The front-month New York Harbor ethanol market's premium to the Chicago paper has fallen to a four-month low Tuesday as high stocks and low demand weighs on prices.
"October premiums fell as October stocks were long," said one source. "November premiums are only slightly lower."
Liquidity for the October Chicago ethanol swap has fallen as the month is more than halfway done. But S&P Global Platts assessed October New York Harbor barges at an unchanged 5.25-cent premium to November swap Tuesday, the narrowest premium in four months.
Inventories in the East Coast hub have been high for several weeks as product backed up following Hurricane Irma's assault on the Southeast US.
Barges from New York Harbor can be used to supply the lower East Coast, such as Florida and Georgia.
But Irma disrupted logistics along the East Coast. Regular shipments into Florida and Georgia were delayed by the storm and its path of destruction.
With abundant product in New York Harbor interest has waned.
The US Energy Information Administration said East Coast ethanol stocks were 974,000 barrels higher than the same time last year in the week ended October 6.
The year-on-year climb came despite a 173,000 barrel decline on the week.
And the problem is likely to persist as trading interest shifts to November.
"Buying interest in November seems pretty light, so the November premium might start to fall when it becomes the prompt month."
Demand is currently entering its seasonal low as gasoline consumption falls. Without significant demand for ethanol there's little support for the market.
Another source said the New York Harbor market is simply unattractive for trade right now with poor demand and high product availability.
"New York Harbor is not healthy," he said.
