Ethanol production hits highest level since December 2013... Ethanol plant production hit its highest levels in more than four months the week ended April 11. Production rose 43,000 barrels per day (bpd) to 939,000 bpd. Ethanol stocks declined 455,000 barrels to 15.95 million barrels, a 0.5% decline from last week.
Changing nature of oil production challenges transportation systems... In its latest edition of The Main Street Economist, the Federal Reserve Bank of Kansas City examines the challenges the U.S. petroleum oil industry faces in getting oil from newly opened fields in the middle of the country to refineries. According to the article, oil transportation in the central U.S. is undergoing a historic realignment in response to the recent shale oil boom.
Rising oil production in the middle of the country has increased inventories due to inadequate pipeline capacity, which caused a spread between the benchmark U.S. crude oil price in Cushing, Okla., and the global benchmark, Brent. These, in turn, have motivated the usage of alternate but costlier modes of transportation, such as rail, as well as increased pipeline capacity.
But even as pipeline capacity has risen, continual growth in oil production has caused the oil glut and the price spread to persist. As such, usage of alternate transport modes has grown, providing a boost to economic activity in areas where it occurs. And if new shale "plays" are tapped in other places not connected to pipelines, the trend in the usage of alternate transport modes could continue for some time.
Washington Consultant Jim Wiesemeyer points out the situation emphasizes the already important and needed debate about U.S. infrastructure. He says many sectors were caught unaware of logistical needs following the mega changes in the U.S. oil industry. The agriculture industry is also feeling the brunt of many years of inadequate funding to the transportation sector at all levels -- water, rail and port, etc., Jim continues. "With the mega changes in the business of agriculture expected to continue in the years and decades ahead, with the "rise of the rest" leading to more demand-pull markets and the need for imports, especially from the United States, this will make investments in all types of transportation necessary. That means some funding priorities will likely have to take place ahead," he says. Learn more.
Vermont one step closer to mandatory GMO food labeling... Vermont's Senate cleared a bill today to enact mandatory labeling of foods made with genetically modified organisms (GMO). The bill now heads back to the House to see if the chamber approves changes the Senate made to the bill. Vermont's House previously approved the measure. If the House and governor sign off on the measure, this would make Vermont the first state in the U.S. to enact mandatory labeling for foods made with GMOs. Also of note, the bill would make it illegal to describe foods containing GMOs as "natural or "all natural."
Other states have passed GMO labeling laws, but they included "trigger clauses" requiring other states to pass GMO labeling laws before the laws were enacted. This is not the case with the Vermont bill. If passed, the law would take effect July 1, 2016.
Meanwhile, representatives in the U.S. House last week introduced legislation that would establish federal voluntary labeling standards that would override any state labeling laws. However, this legislation is unlikely to advance.
BNSF to prioritize fertilizer shipments... The BNSF Railroad recently announced it will "increase velocity and efficiency for fertilizer shipments," in an effort to ensure dealers and farmers have enough fertilizer on hand to get the crop started. Farmers claim the rail system favors crude oil shipments over grain noting that as storehouses continue to fill, trains to haul grain away are not arriving on time if at all. That could cause some real problems at harvest and has already had a major impact on northern corn basis. But the immediate concern is now for fertilizer deliveries, which have already been delayed by as much as three weeks -- even longer in some areas.
But while the prioritization of fertilizer shipments may be enough to get fertilizer to suppliers on time, northern co-ops report their facilities average 85% full from last year's crop. If rail cars do not get that stored grain moving, there will not be much room to store this year's crop. But if grain shipments are too heavily prioritized through the summer, propane shipments will be delayed. Read more about this rail snarl from Inputs Monitor Editor Davis Michaelsen.
Dairy Forage Research Center Names New Director
BLM Criticized for Selling Horses for Slaughter