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In addition, revised forecasts calling for short-lived heat in the Midwest corn belt also weighed on the front end of the market. More favorable growing conditions due to the prospects of cooler temperatures and increased chances for precipitation next week come at a time when soybean crops in the region move toward their peak pod-setting phase.

Nearby delivery August soybean oil futures settled at 67.60 cents per pound on Friday, down 101 basis points per pound, or 1.47 percent. The September contract was down 18 basis points per pound at the closing bell. December soy oil futures finished the session at 62.40 cents per pound, up 33 basis points per pound.

Despite the afternoon sell-off, soybean oil contracts farther out along the forward curve ended with slight gains but still well below session highs, underpinned by stronger crude oil prices and worries of tighter global supply. Tensions were heightened in the Black Sea region this week following a volley of air strikes between Russia and Ukraine. Russia pulled out of the Black Sea Grain Initiative early last week.

In Malaysia, palm oil futures ended the session and the week lower, amid ongoing strength in the ringgit. Still, worries that supply from the Black Sea could be choked off kept losses contained. The most actively traded palm oil futures contract (October) closed down 20 ringgit per tonne, or 0.5 percent, on Friday, just above 4,000 ringgit per tonne at 4,006 ringgit per tonne. On the week, the contract was down 0.72 percent in value.

Miller’s data suggested that palm oil production could be marginally higher for the full month of July.

The post Soybean oil futures succumb to late selling pressure appeared first on Fastmarkets.

Speaking during a panel session at the Fastmarkets Biofuels and Feedstocks Americas conference on Tuesday May 16, Clean Fuels Alliance America (CFAA) public affairs and federal communications director Paul Winters told delegates that priorities for the US administration “are about electrifying this or that,” while there is “no consideration for the role that renewable fuels can play.”

Last year, proposals to include biogas for renewable electricity supplied to electric vehicles in the US Renewable Fuel Standard (RFS) received opposition from refiners, who would be obliged to buy compliance credits from carmakers that will ultimately earn the credits.

“There is a lot of lip service to our industry, however, with Administrator Regan reiterating in Congress that our industry should have a seat at the table,” Winters said, adding that, despite Regan noting he had met with industry groups over the RFS rule, CFAA “is still waiting for that meeting two years later.”

RFS woes

In December 2022, the US Environmental Protection Agency (EPA) proposed to increase biofuel blending volume requirements for the next three years under the RFS, as well as proposing changes, including making refiners buy newly classified “e-RINs” from makers of electric cars — vehicles that are viewed by the oil industry as an existential threat.

The agency called for an overall blending mandate of 20.82 billion gallons in 2023, 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025, and is expected to publish its final rule for 2023 RVOs by June 14, although conference delegates told Fastmarkets Agriculture that delays “wouldn’t be surprising.”

“I wish they would raise the top number,” Michael McAdams, from the Advanced Biofuels Association, told the audience in Chicago.

“But I am less than 50% [sure] they will go there,” he added.

Renewable diesel capacity

Fastmarkets Agriculture sees renewable diesel (RD) capacity at approximately 2.4 billion gallons at the end of 2022, surpassing the biodiesel industry for the first time.

Not only has RD just moved beyond biodiesel in terms of market size, but it is also expected to more than double by the end of 2024.

The doubling of RD capacity is going to increase feedstock demand proportionately. Vegetable oils, including distillers’ corn oil (DCO), will continue to face strong demand.

Still, there are potential headwinds for several new RD projects due to current economic factors, with Canadian-based Parkland Corp in March canceling plans to build an RD plant at its Burnaby refinery in British Columbia due to rising feedstock costs and uncertainty surrounding renewable fuel tax credits in the US for non-domestic producers.

“You are seeing a rationalization now to Parkland,” Trent Weatherly, from Montana Renewables, said during the conference. Montana Renewables recently began producing RD in Great Falls, Montana.

“Refinery margins [which have improved] since the second quarter of last year are also going to influence this,” Ash Creek Renewables president John Cusick said, regarding whether companies will proceed with plans to build RD plants.

Feedstock supply

Panelists had mixed views on feedstock supply for the biofuel industry, with some remaining confident that supply issues in the US were subsiding, while others warned this could be only temporary.

“The market is awash with feedstock in a way, but we also see big projects coming online — some are a bit delayed or not being commissioned as quickly as envisioned, so there’s definitely some false sense of security in the market,” Cusick said.

However, Winters pointed to growing domestic soybean crushing capacity in echoing sentiments expressed earlier in the day by the American Soybean Association, adding that the US plans to stop exporting so much of its soybean crop.

“There are also other crops being discussed, like canola, for winter rotations in southern states,” Winters said, referencing a new joint project between Chevron, Bunge and Coretva that was announced on May 16.

State-led low-carbon efforts

Meanwhile, panelists told the conference that a handful of states could potentially follow the lead of California by implementing low-carbon emissions programs in the coming years.

According to Cusick, New York, or any other state in the northeastern US, could be the next to move in a low-carbon direction.

Cheryl Laskowski, from the California Air Resources Board, earlier pointed to New Mexico as a possibility as the next state in the western US to implement such a program.

Earlier this year, Washington state said it would reduce the carbon intensity of its transportation fuels to 20% below 2017 levels by 2038, and quite possibly by 2034.

The post US industry calls for government to boost renewable fuels support appeared first on Fastmarkets.

In a recent letter, signed by senators Cynthia Lummis and John Barrasso as well as other senators, the officials shared their “strong concerns” regarding the Department of Energy’s role in “scoring petitions filed under the small refinery exemption program in the Renewable Fuel Standard and inquiring about the steps DOE plans to take to remedy these shortcomings.”

