Ethanol futures fell the most in more than a week in Chicago as production costs eased with cheaper corn.
Prices followed the grain lower after a Professional Farmer Crop Tour analysis showed average yields in Illinois, the second-biggest U.S. grower after Iowa, may average 121.6 bushels an acre, more than the 116 bushels the Agriculture Department estimated on Aug. 10, tempering manufacturing costs for ethanol distilleries that use the grain to make the biofuel.
“It has to follow corn, it’s the number one input,” said Jason Ward, an analyst at Northstar Commodity Investments LLC in Minneapolis.
Denatured ethanol for September delivery fell 3.6 cents, or 1.4 percent, to settle at $2.628 a gallon on the Chicago Board of Trade, the biggest decline since Aug. 13. The futures have gained 19 percent this year.
In cash market trading, ethanol in New York sank 5 cents to $2.68 a gallon and fell in Chicago 2 cents to $2.615.
Ethanol in the U.S. Gulf dropped 2 cents to $2.675, while falling 3 cents to $2.76 a gallon on the West Coast, data compiled by Bloomberg as of 4:40 p.m. shows.
Corn for December delivery declined 20 cents, or 2.4 percent, to $8.1475 a bushel in Chicago. One bushel makes at least 2.75 gallons of the renewable fuel.
The value of Renewable Identification Numbers, known as RINs, rose 2.7 percent to 3.75 cents, data compiled by Bloomberg show. They are credits that help the government track whether refiners are meeting 2012 federal ethanol use mandates.