By Bloomberg

Ethanol surged to the highest price in more than seven years as producers struggle to get the biofuel to consumers while demand for it climbs.

Futures rose 1.7 percent a day after BNSF Railway said a winter storm in the Midwest would force it to reroute trains there, leading to longer transit times. Ethanol is delivered by rail, truck and barge, and about 89 percent of plants are located in the region.

“Rail transport is difficult and that inherent difficulty is compounded by weather,” said Peyton Feltus, president of Randolph Risk Management Inc. in Dallas. “Some plants have slowed down or halted production because they couldn’t do anything with it.”

Denatured ethanol for April delivery gained 5.8 cents to settle at $3.517 a gallon on the Chicago Board of Trade, the highest close since July 10, 2006. It was the fourth consecutive advance. Futures have gained 84 percent this year. The more actively traded May contract increased 8.7 cents to $2.788 a gallon.

Gasoline for May delivery decreased 4.82 cents, or 1.7 percent, to $2.8697 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

Ethanol’s discount to the motor fuel, based on May contracts, narrowed to 8.17 cents from 21.69 cents yesterday.

Refinery Inputs

Ethanol refinery and blender inputs, a measure of demand, increased in the week ended March 21 to the highest level since Dec. 20, data from the Energy Information Administration show.

The biofuel is made mostly from corn in the U.S., and a government report yesterday showed inventories of the grain were smaller than estimated.

Corn for May delivery advanced 5.5 cents, or 1.1 percent, to $5.075 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

The corn crush spread, or the difference between the cost of corn and the price of ethanol, based on May contracts, was 91 cents, up from 87 cents yesterday.

In cash market trading, ethanol in New York slipped 1 cent to $4.165 a gallon, data compiled by Bloomberg show. The additive gained 5 cents to a record $3.90 in Chicago; 5 cents to $4.175 on the Gulf Coast, also an all-time high; and 3.5 cents to $4.04 a gallon on the West Coast.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Charlotte Porter, Margot Habiby