June 18 (Bloomberg) -- Ethanol futures advanced the most in 11 weeks on concern that hot weather will raise production costs for the biofuel.
Prices gained as a heat wave blanketing parts of the U.S. Midwest threatened corn crop development. The grain is the primary feedstock in U.S.-made ethanol, with one bushel distilling into at least 2.75 gallons of the gasoline additive.
“It’s just a big weather rally in corn,” said Jason Ward, an analyst at Northstar Commodity Investments in Minneapolis.
Denatured ethanol for July delivery surged 5 cents, or 2.5 percent, to settle at $2.077 a gallon on the Chicago Board of Trade, the highest price since June 8 and the biggest one-day gain since March 30. Futures have fallen 5.7 percent this year.
In spot market trading, ethanol was unchanged in New York at $2.10 a gallon, in Chicago at $2.03 and in the U.S. Gulf at $2.09 a gallon, according to data compiled by Bloomberg. Ethanol on the West Coast jumped 5 cents, or 2.3 percent, to $2.225.
Corn for December delivery increased 28 cents, or 5.5 percent, to $5.34 a bushel in Chicago.
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