Small Biodiesel Maker Closing Indicative of RFS Problem

yokayo1While the closing of one small biodiesel maker in California might not seem like big news, it’s certainly indicative of the problems facing the industry, big and small producers alike. This story from the Ukiah (CA) Daily Journal says that Yokayo Biofuels, which turned waste cooking oil into biodiesel, has closed.

[Kumar Plocher, Yokayo Biofuels' CEO] says the biggest reason for their closure was due to a lack of government support both at the state and federal levels. He explains that the carbon credit programs, those where petroleum companies are required to buy a certain amount of renewable fuels, allowed his company to bank carbon credits, normally valued high based on demand. This year state and federal value levels were very low: the state’s due to tampering by global companies that flooded the market and at the federal’s due to the Obama administration and the EPA. “Every year the federal government is supposed to raise the requirement of renewable fuel that should be purchased. At the beginning of 2014, they did not do that; they kept it static. They waited until September to announce a tiny increase, and by that time the damage was done and carbon credits were worthless all year. Every mid-term election year, the dollar per gallon subsidy that goes to biofuels has been absent; they wait until after the election.”

Plocher’s complaint is a common one among advanced biofuel makers and their advocates this year. In fact, at the recent National Advanced Biofuels Conference & Expo, Michael McAdams, founder and president of the Advanced Biofuels Association, said the partnership between the federal government and industry has to have clarity and certainty, but that’s not been the case lately.

“What we haven’t had in the last two years is certainty for the people I represent in the advanced and cellulosic sector,” McAdams said.

Similarly, Bob Dinneen, CEO and president of the Renewable Fuels Association (RFA), pointed to the U.S. Department of Agriculture’s estimates that corn prices will hit an eight-year low because of the government’s failure to follow through on the promises made in the Renewable Fuel Standard (RFS).

“Indeed, today’s USDA report should be the closing argument in the debate over the 2014 RFS final rule,” Dinneen continued. “When farmers made their planting decisions for the 2014 season, they anticipated that the Environmental Protection Agency (EPA) and the White House would continue to enforce the statutory RFS volumes. But in one fell swoop, the EPA’s proposed rule wiped away demand for 500 million bushels of corn and grain sorghum. Now, farmers are faced with corn prices below the cost of production and the risk of returning to an era of increased reliance on federal farm program payments.”

There is a little good news in all of this. Plocher was able to sell Yokayo Biofuels’ biodiesel assets to like-minded Simple Fuels.

Crop Report Underscores Need for Market Certainty

The U.S. Department of Agriculture (USDA) has released new corn crop estimates that confirm another record setting corn crop and after accounting for the surplus after all demands are met, will hit a 10-year high. The WASDE report predicts the final 2014 corn crop at 14.48 billion bushels based on a record average yield of 174.2 bushels per acre In addition, WASDE estimated global grain stocks will reach a 14 year high.

While the corn crop is at record levels, corn prices are falling. USDA projected prices will average $3.40 per bushel – the lowest in eight years. This is also below the cost of production for more farmers.

“API [American Petroleum Institute] has spent millions upon millions of dollars on ad campaigns trying to sell people on the canard that ethanol drives up food prices in a misguided attCorn Harvestempt to garner opposition to the Renewable Fuel Standard (RFS),” said Bob Dinneen, CEO and president of the Renewable Fuels Association (RFA). “But their argument is bankrupt. Because of the RFS, farmers have invested in technology and increased yields to assure ample supply for all users. Today’s report demonstrates the API campaign is intellectually dishonest.

“Indeed, today’s USDA report should be the closing argument in the debate over the 2014 RFS final rule,” Dinneen continued. “When farmers made their planting decisions for the 2014 season, they anticipated that the Environmental Protection Agency (EPA) and the White House would continue to enforce the statutory RFS volumes. But in one fell swoop, the EPA’s proposed rule wiped away demand for 500 million bushels of corn and grain sorghum. Now, farmers are faced with corn prices below the cost of production and the risk of returning to an era of increased reliance on federal farm program payments. The White House has an opportunity to help alleviate this situation simply by fixing the badly misguided 2014 RFS proposal and getting the program back on track.”

