The latest World Agricultural Supply and Demand Estimates (WASDE) are bumping up the use of corn for ethanol in the 2011-12 marketing year.
According to the June 12 report, the 50 million bushels adjustment upward to corn usage for 2011/12 reflects the latest ethanol production and trade data. “Weekly ethanol production has increased since mid-April after gradually declining from the record levels of late December,” the report states. “The higher corn use projection assumes slightly lower ethanol production during the June-August quarter as compared with the same period last year.” The total for 2011-2012 now stands at 5.05 billion bushels, higher than the 5.021 of the previous year and the projected 5.0 billion for 2012-13.
The most recent Energy Information Administration data for ethanol production, the week ending June 1, showed an average of 904,000 barrels, or 37.97 million gallons, per day. For the month of May, the four week average for ethanol production was 907,000 barrels per day, which could bring the total for the year very close to 14 billion gallons if that pace continues.
Secretary of Agriculture Tom Vilsack is “disappointed” in recent Congressional action that would cut the use of biofuels by the military.
“We are extremely disappointed in that vote because I think it fails to recognize and appreciate the enormous potential of this industry to revitalize the rural economy,” said Vilsack during a conference call today when asked specifically about a vote last week by the Senate Armed Services Committee that would prohibit the military from spending money on alternative fuels. “I certainly hope that as this process continues folks will understand the negative impact such a vote has on rural America and will decide that the Navy, USDA and Department of Energy are on the right track to produce these new fuels.” The House Armed Services committee is considering a similar amendment to the defense spending bill.
Vilsack, pictured here during a visit to Pearl Harbor earlier this year to talk about military use of biofuels, said it is the right policy for the country. “People have got to understand we should not be so overly reliant on others for the supply of fuel,” he said, noting that commercial airlines are also very interested in the development of aviation biofuels.
The secretary indicated that he believes the oil industry is behind the movement in Congress to keep the military from using alternative fuels, just as oil interests are working to get rid of the Renewable Fuel Standard. “Because it is becoming a competitive alternative, and that is a good thing,” he said.
Listen to Vilsack’s comments here: Vilsack press conference questions
Advanced biofuels took a $200 million step forward on the march toward commercialization Wednesday with the official opening of Novozymes’ enzyme plant in Blair, Nebraska.
The inauguration of Novozymes’ new Blair facility was celebrated with employees, customers, community leaders and government officials, including the governor of Nebraska, Dave Heineman, U.S. Department of Energy Senior Advisor Jason Walsh and Blair Mayor James Realph. The governor and the mayor together ceremonially started the fermentation process at the plant. “The grand opening of Novozymes is important for the ethanol industry and for energy independence,” said Governor Dave Heineman. “Nebraska is one of the top producers of ethanol in America, which makes our state the perfect site for this facility.”
With the 100 new jobs created by the plant opening, Agriculture Secretary Tom Vilsack highlighted the importance of expanding tax credits for investments in clean energy manufacturing for the economy during a conference call today with Novozymes President Adam Monroe. Novozymes leveraged its $200 million private investment in the Blair facility with a 48C manufacturing tax credit from the federal government.
“This program (48C) along with several other tax credits really create the opportunity for a clean energy future with three very important results,” said Vilsack. Those results, he says, include increasing farm income, creating jobs, and reducing reliance on foreign oil.
Monroe says biofuels currently make up 16% of Novozyme’s $2 billion in revenues. “We’ve done a number of research projects funded by DOE and have reduced the cost of the key enzymes needed for advanced biofuels production by 90%,” he said. “Now it’s about getting steel in the ground and moving ahead. We wanted to be ready when this industry commercialized and now we are.”
Listen to comments from Secretary Vilsack and Adam Monroe here: Vilsack/Monroe press conference
Aviation and clean technology leaders have joined together to launch the Midwest Aviation Sustainable Biofuels Initiative (MASBI).
United Airlines, Boeing, Honeywell, the Chicago Department of Aviation and the Clean Energy Trust formed the initiative with the goal of advancing aviation biofuel development in a 12-state region of the central United States. MASBI will deliver “a comprehensive evaluation of the region’s biofuel potential and a plan to support regional and national needs in a responsible manner.” MASBI’s Advisory Council will include national leaders in advanced biofuels, such as the U.S. Department of Agriculture, U.S. Department of the Navy, other Federal agencies, non-governmental organizations and academic institutions.
“In just a few short years, aviation biofuels have developed from a hopeful vision of the future to an exciting reality of more than 1,500 passenger flights flown with advanced biofuels,” said Jimmy Samartzis, managing director of Global Environmental Affairs and Sustainability for United. “Our industry is committed to advancing sustainable biofuels, and United is proud to launch MASBI with our partners to define appropriate solutions to make alternative fuel available at commercial scale, unlock the Midwest’s economic potential for advanced biofuels and secure a sustainable future for aviation.”
