Ethanol and the Corn Supply-Demand Picture

Cindy Zimmerman

According to USDA, global corn production for 2011/12 is projected at a new record high of 867.5 million tons, despite a smaller crop here in the U.S.

global cornThe latest World Agricultural Supply Demand report estimates the U.S. crop was down 3.5 million tons this year compared to last year, but foreign corn production is expected to be 43.4 million tons higher, with China alone up 7.3 million tons this month based on the recently released government estimates. USDA is now predicting the 2011/12 season-average farm price for corn will be about 30 cents lower than previous estimates at $5.90 to $6.90 per bushel.

On the demand side, corn for food, seed, and industrial use was lowered 5 million bushels and projected corn ending stocks were increased by 5 million bushels to 848 million. Corn for ethanol use remains unchanged at 5 billion bushels, which is slightly lower than last year, despite the fact that ethanol production this year is on pace to possibly be as much as a billion gallons more than 2010.

As we head into 2012, ethanol is like to be the wild card in the corn demand situation with the expiration of the Volumetric Ethanol Excise Tax Credit (VEETC) at the end of this year. “That could potentially change how much ethanol is blended into gasoline,” said USDA chief economist Joe Glauber. “There are mandates in terms of overall production that has to be blended into gasoline, the issue is how much gets produced above and beyond the mandates.” However, industry analysts expect ethanol prices are expected to drop 30-40 cents per gallon at the wholesale level after the blenders tax credit expires, which should serve as an incentive to blend as much if not more.

“Domestically, it will depend on the profitability of ethanol price versus gasoline and whether or not it pays to blend above the mandates,” said Glauber.

corn, Ethanol, Ethanol News, USDA

Doing the Ethanol Shuffle

Cindy Zimmerman

Ethanol Report PodcastThere’s a hot new craze called the “Ethanol Shuffle” that’s sweeping seaports from Sao Paulo to Los Angeles. No, it’s not a new dance, this shuffle is all about the “confounded realignment of the global ethanol trade.”

rfaRenewable Fuels Association (RFA) Vice President of Research and Analysis Geoff Cooper wrote about the “Ethanol Shuffle” this week on the RFA E-xchange Blog. Basically, it’s about the shuffling of sugarcane ethanol from Brazil to California to meet that state’s Low Carbon Fuels Standard (LCFS) – at the same time, Brazil is importing lower priced corn ethanol from the United States to make up for not only the ethanol it is exporting to California, but the shortfall that country has experienced in ethanol production recently.

So, that’s how the “Ethanol Shuffle” works. California imports sugarcane ethanol from Brazil rather than corn ethanol from Nebraska or Kansas; and in turn, corn ethanol from the Midwest travels to Houston or Galveston via rail, then is shipped to Brazil via tanker to “backfill” the volumes they sent to the U.S. Picture the irony of a tanker full of U.S. corn ethanol bound for Brazil passing a tanker full of cane ethanol bound for Los Angeles or Miami along a Caribbean shipping route.

Cooper explains the sweet irony of it all in this edition of “The Ethanol Report.” Geoff Cooper on the Ethanol Shuffle

Audio, Brazil, Ethanol, Ethanol News, Ethanol Report, Exports, RFA

2012 Ag Events Calendar

Cindy Zimmerman

zimmcomm calendarZimmComm New Media is proud to announce the very first (that we know of) Ag Events Calendar.

This slick 10×15 wall calendar includes dates for all the major ag-related and biofuels events in 2012, along with photos each month from the 2011 events that we covered. There’s photos from the National Biodiesel Conference, National Ethanol Conference, Commodity Classic, Iowa Corn Indy 250, American Ethanol NASCAR, Farm Progress Show and much more.

We ordered a limited number of the calendars to give to some of our clients for Christmas, but then discovered that there are lots of other folks out there who would like to get a copy, so we are ordering more and offering them for sale.

For just $20 each plus $2 shipping/handling, you can get your very own 2012 Ag Events calendar here:

Order 2012 ZimmComm Ag Events Calendar.

Company Announcement

IRFA Elects 2012 Board of Directors and Officers

Iowa RFAThe Iowa Renewable Fuels Association (IRFA) elected its new 2012 Board of Directors and executive committee during its annual meeting last week.

2012 IRFA Board of Directors include Brad Albin, Renewable Energy Group, who will serve as president; Rick Schwarck, Absolute Energy, vice president; Steve Bleyl, Green Plains Renewable Energy, treasurer and Brian Cahill, Southwest Iowa Renewable Energy, secretary. Monte Shaw, IRFA executive director, is a non-voting member of the board of directors.