Bioenergy for the Birds

A new research paper examines the relationship between bioenergy and the birds. The study, conducted by researchers at the University of Wisconsin-Madison (UW-Madison) in conjunction with the Wisconsin Department of Natural Resources (DNR) and published in PLOS ONE, looked at whether corn and perennial grassland fields in southern Wisconsin could provide both biomass for bioenergy as well as a bird habitat.

The answer is yes.

UW-Madison biofuels and bird studyThe study found that where there are grasslands there are birds. For example, grass and wildflower dominated field supported more than three times as many bird species as cornfields. And grassland fields can product ample biomass to be used to produce advanced biofuels.

Monica Turner, UW-Madison professor of zoology, and study lead author Peter Blank, a postdoctoral researcher in her lab, hope the findings help drive decisions that benefit both birds and biofuels, too, by providing information for land managers, farmers, conservationists and policy makers as the bioenergy industry ramps up, particularly in Wisconsin and the central U.S.

The research team selected 30 different grassland sites – three of which are already used for small-scale bioenergy production – and 11 cornfields in southern Wisconsin. Over the course of two years, the researchers characterized the vegetation growing in each field, calculated and estimated the biomass yields possible, and counted the total numbers of birds and bird species observed in them.

According to Blank and Turner, the study is one of the first to examine grassland fields already producing biomass for biofuels and is one of only a few analyses to examine the impact of bioenergy production on birds. While previous studies suggest corn is a more profitable biofuel crop than grasses and other types of vegetation, the new findings indicate grassland fields may represent an acceptable tradeoff between creating biomass for bioenergy and providing habitat for grassland birds. The landscape could benefit other species, too.

Among the grasslands studied, the team found monoculture grasses supported fewer birds and fewer bird species than grasslands with a mix of grass types and other kinds of vegetation, like wildflowers. The team found that the presence of grasslands within one kilometer of the study sites also helped boost bird species diversity and bird density in the area.

This is an opportunity, Turner said, to inform large-scale land use planning. By locating biomass-producing fields near existing grasslands, both birds and the biofuels industry can win.

Food Prices Still Up Despite Lower Corn Prices

With record corn production forecast this year comes lower corn prices, which makes the food versus fuel argument harder than ever to make, according to Growth Energy.

Total corn production is now projected at 14.475 billion bushels, 550 million bushels more than last year’s record, while the average price received by farmers is expected to be $3.40 per bushel, the lowest price in eight years.

Meanwhile, the United Nations Food and Agriculture Organization (FAO) reports the international food price index is down 6.0 percent over the last year, grain prices are down nearly 9 percent since 2013, but meat prices are nearly 22 percent higher than a year ago.

Domestic food prices are up 2.5 percent compared to December 2013, nearly the same as the overall Consumer Price Index, which is up 2.1 percent for the same period. But while corn and other grain prices are rapidly declining, consumer meat prices are up 11.6 percent since last December.

growth-energy-logo“The current WASDE projections and recent reports from the FAO and Bureau of Labor Statistics further confirm that there is virtually no correlation between U.S. ethanol production and consumer food prices,” said Tom Buis, CEO of Growth Energy. “Corn prices are below the cost of production for most farmers, and ethanol is selling approximately $1.00 per gallon less than the gasoline on the wholesale marketplace.”

“As integrated livestock and poultry companies brag about their record profits and margins to their stockholders and investment bankers, the Turkey Federation, National Chicken Council and The National Council of Chain Restaurants, all allies of Big Oil, continue their campaign to intentionally mislead Americans about the cause of rising food prices in the U.S,” Buis added.

USDA Increases Crop Forecast Again

il-harvest-14The harvest may be running a little slow right now, but the latest report from USDA’s National Agricultural Statistics Service is calling for a bit more corn than expected a month ago, adding to the already record forecasts.

Corn production is now forecast at 14.5 billion bushels, up almost one percent from the previous forecast and four percent more than last year. Corn yields are expected to average 174.2 bushels per acre, up 2.5 bushels from the September forecast and 15.4 bushels above the 2013 average.

