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.

Valero Restarts Mount Vernon, IN Ethanol Plant

Valero Renewable Fuels Company has restarted its recently purchased ethanol plant located in Mount Vernon, Indiana. On hand for the Port Appreciation and Welcome Ceremony was Lt. Gov. Sue Ellspermann and other state and local officials. The Mount Vernon plant is the 11th corn ethanol plant in Valero Renewables’ system and its second in Indiana. It has an annual production capacity of 110 million gallons and uses Delta-T technology, similar to the process already in use at Valero Renewables’ ethanol plant in Jefferson, Wisconsin.

“The opening of Valero’s ethanol facility at the Port of Indiana-Mount Vernon is another economic development win for the State of Indiana,” Ellspermann said during the ceremony. “When the tenth largest Valero renewables_logo smallcompany in the U.S. decides to make such a large investment right here in Indiana, the company is confirming that we have a great business climate that includes our strong agriculture industry and our multimodal transportation infrastructure. Not only is Valero developing a partnership with the Ports of Indiana on this project, but the company is also making a significant commitment to support Mount Vernon and the entire Southwest Indiana community.”

Adding the Mount Vernon location gives Valero more than 1.3 billion gallons per year in ethanol production. The plant had been shut down for approximately two years, but Valero Renewables resumed production at the site earlier in August and now employs approximately 65 full-time workers.

“We pride ourselves in our operations and being a positive impact to the community,” said Martin Parrish, senior vice president, Valero Renewable Fuels Company LLC. “I’m confident you will find that our actions back this up.” During the event Parrish presented a donation of $20,000 on behalf of the Valero Energy Foundation to the United Way of Posey County to mark the beginning of Valero’s impact in the area.

According to Valero, the Mount Vernon ethanol plant’s logistical advantages include ready access to corn suppliers as well as strong rail, truck and barge transportation. The plant is at the Port of Indiana-Mount Vernon on a location leased from Ports of Indiana, the state port authority.

Summit Group Building Brazilian Corn Ethanol Plant

Alden, Iowa-based Summit Group announced a project to build the first modern corn ethanol plant in Brazil during the 2014 Farm Progress Show. The project will consist of a US$140 million ethanol plant near Lucas do Rio Verde in Mato Grosso, a leading agricultural state in west central Brazil and the country’s largest producer of corn and soybeans. The project is being financed by Summit Group’s private equity group U.S. Farmland Fund and the company partnering with Fiagril and will be developed by ethanol technology company ICM and built by agribusiness company Marino Franz.

Bruce Rastetter Summit GroupI asked Rastetter “Why Brazil” and he answered that outside of the U.S. they believe this country will play the biggest role in feeding the world. “One of the interesting parts in particular about Mato Grosso is because of improved genetics they’re able to double crop. So they are able to raise the first crop of soybeans and the second crop of corn or cotton so they have increasing corn production in the middle of the continent where it is difficult to get it out. So they are embracing value-added agriculture,” explained Rastetter.

So what is the difference between the early U.S. ethanol plants and the modern corn ethanol plant that will be based in Brail? Rastetter said they are partnering with Colwich,Kansas-based ICM and CEO Dave Vander Griend has been traveling to Brazil with Rastetter and his team for a few years. While the majority of the technology will be the same with an improvement on high protein low fiber DDGs (dried distillers grains) – a just patented process for livestock feed.

The ethanol will stay in Brazil since the Government in Brazil wants to increase the ethanol blend from 25 percent to 27 percent. I also asked him about the environmental footprint of growing corn in Brazil and Rastetter said the country is very sustainable and the farms they are purchasing from have a large percentage of trees, and if they don’t, they are planting trees.

To learn more about Summit Group’s corn ethanol plant in Brazil, listen to my interview with Bruce Rastetter: Interview with Bruce Rastetter

I also had the opportunity to speak with Eric Peterson who is the president of Summit Group who talked more specifically about the value-added opportunities the corn ethanol plant will provide the community of Mato Grosso. Peterson explained the area has difficulty getting corn exports out of the region and ethanol into the region. With the new ethanol plant, the corn will be purchased locally and the ethanol and DDGs produced will then stay local – overcoming the export/import barriers of the region. This has made the project and partners very accepted in the community.

