Sao Paulo — The Cielo di Salerno, laden with nearly 40 million liters of ethanol, is due to arrive in San Francisco on August 20 after leaving Santos, Brazil, on July 23, according to S&P Global Platts trade flow software cFlow.
The vessel, which represents the first US ethanol imports of 2018, was west of Peru Friday, according to cFlow.
According to the Brazilian producing group who traded the first 40 million liters, a further 250 million liters are already booked to leave Brazil and head to California in the coming months.
Sources have said Brazilian Real weakness in July may have opened the export arbitrage enough to book cargoes.
"We have sold that cargo at $540/cu m FOB Santos," the trader responsible for the export cargo said.
Plants from that producing group usually trade anhydrous ethanol with a Carbon Intensity of 46 and are certified by the US Environmental Protection Agency to generate Renewable Identification Numbers.
Domestic prices in Brazil have fallen in recent months as the ongoing sugarcane crop season pours product into the market at record rates.
Total ethanol production between April 1 and July 31 rose 38% year on year to 16.05 billion liters, according to sugarcane industry association UNICA.
Platts assessed FOB Santos anhydrous ethanol at $479/cu m Thursday, down from $495/cu m on Wednesday.
US prices have been mostly rangebound in recent months, which has not provided much support for the arbitrage.
Ethanol from Brazil typically flows to California as imports there generate both D5 RINs and Low Carbon Fuel Standard credits.
Lower D5 RIN values in 2018 have not helped the arbitrage, but LCFS credits have hovered near all-time highs above $190/mt in recent months.
The US Energy Information Administration has not reported any ethanol imports since the week that ended December 1, 2017.
S&P Global Platts Analytics estimates Brazil will export around 400 million liters of ethanol to California in 2018.
