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Trump Ethanol Moves May Be Worse for Farmers Than Soy Tariff

Submitted by on April 10, 2018 – 4:29 pmNo Comment

by Mario Parker (Bloomberg)  Change to biofuel mandate may mean destruction of corn demand; Growers already dealing with trade concerns, crop gluts  —  Based on his own back-of-the-envelope calculations, Minnesota farmer Kirby Hettver could lose tens of thousands of dollars of earnings because of President Donald Trump. 

But damaging as the brewing trade war with China may turn out to be for Hettver and other American soybean farmers, he says the greater financial impact could come if Trump moves ahead with changes to the U.S. ethanol mandate, known as the Renewable Fuel Standard, or RFS. 

While proposed tariffs announced by China last week would apply to about $14 billion a year of U.S. soybean exports, the RFS accounts for 38 percent of the U.S. corn crop, valued at about $21 billion at current prices. And unlike the situation in the soybean market, where other buyers could pick up the slack for a drop in Chinese demand, the undoing of U.S. biofuel laws could lead to real demand destruction. 

Farmers “thought they were voting for an administration that was supportive of rural America,” and now they’re anxious, said Wallace Tyner, an economist at Purdue University in West Lafayette, Indiana.

The National Corn Growers Association, along with other groups, had its members send a barrage of tweets to Trump ahead of Monday’s meeting, reminding him of his promise to uphold the law.

The threat to ethanol demand comes as the rural economy is already suffering from years of crop gluts. The oversupply sparked a prolonged rout for grain prices, and U.S. farmer incomes are projected to fall to a 12-year low in 2018. At the same time, China has retaliated to Trump’s hard-line stance on trade with a plan for duties on about $50 billion of U.S. imports, including a host of agriculture products.   READ MORE

US-China trade feud may impact Brazilian ethanol market: UNICA (Platts)

Fortunately, Unfortunately: The Spring Saga of American Ethanol (Biofuels Digest)

Ethanol Report on Demand Destruction  — RFA’s Geoff Cooper Details Recent Drops in Ethanol Blending and RIN Prices (Energy.AgWired.com)

RFA: SIGNS OF CORN & ETHANOL DEMAND DESTRUCTION (Brownfield Ag News)

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