MASBI Steering Committee members believe their efforts in promoting sustainable fuel supplies ultimately will spur economic growth, create jobs and promote energy security.
The first guess of corn production for the new year in USDA’s May 10 World Agricultural Supply and Demand Estimates report is even higher than many in the industry expected.
“By all accounts, it could be a monster,” says Renewable Fuels Association (RFA) Vice President of Research and Analysis Geoff Cooper who did an analysis of the numbers that came out this morning.
Besides a record projected corn crop for 2012 of 14.8 billion bushels, Cooper says there are a number of interesting points to be made about the report, like the fact that use for ethanol is expected to remain steady, while usage for exports and animal feed are increased. “This report shows the increases in demand would not be coming from ethanol,” Cooper says. “So all this rhetoric we hear about ethanol diverting corn away from the feed market, what we’re seeing in this report is that isn’t the case.”
In addition, Cooper says adding in the use of the ethanol co-product distillers grains for livestock feed, “you end up with the equivalent of almost seven billion bushels of corn and co-products going into feed use and that’s an all time record.”
Listen to Cooper’s analysis of the numbers in this edition of “The Ethanol Report.” Geoff Cooper Analyzes USDA WASDE Report
The first U.S. Department of Agriculture outlook for this year’s corn crop is calling for record yields and record production, while corn use for ethanol is expected to remain the same.
The May 10 World Agricultural Supply and Demand Estimates report projects U.S. feed grain supplies for 2012/13 at a record 416.3 million tons, up 16 percent from 2011/12 at a record 416.3 million tons, with corn production called at a record 14.8 billion bushels, up 2.4 billion from 2011/12.
A projected 5.1-million acre increase in harvested area and higher expected yields, compared with 2011/12, sharply boost production prospects. The 2012/13 corn yield is projected at a record 166.0 bushels per acre, 2.0 bushels above the 1990-2010 trend reflecting the rapid pace of planting and emergence. Despite the lowest expected carry-in in 16 years, corn supplies for 2012/13 are projected at a record 15.7 billion bushels, up 2.2 billion from 2011/12. Total U.S. corn use for 2012/13 is projected up 9 percent from 2011/12 on higher feed and residual disappearance, increased use for sweeteners and starch, and larger exports.
The report kept projected corn use for ethanol unchanged at 5 billion bushels for this year on weak gasoline consumption limiting domestic blending opportunities. In an analysis of the report this morning, the Renewable Fuels Association said, “While still just an estimate, the confidence USDA is displaying in American farmers underscores their unique ability to feed the world and help renewably fuel the nation. There is a lot of growing season left, and these numbers could change by the fall. But, with normal growing conditions it is clear that farmers will continue to meet the bell and provide safe, reliable food and clean, domestic fuel and silence those ‘chicken littles’ that perpetually predict a shortage of corn and catastrophe in the grocery aisle.”
The ethanol blend wall is still a reality for the industry, according to the chief economist with the U.S. Department of Agriculture.
“For the time being, I think we are at a blend wall and it’s a pretty hard wall,” said USDA’s Joe Glauber during a recent gathering of farm broadcasters in Washington DC. Glauber says the general feeling now is that the blend wall is about 13.5 billion gallons. “What gets produced in excess of that has to go out through the export market,” he said. “Last year we had a spectacular year, exporting more than a billion gallons, but most people think that won’t happen this year.” He expects Brazil in particular will not import as much ethanol this year.
While the industry is moving steadily toward the 15 billion gallon corn ethanol cap under the Renewable Fuel Standard (RFS2), Glauber says right now the market is steady at about 10 percent of ethanol blended fuel and getting E15 in the marketplace is moving slowly toward reality. “But you still have the underlying economics of whether or not a gas station is going to change over equipment to be able to sell E15,” he said. “The likely thing would be so-called blender pumps, which are expensive propositions.”
The expense of putting in blender pumps for stations can be offset by numerous federal, state and industry programs that offer grants and incentives to stations, but the oil companies are still putting up walls to discourage station owners from doing so. Last week, the American Petroleum Institute (API) proclaimed that EPA approval of E15 poses “serious safety and environmental concerns for consumers” because “an estimated half of all gasoline station equipment is not compatible with E15.”
