Ethanol Rises Most in Year as Corn Report Signals Higher Costs

Ethanol rose the most in a year in Chicago after a government report on corn inventories signaled higher production costs.

Futures surged after the Agriculture Department said corn stockpiles on March 1 declined to the lowest level for this time of year since 2004. U.S. distillers typically use the grain to make ethanol.

“That stocks report was bullish, friendly towards corn,” said John Janney, a vice president at Citigroup Global Markets Inc. in Chicago.

Denatured ethanol for April delivery soared 11.5 cents, or 5.4 percent, to $2.265 a gallon on the Chicago Board of Trade, the biggest one-day gain since March 31, 2011. Futures have risen 2.8 percent this year in the first quarterly gain since March 2011.

Corn for May delivery rose the exchange-limit 40 cents, or 6.6 percent, to $6.44 a bushel in Chicago.

Distillers are losing 6 cents per gallon of ethanol based on current prices for corn and the biofuel, assuming a bushel of corn generates 2.75 gallons of ethanol, according to data compiled by Bloomberg.

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