Ethanol rose the most since April as more expensive corn signaled higher manufacturing costs for U.S. producers.
Futures gained as warm, dry weather in the Midwest threatened development of the grain, which is the basis of ethanol production in the U.S. One bushel of corn makes at least 2.75 gallons of the fuel and producers are losing 4 cents on every gallon made, according to data compiled by Bloomberg.
“The whole agricultural complex was pretty strong,” said Ian Jackson, an analyst at SCB & Associates in Chicago. “It’s certainly more highly correlated to corn than the energies. There’s not a lot of physical corn out there.”
Denatured ethanol for June delivery advanced 2.4 cents, or 1.1 percent, to settle at $2.127 a gallon on the Chicago Board of Trade, the first gain in a week and the biggest since April 30. Ethanol has fallen 3.5 percent this year.
In cash market trading, ethanol in New York sank 3.5 cents, or 1.6 percent, to $2.15 a gallon and in the U.S. Gulf the biofuel dropped 2 cents, or 0.9 percent, to $2.155, according to data compiled by Bloomberg.
Ethanol in Chicago slipped 1.5 cents, or 0.7 percent, to $2.09 a gallon and on the West Coast the additive dropped 0.5 cent to $2.275.
Corn for July delivery jumped 14.25 cents, or 2.4 percent, to $5.9725 a bushel in Chicago.
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