The letter pointed to a November 2022 report from the US Government Accountability Office (GAO) that examined the policies and procedures of the DOE and the US Environmental Protection Agency (EPA) for the exemption decisions.

Small refinery exemption process

The EPA can grant exemptions if the refiners can prove compliance with the mandates caused financial hardship.

In early April 2022, the EPA denied 36 petitions from refiners seeking exemptions to 2018 biofuel blending laws due to financial hardship.

Meanwhile, the four refineries in the state of Wyoming operate within the parameters of the small refinery exemption.

“Despite repeated requests for the EPA to reconsider its decisions regarding small refinery exemptions to the renewable fuel standard, as well as a GAO report refuting their actions, Administrator Reagan and his staff have decided to double down on their actions against the small refineries that operate across Wyoming,” Lummis said in the letter.

In December 2021, the EPA attempted to block all pending SRE requests.

In January 2022, meanwhile, Lummis and her colleagues sent a letter to the EPA, citing concern for the new approach to SRE petitions.

Late last year, a group of US senators wrote to the EPA calling for greater renewable volume obligations (RVOs) ahead of the release of the 2023 blending targets in December, stating that previously, renewable volume obligations (RVOs), which were backed by statutory volumes, had been undermined by SREs.

The Environmental Protection Agency’s proposed Renewable Volume Obligations (RVOs), which were finally released on December 1 after being delayed several times, called for an increased overall blending mandate of 20.82 billion gallons for 2023, 21.87 billion gallons for 2024 and 22.68 billion gallons for 2025, prompting highly mixed industry reactions.

The post US senators seek clarity on EPA’s small refinery exemption process appeared first on Fastmarkets.

Margins for RBD soybean oil users pushed to their best level for the year, while margins for crude-degummed users hit an 18-week high. The EIA reported the price for natural gas increased, but methanol values were reported steady. Crude glycerin, a by-product of biodiesel production, saw price levels continue to fall and with glycerin refiners remaining in an over-supplied position, crude glycerin values may fall further.

The average weekly Biodiesel price dropped 4.5 percent last week and is 8.2 percent below values seen a month ago. Glycerin prices crumbled nearly 14 percent to 7.55 cents per pound and are at their lowest level since Jan 8, 2021. Glycerin prices have fallen nearly 25 percent over the past month.

The average weekly soybean oil price fell 12 percent for RBD and 14 percent for crude-degummed. The average RBD price is 17 percent below month-ago levels, while crude-degummed is 18 percent lower.

Geo-political tensions show little signs of abating and continue to impact commodity market volatility in general. The spread in pricing between crude-degummed and RBD soybean oil edged fractionally higher but remained below 10 cents for a fourth consecutive week.

Prior to April 2021, RBD soybean oil averaged a price premium of nearly three cents per pound over crude degummed. The rise in renewable diesel capacity elevated RBD soybean oil prices relative to crude-degummed due to limited crushing capacity to supply the needed refined soybean oil. This caused the spread between RBD and crude-degummed to expand. The spread climbed as high as 25 cents but has narrowed in recent weeks following a projected increase in refined capacity.

Biodiesel revenue fell nearly five percent but was eclipsed by the drop in variable costs. Variable costs for RBD soybean oil users fell 11 percent, while crude-degummed users saw a 13 percent drop from the prior week. Margins for RBD soybean oil feedstock users improved from $0.14 per gallon over variable costs to $0.62.

Crude degummed soybean oil margins improved 63 percent to $1.34 per gallon over variable costs.

Variable costs include a 25 cents per gallon estimate for “other variables” beyond soybean oil, natural gas, and methanol. The overall margin, which includes fixed costs, improved 48 cents to $0.27 per gallon for RBD feedstock producers, showing a profit for the first time in seven weeks. Producers using crude degummed soybean oil as feedstock had overall margin increase of $0.52.

The post Average weekly central IL crude degummed soybean oil at 20-week low appeared first on Fastmarkets.

The USDA report was prepared as part of an effort to understand the barriers and opportunities to expand the use of higher blends of ethanol in the US gasoline market, especially 15 percent ethanol blends. The EPA on April 29 issued an emergency waiver to allow the sale of E15 gasoline during the peak summer driving period this year. The waiver is expected to increase near-term demand for ethanol.

Currently, of the gasoline sold in the U.S., about 95 percent to 98 percent is sold with concentrations of E10. Historically, the second most common ethanol blend available at retail stations was E85, which is an ethanol-gasoline blend that may contain up to 85 percent ethanol by volume. However, in 2019, E15 sales surpassed those of E85 for the first time. Flexible fuel vehicles (FFVs) are the only ones approved to safely operate on gasoline with any blend of ethanol up to E85.

However, with a decrease in FFV offerings by car manufacturers and stalled E85 sales growth, the report pointed to concerns about possible ethanol demand reductions given the projected decline in gasoline consumption in the next ten years.

“Given the decline in FFVs and lack of growth in E85 sales, mid-level ethanol blends, in particular E15, are options to expand future ethanol markets. Furthermore, transitioning to ethanol blends between E11 to E25 will be easier and less costly than blends above E25. The current structure of the RFS, combined with the commercialization stage of cellulosic fuels, does not serve to incentivize ethanol blends higher than E10. “

Gas stations are less likely to invest in infrastructure for a fuel that can only be sold for a portion of the year,” the report concluded.

The increased use of E15 could have an effect on credit values and prices.

The post Higher blends of ethanol: challenges and opportunities in the US market appeared first on Fastmarkets.