Ethanol tumbled the most in more than four months in Chicago as corn declined on speculation that favorable weather in the U.S. Midwest will aid crops.
The biofuel fell 3.7 percent as its primary feedstock dropped 5.7 percent on the expectation that rain will help corn and lower the cost of making ethanol in the U.S. One bushel of corn produces at least 2.75 gallons of the additive.
“It followed corn lower hard today,” said Will Babler, a broker at First Capital Risk Management in Galena, Illinois. “You’ve got a failed weather rally and weakness in the export market. Day to day, it’s going to track corn.”
Denatured ethanol for June delivery plunged 8.1 cents to settle at $2.131 a gallon on the Chicago Board of Trade, the steepest decline since Jan. 12 and the lowest price since May 15. Ethanol has fallen 3.3 percent this year.
In cash market trading, ethanol in Chicago lost 3 cents, or 1.4 percent, to $2.15 a gallon and in New York the additive decreased 2.5 cents, or 1.1 percent, to $2.235, according to data compiled by Bloomberg.
Ethanol in the U.S. Gulf dropped 0.5 cent to $2.235 a gallon and on the West Coast the biofuel slipped 0.5 cent to $2.375.
Corn for July delivery sank 36 cents to $5.97 a bushel in Chicago.
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