Chicago Argo ethanol prices reached their highest level in more than seven months on July 6, as low inventories sparked a massive rally.
S&P Global Platts assessed benchmark Chicago Argo ethanol at $1.53/gal, the highest level since reaching $1.5350/gal on December 2.
The rally was stoked by low stocks at the Kinder Morgan terminal, the dominant ethanol trading hub in the US. Customers in June loaded product on to barges to ship out during the month, before the US Army Corps of Engineers started a river maintenance project that would curb barge traffic into and out of the terminal.
A market source estimated that Argo inventories were between 20% and 25%. And sellers would not be willing to get rid of product without charging a substantial price.
"If someone has ethanol, then they need it," the source said. "If you want some ethanol, going to have to buy the offer."
Argo ethanol has risen for four of the fast five sessions. The rally began with a substantial rise in corn prices, and a drop in ethanol stocks across the country.
Furthermore, the market source said, Argo inventories may not rebound quickly. Without barge traffic, the most economical way to move product into the terminal, customers may not be eager to move large amounts of ethanol into the terminal.
"People wouldn't have put anything in Argo, unless they have something to do with it," the source said.