Eric Peterson Summit GroupSince the technology will provide a different type of DDGs than used in the U.S. a part of the project and because Brazilians are very used to using soy meal, they will be able to complement the soy meal with a high protein product. In addition, with the high fiber feed product they are going to run feed trials with a University of Nebraska nutritionist to learn how to best utilize the co-product.

Peterson believes there is a great opportunity to create synergistic relationships between U.S. farmers and Brazilian farmers. “When we go there we are impressed with some of their technology and how they adapt to large scale agriculture and they are quickly adopting precision technologies that we have here in the U.S. and there is no better place for people to assimilate technology than in Brazil and so I think we can learn a lot from each other.”

The plant is to break ground the next six months and to be operational 16 months from groundbreaking which will occur before the rainy season in Feb/March and will produce 50 million gallons of ethanol per year.

To learn more about the agribusiness aspect of the Summit Group’s Brazilian ethanol plant by listening to my interview with Eric Peterson: Interview with Eric Peterson

View the Farm Progress 2014 Flicker photo album.

American Ethanol a Winner for Corn Growers

fps14-ncga-robThe American Ethanol NASCAR program is in its fourth year now and the National Corn Growers Association (NCGA) considers it to be a big success.

NCGA incoming Vice President Rob Elliott of Illinois says American Ethanol began its partnership with NASCAR in 2011 supporting the transition to 15% ethanol. “NASCAR in its three levels has run over six million miles (on E15) which is the same number of miles EPA drove to prove E15 to be a good fuel,” Elliott said during an interview at Farm Progress Show this week. “The feedback we get is that 80% of NASCAR fans are now more likely to be very supportive of the use of ethanol in their own cars.”

The challenge still remains in getting more E15 into the market. “The ready availability of E15 at a broad number of stations, we’re just not there yet,” said Elliott, but he believes promoting through NASCAR is having an impact for the long term. “We’re moving the needle with 100 million NASCAR fans and we’ve seen the great benefit in the synergy created with NASCAR itself at a high level.”

American Ethanol is a partnership between NASCAR, NCGA, Growth Energy, New Holland with a number of individual ethanol producers and state corn grower groups.

Listen to an interview with Rob here: Interview with Rob Elliott, NCGA

2014 Farm Progress Show photo album

Corn Farmers Concerned About RFS and Low Prices

gps14-ncga-chipCorn farmers are concerned about the impact lower volume requirements under the Renewable Fuel Standard (RFS) could have on growers ready to harvest a record corn crop this year.

“We’re keeping a close eye on corn prices and are greatly concerned about efforts in Washington that may reduce or stifle demand for corn and raise the cost of production,” said National Corn Growers Association First Vice President Chip Bowling during the Farm Progress Show in Boone, Iowa this week. “As thrilled as we are with a record crop, we know it has its challenges.”

Bowling says it will be detrimental if the EPA moves forward with its proposal to lower volume requirements for corn ethanol to be blended into the nation’s fuel supply. “Reducing the demand of corn for ethanol will significantly impact corn prices – at a time when prices are already too low,” said the corn farmer from Maryland. “We need stability and we need EPA to stick to the statutory amount of corn ethanol in the RFS.” Chip Bowling, NCGA comments on record corn crop
Interview with Chip Bowling, NCGA

2014 Farm Progress Show photo album

DF Cast: Ethanol Innovators Talk New Tech at ACE Conf.

Any manufacturer is looking to get more out of their operations, and it’s certainly no different for biofuel makers.

In this edition of the Domestic Fuel Cast, we hear from four innovators who talked about their operations and how they are on the cutting edge of biofuel producing technologies during the recent at the American Coalition for Ethanol conference. Among those who spoke were ACE president Ron Alverson of Dakota Ethanol; Ray Baker, general manager of Adkins Energy in northwest Illinois; Mike Erhart, CEO of Prairie Horizon Agri Energy in Kansas; and Delayne Johnson with Quad County Corn Processors.

Domestic Fuel Cast - Increasing Ethanol Blends

You can also subscribe to the DomesticFuel Cast here.

