Ethanol-Gas Price Difference Back to Normal

Ethanol and gas have settled back into a more normal price differential after three months of being nearly the same after gas prices started to plummet late last year.

RBOB - Reformulated Blendstock for Oxygen Blending

RBOB – Reformulated Blendstock for Oxygen Blending

Renewable Fuels Association president and CEO Bob Dinneen notes that “wholesale ethanol prices traded near parity with—or even above—gasoline prices intermittently in November, December, and January,” but since the end of January, ethanol prices “have been below gasoline prices every day.”

Dinneen refuted a statement by the Petroleum Marketers Association of America that ethanol was “taking a hit” because of the price parity noting that “since January 1, 2011, daily ethanol prices have been below gasoline prices 91% of the time” averaging about 50 cents per gallon. Since January 30, 2015, ethanol has averaged 26 cents less than gasoline.

Market analyst Randy Martinson with Progressive Ag says there was definitely a concern when ethanol prices were higher than gasoline in December. “But the price of corn has dropped and we’ve gotten ethanol back in line and the profitability is improving for ethanol plants,” said Martinson, who adds that the bigger concern for ethanol declining gasoline use.

Methes Biodiesel Maker to Refine Corn OIl

Methes1A Canadian company has bought a Methes Energies International Ltd. biodiesel processor and will make the gaining plant the first facility in the world to use Methes’ pre-treatment system to process corn oil from a local ethanol plant. This Methes news release says the Denami 600 biodiesel processor and a PP-MEC pre-treatment system will be installed in Havelock, Ontario, Canada, for Drain Bros and will come from Methes’ Mississauga facility.

John Loewen, COO of Methes said, “We are glad to have finalized this transaction and to be able to use the Denami 600 in Mississauga. The Denami 600 has recently been used for research, testing and marketing but has not been used in commercial biodiesel production in over two years so it made sense for Drain Bros and Methes to move it to their location. More importantly, we will be installing a pre-treatment system that will be running on corn oil and we’ll have the ability to showcase the technology in action to other potential clients. This is a major milestone and we are looking forward to help Drain Bros with their new biodiesel facility.”

Furthermore, Methes announced on January 20th 2015 that it had entered into an agreement to license its technology to a US client in exchange for an upfront payment of $4 Million which, as per the agreement, was due February 20th, 2015. Methes provided an extension to the payment date to allow its US client to finalize a pending transaction. At this time, though they express continuing interest in the transaction with Methes, they still have not finalized their other pending transaction.

The refiner will take about 3 weeks to dismantle the equipment at the Mississauga facility.

Ethanol Supporters Counter Funding Request

houseEthanol and agriculture industry groups sent their own letter to House Appropriations leadership in response to a group of lawmakers calling for the elimination of funding for blender pumps or corn ethanol export promotion.

The letter signed by the Renewable Fuels Association, American Coalition for Ethanol, National Farmers Union, National Corn Growers Association, and Growth Energy calls on the subcommittee to “vehemently oppose and reject any efforts to include such limiting language” in FY 2016 appropriations for USDA.

It is important to note at the outset that there already exists a prohibition on the US Department of Agriculture using grant funds for the installation of blender pumps, which was included in the recently passed Farm Bill. Now, in a blatant effort to shelter the oil and gas industry from any further competition from ethanol, Representatives Goodlatte, et al. are seeking to place limitations on the U.S. Department of Agriculture’s efforts to help promote the consumption of American made ethanol at home and abroad; something that agency has been successfully doing with other agriculture and livestock products for decades.

Reps. Bob Goodlatte (R-VA), Peter Welch (D-VT), and Jim Costa (R-CA), claim in their letter that the government has created an “artificial market” for ethanol that is “negatively impacting American consumers, livestock farmers, food producers, retailers, air and water quality, and the ability to feed our nation’s hungry.” The ag and ethanol groups responded that “corn prices today are below the prices witnessed in 2007 when the Renewable Fuel Standard was expanded and livestock feed costs are at their lowest levels in more than five years…Meanwhile, consumer food prices have advanced more slowly since passage of the RFS than in the 25 years prior to its enactment.”

Read the letter here.

Appropriations Request Targets Corn Ethanol

A group of Congressional representatives wrote to the House Appropriations leadership this week specifically asking that any funding to help install blender pumps or promote corn ethanol exports be eliminated from the USDA budget.

growth-energy-logoIn response to the letter, Growth Energy CEO Tom Buis said “the request is neither helpful nor logical,” and also “unnecessary since there is already a prohibition on USDA funding blender pump grants in the 2014 Farm Bill.”

