Weekly US ethanol profits steady depite corn rise

NEW YORK, March 6 (Reuters) - Average profits for distilling U.S. ethanol were steady this week as strong prices for corn, the main ethanol input, balanced rising prices for fuels, analysts said.

Citigroup Global Markets analyst David Driscoll said in a research note that average distilling margins were about 18 cents per gallon as prices for ethanol held at about 8-month highs, supported by crude oil prices at record levels.

That margin level was in range from last week's margins, which averaged about 15 to 25 cents, analysts said.

Ethanol prices rose slightly, pulled up by stronger front month U.S. gasoline futures, which rose nearly 5 percent Wednesday to close at about $2.64 a gallon.

Oil prices shot to about $105 a barrel after the Organization of Petroleum Exporting Countries said it would keep output steady despite record prices and an unexpected drop in U.S. oil stockpiles.

Spot Midwest ethanol prices <ETHANOL/US> on Wednesday were $2.37 per gallon, up about 2 cents on the week and were trading at about the highest level since June 2007.

Higher corn prices kept margins steady, however. Corn futures CH8 on the Chicago Board of Trade closed at $5.57 per bushel on Wednesday, up about 11 cents in nearly a week, driven higher on fund buying as crude oil prices soared.

Strong demand for grains, despite record prices, from exporters, feed lots and biofuel producers also supported prices.

Prices for natural gas, which most ethanol producers use to fire their plants, closed at about $9.74 per million British thermal units on Wednesday, up about 1 percent from last week.