Evening Report (VIP) -- August 6, 2013

August 6, 2013 09:57 AM

EPA ISSUES FINAL 2013 RFS REQUIREMENTS... The U.S. Environmental Protection Agency (EPA) today finalized the 2013 percentage standards for four fuel categories that are part of the Renewable Fuel Standard (RFS) program. The final 2013 overall volumes and standards require 16.55 billion gallons of renewable fuels to be blended into the U.S. fuel supply (a 9.74% blend). This standard specifically requires: Biomass-based diesel (1.28 billion gallons; 1.13%); Advanced biofuels (2.75 billion gallons; 1.62%); and Cellulosic biofuels (6.00 million gallons; 0.004%).

In the rule issued today, EPA also announced it will propose to use flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes in the forthcoming 2014 RFS volume requirement proposal.

Renewable Fuels Association President and CEO Bob Dinneen said the announcement demonstrates the flexibility of the RFS. "First and foremost, by decreasing the cellulosic requirement by 99.4% to a very realistic, achievable number, the EPA has totally obliterated Big Oil's myth that the RFS is inflexible and unworkable. As in years past, the finalized annual requirements are a testament to the inherent flexibility that is the backbone of the RFS," he said.


CONSULTANT RAISES CORN YIELD; SOYBEANS UNCHANGED... Crop consultant Dr. Michael Cordonnier has raised his estimate of the U.S. corn yield by 1 bu. per acre to 154 bu. per acre to reflect his neutral to slightly positive bias toward the crop. But he warns that while cooler-than-usual temps have been beneficial during pollination, a prolonged growing season is needed to maximize yield potential.

"If the corn crop continues to develop at a slower-than-normal pace, then there will be a significant risk from frost for the latest planted corn in Iowa, Wisconsin, Minnesota, South Dakota and North Dakota," he says. "The ideal situation for the corn in (this area) would be if the first frost occurred two weeks later than normal, which would be early to mid-October."

Cordonnier 2013 estimates
in billion bushels

Meanwhile, Dr. Cordonnier left his soybean yield estimate unchanged at 42 bu. per acre and says he has a neutral bias toward the crop. "If there wasn't a back-end risk from frost, I would consider these cool temps beneficial, but there is a risk and I think any frost during September would negatively impact this year's late-planted soybean crop," he says.

Dr. Cordonnier says of the top 18 production states, he puts 28.1% of corn acres in the below-trendline yield category, 45.5% at trendline yield and 18.0% in the above-trendline yield category. For soybeans, he puts 19.1% of acres in the below-trendline yield category, 55.9% at trendline yield and 18.4% in the above-trendline yield category. All these comparisons are unchanged from last week, which include Iowa in the below-trendline category, Indiana in the above-trendline category and Illinois at trendline for both crops.


EIA LOWERS GASOLINE PRICE FORECAST... The Energy Information Administration (EIA) says rising crude oil prices and seasonal demand increases contributed to U.S. regular gasoline retail prices increasing from an average of $3.50 per gallon on July 1 to $3.63 per gallon on August 5. EIA expects gasoline prices to average $3.59 per gallon in the third quarter of 2013. The agency lowered its 2013 forecast by 11 cents to $3.52 and expects prices to moderate to $3.37 on average in 2014. Click here for additional details from our Inputs Monitor.


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