Corn futures rebounded from a four- week low on speculation that improved profits for U.S. ethanol makers will lead to increased purchases of the grain. Soybeans were little changed.
Ethanol is the cheapest relative to gasoline, based on futures prices, since Sept. 28, with a spread of more than 63 cents a gallon compared with about 19 cents on Dec. 6. That’s improving the incentive for distillers to produce more corn- based fuel, especially after grain prices fell this week and gasoline futures reached a four-month high.
“Ethanol producers are making some money because of the drop in corn prices and rally in gasoline,” Roy Huckabay, an executive vice president for the Linn Group in Chicago. “We are seeing improved demand for corn from ethanol producers.”
Corn futures for March delivery rose 1 percent to $7.18 a bushel at 10:47 a.m. on the Chicago Board of Trade, heading for the first gain in six sessions. Earlier, the price touched $7.0875, the lowest for the most-active contract since Jan. 11, the day the U.S. Department of Agriculture reported domestic stockpiles fell to the lowest in nine years.
Soybean futures for March delivery were unchanged at $14.8675 a bushel in Chicago. Through yesterday, the price gained 5.5 percent this year as rising Chinese demand cut U.S. inventories on Dec. 1 to a nine-year low.
The USDA will release its latest updates on U.S. and world supply and demand forecasts at noon in Washington today.
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