US weekly ethanol margins inch up but remain dismal

NEW YORK, May 22 (Reuters) - Average U.S. ethanol margins rose a few pennies last week as corn prices slipped, but the gains were not enough push the industry out of break even territory.

The gains were limited as prices for corn, the top raw material cost for U.S. ethanol, held most of their recent gains as rain kept up worries about delayed plantings. The July corn contract CN9 on the Chicago Board of Trade closed $4.28 a bushel on Thursday, down four cents from the previous week.

Spot ethanol prices <ETHANOL/US> in the Midwest held 7 cents gains from the previous week at $1.73 per gallon, dealers said.

The ethanol crush spread fell about three cents to 20 cents a gallon, using the formula of the Midwest ethanol price, minus the corn price divided by 2.8.

Operating costs such as natural gas and overhead trim the crush spread for average alternative fuel producers by about 20 to 30 cents per gallon, depending on the distillery, bringing net margins between break even and +10 cents a gallon.

Daily U.S. ethanol production rose nearly 3 percent in February, the latest month for which data was available, the Energy Information Administration, the statistics arm of the Department of Energy said this month. But much of that fuel went into spare inventories amid the soft demand. [ID:nN30522626].

The dismal ethanol margins have deepened a series of production shutdowns, bankruptcy filings and curtailments as the hardest-hit distillers slow operations.

On Monday Pacific Ethanol Inc (PEIX.O), the largest West Coast ethanol producer, put its plants in California, Oregon, and Idaho in Chapter 11 bankruptcy protection. Its marketing arm did not seek the protection.

Earlier this month Dallas-based White Energy Inc, which had $500 million in revenues last year, became the latest ethanol company to file for bankruptcy protection.