| CHICAGO, March 24
CHICAGO, March 24 U.S. ethanol futures climbed
in the sixth straight session on Monday, expanding their premium
to gasoline futures to the largest in 2-1/2 years as gridlock on
the nation's railroads continued to slow shipments of the
grain-based biofuel, traders and analysts said.
Slow turnover of tanker cars has kept a lid on ethanol
production this year, with the ethanol stockpile last week
falling to the smallest since November and just above the lowest
levels in records dating back to 2010.
Ethanol futures for April delivery finished 10 cents
higher at $2.95 per gallon after earlier trading above $3 for
the first time since July 2011. The closely watched
ethanol-gasoline spread widened to as much as 10 cents premium
ethanol, also the largest since 2011.
Gasoline futures eased 1 cent to $2.89 per gallon.
"It's all rail logistics," a Wisconsin ethanol trader said
of the rising prices.
Nearly every gallon of gasoline sold in the United States
contains about 10 percent ethanol. Rising prices for the biofuel
were blamed for a 5-cent spike in gasoline prices during the
past two weeks, according to the Lundberg survey released on
Higher prices at the pump could keep lead to lower demand
from drivers for gasoline and for higher biofuel blends such as
E85, which contains 85 percent ethanol, said Mike Zuzolo,
analyst at Global Commodity Analytics in Lafayette, Indiana.
"This type of premium in ethanol will take three to four
weeks to get into the market as far as reduced overall demand
for E10 and E85," Zuzolo said.
Slow traffic on U.S. railways was also preventing traders
from taking advantage of market opportunities. Cash ethanol in
the U.S. Midwest was trading at about $3.20 per gallon while
prices for prompt delivery at New York Harbor were $4 or more.
"The tankers in the upper Midwest is still an issue in the
grains and energy markets - that's hurting arbitrage," Zuzolo
(Reporting by Michael Hirtzer; Editing by Bernard Orr)