US Atlantic Coast spot fuel ethanol prices Wednesday hit their highest level year-to-date, with sourcing pegging New York Harbor July-delivered barges at $3.03/gal on sustained buying interest following legislative efforts to end the 45 cents/gal federal blending credit by month's end.
In early July, three US senators proposed to axe the nearly $6 billion/year subsidy to refiners and blenders as part of fresh efforts to trim the US fiscal budget.
September Chicago Board of Trade corn futures Wednesday morning were trading at $6.98/bushel, nearly flat from Tuesday.
On Tuesday, Platts assessed New York Harbor July barges at $3.025/gal, and August barges at $2.9750/gal.
Sources said that the New York Harbor ethanol market was "exceptionally long," and that one reason was heightened interest arising from players intending to benefit from the blending credit before it is repealed.
"You have this sudden pressure on the prompt market, because everyone wants to blend some ethanol into their gasoline and get the credit," one trader said.
The strength in prices also spiked the inter-month spread in ethanol, as the backwardation between the front-month and second-month widened to an average of 7 cents/gal July 1 through July 19, compared with an average of 1.1 cents/gal over June.
"Its likely to come off somewhat," another trader said, referring to the increasingly unlikely chance of an end to the blending credit and its associated 54 cents/gal import tariff by July 31.
