EPA May Grant Few Biofuel Waivers
- The Environmental Protection Agency (EPA) could grant fewer waivers exempting small refineries from the country's biofuel policy as lower prices for blending credits known as RINS have helped reduced the cost of compliance.
- Under the U.S. Renewable Fuel Standard (RFS) program, refiners must blend certain volumes of biofuels like ethanol into their fuel each year or purchase RIN credits to offset production. Small refineries with a capacity of less than 75,000 barrels per day can get waivers if they prove that compliance with RFS would cause material financial strain.
- RINs, also known as renewable identification numbers, are methods to track production and are traded in the secondary market.
- Biofuel producing companies have complained that speculation in the RIN market has inflated prices and damaged profits.
- The Department of Energy should rule on allowed production cuts for 39 refineries that filed small refinery waivers.
- What It Means For The U.S. Farmer: The ethanol business for the 2018/19 marketing year has been complicated as margins are low and production has only recently declined. We believe that if production waivers are granted, local corn basis could weaken as demand would fall. We’re unsure how corn futures could react to the DOE granting production waivers. Depending on the details, production cuts could provide the USDA with support to reduce corn for ethanol use on the WASDE.
Argentina Soybean Production Estimates Rise To 56 MMT
- Timely precipitation has helped raise soybean yields and production estimates in Argentina.
- This week both the Buenos Aires Grains Exchange and the Rosario exchange also increased its estimate for the crop.
- On Wednesday the Rosario Exchange raised its soy output estimate by 2 MMT to 56 MMT.
- The Buenos Aires exchange also raised production estimates by 2 MMT to 55 MMT.
- The two exchanges are predicting the corn crop to fall between 46-48 MMT.
- The Buenos Aires exchange has meanwhile forecast a record wheat crop of 20.6 MMT.
- What It Means For The U.S. Farmer: We believe that production increases in corn, soy and wheat are not positive for the U.S. farmer as increased supply creates greater competition in the global export markets.
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