Market Update: EPA's EMTS data has for the first time in February classified 76,051 2016 D4 RINs as Renewable Jet Fuel. Renewable jet fuel RINs can be used by obligated parties to help them comply with their RVOs, even though jet fuel consumption is not included in calculating the percentage standards. These extra RINs will help obligated parties that are facing ethanol blending constraints. We will likely see more renewable jet fuel RINs generated as it's now regularly being used on commercial flights.
EIA just released biodiesel movement by rail data that PRX will look to incorporate into this report. The new data has intra PADD movements and imports/exports to Canada.
Analysis: For crop year 15-16 through January, 2.089 billion pounds of soybean oil was used to produce biodiesel, with 392 mil lbs used in December (pg 1). If this pace continues, 5.014 bil lbs of soybean oil will be used in 15-16 vs USDA's March WASDE estimate of 5.5 bil lbs. Soybean oil's share of all inputs to biodiesel production is up .8% for 15-16 through January to 47.57% (pg 2). Corn oil used to produce biodiesel decreased in Jan to 94 mil lbs, bringing the 15-16 through January total to 476 mil lbs, yielding 58 mil gals of biodiesel (pg 4 & 5).
EIA's Mar-STEO has 2016 biodiesel production optimistically estimated at 1.628 billion gallons (pg 7). PRX estimates US biomass-based diesel (biodiesel & renewable diesel) production for 2016 at 1.544 bil gals, with 236.3 mil gals being US renewable diesel production. EIA's STEO is also enthusiastically forecasting 2017 biodiesel production at 1.713 billion gallons, respectively. PRX views these biodiesel estimates as overly optimistic even with the $1/gallon blender's tax credit available through 2016 and EPA's increased Biomass-based diesel RVOs. One reason for this is that if soybean oil maintains its average market share of 53.5% of feedstocks used for biodiesel production in 15-16 crop year, then nearly 6.2 billion pounds of soybean oil will be required, that's 700 mil lbs more than USDA's 5.5 bil lbs estimate. Another reason is that US renewable diesel and jet fuel production is continuing to increase in 2016 & 2017, which will directly compete with US biodiesel production to fill the RVOs.
PRX estimates US biomass-based diesel consumption for 2016 at 1.97 billion gallons, which is above the 1.9 billion gallon Biomass-based diesel RVO (pg 12). These 70 million extra gallons can be used toward the other Advanced and/or Renewable fuel RVOs. The EIA's Mar-STEO is expectantly forecasting the 2016 & 2017 biodiesel and imported renewable diesel consumption at 2.327 & 2.431 billion gallons, respectively. In addition, there is likely to be 200-300 million gallons of domestic renewable diesel consumed in both 2016 & 2017. The 2017 Biomass-based diesel RVO is 2 billion gallons. Thus, if the EIA's optimistic forecasts are accurate this implies the extra 600-700 million gallons each year will likely be used to meet the Advanced biofuel and/or the Renewable fuel RVOs. PRX is forecasting 2.327 billion gallons of biomass-based diesel consumption in 2017.
USDA's FAS is estimating 2016 biodiesel imports at 442 mil gals and renewable diesel at 210 mil gals. The FAS is also estimating 2016 biodiesel exports at 50 mil gals.
Ryan Ruikka
Energy Analyst
The ProExporter Network
114 S. Main St. Suite 100
Chelsea, MI 48118
Off: 734-475-0454
Fax:734-475-0452
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