The Houston ethanol market's premium to the front-month Chicago ethanol swap remained at 10.5 cents/gal Friday as available product was tough to find despite high stocks.
"It's a combination of exports and poor [Union Pacific] performance," said one source.
The premium spiked to 14.25 cents/gal in late February, its highest since December 2016.
Houston is the largest export location for ethanol leaving the US and arbitrages to Southeast Asia and Brazil started the year wide open.
That has encouraged market participants to move product into Houston, raising stocks.
The Gulf Coast was responsible for 1.025 million barrels of a 1.137 million-barrel build in the week ended March 9, according to recent US Energy Information Administration data.
But even though stocks in the region surged higher much of the product is export-grade and cannot be used in the US market. That has left some traders looking for offers.
The Union Pacific railroad has also seen delays on many of its routes, which the company is working to address.
"As you likely know, our network is experiencing service challenges," said Beth Whited, Union Pacific's executive vice president and chief marketing officer, in an online statement Thursday.
That statement followed a similar one release in mid-February, which said the railroad would be activating locomotives from storage and increasing crew members.
In the Southern Region, specifically, Union Pacific is aiming to alleviate congestion, according to the statement.
"We have supplemented our workforce by deploying crews from other areas of the network to the Southern Region," Whited said. "In addition, we will be graduating 110 new crew members from training in the south between now and the end of the first quarter and 150 more in the second quarter."
