Oct. 27 (Bloomberg) -- Ethanol futures rose to the highest price in more than seven weeks in Chicago, following gasoline, after Europe took steps to ease its debt crisis that threatened the global economy.
The futures, along with gasoline and corn, climbed after European leaders agreed to expand a bailout fund to about 1 trillion euros ($1.4 billion). A Commerce Department report today showed that the U.S. economy grew at a 2.5 percent annual rate in the third quarter, the fastest pace in a year.
“We still feel that ethanol is very closely tied to corn and gasoline,” said Rich Nelson, director of research for McHenry, Illinois-based Allendale Inc. “The fact that it’s so close to gasoline shows the good demand.”
Denatured ethanol for November delivery climbed 4.6 cents, or 1.7 percent, to $2.735 a gallon on the Chicago Board of Trade, the highest settlement price since Sept. 13 and the largest gain since Oct. 14. The futures have gained 15 percent this year.
In cash market trading ethanol in New York jumped 7 cents, or 2.4 percent, to $3 a gallon and in the U.S. Gulf the biofuel added 5 cents, or 1.8 percent, to $2.85, according to data compiled by Bloomberg.
Ethanol in Chicago increased 3 cents, or 1.1 percent, to $2.775 a gallon and on the West Coast the additive rose 3.5 cents, or 1.2 percent, to $3.035.
Gasoline for November delivery rose 9.04 cents, or 3.4 percent, to settle at $2.742 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.
Ethanol traded at a 0.7-cent discount to the motor fuel. That compares to a 21.8-cent discount averaged over the past year. Refiners receive a 45-cent tax credit for each gallon mixed into gasoline.
Corn futures for December delivery climbed 2.2 percent to $6.515 a bushel in Chicago, the biggest gain since Oct. 11. One bushel makes at least 2.75 gallons of ethanol.
--Editors: Bill Banker, Dan Stets
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