Chicago Rule 11, or R11, ethanol was trading 3.5 cents higher than prompt Argo product Tuesday. R11 has not traded at such a high premium to Argo since November 4, 2015.
R11 for this-week shipment traded at $1.3350/gal Tuesday, while prompt Argo for delivery Tuesday traded at $1.30/gal.
Argo has averaged a 0.93 cent premium over R11 since November 5, 2015.
Argo started trading at a premium to R11 as there was "too much supply in the rail market," an US ethanol trader said Tuesday, adding that the advantage of trading Argo had disappeared with the Argo terminal full.
Kinder Morgan's Argo, Illinois, terminal is the main trading hub for physical ethanol in the US.
But Kinder Morgan began redirecting ethanol deliveries on March 2 as the terminal neared its ethanol storage capacity. The terminal has hovered near capacity ever since and continued to turn away deliveries Tuesday.
Another source said the R11 market has only strengthened "relatively." The rail market is still oversupplied with product, but is currently stronger than the Argo market.
Platts Argo 5-15 day assessment dropped 6.5 cents in the past two trading sessions, while the Platts R11 assessment declined 5.95 cents over the same period.
Whether the relationship between the two markets will continue in this vein, sources said, was unclear. "These are new times for the market," said a source regarding what to expect in the coming days.