The letter was signed by 18 mostly Republican members of Congress, led by Reps. Bob Goodlatte (R-VA), Peter Welch (D-VT), and Jim Costa (R-CA), who claim that “the federal government’s creation of an artificial market for the ethanol industry is negatively impacting American consumers, livestock farmers, food producers, retailers, air and water quality, and the ability to feed our nation’s hungry.”

“This request stems from a flawed and inaccurate argument that has been disproven time and again,” said Buis. “The government is not creating an artificial market for ethanol, but the RFS is seeking to level the playing field and ensure alternatives to fossil fuels have market access so consumers are given a choice instead of a de-facto mandate to use petroleum based products.”

The 18 members of Congress who signed the letter represent ten states – California, South Carolina, Texas, Florida, Georgia, Vermont, Virginia, Oregon, Pennsylvania, and Wisconsin.

Biofuels Leaders Defend RFS

Holding a press conference in advance of the American Petroleum Institute continuing its call to repeal the Renewable Fuel Standard (RFS), representatives of the ethanol and advanced biofuels industry and corn growers defended the law and the fuel.

mess-rfsGrowth Energy CEO Tom Buis said the oil industry is making the same old arguments about ethanol that are simply not true, but he thinks the industry received a good boost over the weekend “when six out of nine of the Republican presidential candidates that came to the Ag Summit expressed support for the RFS.”

National Corn Growers Association (NCGA) first vice president Rob Elliott of Illinois talked about how the facts dispel the perpetual myths about food versus fuel. “Corn prices are now below cost of production … so obviously food prices have not followed a similar path,” he said.

Adam Monroe, president of enzyme producer Novozymes, said if Washington gives in to pressure by the oil industry to weaken the RFS it will keep second generation biofuels from going forward. “It makes it tremendously difficult for us to bring in new investors and spend more money,” he said.

Renewable Fuels Association president Bob Dinneen says no matter what ethanol critics say, there is now real world data that shows no detrimental effects have occurred as a result of the RFS and he encouraged reporters to question API. “Ask them to explain the fact that the price of corn is lower than it was when the RFS was passed,” he said, noting also that food price inflation has been lower, the dead zone has gotten smaller, and hunger worldwide has fallen.

Conference Call with Renewable Fuel Industry Leaders

New USDA Report Shows Ethanol Increasing Efficiency

Patriot Renewable Fuels in Annawan, Illinois

Patriot Renewable Fuels in Annawan, Illinois

The amount of corn necessary to make a gallon of ethanol is less than previously believed according to a new U.S. Department of Agriculture report.

In today’s monthly World Agricultural Supply and Demand Report (WASDE), corn use for ethanol production was projected 50 million bushels lower based on the new Grain Crushings and Co-Products Production report recently released by the National Agricultural Statistics Service (NASS), citing “a higher rate of conversion than previously assumed” as the reasoning for the adjustment.

“What is most remarkable about this supply and demand report is the light it sheds on a topic of great concern to U.S. corn farmers – recognition of the growing efficiencies in the ethanol industry,” said National Corn Growers Association (NCGA) President Chip Bowling, a Maryland corn farmer. “For many years, we have strongly asserted that the ethanol industry continues to improve and those productivity gains should be taken into consideration. With the simple justification offered for the analysis, USDA made a great step forward in showing its growing appreciation for the advances made in ethanol production and, thus, the ever-increasing benefit it offers Americans.”

While USDA estimates for corn use in ethanol production were lowered by 50 million bushels, the overall drop was partially offset by higher than expected production over the winter months. The demand decline was more than offset by projected increases in demand for corn from the export and feed and residuals markets of 50 million bushels each.

Projected ending stocks were lowered by 50 million bushels in light of the other adjustments. Average farm price estimates were raised by five cents at the midpoint to $3.50 to $3.90 per bushel.

Syngenta Ups Ethanol Output, Growers’ Profits

syngenta1Agribusiness company Syngenta is working with ethanol producers to have a variety of corn that produces more ethanol at the refinery and makes more profit for the feedstock growers. The company says that growers of its Enogen variety of corn, specifically engineered to increase ethanol production, will receive some more incentives to grow the grain.

According to Chris Tingle, head of Enogen and Water Solutions for Syngenta, ethanol plants are increasingly seeking not just clean, dry corn with little or no damage or foreign material, but also grain with quality characteristics that can help maximize ethanol production.

“A growing demand for high-quality feedstock is creating opportunities for growers to increase their income per acre,” Tingle said. “By supplying the quality grain that ethanol plants want all year long, growers can maximize profitability, while helping to support the ethanol industry.”

