Market Update: EPA released its prepublication of the
Final Rule for the 2014-2016 RVOs on November 30th and will soon publish them in the Federal Register. The 2014 conventional biofuel demand increased to 13.61 billion ethanol equivalent gallons in the Final Rule (PRX estimated 13.6 bil ethanol equivalent gals). The Final 2015 & 2016 conventional biofuel demands also increased to 14.05 & 14.5 bil ethanol equivalent gals, respectively (PRX est 14.21 & 14.38). The Final 2014 Renewable fuel Renewable Volume Obligation (RVO) is 16.28 bil ethanol equivalent gals (PRX est 16.27). The 2015 & 2016 Final Renewable fuel RVOs are 16.93 & 18.11 bil ethanol equivalent gals, respectively (PRX est 17.01 & 17.67). These volumes have given a boost to the ethanol industry over the Notice of Proposed Rulemaking issued back in June, but are still below the statutory volumes.
PRX is working on digesting the 202 pages in the
prepublication and waiting for the supplemental information used to calculate the RVOs to be published on Regulation.gov.
EIA Petroleum Supply Monthly Data: For the latest month of actual data in September, ethanol production was 1.199 billion gallons with a monthly residual error of 39 mil gals. Refiner input was 1.135 bil gals and the calculated inclusion rate for the 11.276 bil gals of mogas receiving ethanol was 10.07%. About 98.6% of all mogas (with 11.433 bil gals) did indeed receive ethanol. Ethanol ending stock were 809 mil gals and fuel ethanol imports were 21.21 mil gals, while fuel and industrial ethanol exports were 60.4 mil gals.
EIA Short Term Energy Outlook Data: Using the November forecasts, the STEO is forecasting slightly higher 2015 ethanol production at 14.647 bil gals & 2016 at 14.65 bil gals. The EIA is forecasting mogas production slightly lower at 139.656 bil gals in 2015 & slightly higher at 140.269 bil gals in 2016, while also increasing ethanol blending in 2015 to 13.848 bil gals & 2016 to 13.872 bil gals. Thus, implying ethanol net exports in 2015 are 799 mil gals & 2016 are 778 mil gals (pg 4). EIA's WTI crude oil price forecast increased only a few cents in 2015 to $49.89/bbl and was lowered in 2016 to $51.25/bbl (pg 5). The Nov-STEO's wholesale mogas price forecast is now less than the ethanol futures market price for December 2015, only counting a portion of D6 RINs that are priced into spot ethanol (pg 6).
DOC US Census Foreign Trade Data: Fuel and industrial ethanol exports increased in September and were 60.33 mil gals with Canada receiving the most at 26.26 mil gals, India 14.31, South Korea 8.53, Peru 4.25, Philippines 2.69, and Brazil nothing to name a few. For Jan to Sept of 2015, 625 mil gals of US ethanol have been exported. If this pace continues, 833 mil gals of fuel and industrial ethanol will be exported this year (pg 8). Fuel ethanol imports increased in September to 24.9 mil gals, all coming from Brazil. Jan-Sept 2015 fuel ethanol imports are now at 57.7 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 626.14 mil gals exported through September, which is nearly what the DOC reported at 625.06 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 Sept at 263.2 mil gals. This can be compared to EPA's 227 million D6 RIN exports for 2015 through Sept 10th, with 2015 through October 15th data at 280 mil D6 RIN exports.
Looking at 2015 fuel ethanol imports, the EIA-814 monthly survey has 52.08 mil gals imported through September vs the DOC's 57.7 mil gals (pg 9). We can further compare this to EPA's 2015 importer generated 45.9 million D5 RINs through Sept and 53.4 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 64 to 77 mil gals of fuel ethanol will likely be imported in 2015.
USDA Grain Crushings and Co-products Production Data: In September, dry mill plants used 383.792 million bushels of corn to make fuel ethanol, while wet mill plants used 43.708 mil bu. For crop year 14-15 through August (less missing data for September) total corn use for ethanol production was revised to 4.794 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.
