USDA Lowers Corn for Ethanol Outlook

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COVID-19 took its toll on the April World Agricultural Supply and Demand Estimates released Thursday, especially for corn and soybeans.

This month’s 2019/20 U.S. corn outlook is for reduced imports, greater feed and residual use, lower food, seed, and industrial use, and larger stocks. Feed and residual use is raised 150 million bushels to 5.675 billion. This is based on corn stocks reported as of March 1 which indicated disappearance during the December-February quarter rose about 4 percent relative to a year ago. Lower forecast corn used for ethanol also supports larger feed and residual use. Corn used to produce ethanol is lowered 375 million bushels to 5.050 billion based on the latest indications from Energy Information Administration data indicating an unprecedented decline in ethanol production and motor gasoline consumption as a result of COVID-19. Partly offsetting is a forecast increase in the amount of corn used for alcohol for beverages and manufacturing use.

The decline in ethanol production is being felt in the livestock feed sector with less production of distillers grains. “Domestic soybean meal use is forecast higher with an expected reduction in available supplies of DDGs resulting from lower ethanol production. With higher crush only partly offsetting lower exports, seed, and residual use, ending stocks are projected at 480 million bushels, up 55 million.”

corn, Distillers Grains, Ethanol, Ethanol News, Soybeans, USDA

Ethanol Production Hits Record Lows

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The latest EIA Weekly Petroleum Status Report for the week ending April 3 hit some very troubling record lows as a result of the deepening impact on the ethanol industry from the social-distancing and stay-at-home restrictions associated with COVID-19.

According to EIA data analyzed by the Renewable Fuels Association, ethanol production plunged 20.0%, or 168,000 barrels per day (b/d), to 672,000 b/d—the lowest level since the EIA began reporting ethanol production statistics in 2010. Production was 33% below the same week in 2019. The four-week average ethanol production rate fell 9.5% to 888,000 b/d, equivalent to an annualized rate of 13.61 billion gallons.

The volume of gasoline supplied to the U.S. market, a measure of implied demand, hit a record low of 5.065 million b/d (77.65 bg annualized), the smallest volume since the beginning of EIA’s dataset in 1991. Refiner/blender net inputs of ethanol slumped to 502,000 b/d, equivalent to only 7.70 bg annualized, down over 45% from last year to the lowest level on record.

Meanwhile, ethanol stocks are hitting record highs, up 5.3% to a record 27.1 million barrels.

Ethanol, Ethanol News, RFA

10th Circuit Court Rejects Request for Rehearing

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The 10th Circuit Court of Appeals has rejected the request for a rehearing that was filed by two oil refining companies in response to the court’s unanimous decision Jan. 24 in Renewable Fuels Association et al. v. U.S. Environmental Protection Agency. The court found that EPA abused its statutory authority in issuing Renewable Fuel Standard compliance exemptions to small refineries and overturned three specific exemptions.

“We are pleased the 10th Circuit Court acted so quickly to deny the refiners’ baseless request for a rehearing,” said RFA President and CEO Geoff Cooper. “It’s time for EPA to immediately implement the 10th Circuit decision nationwide, starting with the pending 2019 petitions. There are no excuses left for further delaying implementation of this important decision that helps restore integrity to the Renewable Fuel Standard.”

American Coalition for Ethanol (ACE) CEO Brian Jennings said this is an opportunity for EPA to restore some certainty for the industry. “We always believed the appeal by HollyFrontier and CVR had no merit. Now, we fully expect EPA to comply with the law and end its mismanagement of the RFS. The economic fall-out of COVID-19 is causing substantial damage to the ethanol industry, and in this world filled with so much uncertainty, EPA can provide some much-needed certainty to the RFS by applying the Tenth Circuit Court precedent nationwide.”

ACE, EPA, Ethanol, Ethanol News, RFA

Senators Call on USDA to Help Biofuels Industry

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Iowa Republican Senators Chuck Grassley and Joni Ernst, along with Tammy Duckworth (D-IL), led a dozen more of their Senate colleagues in sending a letter to Secretary of Agriculture Sonny Perdue requesting additional funds be allocated to the biofuel industry through the Commodity Credit Corporation (CCC) during the unprecedented economic circumstances brought on by the COVID-19 pandemic.

“As the country follows the advice of local and state governments and remain at home, motor fuel use has rapidly decreased… The decrease in fuel consumption has left production facilities little choice but to idle production or close completely,” the senators wrote in the letter.

