March 5th, 2012

Ethanol futures climbed to a three- month high in Chicago as corn surged on speculation that export demand will increase.

Ethanol futures rose after Liu Yonghao, the chairman of New Hope Group Co., China’s top maker of livestock feed, said the country should reform its corn-import system by dropping shipping quotas or boosting the amount buyers are able to purchase. Corn is used to make ethanol in the U.S.

“Corn was stronger today and ethanol kind of went with it,” said Matt Janney, a trader at Citigroup Global Markets Inc. in Chicago. “I’m sure the ethanol guys need to be bidding up to get the corn.”

Denatured ethanol for March delivery advanced 2.9 cents, or 1.3 percent, to $2.289 a gallon on the Chicago Board of Trade, the highest price since Dec. 5. Futures have gained 3.9 percent this year. The March contract expired today.

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February 21st, 2012

Ethanol futures declined the most in three weeks as corn fell on signs that demand for the grain may ease.

The biofuel dropped 1.4 percent. Corn futures decreased for the first time in three days on speculation that near-record supplies of ethanol will reduce purchases of the biggest U.S. crop, the primary ingredient in U.S. production of the alternative fuel.

“Ethanol followed corn,” Dan Flynn, a trader at PFGBest in Chicago, said by telephone. “Ethanol prices are down due to the big break in the corn market.”

Ethanol futures denatured for March delivery declined 3.1 cents to $2.184 a gallon on the Chicago Board of Trade. Corn for May delivery fell 1.8 percent to $6.335 a bushel.

Stockpiles in the U.S. rose for a ninth straight week to an all-time high of 21.5 million barrels in the week ended Feb. 10, the Energy Department said. Daily output is down 3.6 percent from the record set in December.

In cash market trading, ethanol was unchanged in the Gulf Coast at $2.225 a gallon and in New York at $2.24, according to data compiled by Bloomberg. Ethanol in Chicago was unchanged at $2.175 a gallon and on the West Coast the additive was steady at $2.295.

The biofuel is blended with gasoline to augment supply and meet federal mandates. There are 209 ethanol distilleries in the U.S., with the capacity to produce 14.8 billion gallons annually, according to the Renewable Fuels Association, a Washington-based trade group.

- Ksenia Galouchko in New York at Bloomberg.