Syngenta designed the Ethanol Grain Quality Solution specifically for growers who plant Enogen®, Golden Harvest® and NK® Corn hybrids. Its goals are to raise yields and drive grain quality through effective insect control, early-season weed management, glyphosate weed-resistance management, and Crop Enhancement (the Syngenta global business focused on minimizing the effects of nonliving factors, such as heat, wind and rain, on plants). The Ethanol Grain Quality Solution provides the ethanol plant and its growers more high-quality grain, while improving return on investment.

“Growers with an Enogen contract can receive an additional 10 cents per bushel premium above the current Enogen contract premium by following agronomic protocols outlined in the Ethanol Grain Quality Solution,” Tingle said. “Plus, growers who have purchased Golden Harvest or NK Corn can receive 10 cents more per bushel for any additional bushels of corn produced under the Ethanol Grain Quality Solution protocol, provided those bushels are delivered to the ethanol plant.”

Ethanol producers say Syngenta’s Ethanol Grain Quality Solution is providing a better ethanol feedstock for their plants, and since the farmers get the premium for growing Enogen, they are also able to achieve higher yields because they can afford some of the inputs that maximize production.

Biofuels and Ag Groups Protest Anti-RFS Bill

mess-rfs U.S. Senators Pat Toomey (R-PA) and Dianne Feinstein (D-CA) today introduced legislation that would abolish the corn ethanol mandate in the Renewable Fuel Standard (RFS), with Sen. Jeff Flake (R-AZ) as a co-sponsor. The move was immediately criticized by both ethanol and agricultural organizations.

“Senators Feinstein and Toomey continue to operate under the misguided assumption that the RFS is driving food prices higher” said Renewable Fuels Association (RFA) president Bob Dinneen. “It is not. Corn is less expensive today than when the RFS was passed! As the World Bank recently concluded, ‘most of the contribution to food price changes from 1997-2004 and 2005-2012 comes from the price of oil.’”

“Just like their previous failed attempt, this legislation is incredibly shortsighted,” said Growth Energy CEO Tom Buis. “Nearly identical legislation has been introduced in the past and has always failed to gain any traction since a majority of senators understand the importance of homegrown, American renewable fuels. This bill would eviscerate the RFS – the most successful energy policy enacted in the last 40 years.”

National Farmers Union (NFU) President Roger Johnson says the Corn Ethanol Mandate Elimination Act would “cripple rural America’s economy and be an enormous step backwards for America’s goal of energy independence by a decade or more.”

National Corn Growers Association
board member Keith Alverson of South Dakota added that Congress should not turn its back on success with renewable fuels. “The Renewable Fuel Standard is working,” said Alverson. “With a second consecutive record crop, there is more than enough corn to meet all demands for food, fuel, feed, and fiber. Corn farmers have more than met our commitment on the RFS. There are many good reasons to continue this policy, and we look forward to working with Congress to support it.”

Fuels America held a telephone press conference to discuss the legislation on Thursday with Dinneen, Alverson, POET’s Jeff Lautt, BIO’s Brent Erickson, and Advanced Ethanol Council’s Brooke Coleman. Listen or download here: Fuels America press conference on Toomey-Feinstein bill

Mycogen Seeds Joins Growth Energy

growth-energy-logoMycogen Seeds, the national retail seed company of Dow AgroSciences, has joined Growth Energy as a premiere associate member.

“We applaud Mycogen Seeds for recognizing the role ethanol plays in strengthening American agriculture and for supporting our nation’s homegrown food, feed and fuel solution,” said Growth Energy CEO Tom Buis. “Ethanol is fueling our future by creating jobs, improving the environment and increasing our nation’s energy independence, while also providing consumers with a choice and savings at the pump. We look forward to collaborating with Mycogen Seeds, a leader in seed innovation.”

mycogen-seeds-logoDamon Palmer, marketing director for Dow AgroSciences’ U.S. seed business, commended the partnership. “Our support of Growth Energy will help promote the importance of a strong ethanol industry for U.S. farmers. It’s about partnering with others in the Agriculture industry to develop markets for today and the future.

Mycogen Seeds’ partnership with Growth Energy supports ethanol as a market option vital to corn growers throughout the U.S.

USGC Helped Move DDGS Exports in 2014

usgc-winter-grayThe U.S. Grains Council (USGC) held its winter meeting last week in Costa Rica where more than 250 delegates met to take a look back at last year and assess export opportunities.

