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Ethanol futures fell a second day in Chicago on speculation rain and cooler weather in the Midwest is helping the corn crop and will reduce production costs. 

Prices followed corn lower on forecasts for rain and cooler weather in the grain-rich region.  One bushel of corn makes at least 2.75 gallons of ethanol and the cost of the grain is the primary expense for producers of the fuel. 

“We’re kind of weak,” said Dan Flynn, a trader at Price Futures Group in Chicago. “ We’re seeing a long liquidation in corn” that’s spilling over into ethanol. 

Denatured ethanol for September delivery fell 0.6 cent to $2.572 a gallon on the Chicago Board of Trade.  Prices have gained 17 percent this year. 

In cash market trading, ethanol in Chicago gained 2.5 cents, or 1 percent, to $2.57 a gallon and in the U.S. Gulf the biofuel jumped 2 cents, or 0.8 percent, to $2.635, according to data compiled by Bloomberg. 

Ethanol in New York increased 1 cent, or 0.4 percent, to $2.65 a gallon and on the West Coast the additive rose 1 cent, or 0.4 percent, to $2.765. 

Corn for December delivery fell 4.5 cents, or 0.6 percent, to $8.005 a bushel in Chicago.  Futures rose to a record $8.205 on July 31. 

The Agriculture Department plans to release its latest World Agricultural Supply and Demand Estimates report on Aug. 10 at 8:30 a.m. in Washington. 

Flynn said traders will be cautious until they see the report and that prices for ethanol and corn will likely rise if it shows crop deterioration, caused by drought in the Midwest.