable Energy (GPRE.O), the nation's fourth largest ethanol producer. Green Plains makes not only ethanol from the corn but also distillers' dried grain which is used as animal feed.

(Reporting by Janet McGurty; Editing by Carole Vaporean)