Ethanol increased to the highest price in more than seven months as drought in the U.S. worsens yield losses on corn, boosting costs for distillers.
Areas in the U.S. Midwest suffering from moderate to extreme drought expanded to about 63 percent as of July 10 from 53 percent a week earlier, the National Drought Mitigation Center said yesterday. Corn is the primary feedstock for making ethanol.
Denatured ethanol for August delivery rose 3.9 cents, or 1.6 percent, to $2.556 a gallon on the Chicago Board of Trade, the highest settlement since Nov. 22. Futures have gained 6.3 percent this week, and are up 29 percent since dropping to the lowest level this year on June 1.
In cash market trading, ethanol in New York rose 3.5 cents to $2.65 a gallon and in Chicago the additive added 3.5 cents to $2.52, according to data compiled by Bloomberg as of 2:04 p.m. New York time.
Ethanol in the U.S. Gulf increased 4 cents to $2.58 a gallon and on the West Coast the biofuel climbed 3 cents to $2.745.
Corn for December delivery rose 8 cents, or 1.1 percent, to $7.4025 a bushel in Chicago.