Chairman Ron Gray says one of big issues of 2014 was with the ethanol co-product distillers grains (DDGS) and China. “At the end of the year, our exports were one of the highest years for DDGS on record,” said Gray. “The Grains Council was instrumental in mitigating that process so that trade can continue.”

Gray, who is a farmer from Illinois, believes it’s important for producers to be involved in trade policy. “I think combines would be easier to fix than trade policy,” he said. “We try to address the next problem so we can keep trade moving.”

Gray says U.S. sorghum picked up some exports to China last year to pick up the slack caused by the biotech trait issue with corn, which allowed them to remain active in the market, but ultimately it’s the growing demand for corn that is benefiting farmers back home.

USDA Secretary Returns to Commodity Classic

classic14-vilsack-stageU.S. Secretary of Agriculture Tom Vilsack will visit the Commodity Classic next week for the sixth year in a row to address the annual convention and trade show for corn, soybean, wheat and sorghum growers. The secretary will deliver a keynote address to several thousand farmers and ag allies during the event’s General Session on Friday, Feb. 27, in Phoenix, Arizona.

“We’re thrilled to be welcoming Secretary Vilsack back to Commodity Classic,” said National Corn Growers Association President Chip Bowling. “With so much going on in our nation’s capital that impact their lives, the audience will be eager to get his report on the top issues facing our growers, such as trade and the farm bill. He always provides an experienced, deep-inside-Washington perspective.”

The 20th annual Commodity Classic takes place Feb. 26-28, 2015, at the Phoenix Convention Center.

Anti-RFS Bill Re-Introduced

Representatives Bob Goodlatte (R-VA), Jim Costa (D-CA), Steve Womack (R-AR) and Peter Welch (D-VT), today re-introduced legislation called the RFS Reform Act “to reform the Renewable Fuel Standard (RFS) to help ease concerns created by the ethanol mandate and protect consumers, livestock producers, food manufacturers, retailers, and the U.S. economy.”

Livestock and poultry producer organizations are among those supporting the bill, but general farm groups and corn growers say the RFS is working fine just the way it is.

mess-rfs“The elimination of the corn-based ethanol mandate and blend cap will gut the nation’s biofuel production, strand existing investment in second generation biofuel production and hurt family farmers, ranchers and rural communities that have experienced much-needed reinvestment from this policy,” said National Farmers Union president Roger Johnson. “This is not only a bad step for agriculture, but also is a major setback to the environment and our nation’s attempts to manage its carbon emissions.”

National Corn Growers Association president Chip Bowling notes that “the price of corn today is lower than the cost of production, and less than when the RFS was passed” and that “repealing the RFS would increase the cost of farm programs, hurt rural communities, and make America more dependent on foreign oil.”

Renewable Fuels Association President and CEO Bob Dinneen called the legislation a “reckless paean to Big Oil” and said it was “a slap in the face to corn farmers across the country who responded to the RFS with increased production and yields.”

Growth Energy CEO Tom Buis
says the bill is also a gift to Big Food “in their effort to extend their record profitability by blaming ethanol for food price increases” even as corn prices have been declining. “This has provided an economic boon to the integrated U.S. livestock and chain restaurant industries that tout their profitability to their stakeholders while consumer food prices, led by the meat sector, continue to escalate,” said Buis.

According to the sponsors, the RFS Reform Act “eliminates the corn-based ethanol requirement, caps the amount of ethanol that can be blended into conventional gasoline at 10 percent, and requires the EPA to set cellulosic biofuels levels at production levels.” There are currently 34 co-sponsors for the bill.

Corn and Ethanol Groups Blast Report

A report critical of corn-based ethanol is being blasted by groups representing the corn and ethanol industries as being the same old arguments that have been roundly rejected and criticized by the scientific community and disproven by the empirical data, as well as smacking of Big Oil’s efforts to discredit an American success story. The National Corn Growers Association (NCGA), the Renewable Fuels Association (RFA) and Growth Energy all released statements critical of “new” research from the World Resources Institute, where Tim Searchinger and Ralph Heimlich re-hash their already disproven theories of “food vs. fuel” and “Indirect Land Use Change.”

ace14-dc-alversonSouth Dakota corn grower and a member of the Corn Board Keith Alverson said:

“This ‘new’ study is just more of the same, tired arguments Big Oil have been using for years. They simply are not true. In fact, numerous studies by independent, unbiased third parties have come to vastly different conclusions.

The fact is, ethanol is a very efficient energy source. When calculating the amount of energy used to produce ethanol, from farm to pump, ethanol represents a 40 percent net energy gain. No other energy source comes close. Ethanol is also better for the environment: reducing greenhouse gas emissions by 110 million metric tons, the equivalent of taking 20 million vehicles off the road.