27th Annual Ethanol Conference photo album

Enogen Corn Passes 300,000 Acres

In one year the acres planted in Enogen corn will expand from 100,000 acres in 2014 to more than 300,000 acres in 2015 and that means that ethanol production will be expanding too. To learn more about how Syngenta achieved this feat, I spoke with David Witherspoon, head of renewable fuels for Syngenta during Farm Progress. Not only are ethanol plants excited about Enogen corn (Syngenta donates $1 per acre planted to the renewable fuels industry), but corn farmers are excited about it as well – they receive a 40 cent premium. So assuming an average yield of 165 bushels an acre, Enogen corn will generate approximately $6.6 million of additional revenue for the local growers who have signed contracts in 2014.

What is interesting is that only 15 percent of a farmer’s acre is planted with Enogen corn because the “sweet” spot for ethanol production is 15 percent. David Witherspoon Syngenta:EnogenSo how is Enogen different? As Witherspoon explained, the Enogen corn enzyme technology offers ethanol plants an opportunity to increase their per bushel ethanol production as well as improve energy efficiency during the production process.

“The ethanol plant needs an enzyme for ethanol production at 15 percent and then this corn is mixed with the other corn that comes into the plant,” explained Witherspoon. “And the way we found this out is that we tested plants in the lab and looked at what the optimal dosage at that plant to get the maximum performance enzyme. And if we go higher than that, we found that we don’t need anymore.”

When you look at a farmer’s field growing Enogen corn you can’t tell the difference. The corn has the exact same benefits (pest control, disease control, etc.) that other Syngenta hybrids have.

Another application that Witherspoon said that Enogen corn is really excelling in is when used with the “ACE” technology, or Adding Cellulosic Ethanol, that separates the fiber from the corn kernel and produces cellulosic ethanol. It’s the first technology of its kind in the world and the Galva, Iowa plant went online with commercial scale cellulosic ethanol production this summer. Syngenta was so impressed with the technology that they have partnered with the plant to sell the technology.

So here’s the scoop. Several ethanol plants who are buying the Enogen corn have sold out their acres for the 2015 growing season but there are still a few acres left for some other ethanol plants. In addition, Witherspoon said there are quite a few farmers who would like to plant Enogen corn but need to partner with their local ethanol plant to implement the program. So, all ethanol plants that would like to pursue the program need to contact Syngenta soon to get in the program before it sells out this year. And if you are interested in seeing first-hand how Enogen corn performs, then come to the Quad County Corn Processors grand opening on September 9, 2014.

To learn more about Enogen corn and its benefits for farmers and for ethanol plants, listen to my interview with David Witherspoon: Interview with David Witherspoon

View the Farm Progress 2014 Flicker photo album.

IA Ag Secy Bill Northey On Corn, RFS

IA Ag Secy Bill NortheyThere are two big topics during the Farm Progress Show this year: the corn crop and the Renewable Fuel Standard (RFS). During the show, I had the opportunity to speak with Iowa Ag Secretary Bill Northey who is a corn farmer and also a huge supporter of biofuels. I first asked him how the corn crop was looking with all the August rain.

Northey said that for the most part, Iowa is going to have a great corn crop. He said that there are some pockets that had too much rain and hail in June (this affected his farm) but overall, the corn crop is going to offset some of the below average acres and Iowa should see a record crop.

I asked Northey how the record corn crop would positively affect biofuels, such as the Project Liberty cellulosic ethanol plant and the Quad County Corn ethanol/cellulosic plants that are celebrating grand openings this year.

“Well certainly we have enough corn to be able to fuel our biofuel plants, to be able to have exports and to be able to feed the livestock we have in this country,” said Northey. He said it is exciting to see the next generation come, “and it makes us think of the Renewable Fuel Standard and the Environmental Protection Agency not coming forward with a target this year. It’s frustrating to have it already be August and have it go to OMB now [Office of Management and Budget] and it could be another 90 days until it comes out of there and the year will be darn near over by the time we find out how much we should blend this year.”

“It’s too bad its gotten to this point,” Northey continued. “What we need is a big green light from the EPA [Environmental Protection Agency] that ethanol will expand from the 10 percent blend to E15 blends and we can get our 85 percent blends in that cellulosic will be supported so we can see more investment, more jobs and certainly more demand from our corn crop and our cellulosic opportunities which includes corn stover but it will be other things in other places.”

Learn more about the corn crop and RFS by listening to my interview with Bill Northey: Interview with Bill Northey

View the Farm Progress 2014 Flicker photo album.