July 2 (Bloomberg) -- Ethanol futures rose to a three-month high in Chicago as dry, hot weather in the U.S. raised costs for the corn used to make the biofuel.
Prices gained as above-normal temperatures blanket the corn-rich U.S. Midwest, threatening crop development for the grain and ethanol feedstock. Negative margins to make the fuel have beleaguered producers this year, causing Valero Energy Corp., the third-biggest maker of the additive, to idle output at two distilleries.
“This is weather, weather and more weather,” said Jerrod Kitt, an analyst at Linn Group in Chicago. “It’s important to keep in mind that you’re already losing ethanol production.”
Denatured ethanol for July delivery advanced 5.9 cents, or 2.6 percent, to $2.292 a gallon on the Chicago Board of Trade, the highest price since March 23. Futures have gained 4 percent this year.
In cash market trading, ethanol was unchanged in New York at $2.31 a gallon, according to data compiled by Bloomberg. In Chicago, the additive lost 2.5 cents to $2.22.
Ethanol in the U.S. Gulf slipped 2.5 cents to $2.295 a gallon and on the West Coast the biofuel increased 2.5 cents to $2.405.
Corn for December delivery increased 21.75 cents, or 3.4 percent, to $6.565 a bushel in Chicago.
One bushel makes at least 2.75 gallons of ethanol.
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