The bigger crop mean lower prices and USDA’s latest World Agricultural Supply Demand Estimate also released today. Corn supplies for 2014/15 are now projected at 15,736 million bushels, up 129 million from last month, while season average prices were lowered 10 cents to $3.10 to $3.70 per bushel. Corn used to produce ethanol, distiller’s grains and other co-products is projected at 5.125 billion bushels, while corn consumption for feed is estimated at 5.375 billion bushels.

More Corn in the Bins

usda-logoThere’s more corn in the bins than there was a year ago at this time. USDA’s newest Grain Stocks report shows 1.24 billion bushels of old crop corn in all positions as of September 1, up 50 percent from the same time last year. Of the total stocks, 462 million bushels of corn were stored on farms and 774 million bushels were stored off the farm, up 68 and 42 percent from the prior year, respectively. The U.S. corn disappearance totaled 2.62 billion bushels during June-August, up from 1.95 billion bushels during the same period last year.

il-harvest-14Meanwhile, the corn harvest nationwide is running behind average for this time of year and just a bit ahead of last year, but the crop continues to look good.

According to USDA, the condition of the corn crop remains 74% good to excellent, 60% of the crop is mature, and 12% was harvested as of Sunday. All states are behind normal pace in the harvest.

The Illinois Corn Growers Facebook page has been showcasing harvest photos from around the state, including this one here submitted by Jordan Miles.

Orrie Swayze: EPA is Destroying Grain Prices

Orrie Swayze, from Wilmont, South Dakota is a long-time ethanol advocate and has been involved with the American Coalition for Ethanol (ACE) since its inception more than 20 years ago. He has been following the progress of the Environmental Protection Agency’s (EPA) writing of the final 2014 final rule for the Renewable Fuel Standard and as a retired farmer, he is not happy with their direction. While no one knows what the renewable volume obligations will be for obligated parties this year (yes, the EPA is way behind should be releases the proposed rule for 2015 in November) there is grave concern among the renewable fuels industry that volumes will be lower than mandated by the law and from years past.

orrieSwayze is speaking out. “The EPA deceitfully created E10 blend wall destroys free enterprise’s role deciding corn prices because it locks a potential new five billion bushel demand for corn out of the market,” he says. “Free enterprise cannot play a legitimate role in corn and auto fuels markets when EPA’s dishonest policies limit ethanol’s auto fuels market participation to ten percent. Countering free enterprise principles EPA picks gasoline as auto fuels market winner by deceitfully claiming high octane E30 is illegal to use in and damages standard auto engines.”

He notes that unlike gasoline, ethanol does not contain or emit harmful tailpipe emissions that are particularity harmful to children and the elderly. “Therefore it isn’t Clean Air Act defined tampering or illegal, as EPA alleges, to fuel standard autos with E30 because it decreases known human carcinogenic tailpipe/evaporative emissions 30 percent,” explains Swayze.

“Importantly, auto companies urgently request EPA to raise minimum gasoline octane levels,” he continues. “Autos endorse ethanol’s high octane E30 but ridicule low octane E15. E15 cannot provide E30’s air cooling turbocharging effect and 93 ‘safe’ octane that’s required for optimized, efficient high compression engines. Engines autos need to be competitive in international markets plus meet 2017 café standards.”

South Dakota farmers have a deep experience of producing corn and ethanol with the state producing nearly a billion bushels of corn plus a billion bushels of ethanol each year. “We all have hit EPA’s fraudulent blend wall evidenced by a dollar plus lower tumbling corn prices and necessarily all grain/ethanol prices,” says Swayze. “The economic impact of government’s war on E30 use in standard autos creating the e10 blend wall will obviously extort several billion dollars annually from SD’s economy alone.”

Swayze concluded, “Incredibly state government, corn and ethanol organizations assure the blend wall stands firm today: They irresponsibly agree with EPA’s big oil sponsored fabrications that built the blend wall: E30 is illegal to use in and damages standard auto engines.” He is asking corn growers associations and ag associations to stand firm on ethanol and be more proactive in fighting Big Oil who is perpetuating myths about ethanol.

