European T2 ethanol was assessed at an 11-month low Thursday after increasing beet-based supply due to reach the market in coming weeks incentivized buyers to wait and saw offer levels move lower, sources said.
T2 ethanol was assessed at Eur458/cu m ($542/cu m), down Eur12.25/cu m week on week, S&P Global Platts data showed.
The start of the month saw a Eur53.75/cu m drop in T2 over the first three trading sessions, partly caused by Spanish and South American cargoes landing in Rotterdam at the end of September, but also partly reflecting the start of the sugar campaign as EU sugar deregulation came into force.
As a result, part of the increase in supply from sugar-beet is already priced in and, indeed, the first parcels have been reaching the market since late September.
However, market participants expected the majority of beet-based volumes to arrive in November.
Sugar-beet represents a relatively smaller proportion in the European feedstock mix, around 16%-25% of total production, though any additional volume can have a large impact on values in an already well supplied market.
Although recent price drops have seen margins slimming considerably, exceptionally high margins over the past few months would have provided an incentive for European producers to run at full speed.
With beet-based volume added to the supply mix in a period of typically weak demand, T2 values may see further downside, sources said.
However, sharp drops on the prompt have meant the forward curve backwardation until December has flattened, so that any further declines are likely to be less dramatic.
