Ethanol futures in Chicago climbed to a 32-month high as corn, crude oil and gasoline advanced on supply concerns and a weaker dollar.
The biofuel followed the other commodities higher on speculation that Libya's unrest will curtail crude oil supply and on signs that the highest corn prices in two years haven't quelled demand for feed and ethanol.
The dollar weakened against its major counterparts as US lawmakers failed to agree on a federal budget.
"All the commodities are going nuts here," said Dan Flynn, a trader at PFGBest in Chicago. "This budget battle has everyone fleeing to commodities."
Denatured ethanol for May delivery rose 3.2 cents, or 1.2 per cent, to $2.726 (Dh10) a gallon on the Chicago Board of Trade, the highest price since July 11, 2008. Prices have risen 15 per cent this year.
In cash market trading ethanol in the US Gulf was unchanged at $2.775 a gallon and on the West Coast the fuel lost 3.5 cents, or 1.2 per cent, to $2.825, according to data compiled by Bloomberg.
Ethanol in New York gained one cent, or 0.4 per cent, to $2.76 a gallon while the fuel declined one cent, or 0.4 per cent, to $2.68 in Chicago.
Corn for May delivery jumped nine cents, or 1.2 per cent, to $7.68 a bushel in Chicago. Prices for the grain, the main input in US-made ethanol, have more than doubled in the past year.
Fuels rise
Crude oil for May delivery rose $2.49 to $112.79 a barrel on the New York Mercantile Exchange, the highest settlement since September 22, 2008. Futures advanced 4.5 per cent last week and are 32 per cent higher than a year ago.
Gasoline for May delivery added 7.42 cents, or 2.3 per cent, to settle at $3.2607 a gallon on the exchange, the highest settlement for the contract closest to expiration since July 16, 2008.
It covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.
The dollar slipped as much as 1.2 per cent to $1.4477. A weaker US currency reduces the appeal of commodities, which are priced in dollars.
Average ethanol mills in Iowa are earning 11 cents on every gallon produced, while plants in Illinois are profiting 15 cents on a spot basis, according to Ag Trader Talk, an online grains information service in Clive, Iowa.
