East Coast ethanol stock draw driven by exports, moving product

Source: By Josh Pedrick, Platts • Posted: Tuesday, October 18, 2016

Exports and ethanol in transit created the 762,000 barrel draw in East Coast ethanol stocks in the week ended October 7 seen in the most recent Energy Information Administration data, sources said Friday.

“The draw in the East Coast is stuff in transit,” said one source. “Ocean going barges. There were also a couple of big boats that got loaded for export.”

Brazil and China have been two of the strongest buyers of US ethanol this year, taking 112.798 million gallons and 130.800 million gallons, respectively according to the most recent US Census bureau data.

But not all the product was headed abroad, said the source. Some of the draw was ethanol moving from the New York Harbor market down to Florida that may have been delayed by Hurricane Matthew last week. As the ethanol would have been aboard ships during the EIA’s data gathering, it may not have been counted.

Another source said the narrower spread between the Chicago Argo market, a key hub for physical ethanol trading in the US, and New York Harbor could have hampered product resupplying the East Coast.

Over the past month, the New York Harbor’s premium to Argo has averaged 4.5 cents/gal, but in the previous month it averaged 6.25 cents/gal. As the premium shrinks, market participants have less incentive to ship product to the East Coast market from Argo.