1. No category

Biofuels Outlook
2014 Midwest Outlook Conference
David Ripplinger
August 14, 2014
Saint Louis, Missouri
1
Million Bushels
U.S. Corn
16,000
$8.00
14,000
$7.00
12,000
$6.00
10,000
$5.00
8,000
$4.00
6,000
$3.00
4,000
$2.00
2,000
$1.00
-
$0.00
1990
1994
1998
Production
2002
E. Stocks
2006
2010
2014
Price
Source: NASS, WASDE
2
Ethanol Crush Margin
$6.00
$4.50
$3.00
$1.50
$January 2013
Gross Crush
January 2014
Major Feedstock Costs
January 2015
Crush Less FC
3
Daily US Ethanol Production
Million Gallons per Day
100%
42
80%
38
60%
40%
34
20%
30
Jan 2011
0%
Jan 2012
Production
Jan 2013
Jan 2014
Capacity Utilization
Source: EIA, Renewable Fuels Association
4
Motor Fuel
Forward Price Curves
$3.25
$3.00
$2.75
$2.50
$2.25
$2.00
August 2014
August 2015
RBOB
August 2016
Ethanol (GGE)
Source: CME
5
Vehicle Miles Traveled (Million)
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
January 1971
January 1986
January 2001
Source: St. Louis Federal Reserve Bank
6
12,000
110%
100%
11,000
90%
10,000
80%
9,000
70%
8,000
7,000
January 2012
60%
% Change over Year Previous
Net Production of Finished Gasoline
(Thousand Barrels per Day)
Motor Gasoline Produced
50%
January 2013
January 2014
Source: Energy Information Administration
7
Motor Gasoline Blending
12%
11,500
10%
11,000
8%
10,500
10,000
6%
9,500
4%
9,000
Percent Ethanol
Net Finished Gasoline
12,000
2%
8,500
8,000
January
2011
0%
January
2012
January
2013
Motor Gasoline Production
January
2014
Ethanol Blend Rate
Source: Energy Information Administration
8
US Ethanol Export Markets
2010-2014
(3.3 billion gallons)
Rest of
World
Mexico
Canada
UAE
United
Kingdom
Netherlands
Brazil
Source: Energy Information Administration
9
Brazilian Sugar Ethanol
2015 production expected to be 7.1 billion gallons
Current government mandated blend is 25%
Process initiated to increase level to 27.5%, but that is
expected to be unsuccessful
2014 exports (235 million gallons) are expected to be
half of 2013 levels and increase in 2015 (265 million
gallons)
Brazil Biofuels Annual, USDA/FAS
10
Monthly U.S. Ethanol Imports
3,500
Thousand Barrel
3,000
2,500
2,000
1,500
1,000
500
0
January 1993
January 2001
Total Imports
January 2009
Brazil
Source: Energy Information Administration
11
Corn Ethanol Outlook CY 2015
Ethanol
Production
% Capacity
Corn Use
DDGs
Consumption
Exports
14.125 billion
gallons
95%
5050 bushels
43 million tons
13.375 billion
gallons
750 million
gallons
12
SME Crush (per gallon)
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
July 2013
April 2014
Biodiesel Price
Feedstock Cost
13
Biodiesel Production
80%
Million Gallons per Month
70%
60%
50%
40%
30%
20%
Capacity Utilization
200
180
160
140
120
100
80
60
40
20
0
December 2011
10%
0%
December 2012
Production
December 2013
Capacity Utilization
Source: Energy Information Administration
14
Biodiesel Feedstock Prices
$65.00
$60.00
$55.00
$50.00
$45.00
$40.00
$35.00
$30.00
January 2011
January 2012
Soybean Oil
January 2013
January 2014
Canola Oil
15
Distillate Fuel Production
(Thousand Barrels per Day)
Biodiesel Blending
6,000
5%
5,000
4%
4,000
3%
3,000
2%
2,000
1%
1,000
0
January 2009
0%
July 2010
January 2012
Distillate Fuel Production
July 2013
Blend Rate
Source: Energy Information Administration
16
Biodiesel Outlook CY 2015
Biodiesel
Production
% Capacity
SME
SO Use
1.28 billion
gallons
60%
650 million
gallons (51%)
4.96 billion
pounds (24%)
Reinstatement of the Biodiesel Tax Credit???
17
RFS – Proposed Rule
Mandate
Cellulosic
Biomass-based diesel
Other
Total
Corn-starch
Ethanol Cap
Total Renewable Fuels
RFS Biofuel Mandate
1.75
1/1.28
1
3.75
14.4
2014 Proposed Rule
.017
1.28
.263
2.2
13.01
18.15
15.21
18
D4 RINS Generated by Month
400
350
Millions
300
250
200
150
100
50
0
January 2011
January 2012
January 2013
January 2014
Source: Environmental Protection Agency
19
Monthly D6 RIN Generation
D6 RINs
1,400
1,300
Million RINs
Chart: Monthly Generation, projected/prices
1,200
1,100
Stocks/Mandate Price
1,000
900
800
January 2012
October 2012
July 2013
April 2014
Source: Environmental Protection Agency
20
RFS – Expected
(billion gallons)
Mandate
Cellulosic
Biomass-based
diesel
Other
Total
RFS Biofuel
Mandate
1.75
1/1.28
2014 Proposed Expected
Rule
.017
.017
1.28
1.28
1
3.75
.263
2.2
.263
2.2
13.01
13.8
15.21
16
Corn-starch
14.4
ethanol cap
Total Renewable 18.15
Fuels
21
RFS – 2015
(billion gallons)
Mandate
Cellulosic
Biomass-based diesel
Other
Total
Corn-starch ethanol
cap
Total Renewable Fuels
RFS Biofuel Mandate
3
1+
1.5
5.5
15
2015 Proposed
<=.025
1.28
.255
2.2
13.8
20.5
16
22
Summary
Corn ethanol is expected to operated at full capacity.
Expect the 2014 RFS revision for corn ethanol between
13.5 and 14 billion.
Focus on the justification, should provide guidance for
2015 revisions.
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