Canadian National halts ethanol rail deliveries to Argo hub: sources

NEW YORK/CHICAGO (Reuters) - Canadian National Railway Co has halted deliveries of ethanol by rail to Kinder Morgan's Argo terminal near Chicago, citing congestion and oversupply, the company confirmed on Thursday.

The embargo, initially imposed on Sept. 5, could be lifted as early as Friday, the company said in an email to Reuters.

The delivery halt to the most important U.S. ethanol delivery point and home for benchmark cash pricing is the latest sign of a growing ethanol inventory glut amid escalating trade wars and flat domestic demand.

U.S. President Donald Trump's widening trade disputes have forced U.S. ethanol producers to seek new export markets or cut production.

The disruption to deliveries has not had an impact on prices, which are already at multi-year lows, traders said.

Canadian National said it imposed the embargo to manage the number of inbound cars at the facility.

"CN is currently working with its supply chain partners and customers to work through the built up inventory at the facility and restore inbound traffic," company spokesman Patrick Waldron said in an email on Thursday.

U.S. ethanol inventories have swollen to near-record highs in recent weeks.

Commodities giant Archer Daniels Midland has ramped up sales to the Argo trading hub in recent months, driving down prices in the U.S. Midwest and angering the company's rivals, according to traders and regulatory data.

"It's bad for them," said one trader. "It can really impact their ability to operate."

ADM did not immediately respond to requests for comment.

(Reporting by Jarrett Renshaw in New York and Michael Hirtzer in Chicago; Editing by Dan Grebler and Bernadette Baum)