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After the conclusion of the biofuels meeting at the White House yesterday, Texas Senator Ted Cruz exhorted that it was a “win-win for everybody.” Iowa Senator Chuck Grassley was a bit more cautious but did praise the prospect of allowing E-15 to be sold year around but also noted that all the details have not been decided and that we have wait to review them before an assessment is made. The RIN markets exclaimed, “this sucks” and dropped 1/3 in value and down to the lowest levels since 2015. As I commented above, the proposed deal would allow the year around sales of E-15, which is not allowed in some metropolitan regions of the country in exchange for allowing RINs to be used on exported biofuels. One other voice the spoke up after the meeting was that of Emily Skor, CEO of Growth Energy, which is a Washington trade group representing many in the ethanol industry who stated that that the export idea was “nonsensical” and could prompt retaliatory tariffs. Great, all we need are more tariffs imposed on our products. Far be it from me to ever suggest that Senator Cruz would not have the best interest of the American farmer at heart, but I think I will side with the skepticism expressed by Senator Grassley and Ms. Skor for now.
RINs and biofuel blends are not the only things creating excitement in the energy sector this morning as the announcement by President Trump that he is reinstating sanctions on Iran, which would include crude oil, sent those markets higher in today’s trade. Do keep in mind that no US entities purchase Iranian crude, but they do account for around 3% of the global trade and the sanctions outlined would be leveled at foreign firms who do, including monies deposited in U.S. banks. The top 5 largest purchasers of crude from that nation are; China, South Korea, Turkey, Japan, and Italy. While all the details of the sanctions are yet a bit sketchy, it does appear that buyers will have until November to find other sources before anything takes effect. Of course, we are dealing with “futures” markets here that are always trying to “look,” and price forward and the news has sent us to the highest levels traded since November 2014.
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