Louis Dreyfus Ships Big U.S. Ethanol Cargo to Middle East -Traders
by Chris Prentice (Reuters) Louis Dreyfus Commodities has shipped a large cargo of U.S. ethanol worth over $17 million to the Middle East, traders said, stoking hopes among U.S. producers of renewed appetite from some buyers overseas.
Dreyfus, one of the world’s largest commodities merchants and a major ethanol player, is sending about 280,000 barrels of ethanol from the Port of New York to Jebel Ali in the United Arab Emirates, where it will be blended into gasoline for Iraq, according to four traders familiar with the move.
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The shipment represents almost double the average monthly U.S. exports to the country in 2014. For the UAE, it marks a return to the United States, the world’s top ethanol producer, after a buying opportunity opened up as ethanol prices returned to a discount over crude oil. Chicago Board of Trade ethanol futures traded around $1.48 a gallon on Thursday.
Without a government-mandated biofuels blending policy, the UAE typically buys on an ad hoc basis when economics are attractive.
The UAE accounted for about 8 percent of the 20-billion-barrel U.S. export market in 2014, but buying dried up late last year as crude oil crashed to below $45 per barrel in January, taking ethanol futures to a premium over gasoline for the first time since October 2011.
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Ethanol’s discount returned in February as crude’s sell-off ebbed, renewing hopes of discretionary blending of ethanol as an octane-booster in gasoline.
Foreign demand is critical for troubled U.S. producers, which face stiffer competition and uncertainty over government policy and domestic demand. Inventories are near their highest since 2012. READ MORE
