Ethanol futures climbed to the highest level in more than three months in Chicago as gains for corn signaled higher manufacturing costs.
Futures followed corn higher on speculation that Argentina, the world’s second-largest shipper of the grain behind the U.S., will curb exports because of damage caused by drought. Corn is the primary feedstock for ethanol made in the U.S.
“Ethanol is definitely riding on the corn,” said Dan Flynn, a trader at PFGBest in Chicago. “We’ve heard no good news from Argentina. Obviously they’re looking at our market now and that’s spilling over into ethanol.”
Denatured ethanol for April delivery climbed 2.8 cents, or 1.2 percent, to $2.294 a gallon on the Chicago Board of Trade, the highest price since Dec. 5. Prices have gained 4.1 percent this year.
In cash market trading, ethanol in New York was unchanged at $2.31 a gallon and in Chicago the biofuel added 0.5 cents to $2.275, according to data compiled by Bloomberg.
Ethanol in the U.S. Gulf advanced 1.5 cents to $2.325 a gallon and on the West Coast the additive lost 1.5 cents to $2.395.
Corn futures for May delivery rose 14.5 cents, or 2.3 percent, to $6.595 a bushel in Chicago, the biggest gain for a most-active contract since Dec. 19.
Distillers are losing 9 cents per gallon of ethanol, based on current prices for corn and the biofuel and assuming a bushel of the grain generates 2.75 gallons of ethanol, according to data compiled by Bloomberg.
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