The Platts Chicago Rule 11 ethanol premium to the Chicago Argo assessment jumped to its highest level in more than four months Tuesday on growing concerns about railcar availability, sources said.
The Rule 11 assessment rose 4 cents to $1.92/gallon, the highest level since September 10, when it was at $2.00/gal. As the Argo assessment added 3.85 cents to $1.7935/gal, the spread hit 12.65 cents, the highest R11 premium since June 4, when it was at 12.9 cents/gal.
The spread has risen 7 cents week on week after the R11 assessment was lower than the Argo assessment for much of September on cheaper railcar availability.
"Railroads are having issues again, and it could get ugly fast," one ethanol trader said.
After the R11 assessment averaged a 20.8-cent premium over the Argo assessment throughout the first six months of 2014 amid extreme railcar tightness and competition issues, the spread has plunged to average a minus- 0.28-cent discount since July 1.
But as winter approaches, with the chances of icy railroads tying up traffic in the Midwest, the R11 premium over Argo is expected to grow in the coming weeks, sources said.
