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Ethanol futures climbed in Chicago on speculation that more-expensive corn will lead to higher manufacturing costs.
Prices increased as dry, warm weather in the Midwest threatened corn crop development. One bushel of the grain makes at least 2.75 gallons of the biofuel and based on the July contracts for corn and ethanol, producers are losing 7 cents on each gallon manufactured, according to data compiled by Bloomberg.
Ethanol “was definitely up,” said Jim Damask, a manager at BiofuelsConnect, a Jupiter, Florida-based alternative energy broker. “It was strong, but not as strong as people were expecting.”
Denatured ethanol for July delivery advanced 2.1 cents, or 1 percent, to settle at $2.052 a gallon on the Chicago Board of Trade.
In spot market trading, ethanol in Chicago jumped 2.5 cents, or 1.3 percent, to $2.01 a gallon and in the U.S. Gulf the additive increased 2.5 cents, or 1.2 percent, to $2.075, according to data compiled by Bloomberg.
Ethanol in New York rose 2 cents, or 1 percent, to $2.07 a gallon and on the West Coast the biofuel advanced 1.5 cents, or 0.7 percent, to $2.215.
Corn for July delivery rose 18.75 cents, or 3.3 percent, to $5.8625 a bushel in Chicago.
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