Ethanol capped the biggest monthly gain in more than four years in Chicago as higher corn prices raised production costs and prompted companies to temper output.
Futures gained as corn, used to make the fuel in the U.S., reached records this month in Chicago. Ethanol also increased on speculation an Energy Department report will show plants reduced production a record seven consecutive weeks. Output is down 17 percent from 963,000 barrels a day Dec. 30.
“I assume we’ll get another sizable draw in stocks and the hot weather will affect the production side,” said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa.
Denatured ethanol for August delivery climbed 1.7 cents, or 0.7 percent, to $2.63 a gallon on the Chicago Board of Trade, the highest settlement since July 23. Prices gained 18 percent this month, the most since June 2008.
In cash market trading, ethanol in Chicago rose 3 cents to $2.57 a gallon and in New York the additive increased 2.5 cents to $2.665, according to data compiled by Bloomberg.
Ethanol in the U.S. Gulf added 1.5 cents to $2.635 a gallon and on the West Coast the biofuel dropped 0.5 cent to $2.755.
Corn futures for December delivery dropped 1.1 percent to settle at $8.0525 a bushel in Chicago, after earlier touching the all-time high for the contract of $8.205.