The Silver Sawsan is due to land this Thursday in California bearing ethanol from Brazil, sources said Monday.
"It's going to be there in a couple of days and another one [is coming from] Santos," said one source.
The Silver Sawsan was located off Mexico's Baja California Peninsula Monday morning, according to cFlow, S&P Global Platts' trade flow software.
It is due to arrive in San Francisco on Thursday morning, while the Madha Silver, the next vessel due to make the voyage, left Santos Sunday, according to cFlow data.
The product the vessel is carrying could weigh on West Coast stocks.
When a cargo is due to land in California it can cause disruptions to the market as traders make space. That can lower interest in domestic trains and drive prices down, even if the cargo is not very large.
The last time a vessel arrived in California was in the week that ended September 8, according to US Energy Information Administration data. That cargo had been delayed and created headaches in the market as participants scrambled to fill holes in demand that were ready for the imported product. But the Silver Sawsan appears to be on schedule with expectations.
Sugarcane-based Brazilian ethanol generates an advanced biofuel, or D5, RIN that is more expensive and represents a greater greenhouse gas reduction than conventional biofuels.
The more valuable RIN can help open the arbitrage when it would normally be closed, and California's Low Carbon Fuel Standard credits can open it even more.
Traders usually eye the spread between D5 and D6 ethanol RINs to track arbitrage opportunities for Brazilian exports to the US. Given the recent spike in D6 prices and the narrowing spread to D5, sources believe this cargo must have been booked some months ago.
Ethanol buyers in California have historically seen an advantage in buying Brazilian ethanol due to the lower carbon intensity, which generates more credits.
Through August, the US imported almost 196 million liters of fuel ethanol from Brazil, according to US Department of Agriculture data.
That was already 63% more than the 120 million liters of fuel ethanol the US imported from Brazil in the whole of 2016.