According to Renewable Fuels Association President and CEO Geoff Cooper, as of Monday, 41 ethanol plants with an annual production capacity of 3.2 billion gallons have been fully idled, while 66 plants have reduced their output rates by a collective 1.8 billion gallons. “Ethanol prices have plunged to record lows, stocks are at all-time highs, and plants throughout the Heartland are shutting down. As ethanol serves as the largest market for U.S. corn growers, the well-being of the ethanol industry is directly linked to farm income and the livelihood of farm families across the nation. We agree with the senators that providing assistance to the renewable fuels industry would be an appropriate and timely use of emergency relief funding appropriated to USDA.”

The historic Coronavirus Aid, Relief, and Economic Stabilization (CARES) Act provided an additional $14 billion to the CCC to help stabilize, support and protect farm income and prices while also maintaining balanced and adequate supplies of agricultural commodities.

Ethanol, Ethanol News, RFA

POET Takes Two Plants Off Line

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Number one ethanol producer POET will idle production at three of its of 27 bioprocessing facilities across seven states, joining dozens of other plants forced into that position around the country.

The South Dakota-based company will idle plants in Chancellor, S.D., Ashton, Iowa, and Coon Rapids, Iowa, and delay the start-up of its new plant in Shelbyville, Ind., as producers across the United States continue to grapple with the economic fallout of the ongoing COVID-19 pandemic. On an annualized basis, these operational changes are expected to reduce corn demand by 110 million bushels, freezing 330 million gallons of ethanol production across the four facilities. POET has also significantly slowed production and stopped buying corn at other facilities.

“Across the board, biofuel producers and our partners in the farm community face an unprecedented challenge,” said POET Founder and CEO Jeff Broin. “Unfortunately, plummeting fuel demand amid the coronavirus pandemic has overwhelmed markets already suffering from continued trade barriers, a foreign price war over oil and regulatory uncertainty here at home.”

Growth Energy CEO Emily Skor says the POET plants join a growing list of plants that have cut or halted production in California, Iowa, Idaho, Illinois, Indiana, Kansas, Michigan, Minnesota, Nebraska, Ohio, Oregon, and South Dakota. “At this rate, nearly half of America’s biofuel production could soon be offline. These plants support hundreds of thousands of jobs, including a highly-skilled manufacturing workforce that rural America cannot afford to lose,” said Skor. “We urge policymakers to act swiftly to expand markets for higher biofuel blends, lift regulatory barriers to vital markets, and ensure that financial assistance is available to farmers, workers, and rural businesses hit hardest by the crisis.”

Ethanol, Ethanol News, Growth Energy, POET

ACE: COVID-19 Exposes Flaw in RFS Rulemaking

Cindy Zimmerman 1 Comment

The American Coalition for Ethanol is urging the Environmental Protection Agency (EPA) to address a shortcoming in the implementation of the Renewable Fuel Standard (RFS) which has been exposed with the recent nosedive in gasoline use as a result of COVID-19.

ACE CEO Brian Jennings explains that the world is very different today compared to the end of December. “At the time EPA set the 2020 RFS blending requirement and renewable volume obligation (RVO), the Agency projected gasoline demand would approach 143 billion this year. Today, due to the social distancing from COVID-19, as gasoline demand falls, it leads to reductions in ethanol blending, meaning the 11.56 percent RVO will not result in the use of 20.09 billion gallons in 2020 as required by statute. Without adjusting the percentage of renewable fuel volume obligated parties must use in 2020, EPA will be violating the RFS statute which amounts to an illegal waiver of blending volumes.”

Jennings says ACE is calling on EPA to use existing statutory authority to issue an interim final rule by July 1 to increase the RVO for 2020 to the percentage necessary to ensure that the full 20.09 billion gallons required by law are used. He adds that, based on the recent Tenth Circuit Court precedent regarding small refinery exemptions (SREs), EPA should deny most of the 25 SRE waivers pending for the 2019 RFS compliance year.

In this interview, Jennings also discusses how ethanol plants are faring and other actions the government could take to ease the pain.

Interview with ACE CEO Brian Jennings (11:16)

ACE, Audio, EPA, Ethanol, Ethanol News

Farm Bureau Details COVID-19 Impact on Ethanol

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Agricultural commodity prices are taking big hits from the COVID-19 emergency, and one of the most hard hit sectors is ethanol, according to the American Farm Bureau Federation (AFBF).

In the past month, dairy prices have dropped 26-36%, corn futures have dropped by 14%, soybean futures are down 8% and cotton futures have plummeted 31%. Hog futures are down by 31%, prices paid to cattle ranchers have fallen 25%, and ethanol prices are down 35%.

