Ethanol futures in Chicago climbed to a five-week high on speculation demand for the fuel will grow after Congress last week passed an $858 billion tax-cut plan including provisions that support the biofuel industry.
The grain-based additive rose after lawmakers extended a 45-cent incentive to refiners for each gallon of the fuel blended with gasoline and renewed a 54-cent tariff on Brazilian imports. U.S. ethanol output reached a record 939,000 barrels a day in the week ended Dec. 3, government data show.
Denatured ethanol for January delivery rose 2.6 cents, or 1.2 percent, to settle at $2.244 a gallon on the Chicago Board of Trade, the highest price since Nov. 11.
In cash market trading, ethanol in Chicago climbed 6.5 cents, or 2.9 percent, to $2.275 a gallon and in the U.S. Gulf the additive increased 3.5 cents, or 1.6 percent, to $2.275, according to data compiled by Bloomberg.
Ethanol on the West Coast rose 8 cents, or 3.5 percent, to $2.375 a gallon, and in New York the biofuel jumped 7.5 cents, or 3.3 percent, to $2.375.
U.S. carmakers and engine manufacturers asked an appeals court to force the U.S. Environmental Protection Agency to reconsider its October decision allowing the sale of gasoline with 15 percent ethanol.