Ethanol rose the most in eight weeks on concern that bad weather in the U.S. Midwest and Southeast will slow shipments of the biofuel.
Futures gained as much as 5.6 percent. BNSF Railway Co., Union Pacific Corp., and Norfolk Southern Corp. are among railroads that have told customers to expect delays because of frigid, icy weather. Ethanol is typically shipped by rail, barge or truck.
"Definitely, the front-end is getting pushed up with the delays on rail," said Chris Wilson, a broker at Atten Babler Risk Management LLC in Galena, Illinois. "Trucks are having a tough time, too. The logistics issues are supporting the front- end."
Denatured ethanol for February delivery advanced 3.5 cents, or 1.9 percent, to $1.863 a gallon on the Chicago Board of Trade at 10:42 a.m. local time after touching $1.931, the biggest gain by percentage since Dec. 6. Prices have fallen 24 percent in the past year.
Gasoline for February delivery rose 0.88 cent, or 0.3 percent, to $2.6697 a gallon on the New York Mercantile Exchange. The futures cover reformulated gasoline, made to be blended with ethanol before delivery to filling stations.
Ethanol’s discount to gasoline contracted by 2.62 cents to 80.67 cents a gallon.
Wilson said ethanol prices below $2 a gallon attract interest from foreign customers.
"The export market starts to come back in," Wilson said. "So you have the demand side that’s supportive as well."
The U.S. exported about 1.96 million barrels of ethanol in November, the most since March 2012, the Energy Information Administration reported today.
China purchased a record amount and India bought the most since November 2011, according to the EIA, the Energy Department’s statistical arm.
Ethanol is made mostly from corn in the U.S., with one bushel making at least 2.75 gallons of the renewable fuel.
Corn for March delivery climbed 5.75 cents, or 1.4 percent, to $4.3325 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol. The corn crush spread, or the price difference between a bushel of corn and a gallon of ethanol, was 24 cents, unchanged from yesterday.