The Chicago Rule 11 ethanol assessment soared Tuesday to a Platts record high amid mounting logistics issues with rail delivery, sources said.
Chicago R11 ethanol was assessed at $3.16/gal, up 10 cents from Monday and $1.07/gal from one month ago to the highest level since Platts began the assessment on September 1, 2011.
Sources said the bullish sentiment was being pushed by the same issues involving sluggish railcar return times that have boosted all physical ethanol delivered markets in recent weeks.
"No one has barrels, and all the sellers know the buyers need the supply," one rail ethanol broker said. "People are still having logistics issues, and a lot of the March supply is already locked in on a term basis. So there's not as much material available in the prompt."
R11 ethanol for this-week-shipment was heard traded at $3.16/gal shortly before the Platts assessment window on Tuesday afternoon, leaving multiple sources bewildered by the explosive run-up in prices.
"Crazy, crazy stuff," one trader said. "Never seen anything like it."
The premium of R11 product over ITT Argo ethanol reached a Platts record 89.05 cents Tuesday, after hovering around a 10-cent differential -- both plus and minus -- to Argo for the vast majority of 2013.
"That's what's unreal," said another trader, referring to the premium. "The spread is nuts."
Market participants said they expected buying interest to continue to firm in the coming weeks as multiple Midwest plants have been forced to go idle as they have reached their maximum plant production storage capacity.
A typical Midwest ethanol production facility has about seven to 10 days of storage capacity, but producers are now facing delays of at least a week for locomotives to arrive, sources said.
