California ethanol traders make room for expected ship from Brazil

Source: By Josh Pedrick, S&P Global • Posted: Sunday, June 14, 2020

New York — Ethanol traders in California have been selling in-tank product ahead of the late June or early July arrival of imports from Brazil.

 The Rudolf Schulte, the vessel sources said will carry the cargo, was anchored and unladen near Santos, Brazil, on June 12, according to cFlow, Platts trade-flow software. Sources expect it to begin loading and traveling toward California in the coming days.

Ethanol in tanks at the Selby, California, terminal was heard trading below the value of rail cars moving into California as traders try to move product out of tank before the ship’s arrival.

Ethanol imports from Brazil typically begin flowing into California in June or July, based on seasonal trends shown in Energy Information Administration data.

Sources said the arbitrage opened for vessels to bring product into California, and that additional cargoes are expected later in July and in August.

Ethanol imports typically flow into California, as imported sugarcane-based ethanol from Brazil generates more value from carbon credits under the state’s Low Carbon Fuel Standard than US-produced ethanol.