Ethanol futures rose to a three-week high in Chicago as crude oil and corn advanced.
Futures surged after a report showed crop conditions for corn, the primary input for the fuel in the U.S., slipped from last week, threatening to raise production costs at distilleries. Separately, crude oil gained on speculation the Federal Reserve will bolster efforts to boost the economy.
“The rally in outside markets, corn and crude oil, just brought ethanol up with it,” said Terry Reilly, an analyst at Citigroup Global Markets Inc. in Chicago.
Denatured ethanol for September delivery rose 3.7 cents, or 1.3 percent, to $2.893 a gallon on the Chicago Board of Trade. Futures are up 22 percent this year.
In cash market trading ethanol in Chicago increased 3 cents, or 1 percent, to $2.905 a gallon and in the U.S. Gulf the biofuel climbed 2.5 cents, or 0.8 percent, to $2.985, according to data compiled by Bloomberg.
Ethanol in New York added 2 cents, or 0.7 percent, to $2.995 a gallon and on the West Coast the additive increased 1 cent, or 0.3 percent, to $3.02.
The profit from turning a bushel of corn into 2.75 gallons of ethanol, or the so-called crush margin, rose to 24 cents from 23 cents yesterday, according to data compiled by Bloomberg.
Corn futures for December delivery rose 9.25 cents, or 1.3 percent, to settle at $7.345 a bushel in Chicago.
Crude for October delivery rose $1.02 to settle at $85.44 a barrel on the New York Mercantile Exchange. Futures have fallen 6.5 percent this year.
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