Corn rose, matching yesterday's 11- year high, on speculation that a new energy bill and rising oil prices may increase demand for crops used to make fuel.
The bill signed by President George W. Bush last week will more than quadruple the use of alternative fuels such as ethanol to 36 billion gallons in 2022 from 7.5 billion this year. Crude oil, which reached a record last month, is up 58 percent this year, improving demand for biofuels to extend gasoline supplies.
Corn prices continue to gain from recognition that the new energy bill signed last week is very bullish for corn to meet ethanol demand,'' said Bill Nelson, a vice president for A.G. Edwards Inc. in St. Louis. ``The rise in crude oil is
improving demand for ethanol in gasoline'' outside of areas where the fuel is required by law, Nelson said.
Corn futures for March delivery rose 2.5 cents, or 0.6 percent, to $4.5475 a bushel on the Chicago Board of Trade. Prices yesterday and today reached $4.55, the highest since June 1996. The price is up 17 percent this year on record demand to
produce ethanol and feed livestock, poultry and dairy cows.
In 2006, almost 5 billion gallons of ethanol were produced, according to the Energy Information Administration, the Energy Department's statistical arm. Under the new energy bill, that total will rise to 15 million gallons by 2022.
There are 134 ethanol distilleries in the U.S., with the capacity to produce 7.23 billion gallons of the fuel annually, according to the Renewable Fuels Association in Washington. The 77 plants under construction will boost the nation's production capability to about 13.45 billion gallons.
Denatured ethanol for May delivery rose 3 cents, or 1.5 percent, to $2.09 a gallon on the Chicago Board of Trade after yesterday touching $2.10 a gallon, the highest for the most- active contract since May 30.
Critical resistance level had broken
Short term chart showing an uptrend
Corn charts can be found in my blog.
(Think fundamental, but trade technical)