Ethanol Market and Pricing Data

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1 Ethanol Market and Pricing Data August 22, 2017 CONTENTS Ethanol, Fuels and Co-Product Pricing... 2 Tariff Rates... 9 Additional Market Resources For more information on the contents of this publication or the U.S. Grains Council, its mission and programs, please contact the U.S. Grains Council at (202) The U.S. Grains Council is a private, non-profit partnership of producers and agribusinesses committed to building and expanding international markets for U.S. barley, corn, grain sorghum and their products. The Council is headquartered in Washington, D.C. and has ten international offices that oversee programs in more than 50 countries. Financial support from our private industry members, including state checkoffs, agribusinesses, state entities and others, triggers federal matching funds from the USDA resulting in a combined program value of more than $26 million.

2 Ethanol, Fuels and Co-Product Pricing *Note: prior year Ethanol FOB PNW values will be available in Market Outlook: Ethanol prices came under pressure this week from two sources. Lower CBOT corn prices contributed to selling pressure but the biggest factor was the EIA s Wednesday, August 11, 2017 data showing a massive increase in weekly ethanol production. The EIA reported 311 million gallons of ethanol were produced, up from the 297 million the week prior. The data release surprised the market, and CBOT ethanol futures, wholesale rack, and FOB Gulf prices all headed lower. 20 F St. NW, Suite 600 Washington, DC [Page 2]

3 Nearby CBOT ethanol futures fell 0.24 cents/liter last week, ending at Cash markets followed suite, with the average Midwest wholesale rack price slipping 0.89 cents/liter to finish the week at Lower interior prices, combined with increases in ocean freight rates, pressured FOB U.S. Gulf ethanol values, which ended the week at cents/liter after a cent/liter decrease. Brazilian ethanol prices moved in the opposite direction last week, with FOB Santos prices gaining cents/liter. The latest recorded price was cents/liter. The weakness in the U.S. market, combined with Brazil s higher pricing, moved the FOB Houston FOB Santos, Brazil spread to further favor U.S. product. The spread was last quoted at cents/liter, after moving 6 percent lower this week. The EIA reported RIN generation fell 1.7 percent month-over-month in July, as 1.67 billion were generated. Still, RIN generation was up 3.5 percent from July D6 renewable fuel RIN (primarily generated from cornbased ethanol production) generation increased 1.04 percent month-over-month in July to billion RINs a four-month high. D6 RIN prices were softer this week (last quoted at cents/rin) but have increased almost 20 percent from the end of May. Despite softness in ethanol prices, ethanol production will likely continue at a strong pace. Corn prices have fallen 2.4 percent this weekly while wholesale rack ethanol prices are only down 2 percent. Accordingly, the strong margins recorded last week should continue. Ethanol prices will likely be commensurately pressured, making the biofuel even more competitive as a gasoline additive versus MTBE and the aromatic compounds. Petroleum markets have stabilized this week with Brent crude oil up only $0.09/gallon ($ cents/liter) to $47.64/gallon ($ /liter) and RBOB gasoline futures gaining 1.7 cents/gallon (0.46 cents/liter) to $1.597/gallon ($0.418/liter) this week. International Developments Brazil: Brazilian ethanol production is expected to fall 8 percent versus last year, totaling billion liters, according to the USDA. Last year, the country produced billion gallons of ethanol. Corn-based ethanol production, however, is expected to increase in 2017, reaching 480 million liters (1.8 percent of total projected ethanol production); nearly double it s 2016 figure of 235 million liters. Consumption of fuel ethanol in Brazil is expected to fall by 220 million liters to billion, due to the current Brazilian economic recession and expectations for zero GDP growth in Falling consumption will reduce Brazil s 2018 fuel ethanol imports to 1.3 billion liters, a decrease of 400 million from The expected decrease in ethanol production will keep Brazil s total ethanol exports in-line with 2017 values at 1.4 million liters. Australia: The USDA expects the biofuel market and industry to remain limited due to government policies. Currently, Australia s biofuels mandates do no cover the entire country and sharply lower crude oil prices have made fossil-fuels more cost effective for consumers than biofuels. However, ethanol production in the country is expected to remain at 2017 values, due to the New South Wales (NSW) 6 percent mandate and the 3 percent ethanol blending mandate in Queensland. Notably, Queensland s legislation increases the requirement to 4 percent in 2018, which will increase total ethanol consumption. Currently, Australian ethanol plants have nameplate capacity of around 440 million liters but have been operating at less-than-capacity, producing 250 million liters annually. However, the Queensland State government is projecting fuel ethanol demand will grow to 75 million liters in 2017 and to 100 million liters in 2018 as the biofuels blending requirements take effect. To supply the growing demand, several new ethanol plants are currently proposed. 20 F St. NW, Suite 600 Washington, DC [Page 3]

