Ethanol Falls Most in Seven Weeks as Production Costs Ease

Ethanol futures fell the most in seven weeks in Chicago as production costs eased with lower corn prices because rain may ease a drought in the U.S.

Rain may fall in parts of Iowa and Illinois this week and next, and the Midwest might get showers in the next 11 to 15 days, reducing severe moisture deficits from the worst drought since 1988, said Commodity Weather Group LLC in Bethesda, Maryland.

Denatured ethanol for August delivery fell 5.5 cents, or 2.1 percent, to settle at $2.596 a gallon at 2:15 p.m. on the Chicago Board of Trade, the biggest decline since June 1.

Corn for December delivery fell 7.25 cents, or 0.9 percent, to $7.7825 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

In cash market trading, ethanol in New York decreased 3.5 cents, or 1.3 percent, to $2.62 a gallon and in Chicago the additive fell 1.5 cents, or 0.6 percent, to $2.525, according to data compiled by Bloomberg.

Ethanol in the U.S. Gulf slipped 2.5 cents, or 1 percent, to $2.575 a gallon and on the West Coast the biofuel plunged 14.5 cents, or 5.1 percent, to $2.725.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net; Aaron Clark in New York at aclark27@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net