Ethanol rebounded from an eight-week low in Chicago as both corn and gasoline climbed on concern that supplies are slipping.
Prices rose after the Energy Department reported that gasoline supplies fell 2.33 million barrels to 198.9 million last week as Hurricane Isaac idled 13 percent of Gulf Coast production. Corn for December delivery rose 1 percent to $7.985 a bushel as a Bloomberg survey showed the U.S. crop probably will be the lowest since 2003.
“You’ve got strength in gasoline and strength in corn,” said Dan Flynn, a trader at Price Futures Group in Chicago. “That pretty much added strength to ethanol.”
Denatured ethanol for September delivery climbed 1.1 cents, or 0.4 percent, to $2.539 a gallon on the Chicago Board of Trade. The contract expired today. Futures have gained 15 percent this year.
Ethanol in the U.S. is made mostly from corn and blended with gasoline to stretch supplies and meet federal mandates. One bushel of the grain makes at least 2.75 gallons of the biofuel.
In cash market trading, ethanol in the U.S. Gulf increased 2.5 cents, or 1 percent, to $2.62 a gallon and on the West Coast the additive rose 2 cents, or 0.8 percent, to $2.695, data compiled by Bloomberg shows.
Ethanol in New York slipped 0.5 cent to $2.615 a gallon and in Chicago the biofuel decreased 0.5 cent to $2.53.
Ethanol traded at a 45.2-cent discount to the motor fuel today, up from yesterday’s 42.18 cents.
Gasoline for October delivery jumped 4.12 cents, or 1.4 percent, to $2.991 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.