Those who were elected to join the IRFA officers on the executive committee for 2012 include Walt Wendland, Golden Grain Energy, who is the IRFA past president; Tom Brooks, Western Dubuque Biodiesel, at-large and Craig Willis, ADM, at-large.

Each producer member has a seat on the board and votes on officers. New officers will serve a one-year term during the 2012 calendar year.

Biodiesel, Ethanol

OriginOil and Idaho National Lab Partner for Research

OriginOil has a new research agreement with the Department of Energy’s Idaho National Laboratory (INL) to collaborate on establishing industry standards for algal biomass.

Under the terms of the agreement, OriginOil will provide INL with its Single Step Extraction technology and contribute its knowledge of how to stimulate oil production and pre-treat for consistent extraction of the algae and its co-products. In return, OriginOil expects to benefit from INL’s scientific and engineering expertise and its large Process Demonstration Facility which boasts advanced biofuels processing capabilities and equipment. A primary effort will be to integrate algae with terrestrial biomass sources to achieve large-scale biofuels production.

Under this agreement INL will assist OriginOil by conducting evaluations of processes and technologies that may help find solutions to converting algae into energy feedstocks more efficiently by optimizing and standardizing various formats.

“The U.S. Navy alone plans to achieve 50 percent use of alternative fuels in just eight years, a goal of eight million barrels of biofuels per year that must be blended from non-food fuels like algae,” said Riggs Eckelberry, OriginOil’s CEO. “But to blend, we must standardize, using the latest breakthrough technologies.”

advanced biofuels, algae, Research

Ethanol Industry Wants Cellulosic Incentives Continued

Cindy Zimmerman

Advanced biofuel producers are calling on Congress to take action now to ensure that tax incentives for cellulosic ethanol continue past 2012.

RFA AECIn a letter to Congressional leaders, the Advanced Ethanol Council (AEC) asked for a multi-year extension of the Cellulosic Biofuels Producer Tax Credit (PTC) and the Special Depreciation Allowance for Cellulosic Biofuel Plant Property, both of which are set to expire December 31, 2012.

AEC Executive Director Brooke Coleman noted in the letter that the incentives “are vital to the ongoing development of the domestic advanced ethanol industry. To ensure stability in the marketplace, and prevent unnecessary job losses, Congress should provide long‐term extensions of these provisions (5+ years).”

As new ethanol biorefineries are beginning construction, the AEC emphasized the importance of consistent federal policy to this kind of multi-billion dollar investment.

“The advanced and cellulosic biofuels industry is now in the process of building new plants, innovating existing production facilities with emerging technologies, and introducing new product streams that will allow the renewable fuels sector to become more profitable, diversified and efficient,” wrote Coleman. “Several billion dollars have been invested in advanced biofuels development with the expectation that Congress will stay the course with regard to its commitment to the industry. A tax increase on advanced biofuels at this time would curtail investment and undercut an industry just starting to close deals and break ground on first commercial plants.”

The AEC is asking Congress to extend these important tax incentives this year as part of a final tax extenders package as they are set to expire next year. “As Congress considers the extension of a number of tax provisions for the clean energy sector, we would also like to highlight the importance of timing. The mere prospect of the expiration of the PTC and Special Depreciation Allowance for cellulosic biofuels in 2012 will start to affect projects that take 18 months to build, and could drive our industry into a series of ‘fits and starts’ that has dampened investment in other domestic clean energy sectors for decades.”

advanced biofuels, AEC, Cellulosic, Ethanol, Ethanol News, Government, RFA

Ethanol Groups Oppose Legislative Proposal

A number of ethanol supporting organizations recently sent a letter to the chairman and ranking members of the U.S. Senate and House Appropriations Committees urguing them to oppose a proposal by Reps. John Sullivan (R-Okla.) and Gary Peters (D-Mich.) that would delay commercialization of next generation ethanol.

Growth EnergyThe groups, which includ Growth Energy, the Renewable Fuels Association, the American Coalition for Ethanol and the National Corn Growers Association, oppose a proposal by Sullivan and Peters to include language in the FY12 omnibus appropriations package that would prohibit the U.S. Environmental Protection Agency (EPA) from using any appropriated funds to implement the E15 waiver.

The Sullivan-Peters proposed language — which did not receive a vote during this year’s appropriations process or a hearing in the Energy and Commerce Committee — is aimed at derailing and altering the long-standing process by which new fuel blends are brought into the marketplace. The EPA approved E15 after a more exhaustive study and data collection than any other of the 11 previously-approved fuel waiver petitions.

