Dec. 27 (Bloomberg) -- Ethanol futures extended their longest winning streak in more than four months on speculation production costs are poised to rise.
Futures increased amid concern that corn crops in South America will be damaged by heat and dry weather, leading to increased demand for U.S. supplies. The grain is the primary ingredient in U.S. ethanol production.
Both ethanol and corn futures have gained for seven days. One bushel of the grain makes at least 2.75 gallons of ethanol. About 5 billion bushels will go to ethanol production in 2012, down 0.4 percent from the year before, the U.S. Agriculture Department said in the World Agricultural Supply and Demand report issued Dec. 9.
Denatured ethanol for January delivery added 3.8 cents, or 1.7 percent, to settle at $2.223 a gallon on the Chicago Board of Trade, capping the longest streak of increases since Aug. 17. Futures have fallen 6.5 percent this year, headed for the first yearly decline since 2008.
Corn futures for March delivery climbed 13.75 cents, or 2.2 percent, to $6.3325 a bushel on the CBOT.
--Editors: Charlotte Porter, Richard Stubbe
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