Aug. 24 (Bloomberg) -- Ethanol futures rose a fourth day in Chicago on concern warm, dry weather in the U.S. Midwest will hurt corn yields and raise production costs.
The grain-based additive on concern that hot weather and lack of rain in Midwest states such as Iowa and Illinois in July damaged crops. An Agriculture Department report on Aug. 22 showed deteriorating conditions for the ethanol feedstock. Futures today touched $7.4875 a bushel, the highest since June 9. The biofuel is at a four-week high.
“There’s still a profit,” said Jason Ward, an analyst at Northstar Commodity Investments LLC in Minneapolis. “You need that number with the price of corn. The market rallied on lack of rain in central Illinois and Iowa. That’s hurting crops in the No. 1 and 2 states.”
Denatured ethanol for September delivery rose 1.4 cents, or 0.5 percent, to $2.907 a gallon on the Chicago Board of Trade. Futures are up 22 percent this year.
In cash market trading, ethanol in Chicago jumped 3.25 cents, or 1.1 percent, to $2.9375 a gallon and in New York the biofuel added 1 cent to $3.005, according to data compiled by Bloomberg.
Ethanol on the West Coast increased 0.5 cent to $3.025 a gallon and in the U.S. Gulf the additive lost 1 cent to $2.975.
The profit from turning a bushel of corn into 2.75 gallons of ethanol, or the so-called crush margin, was 25 cents from 24 cents yesterday, according to data compiled by Bloomberg.
Corn futures for December delivery slipped 0.5 cent to settle at $7.43 a bushel in Chicago. The grain is up 72 percent in the past year.
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