RFAThe letter from the organizations noted that “preventing the EPA from implementing the use of E15 for cars, pickups and SUVs made in model year 2001 and newer, further contributes to our nation’s reliance on foreign oil. Extensive testing has been done on E15 and it has been found to be a safe and effective fuel for use in the vehicles approved in the waiver. There has been no evidence to the contrary that would indicate problems in any vehicle regardless of vintage.”

Further, the EPA’s decision does not make E15 mandatory. Consumers are not required to use E15. Gas stations will not be required to sell E15. And the EPA will require a fuel label that clearly delineates that using E15 in model year 2000 vehicles, small engines and marine engines is illegal.

Lastly, the Sullivan-Peters language would inhibit new and innovative alternatives to fossil fuels. We are looking toward cutting-edge innovation to move to new ethanol feedstocks, like plant wastes, wood chips and switchgrass. The Sullivan-Peters language would solidify the status quo-a 90 percent mandate of our fuel supply from oil and would prevent American-made ethanol from being made available to consumers.

Ethanol, Ethanol News, Growth Energy, Legislation, NCGA, RFA

Farmers See Biodiesel and Bioheat Use in Big Apple


About 20 U.S. soybean farmers are in New York City this week to see the how the Bioheat Industry is gaining momentum. The National Biodiesel Board (NBB) is hosting the group. Bioheat is biodiesel mixed with home heating oil. Starting in October, 2012, all heating oil sold within New York City will contain at least two percent biodiesel.

The group will tour CME Group, the world’s leading and most diverse derivatives marketplace where energy is bought and sold. There they will have an educational session on the Bioheat market and hear from the president of the New York Oil Heating Association and a New York City Councilman.

In addition, the group will see the biodiesel facilities of the New York City Department of Parks & Recreation and the Port Authority of New York and New Jersey. Both use biodiesel blends in their diesel vehicles as does the Department of Sanitation.

Those three agencies use about 11 million gallons of biodiesel blends a year, ranging from 5 to 50 percent biodiesel (B5 – B50), according to Steven Levy of Sprague Energy, a biodiesel supplier in that area. The farmers are also visiting the facilities of Metro Energy, one of the largest petroleum distributors in New York City and the northeast. In 2009 the company sold 10 million gallons of biodiesel to be used as Bioheat in New York City alone. They are building a 110 million gallon biodiesel production facility in Brooklyn.

The biodiesel and Bioheat Industries have been supported by farmer-led groups including NBB, the United Soybean Board and the soybean checkoff.

Biodiesel, NBB

Pacific Ethanol Raises $8 Million in Stock Sale

Cindy Zimmerman

Pacific EthanolPacific Ethanol reports that they have entered
into a “definitive purchase agreement with a group of institutional investors to raise $8.0 million in a private placement transaction.” In addition, the company has signed purchase agreements to acquire an additional 7% interest in the Pacific Ethanol production facilities, according to a company news release.

Of the net proceeds from the financing, $4.6 million will be used for the purchase of the additional 7% ownership interest in New PE Holdco LLC, the owner of the four Pacific Ethanol production facilities with a combined annual production capacity of 200 million gallons. Upon closing, the company’s total ownership interest will increase to 34%. On October 6, 2010, the company paid $23.3 million in cash for its initial 20% ownership interest, and on November 29, 2011, the company purchased an additional 7% ownership interest for $4.5 million.

The company lost those four plants in a bankruptcy case last year.

Ethanol, Ethanol News

Ethanol Exports Remain Strong

Cindy Zimmerman

The latest government data on exports for October shows continued strong demand overseas for U.S. ethanol.

Renewable Fuels AssociationAccording to the data, exports of denatured and undenatured ethanol which are not eligible for VEETC totaled 121.4 million gallons. That is just short of the record 127.4 million gallons of exports set in July 2011.

On the Renewable Fuels Association E-xchange Blog, RFA’s Vice President for Research and Analysis Geoff Cooper notes that Brazil continues to be the leading destination for U.S. exports, receiving a total of 50 million gallons in October. Canada and the EU continued to be other top export markets. Through the first 10 months of 2011, U.S. exports stood at 867.9 mg, more than double the 2010 export total. The U.S. is on pace to export more than 1 billion gallons in the calendar year.

Meanwhile, the U.S. imported 13.1 mg of ethanol for fuel use from Brazil in October, presumably for compliance with the Renewable Fuel Standard’s (RFS) advanced biofuel requirement and California’s Low Carbon Fuel Standard (LCFS). Imports of sugarcane ethanol from Brazil have picked up significantly in recent months at the same time U.S. exports of corn ethanol to Brazil have grown.

Cooper says that this “shuffling effect” will be the subject of an extensive analysis and blog post he is preparing for this week.

Read more from the E-xchange Blog here.

Ethanol, Ethanol News, Exports, RFA