In a move that's sure to shake up the markets in grains and biofuels, the Obama administration will increase the amount of ethanol allowed in gasoline by 5 percent. The previous maximum concentration was 10 percent; the Environmental Protection Agency will now allow 15 percent.
Since ethanol in the United States is largely produced from corn, the ruling could affect corn futures down the line. It certainly helps large ethanol producers like Archer Daniels Midland, which stand to benefit from a demand for "greener" fuels.
Globex corn futures for December delivery dropped slightly today, losing 4 cents to $5.75 per bushel. There's some speculation that the recent rally to record highs after the U.S. Department of Agriculture's announcement may have been overdone.
Not everyone is likely to welcome the move towards gas with more ethanol. Some auto enthusiasts object to what they see as 'adulterated' fuel that could potentially prove more corrosive, while others are concerned about the impact of turning food supplies into fuel.
Wheat futures for December delivery were unchanged at exactly $7.10 per bushel just after 11 a.m. EST.
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