Falls across the global energy complex Wednesday combined with euro strength against the dollar have led some European ethanol traders to start looking at the possibility of an arbitrage from the US, sources said Thursday.
The Platts T2 ethanol assessment fell Eur4/cu m ($4.38/cu m) to Eur601/cu m Wednesday while the Chicago Argo assessment fell 5.25 cents/gal to $1.4045/gal. At the same time, the euro rose to $1.0948 from $1.0928 Tuesday.
"Oil is coming off, US is coming down, making import parity less negative [and] providing a roof to the market" one trader said of the weaker European ethanol market.
"The US going down with a stronger euro bringing the arb cap closer, grains down following Argentina...this is not an extremely bullish environment" a second trader said.
The arbitrage between the US and EU opened temporarily in November when the price of T2 ethanol hit its highest in three years -- Eur682.50/cu m on November 19.
The price has since fallen 12% but with falling US prices and relatively good demand in Europe for the time of year, the possibility of imports was increasing, a source said.
