Ethanol Increases as Corn Advances on Cold, Wet Midwest Weather
Ethanol futures gained as corn advanced on concern inclement weather will curtail planting and yields.
The grain-based additive rose the most in almost two weeks as planting conditions in the southern part of the Midwest are expected to worsen over the next 10 days, according to State College, Pennsylvania-based AccuWeather.com. Ethanol is made from corn in the U.S.
“The focus is going to be on the acres and how quickly they can get it into the ground,” said Will Babler, a broker at First Capitol Risk Management in Galena, Illinois.
Denatured ethanol for May delivery rose 1.7 cents, or 0.7 percent, to $2.586 a gallon on the Chicago Board of Trade. Prices have risen 63 percent in the past year.
In cash market trading, ethanol on the West Coast slumped 8.5 cents, or 3.1 percent, to $2.675 a gallon and in New York the additive lost 7.5 cents, or 2.8 percent, to $2.65, according to data compiled by Bloomberg.
Ethanol in Chicago decreased 6.5 cents, or 2.5 percent, to $2.575 a gallon and in the U.S. Gulf the biofuel dipped 5 cents, or 1.8 percent, to $2.705.
Corn futures for July delivery rose 4 cents, or 0.5 percent, to close at $7.445 a bushel in Chicago. One bushel distills into at least 2.75 gallons of the fuel.
Ethanol has moved in the same price direction 94 percent of the time over the past two years, according to data compiled by Bloomberg.
Average ethanol mills in Iowa are losing 2 cents on every gallon produced, while plants in Illinois are breaking even on a spot basis, according to Ag Trader Talk, an online grains information service in Clive, Iowa.
To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
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