Ethanol increased to the highest price in more than a month as Valero Energy Corp. idled production at its Linden biofuels plant in Indiana because of “economic reasons.”
Futures gained as the plant, which has an annual capacity of 110 million gallons, was temporarily halted yesterday, a week after Valero closed its Albion, Nebraska, ethanol plant. Bill Day, a spokesman at company headquarters in San Antonio, said in an e-mail that Valero expects “to resume production once market conditions improve.”
Denatured ethanol for July delivery rose 3 cents, or 1.4 percent, to settle at $2.216 a gallon on the Chicago Board of Trade, the highest level since May 18. The increase was the fourth in a row. The biofuel today traded 8.2 percent below its average the last year of $2.414 a gallon.
“Ethanol is up today and it needs to be up because the margins have been poor,” said Christian Mayer, a market advisor at Northstar Commodity Investments LLC in Minneapolis. “The corn market has been going up significantly and so ethanol needs to work higher.”
Corn for December delivery climbed 9 cents, or 1.4 percent, to $6.33 a bushel on CBOT. Corn is the primary feedstock in U.S. ethanol production. Futures have surged as much as 30 percent since touching a 20-month low June 15 as hot, dry weather threatens U.S. yields.
In cash market trading, ethanol rose 3 cents to $2.275 a gallon in the U.S. Gulf and 2.5 cents to $2.35 on the West Coast. The biofuel advanced 3 cents to $2.27 in New York and 1.5 cents to $2.195 in Chicago.