Ethanol futures plunged to the lowest level in almost five months as corn and gasoline dropped.
Prices fell for a third day following a U.S. Agriculture Department forecast that the 2012 corn crop would rise 20 percent to a record 14.79 million bushels, easing ethanol production costs, and as gasoline declined on concern that the European debt crisis might curtail fuel demand.
One bushel of corn makes at least 2.75 gallons of ethanol, which is blended with gasoline to stretch supply and meet federal mandates. The weakness in corn and “euro zone pessimism” pressured prices, SCB & Associates of Chicago said in an e-mailed report today.
Denatured ethanol for June delivery dropped 1.1 cents, or 0.5 percent, to settle at $2.108 a gallon on the Chicago Board of Trade, the lowest price since Dec. 16. Ethanol has fallen 4.3 percent this year.
In spot market trading, ethanol in New York declined 1 cent to $2.17 a gallon and in Chicago the additive decreased 1 cent to $2.10, according to data compiled by Bloomberg.
Ethanol on the West Coast slid 1 cent to $2.295 a gallon and in the U.S. Gulf the biofuel fell 0.5 cent to $2.17.
Corn for July delivery plunged 6.5 cents, or 1.1 percent, to $5.81 a bushel in Chicago.
Gasoline for June delivery slipped 0.94 cent, or 0.3 percent, to $3.0008 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.
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