FAPRI: Biodiesel, Ethanol Feedstocks Bigger than Expected

FAPRI logoA new report shows that the main feedstocks for biodiesel and ethanol, soybeans and corn, are going to have bigger harvests than previously expected. The Food and Agricultural Policy Research Institute at the University of Missouri says while the big crops will push prices for those feedstocks down – even further down than what was projected just a couple of weeks ago – soybean and corn prices will recover a bit as markets adjust.

- Larger corn and soybean crops translate into lower projected 2014/15 prices for many grains and oilseeds. Corn prices drop to $3.50 per bushel, soybeans to $9.92 per bushel… In all … cases, these projected prices are close to the midpoint of the price ranges reported in the September USDA World Agricultural Supply and Demand Estimates.

– Larger crops in 2014/15 also result in larger beginning stocks and total crop supplies in 2015/16. As a result, corn and soybean prices for next year’s crop are lower than projected in August. Corn prices average $3.80 per bushel in 2015/16, and soybean prices drop to $9.04 per bushel.

– Prices recover as markets adjust. Corn prices average $4.10 per bushel, soybeans average $10.21 per bushel … over the 2016‐18 period.

Previously, FAPRI said that corn prices would stay at about $4 per bushel for corn, but the new, bigger numbers for yield estimates push those prices down even more.

Ethanol Report: Ethanol Production, RFS & EPA

ethanol-report-adIn this edition of the Ethanol Report, Renewable Fuels Association (RFA) president and CEO Bob Dinneen discusses ethanol production for the year so far, new Renewable Fuel Standard (RFS) ad campaigns and gives his thoughts on the Environmental Protection Agency’s 2014 Renewable Volume Obligations that are under Office of Management and Budget (OMB) review.

In addition, he touches on record corn crop production, on why the food versus fuel debate should end and Quad County Corn Processors cellulosic ethanol production grand opening.

Ethanol Report on Ethanol Production, RFS Food EPA

Big Corn Crop Getting Bigger

usda-logoUSDA has increased its estimate of the corn crop again this month, building on already forecast record highs. Corn production is forecast at 14.4 billion bushels, up 3 percent from both the August forecast and from 2013 and yields are expected to average 171.7 bushels per acre, almost 13 bushels an acre higher than last year.

NCGA-Logo“It will be the fifth record crop that we’ve had in the last 12 years,” says National Corn Growers Association Vice President of Public Policy Jon Doggett, who commented on the crop during a during a Fuels America press call Thursday discussing the importance of EPA keeping the ethanol requirements under the Renewable Fuel Standard (RFS) going forward. “When the energy bill was passed in 2008, there was a challenge to the corn industry to produce the corn, and we have produced the corn,” he said, adding that farmers have done it so well that prices have fallen back below cost of production.

“The American farmer has done it again!” said Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA). “The innovation and rapid technology adoption we’ve seen in the corn sector over the past decade has been nothing short of astounding. The American farmer has again risen to the challenge to meet all demands for feed, food and fuel.”

RFANewlogoAs harvest ramps up in fields across the country, corn demand from the ethanol sector is ramping up as well. Dinneen notes that DOE projects 2014 ethanol production will be 14.3 billion gallons. “A decade ago, who would have dreamed that 14 billion bushels of corn and 14 billion gallons of clean-burning, domestically-produced ethanol would be the reality in 2014?,” he said.

Dinneen added that EPA’s proposal to reduce the 2014 RFS requirement for “renewable fuel” from 14.4 billion gallons to 13.01 billion gallons would effectively reduce demand for corn by some 500 million bushels, at a time when corn stocks are rising and prices are slumping to levels below the cost of production. “Now is not the time to artificially constrain demand for corn and tie the hands of the American farmer,” Dinneen said, urging EPA to “finalize a rule that returns the RFS to its intended trajectory.”

Dueling RFS Ads Have Same Tune

President Obama needs to overrule this misguided proposal from the EPA before it is too late and these new technologies move overseas. The fate of America’s advanced biofuel industry, along with the President’s clean energy legacy, are resting on his decision. Fuels America USA Today print ad

“Tell President Obama, stop playing politics – fix the RFS.”
American Petroleum Institute TV ad

fuels-americaBoth the American Petroleum Institute and Fuels America unveiled new media campaigns this week targeted at telling the White House what to do when it comes to volume obligations under the Renewable Fuel Standard (RFS). Both organizations held conference calls with reporters to announce the new campaigns.

