Hurricane Harvey is expected to have a muted effect on US Gulf Coast ethanol and biodiesel prices, sources said Friday, though the impending storm had many out of the office seeking safety.
"All the traders in biodiesel in Houston are off the desk as of this afternoon, battening down the hatches," one biodiesel source said.
With most production in ethanol located in the Midwest and biodiesel distributed across the country, output is unlikely to suffer a hit from the storm.
The National Hurricane Center expects the storm to make landfall on the central Texas coast as a Category 3 hurricane late Friday or early Saturday morning, and has warned of severe flooding.
As most of the market for ethanol in Texas is for blending or export, sources expected few impacts. Some refineries along the US Gulf Coast began shutting down in advance of the storm; with less production in the region, blending at racks is likely to slow in the coming days, leading to lower ethanol demand.
The rail market into Houston could be affected, but with less blending happening, the trains might not be needed until after the storm when blending spikes as people return to evacuated areas.
Exports have slowed in recent months as US ethanol prices have climbed relative to destinations abroad, so market participants expected little effect on possible cargo loadings. Pilots stopped boarding in the Houston Ship Channel early Friday.
The Texas coast does host some biodiesel plants, which were eying the storm like their petroleum counterparts.
REG spokesman Anthony Hulen said the company's Houston-area plant was beginning to close up shop Friday.
"With the safety of our employees always coming first, we made the decision this morning to begin shutting down our Houston plant."
He added that the plant would not resume activities until the storm was safely past. Any supply needs would be picked up by the company's other plants.