4 Source: World Perspectives, Inc. Source: World Perspectives, Inc. 20 F St. NW, Suite 600 Washington, DC [Page 4]

5 Source: World Perspectives, Inc. Source: World Perspectives, Inc. 20 F St. NW, Suite 600 Washington, DC [Page 5]

6 Source: World Perspectives, Inc. Source: World Perspectives, Inc. 20 F St. NW, Suite 600 Washington, DC [Page 6]

7 Source: World Perspectives, Inc. Source: World Perspectives, Inc. 20 F St. NW, Suite 600 Washington, DC [Page 7]

8 Source: World Perspectives, Inc. Price Database: If you are interested in historical price data, please click here (link to 20 F St. NW, Suite 600 Washington, DC [Page 8]

9 Tariff Rates HS Code HS Codes Description Ethyl alcohol, undenatured, of an alcoholic strength by volume of 80 percent or higher, for fuel use. Ethyl alcohol and other spirits, denatured, of any strength, for fuel use. Tariff Rate Database: If you are interested in tariff rate data for all U.S. export markets, please click here (link to 20 F St. NW, Suite 600 Washington, DC [Page 9]

10 Additional Market Resources USCG-funded studies: Description of USGC-funded ethanol studies TBD. If you are interested in any of the reports described here, please click here (link to USDA GAIN reports: USDA GAIN Reports Title Description Link Argentina Biofuels Annual 2017 (GAIN) This report provides an overview on biofuel use in Argentina. Read here. EU-28 Biofuels Annual 2017 (GAIN) This report provides an overview on biofuel use in the EU-28. Read here. EU-28: Biofuel Mandates in the EU by Member State (GAIN) This report provides an overview on the biofuel use mandates in the various EU member states. It supplements the EU-28 Biofuels Annual Report. Read here. Canada Biofuels Annual 2016 (GAIN) This report provides an overview on biofuel use in Canada. Read here. Brazil Biofuels Annual 2016 (GAIN) This report provides an overview on biofuel use in Brazil. Read here. China Biofuels Annual 2016 (GAIN) This report provides an overview on biofuel use in China. Read here. India Biofuels Annual 2017 (GAIN) This report provides an overview on biofuel use in India. Read here. Philippines Biofuels Annual 2016 (GAIN) This report provides an overview on biofuel use in the Philippines. Read here. Peru Biofuels Annual 2016 (GAIN) This report provides an overview on biofuel use in Peru. Read here. Indonesia Biofuels Annual 2017 (GAIN) This report provides an overview on biofuel use in Indonesia. Read here. Romania Biofuels Market Overview 2017 (GAIN) This report provides an overview on biofuel use in Romania. Read here. Thailand Biofuels Annual 2017 (GAIN) This report provides an overview on biofuel use in Thailand. Read here. Spain's Biodiesel and Renewable Diesel Overview 2017 (GAIN) Korea Bioethanol Workshop 2017 This report provides an overview on biofuel use in Spain. The report includes an overview of the 2017 Bioethanol Workshop and Roundtable in Seoul, Korea. Read here. Read here. 20 F St. NW, Suite 600 Washington, DC [Page 10]