Market Update: EPA is likely to release its Final Rule for the 2014-2016 RVOs by November 30th. PRX has estimated, using data that EPA will likely use, a 2014 conventional biofuel demand increase from 13.25 billion ethanol equivalent gallons in the June 2015 Proposed Rule to 13.6 bil ethanol equivalent gals in the Final Rule. 2015 & 2016 conventional biofuel demand will likely increase to 14.21 & 14.81 bil ethanol equivalent gals, respectively in the Final Rule. These changes, along with some minor changes to the other categories of Renewable Volume Obligations (RVOs) will likely result in the Final 2014 Renewable fuel RVO being 16.27 bil ethanol equivalent gals. The 2015 & 2016 Final Renewable fuel RVOs will likely be 17.01 & 18.11 bil ethanol equivalent gals, respectively. The calculations for these estimates are extremely complex and are my best guess at what EPA will do. However, it is extremely difficult to know exactly what assumptions EPA will use in some of these calculations. So if clients are interested in understanding more about these estimates, contact me and I will email you my excel file and can explain the process.
EIA Petroleum Supply Monthly Data: For the latest month of actual data in August, ethanol production was 1.244 billion gallons with a monthly residual error of 27 mil gals. Refiner input was 1.196 bil gals and the calculated inclusion rate for the 11.876 bil gals of mogas receiving ethanol was 10.08%. About 96.2% of all mogas (with 12.351 bil gals) did indeed receive ethanol. Ethanol ending stock were 809 mil gals and fuel ethanol imports were 15.4 mil gals, while fuel and industrial ethanol exports were 50 mil gals.
EIA Short Term Energy Outlook Data: Using the October forecasts, the STEO is forecasting slightly lower 2015 ethanol production at 14.627 bil gals & 2016 at 14.645 bil gals. The EIA is forecasting mogas production lower at 139.665 bil gals in 2015 & 140.238 bil gals in 2016, while also slightly increasing ethanol blending in 2015 to 13.829 bil gals & decreasing 2016 to 13.869 bil gals. Thus, implying ethanol net exports will decrease in 2015 to 798 mil gals & 2016 to 776 mil gals (pg 4). EIA's WTI crude oil price forecast increased only a few cents in 2015 to $49.54/bbl and was unchanged in 2016 at $53.5/bbl (pg 5). Their wholesale mogas forecast is projected to decline until December and it fell below JSA's average farm belt spot ethanol price in October by a cent, not counting the portion of D6 RINs that isn't already priced into spot ethanol (pg 6).
DOC US Census Foreign Trade Data: Fuel and industrial ethanol exports decreased in August and were 50.1 mil gals with Canada receiving the most at 21.4 mil gals, North Africa 12.62, East Asia 6.16, China 3.33, and Brazil 1.68 mil gals to name a few. For Jan to Aug of 2015, 565 mil gals of US ethanol have been exported. If this pace continues, 847 mil gals of fuel and industrial ethanol will be exported this year (pg 8). Fuel ethanol imports increased in August to 15.7 mil gals, all coming from Brazil and 8 mil gals going straight into California ports. Jan-Aug 2015 fuel ethanol imports are now at 32.8 mil gals (pg 9).
EIA vs DOC vs EPA Ethanol Exports & Imports: Comparing ethanol export data for 2015 YTD the EIA's PSM is reporting 565.74 mil gals exported through August, which is nearly what the DOC reported at 564.73 mil gals (pg 8). This should be the case because the PSM recieves its data from the DOC. Both the PSM and DOC export data is for fuel & industrial ethanol. The DOC actually breaks down the different types of exports and has denatured for fuel use exports for 2015 through August at 239.36 mil gals. This can be compared to EPA's 202 million D6 RIN exports for 2015 through August 10th, with 2015 through October 15th data at 253 mil D6 RIN exports. In the past, there has typically been a lag in EPA export data, but for 2015 it appears to be fairly in line with DOC denatured for fuel use data, as some denatured exports may have never generated a RIN in the first place.
Looking at 2015 fuel ethanol imports, the EIA-814 monthly survey has 30.9 mil gals imported through August vs the DOC's 32.8 mil gals through August (pg 9). We can further compare this to EPA's 2015 importer generated 10.7 million D5 RINs through August 10th and 45.9 million through October 15th (assuming that only non-cellulosic fuel ethanol, most likely Brazilian sugarcane fuel ethanol, is being imported with D5 RINs, as has been the case the past two years). If we assume these rates of imports continue for the rest of the year, between 49 to 61 mil gals of fuel ethanol will likely be imported in 2015.
USDA Grain Crushings and Co-products Production Data: For crop year 14-15 through August (less missing data for September) total corn use for ethanol production was 4.792 billion bushels (pg 14). If we add an extra month for the missing data, PRX estimates 14-15 corn to ethanol use at 5.228 billion bushels. USDA is estimating 5.207 billion bushels, while PRX's Blue Sky model is higher at 5.242 billion bushels.