There is more than enough corn to meet all demands: food, fuel, feed, and fiber.”

nafb-14-dinneenBob Dinneen, the Renewable Fuels Association’s president and CEO, said:

“Providing a cursory update of a failed theory is not science and does nothing to enlighten the debate about biofuels. For the better part of a decade, lawyer-activist Tim Searchinger has been promoting the flawed notion that increased biofuel use places unnecessary constraints on finite agricultural land resources. But, the “land use change” and “food vs. fuel” arguments are as wrong today as they were seven years ago when Searchinger first gained notoriety with his doomsday predictions…. In fact, Iowa State University’s Center for Agricultural and Rural Development put this issue to bed last November, finding that ‘…the primary land use change response of the world’s farmers in the last 10 years has been to use available land resources more efficiently rather than to expand the amount of land brought into production.’”

fps12-buisTom Buis, CEO of Growth Energy, released the following statement:

“The World Resources Institute’s latest report repackages old, previously debunked food and fuel, as well as Indirect Land Use Change (ILUC) myths in attempts to discredit an American success story, one that is producing both food and fuel, while also improving our environment. Slapping a new title on this previously discredited research won’t change the facts—the American farmer is more than capable of producing an abundant amount of food, feed and fuel, and the air we breathe and our environment, as a whole, is better off for it.”

Buis added that without biofuels, the U.S. actually “might be producing less, not more food, in order to control the expansion of surplus stocks and assistance payments to farmers.” In addition, WRI fails to mention the last two record corn crops, falling corn prices, and co-products such as distiller’s grains that displace the need for other livestock feed crops and reduce the net acreage used to produce ethanol.

Corn Growers: Not the Time to Cut RFS

ncga-logo-newTwo record corn crops and low prices for the grain – that’s not the time the U.S. should be cutting the amount of ethanol to be mixed into the nation’s fuel supply. That’s the message coming from the National Corn Growers Association, as the group laments the fact that altering the Renewable Fuel Standard (RFS) couldn’t come at a worse time.

“Corn ending stocks – the amount above and beyond current demand – are estimated at nearly 2 billion bushels this year, thanks to two back-to-back record harvests,” said NCGA President Chip Bowling, a corn farmer in Maryland. “And with corn selling at low prices, any legislative attempt to cut one of our key markets will drive prices even further below cost of production. We have a policy that works well not just for the environment and energy security – but for the rural economy. We need to support farmers, not bankrupt them.”

NCGA also shot back at an attempt in the U.S. Senate to attach an anti-ethanol amendment to the Keystone XL pipeline legislation, pointing out the many benefits ethanol brings and why it’s an important part of the fuel supply.

“Corn ethanol is better for the environment than fossil fuels and has historically lowered the cost of filling our tanks by nearly a dollar,” said NCGA Director of Public Policy Beth Elliott. “It has been proven that ethanol does not have an impact on the price of food. The Renewable Fuel Standard is working – creating clean, renewable, American-grown energy and good American jobs.”

NCGA says it wants to work with the new Congress to support the RFS.

Retailers Expand E15 Availability

sheetzPennsylvania-based convenience store and gas station chain Sheetz has announced that 60 of its locations in North Carolina will offer 15% ethanol blended fuel (E15) by the spring of 2016.

Growth Energy CEO Tom Buis says the company has over 400 locations across Pennsylvania, Maryland, Virginia, West Virginia, Ohio and North Carolina. “Sheetz is a well-known leader in the fuel retail business and their decision to offer E15 shows they are in tune with an ever changing marketplace where consumers are demanding higher performance, lower cost renewable fuels grown right here at home,” said Buis.

“This is great news for the nation’s corn farmers who have been promoting the benefits of ethanol blended fuel for more than 30 years,” said National Corn Growers Association president Chip Bowling, a farmer from Maryland. “This is a fantastic development for the rural economy and consumers who want a real choice in fuel.”

Renewable Fuels Association president and CEO Bob Dinneen notes
that the announcement comes on the heels of E15’s expansion into 15 states. “It’s invigorating to see a major North Carolina retailer like Sheetz actively decide to do what is best for their consumers by giving drivers access to additional fuel options,” said Dinneen. “Sheetz clearly sees the benefits of E15 and it is my hope that all other retailers in North Carolina will follow Sheetz’s exemplary example.”

Also, Miami-based CR Caraf Oil is opening the first E15 pump in South Florida this week, working in partnership with Protec Fuel.