Ethanol Climbs for Fifth Day as Corn Rises on Supply Outlook

Ethanol climbed for a fifth day in Chicago as corn rose, making the biofuel more expensive to produce in the U.S.

Futures gained 1.1 percent on speculation that dry weather in China will reduce that country’s corn crop and increase demand for U.S. supplies used to produce ethanol. One bushel distills into at least 2.75 gallons of the fuel alternative, and based on today’s prices producers are losing 11 cents on every gallon, according to data compiled by Bloomberg.

“Today’s gain is pretty much due to the corn,” said Dan Flynn, a trader at PFG Best in Chicago. “That’s the driving force. It’s going to be ugly for awhile.”

Denatured ethanol for March delivery advanced 2.4 cents to $2.263 a gallon on the Chicago Board of Trade. Prices are up 2.7 percent this year.

In cash market trading, ethanol was unchanged in the U.S. Gulf at $2.245 a gallon and in New York the additive slipped 0.5 cent to $2.265, according to data compiled by Bloomberg.

Ethanol in Chicago decreased 0.5 cent to $2.18 a gallon and on the West Coast the biofuel fell 1 cent, or 0.4 percent, to $2.28.

Corn for May delivery gained 8.75 cents, or 1.3 percent, to $6.5725 a bushel in Chicago, the fifth straight gain.

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