The single, full page, USA Today ad that will run during Climate Week September 19-21 is a sharp contrast to the oil industry’s multi-million dollar television, radio, and online advertising campaign. “This has been a David and Goliath struggle all along,” said Brent Erickson with the Biotechnology Industry Organization on behalf of Fuels America. “The biofuels industry has been struggling against this Goliath oil industry that has spent millions and millions of dollars on ads.”

The biofuels industry ad stresses the opening of the first large, commercial-scale cellulosic ethanol plants this year and warns that “the companies and investors looking to deploy the next wave of cellulosic ethanol facilities have put U.S. investment on hold” until a decision on the future of the RFS is made. The API ad calls the RFS “Washington red tape” and blames ethanol for raising food prices and contributing to hunger, even though corn prices are lower than breakeven for farmers this year, according to National Corn Growers Association Vice President of Public Policy Jon Doggett. “We are selling corn today at about 35% of what we did just a couple of years ago, certainly below the cost of production for many of our growers,” he said.

API’s Bob Greco says they launched their campaign in part because of recent statements from EPA Administrator Gina McCarthy that the agency will raise ethanol requirements based on the latest gasoline demand figures for 2014. “Unfortunately, the administration seems to be playing politics with the RFS rule instead of doing what’s best for consumers,” Greco said. “You don’t have to be a political insider to see how the Iowa Senate race—and the White House fear of losing control of the Senate—plays into this decision.”

“Politics are being played on this issue by both sides,” said Doggett. “I don’t think anyone should be surprised.”

Fuels America is a “coalition of organizations committed to protecting America’s Renewable Fuel Standard and promoting the benefits of all types of renewable fuel already growing in America.” API is the “only national trade association that represents all aspects of America’s oil and natural gas industry.”

Listen to the Fuels America call, which also includes comments from POET-DSM’s Steve Hartig: Fuels America RFS Campaign call

Ethanol Report on Corn and Food Prices

ethanol-report-adIn this edition of the Ethanol Report, Renewable Fuels Association (RFA) Senior Vice President Geoff Cooper talks about how corn prices have fallen but food prices continue to rise, and how that shows the “food versus fuel” argument is false.

A new report from RFA compares corn prices to the price of dairy products, pork products, beef products, and poultry and egg products from January 2007 – July 2014.

Ethanol Report on Corn and Food Prices

Introducing Cellulosic Technology Cellerate

During the cellulosic ethanol celebration event at Quad County Corn Processors ethanol plant in Galva, Iowa yesterday, Syngenta unveiled the new brand for the cellulosic ethanol technology: Cellerate™. Enhanced by Enogen® corn enzyme technology, Cellerate is a collaboration between Syngenta and Cellulosic Ethanol Technologies, LLC.

Cellerate is unique in that it is designed to increase an ethanol plant’s production by Cellerate cellulosic ethanol technologyallowing the corn kernel fiber to be converted into cellulosic ethanol. Ethanol plants can easily integrate Cellerate process technology into their existing production process. Cellerate, in conjunction with Enogen corn, will deliver notable benefits to ethanol plants beyond what can be achieved through either technology alone.

“The combination of Cellerate and Enogen represents the next leap forward in ethanol production,” said Jack Bernens, head of marketing and stakeholder relations for Enogen corn enzyme technology at Syngenta. “Ethanol is helping America reduce its dependence on foreign oil, lower prices at the pump, improve the environment with lower emissions, and grow the economy with jobs that can’t be outsourced. Together, these technologies will make ethanol more sustainable.”

In July 2014, collaboration between Syngenta and Cellulosic Ethanol Technologies, LLC, a wholly owned subsidiary of Quad County Corn Processors (QCCP), produced the first commercial-scale cellulosic ethanol in Iowa.

