Jan. 24 (Bloomberg) -- Ethanol futures rose the most in two weeks on speculation that production costs will increase with more expensive corn.
Futures and corn advanced for the fourth straight day as U.S. farmers withheld supplies on bets export demand will climb due to dry, hot weather in South America that may have damaged crops. U.S. ethanol producers rely on corn to make the biofuel.
“You’re watching fractions of cents right now,” said Mike Blackford, a consultant at INTL FCStone Group in Des Moines, Iowa. “Ethanol is a market that’s being reluctantly pulled higher by corn.”
Denatured ethanol for February delivery advanced 2.2 cents, or 1 percent, to $2.175 a gallon on the Chicago Board of Trade, the highest price since Jan. 11 and the biggest gain since Jan. 9. Prices have fallen 6.3 percent in the past year.
In cash market trading, ethanol was unchanged in New York at $2.24 a gallon and on the West Coast at $2.23, according to data compiled by Bloomberg.
Ethanol in Chicago increased 2 cents, or 1 percent, to $2.13 a gallon and in the U.S. Gulf the alternative fuel added 1 cent, or 0.5 percent, to $2.22.
Corn for March delivery jumped 10.5 cents, or 1.7 percent, to $6.3025 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
--With assistance from Jeff Wilson in Chicago. Editors: Richard Stubbe, Charlotte Porter
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