Abiding by travel restrictions, people are driving far less, pushing down demand for both oil and ethanol made from corn. A 35% drop in ethanol prices caused some plants to stop production, further depressing corn prices. The sudden change also cut off the supply of dried distillers grains — a byproduct of ethanol production and source of high-protein feed — for livestock producers, who are left scrambling to find a replacement.

AFBF Economist Veronica Nigh says another impact from the decline in ethanol production is in meat processing, which uses the byproduct CO2. “Ethanol plants are the largest producers of CO2 in the U.S.,” said Nigh.
AFBF Economist Veronica Nigh on ethanol declines (1:11)

During a telephone press call on Friday, Minnesota cattle producer Peter Bakken said he uses distillers grains for 25% of his feed and while his local ethanol plant is still operating, he is being rationed.
Comments from MN cattle farmer Peter Bakken (1:37)

AFBF, Ag group, Audio, Distillers Grains, Ethanol, Ethanol News

REG in Newton Seeds Monarch Fueling Station

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The Renewable Energy Group (REG) biodiesel plant near Newton, Iowa is growing a monarch fueling station.

Local Pheasants Forever representatives recently conducted a seeding of native grasses, milkweed, and other plants that attract pollinators. The mixture has a special emphasis on milkweed plants, the only plant monarchs can lay their eggs on.

Iowa Renewable Fuels Association (IRFA) Habitat Establishment Coordinator Kevin Reynolds helped REG get started with the project last year. He said while the majority of the plants will spend the first growing season developing roots, there will be some growth in the spring.

“It will take the habitat a few growing seasons to become fully established but some species will pop up as early as this coming spring,” Reynolds said. “It takes some patience in the beginning but after the first few years REG will be on their way to making an important impact for the monarch butterfly.”

REG – Newton’s Monarch Fueling Station spans one and a half acres. To prepare for seeding, plant employees previously focused on eliminating non-native grasses from the area.

The Monarch Fueling Station Project was established by the Iowa Renewable Fuels Association (IRFA) in partnership with the Iowa Monarch Conservation Consortium in December 2017.

Biodiesel, Ethanol, Ethanol News, Iowa RFA, pollinators

RFA Economist Discusses Ethanol Production Declines

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While the industry knew ethanol production was dropping due to coronavirus impacts on the transportation sector, the actual numbers from the Energy Information Administration for the week ending March 27 were sobering. A drop of more than 16 percent in a week to the lowest level in six and a half years.

But Renewable Fuels Association (RFA) Chief Economist Scott Richman says the consumption side shows more troubling signs. “Gasoline demand was down roughly a quarter, versus the previous week and the previous year,” said Richman. In addition, refiner/blender net inputs, which is a measure of ethanol demand, was down by a third.

In this interview, Richman also talks about how the $2 trillion economic stimulus bill will help ethanol plants, how planting intentions might change, and ethanol plants making hand sanitizer.

RFA chief economist Scott Richman analyses EIA numbers (9:26)

Audio, corn, Ethanol, Ethanol News, RFA

EIA Data Confirms Plummeting Ethanol Production

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The latest EIA Weekly Petroleum Status Report released today for the week ending March 27 is the first to reflect more fully the impact on the ethanol industry from the social distancing and stay-at-home restrictions associated with COVID-19.

According to EIA data analyzed by the Renewable Fuels Association, ethanol production plummeted 16.4%, or 165,000 barrels per day (b/d), to 840,000 b/d, the lowest level in six and a half years. The decline was the largest since the EIA began reporting ethanol production statistics in 2010. The four-week average ethanol production rate declined 5.8% to 981,000 b/d, equivalent to an annualized rate of 15.04 billion gallons.

Ethanol stocks rose 6.5% to a record 25.7 million barrels, eclipsing the previous high set four weeks prior. Inventories shifted higher across all regions except the Midwest (PADD 2). A majority of the stocks build took place in the Gulf Coast (PADD 3), where inventories grew by roughly one-quarter.

The volume of gasoline supplied to the U.S. market for last week sank over 24 percent compared to the previous week and 27.1% lower than a year ago to the smallest volume since the week of Jan. 28, 1994.

In addition, the amount of ethanol blended (Refiner/blender net inputs) last week was the lowest level ever reported by EIA, at 601,000 barrels/day, dropping 31 percent from the previous week and almost 34 percent from a year ago.

Ethanol, Ethanol News, RFA