“The synergy of Cellerate and Enogen will decrease natural gas usage and increase ethanol throughput, while reducing a plant’s carbon footprint,” said Delayne Johnson, chief executive officer of QCCP. “These advantages, combined with higher protein DDGs and increased corn oil production, make the technology package appealing for ethanol plants looking to improve their bottom line.”

RFA Releases Report to Debunk ‘Food v Fuel’

The Renewable Fuels Association (RFA) has released a new report today in an effort to “debunk” what they call the “fictional” food versus fuel debate. The report finds that while corn prices have dropped dramatically over the past two years, retail food prices of key foods including eggs, beef, poultry and pork have remained steady or continue to increase. The report concludes, “… fluctuations in corn prices do not significantly affect consumer food prices.”

RFA Corn Prices are plungingThe report examined a number of factors that contribute to food prices including the cost of food production, pointing to Citibank’s Sterling Smith who stated, “Corn prices may have come down 50% (from their highs), but that doesn’t mean a box of corn flakes will fall 50% in price. Much of the price of food comes from the processing and movement of food…” Additionally, the report also highlighted the role of crude oil in retail food prices, finding that “…every step in the food supply chain is significantly affected by energy costs—especially crude oil.”

The report also compared corn prices to the price of dairy products, pork products, beef products poultry products and egg products from January 2007 – July 2014. Report findings include:

Retail prices for key dairy items like milk and cheese have been largely unresponsive to changes in corn prices. In fact, since January 2011, milk and cheese prices have been negatively correlated to corn prices, meaning retail milk and cheese prices have tended to move in the opposite direction of movements in corn prices.

  • Retail prices for items (like chicken legs, frozen whole turkey, fresh whole chicken) have risen steadily and smoothly since 2007. Wide swings in corn prices did not interrupt or affect the gradual trend toward higher prices for these items.
  • Retail prices for pork products have not shown any meaningful relationship to corn prices over the past seven years. It is well documented that the recent acceleration in pork and bacon prices has been driven by piglet casualties resulting from Porcine Epidemic Diarrhea virus (PEDv). These retail price increases have occurred at a time when corn prices have been plunging.
  • Retail ground beef prices have steadily and smoothly trended higher over the past seven years, showing no obvious response to wide swings in corn prices.

“The food vs. fuel folks screamed to high heaven when the price of corn rose during the drought and immediately blamed high corn prices and ethanol for food price increases,” said Bob Dinneen, RFA president and CEO. “However, these same critics remain suspiciously quiet now that corn prices have dropped, but retail food prices aren’t dropping along with them. The food vs. fuel argument is just another misguided attack on biofuels and the Renewable Fuel Standard, which is reducing foreign oil dependence, lowering gas prices for consumers, and revitalizing rural America.”

AMRC Looks at Ethanol Plant Profitability Projections

Don Hofstrand, retired agriculture extension economist with the Agricultural Marketing Resource Center (AMRC) located at Iowa State University, has recently published projections for ethanol plant profitability over the next several years. When the ethanol boom really took off, Hofstrand noted that most farmers purchased shares in ethanol plants as a way to hedge against low corn prices. So AMRC began to look track the monthly profitability of ethanol plants.

hofstrandfigure5_E2C7BA3AB4D47“We track the monthly profitability by using the current ethanol prices, the current corn prices, distillers grains (DDGs) and natural gas. Each month we compute that and have a record going back to 2005 of how the profitability of those systems have changed over that period of time to give a indication of the current economic status of ethanol production and biodiesel production,” explained Hofstrand.

Today it appears that there is a saturated ethanol market that may cause an excess of corn supplies. However, Hofstrand said that over the past few years corn prices have been high taking a bite out of ethanol production profits. He finds there will be substantial uncertainly surrounding the ethanol selling price and net returns to the ethanol supply chain. This could be affected by rising corn production costs and where they will trend in the future is uncertain. He also finds that although energy prices may soften, interest rates are expected to strengthen, and with continued improvement in genetics, seed cost may continue to rise, but the rise may be offset by higher yields.

Ultimately, Hosftrand said that what is certain is that corn selling prices need to stay relatively strong in relation to historic levels to continue generating farm operator net returns from the marketplace.