Relaxing RFS Mandate May Not Have Desired Effect
by Andy Eubank (Hoosier Ag Today) First – he says the flexibility built into the RFS allowing obligated parties to carry over blending credits from previous years significantly lowers the economic impacts of a short crop. According to Babcock – the 2.4-billion gallon amount of flexibility assumed in the study lowers the corn price impact of the ethanol mandate in the drought year from $1.19 per bushel to 28-cents per bushel. As such – unless corn yields are much lower than assumed in the study – he says relaxing the mandate further would have modest impacts on corn prices. Babcock says the second stand out finding implies that ethanol plants will be a strong competitor for corn even without a mandate.
Babcock says the finding is that if the current price of ethanol relative to gasoline accurately reflects the value of ethanol to blenders – then the price of ethanol will be supported at quite an attractive level as long as ethanol quantities are not pushing up against the blend wall. READ MORE and MORE (Des Moines Register)