Ethanol prices soar as rail delays prompt producers to reduce supplies

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, March 26, 2014 -- The same weather-induced rail congestion that has plagued the transportation of grains and other commodities is also taking a toll on ethanol supplies and driving prices up to nearly three-year highs.

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Analysts say the inability to move ethanol out of Chicago to other parts of the country, particularly east, has caused producers to lower production and reduce supplies to the point that April prices rose Monday on the Chicago Board of Trade to just more than $3.00 per gallon, a price higher than that for gasoline futures and a level not seen since July 2011.

Harsh winter conditions have slowed trains down and resulted in fewer rail cars per train. That, combined with more rail cars being turned over for hauling a surging amount of crude oil, has left railroads with insufficient capacity to haul ethanol, wheat and other products.

Analysts say ethanol plants that usually see trains return within a matter of weeks now have to wait months. The BNSF Railroad said earlier this month that it was experiencing delays of at least 15 days.

Still, industry officials say the return of warmer weather is expected to improve rail shipping conditions within the next several weeks and that ethanol production will return to levels necessary to ensure adequate supplies.

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