Listen to Glauber’s comments here: USDA Chief Economist Joe Glauber
While there are some legitimate concerns with infrastructure, the industry is actively working with all stakeholders to address any safety issues regarding E15. “The nation didn’t have the infrastructure in place for a transcontinental railroad, but that didn’t stop us from moving forward because it was in the best interest of the nation. The same is true with America’s fueling infrastructure,” said Matt Hartwig with the Renewable Fuels Association (RFA). “Because some upgrades may be needed is no reason to accept the status quo as the best we can do.”
RFA has a website dedicated to E15 information (www.E15fuel.org), a misfueling mitigation plan to help retailers avoid confusion, and an E15 Retailer Handbook for gas station owners seeking to offer E15.
Secretary of Agriculture Tom Vilsack today urged petroleum companies to increase adoption of 15% ethanol blended gasoline (E15) to help decrease reliance on foreign oil.
“The availability of E15 will increase America’s energy security and spur additional job creation,” Vilsack said. “The Obama Administration has an ‘all-of-the-above’ to promoting domestic energy security, and increasing the percentage of ethanol to be blended with gasoline will help boost economic growth while lessening the nation’s dependence on foreign oil.”
Vilsack sent out comments in a news release today, shortly after the American Petroleum Institute held a press conference call charging that EPA approval of E15 “could result in serious safety and environmental problems for consumers” due to incompatible gasoline station equipment.
USDA notes that in order to enable widespread use of E15, the Obama Administration has set a goal to help fueling station owners install 10,000 blender pumps over the next 5 years. In addition, both through the Recovery Act and the 2008 Farm Bill, the U.S. Department of Energy (DOE) and U.S. Department of Agriculture have provided grants, loans and loan guarantees to spur American ingenuity on the next generation of biofuels. Before it can be sold, manufacturers must first take additional measures to help ensure retail stations and other gasoline distributors understand and implement labeling rules and other E15-related requirements.
Corn planting is running well above normal across the country, fueling speculation that this year’s crop could be huge.
The crop progress report this week shows that seven percent of the nation’s corn crop is now planted – more than double normal for this time of year. Progress in some Midwestern states has already hit double digits. Missouri has 23% of the crop planted compared to the five-year average of 8% and Illinois is at 17% where just 3% is normal. Huge gains were seen from the previous week in states like Tennessee, which jumped from 15 to 46% planted in a week, while Kentucky went from 5 to 32%. Normally, only 10 of the 18 top corn states have corn in the ground by this time of year but right now only North Dakota and Wisconsin have nothing to report.
Doing the math on the USDA Prospective Planting report predicting almost 96 million acres of corn this year and using only the five year average corn yield of 154.3 bushels per acre, there is the potential for a 14.8 billion bushel crop.
“Certainly if we have a trend yield, we’ll see record production and we should see substantial rebuilding of stocks,” said USDA chief economist Joe Glauber. “We were calculating with even 94 million acres we would see almost a doubling of stock yields.” That, he says, should moderate corn prices considerably which would provide some relief for both livestock and ethanol producers. The newest World Agricultural Supply Demand Estimate projects season-average corn prices at $6.00 to $6.40 per bushel.
The report also notes that corn to produce ethanol in 2011/12 is unchanged again this month at 5 billion bushels, while the latest monthly data from the Energy Information Administration (EIA) indicates that average daily ethanol disappearance fell to a 23-month low in January pushing ethanol stocks to a new record high. Weekly EIA ethanol production data suggest average daily ethanol production during February and March has continued to fall hitting its lowest level since early last fall.
Tomorrow at 1:30pm EDT, Ag Secretary Tom Vilsack will hold the first “USDA Virtual Office Hours on Twitter.” I’d recommend using TweetChat, Twubs or an app like TweetDeck or HootSuite to follow along. It looks like these planned monthly sessions will focus on different topics. Tomorrow it’s renewable energy. You’re asked to submit your questions via Twitter to either @USDA or #askUSDA.
Agriculture Secretary Tom Vilsack will sit down to answer YOUR questions on the Department’s renewable energy programs, and how USDA is helping build a secure energy future for America. He will be joined by Sarah Bittleman, USDA Senior Advisor on energy policy.
USDA Virtual Office Hours, a live question and answer series that will be held monthly, allows stakeholders to directly engage with USDA leadership and subject matter experts through Twitter. Sessions will be focused on a specific mission, issue or program, as aligned with the Department’s strategic goals and based on stakeholder interests.
In January, USDA launched www.USDA.gov/energy to serve as a one-stop shop for data and information about energy efficiency and renewable energy programs. This site allows individuals to learn more about USDA’s programs and see how their community can get involved in an expanding renewable energy and bio-based economy that is creating jobs and driving economic growth across rural America. To learn more about USDA’s accomplishments in renewable energy, read the results document HERE.
Remember to tune in online by following @USDA and using #askUSDA and #energy.