RFS Waiver Would Have Minor Effect on Corn Price in Short Term
by Holly Jessen (Ethanol Producer Magazine) An October report from the Food and Agriculture Policy Research Institute concludes that a reduction in the renewable fuel standard wouldn’t greatly reduce corn prices in the 2012/’13 crop year. However, the effects of the waiver could be larger in the next crop year.
The motivation for ethanol use and production is likely to come from crop and fuel market conditions, not the RFS, the report’s four authors wrote. It’s assumed that the shift away from E10 would be slow, meaning rising wholesale prices for ethanol wouldn’t result in lower use of ethanol by blenders—at least when the ethanol price changes aren’t large. “Waiving the mandate, a minimum use requirement, has limited market impact if people were going to use almost as much as the mandate anyway,” the 20-page report said.
… Other key findings from the report were:
- If the advanced mandate were waived, less Brazilian sugarcane ethanol would be imported. That would lead to increased U.S. ethanol production from corn and increased corn prices.
- In general, reducing the use of corn ethanol domestically would tend to increase exports and cutting back on the amount of advanced ethanol that is imported would mean fewer exports.
“The results stress the importance of the mandate hierarchy, delayed impacts that take place after a waiver, trade, and the interactions among biofuel and crop markets more generally,” the report said. “However, there are important uncertainties about market behavior in the future, particularly about ethanol use, RIN rollover, and reconciling marketing year and calendar year information.” READ MORE and MORE (WKZO) and MORE (DomesticFuel.com) and MORE (Ethanol Producer Magazine) and MORE (DomesticFuels.com) and MORE (The Hill E2Wire)