Ethanol Advances Most in 11 Weeks as Heat Threatens Cost Boost

Ethanol futures advanced the most in 11 weeks on concern that hot weather will raise production costs for the biofuel.

Prices gained as a heat wave blanketing parts of the U.S. Midwest threatened corn crop development. The grain is the primary feedstock in U.S.-made ethanol, with one bushel distilling into at least 2.75 gallons of the gasoline additive.

“It’s just a big weather rally in corn,” said Jason Ward, an analyst at Northstar Commodity Investments in Minneapolis.

Denatured ethanol for July delivery surged 5 cents, or 2.5 percent, to settle at $2.077 a gallon on the Chicago Board of Trade, the highest price since June 8 and the biggest one-day gain since March 30. Futures have fallen 5.7 percent this year.

In spot market trading, ethanol was unchanged in New York at $2.10 a gallon, in Chicago at $2.03 and in the U.S. Gulf at $2.09 a gallon, according to data compiled by Bloomberg. Ethanol on the West Coast jumped 5 cents, or 2.3 percent, to $2.225.

Corn for December delivery increased 28 cents, or 5.5 percent, to $5.34 a bushel in Chicago.

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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