Oct. 11 (Bloomberg) -- Ethanol climbed the most in almost two weeks, rising with corn after the government forecast a decline in world inventories because of the U.S. drought.
The biofuel rose to a one-month high as corn soared after the Agriculture Department predicted worldwide inventories on Oct. 1 will be 117.27 million metric tons, down from 123.95 million predicted a month ago, amid the worst U.S. drought in more than a half century. U.S. ethanol is made from corn.
“The gains were tied 100 percent to corn,” said Jerrod Kitt, director of research at Linn Group in Chicago.
Denatured ethanol for November delivery increased 7 cents, or 2.9 percent, to $2.467 a gallon on the Chicago Board of Trade. The price has risen 12 percent this year.
In cash market trading, ethanol gained 4 cents to $2.55 a gallon in New York, 6.5 cents to $2.455 in Chicago, 5 cents to $2.515 on the Gulf Coast and 3 cents to $2.59 on the West Coast.
Corn for December delivery climbed 36.5 cents to $7.7325 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
Crude oil for November delivery increased 82 cents, or 0.9 percent, to $92.07 a barrel on the New York Mercantile Exchange.
Gasoline for November delivery declined 0.37 cent to $2.9556 a gallon in New York. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.