Ethanol Drops From Eight-Month High as Corn Prices Decline
Ethanol in Chicago fell from the highest price in more than eight months as corn declined from a four-year high.
Futures followed the grain lower on concern that demand would slow as corn neared a record. Corn is the primary ingredient used to make ethanol and drought in the Midwest has boosted prices 23 percent this month.
“It was because new crop corn came off a little bit,” said John Janney, a vice president at Citigroup Global Markets Inc. in Chicago. “That put some pressure on ethanol.”
Denatured ethanol for August delivery fell 0.7 cent, or 0.3 percent, to $2.718 a gallon on the Chicago Board of Trade. Prices have risen 23 percent this year.
Corn futures for December delivery fell 0.7 percent to settle at $7.785 a bushel on the CBOT after touching $7.99. The record for a most-active contract was $7.9925 on June 27, 2008. The grain has jumped 54 percent since June 15.
In cash market trading, ethanol in New York increased 3.5 cents, or 1.3 percent, to $2.82 a gallon and in Chicago the additive rose 2 cents, or 0.8 percent, to $2.68, according to data compiled by Bloomberg.
Ethanol in the U.S. Gulf climbed 2 cents, or 0.7 percent, to $2.74 a gallon and on the West Coast the biofuel added 1.5 cents, or 0.5 percent, to $2.92.
Distillers are losing 26 cents on each gallon of ethanol made based on September contracts for the fuel and corn, assuming one bushel of the grain makes at least 2.75 gallons of the renewable fuel, according to data compiled by Bloomberg.
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