Ethanol Slides on Speculation Producers Will Cut Output
Ethanol rose for the first time in seven days, boosted by gains in gasoline and corn futures.
The biofuel climbed as gasoline advanced on unplanned refinery shutdowns and bets that central banks will boost economic stimulus measures to spur growth. Corn increased as drought in the U.S. and Russia reduced global supplies.
“Corn is up and gasoline is up and that is probably boosting ethanol,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
Denatured ethanol for August delivery rose 1.4 cents, or 0.6 percent, to $2.555 a gallon on the Chicago Board of Trade, after falling 6.8 percent in six days of losses. Prices have dropped 6.2 percent since reaching a year-to-date high of $2.725 on July 18.
Corn for December delivery rose 17 cents, or 2.2 percent, to $7.9325 a bushel in Chicago, up 57 percent since mid-June. One bushel makes at least 2.75 gallons of ethanol.
Gasoline for August delivery rose 7.4 cents, or 2.6 percent, to settle at $2.8878 a gallon on the New York Mercantile Exchange, the highest level in a week.
At least 63.9 percent of the U.S. was in moderate to severe drought as of July 24, up from 63.5 percent the previous week, the U.S. Drought Monitor said yesterday. The International Grains Council yesterday cut its forecast for Russian wheat production by 10 percent to 44 million metric tons.
In cash market trading, ethanol fell 2 cents to $2.61 a gallon in New York and dropped 0.5 cent to $2.73 on the West Coast. Prices rose 0.5 cent to $2.53 in Chicago and gained 0.5 cent to $2.59 on the Gulf Coast.
To contact the reporters on this story: Barbara J Powell in Dallas at firstname.lastname@example.org
To contact the editor responsible for this story: Bill Banker at email@example.com