30 June 2011 21:16 [Source: ICIS news]
HOUSTON (ICIS news)--US ethanol prices fell sharply on Thursday, pressured by major losses in the corn market.
Ethanol for July delivery fell by nearly 18 cents/gal to $2.60/gal on the Chicago Board of Trade, while corn for July slumped by 10% to $6.29/bushel.
Corn for July has traded without limits since Wednesday because the contract is considered to be within its delivery month, a market source said.
The slump in corn prices was triggered by a new report from the US Department of Agriculture (USDA), which showed US corn acreage rising by 5% from 2010 to 92.3m acres (37.4m hectares).
The figure came in above the trade average estimate of 90.8m acres, an analyst said.
The USDA also estimated that 84.9m acres of corn would be harvested this year, up by 3.4m acres from 2010.
Fluctuations in the price of corn tend to immediately impact the price of ethanol because the feedstock is the heaviest component in the price of the biofuel, followed by natural gas.
One bushel of corn produces around 2.8 gal (10.6 litres) of ethanol.
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