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  • When the EPA announced today that it’s rolling the final blending mandate for 2014 into next year, it appeared to create more uncertainty for the industry and more political fodder for opponents and supporters of the renewable fuel standard (RFS) that requires the use of biofuels in gasoline and diesel fuel.Yet, leaders of two of the nation’s largest ethanol lobbies expect the final blending mandate for 2014 to be slightly above the 13 billion gallon amount EPA originally proposed for 2014 a year ago. “I’m assuming the 2014 volume will be what’s actually been blended,” Tom Buis, CEO of Growth Energy, told Friday. “The EPA announced that the RINs generated in 2012, which expire this year, can be used through 2015,” he said. Those Renewable Identification Numbers represent batches of ethanol produced. Petroleum refiners who haven’t met their obligation to sell a certain amount of ethanol or biodiesel can buy RINs from others who have a surplus. Bob Dinneen, CEO of the Renewable Fuels Association, agreed. Extending the ability to trade unused RINs through 2015 will take pressure off refiners, he said. “It should be pretty clear that the EPA is not going to set an RVO [renewable volume obligation] for 2014 higher than what was used,” Dinneen said.Dinneen said biorefineries will likely produce 14.2 billion gallons of ethanol this year and that about 13.4 billion to 13.5 billion of that will be blended in the U.S. market. Ethanol has been in demand for refiners, he said, “because ethanol for much of the year was 80 cents to a dollar cheaper than gasoline.” Both the biofuels industry and the petroleum industry will be watching closely to see how EPA mandates ethanol use in the future.“This isn’t about 2014. This is about 2015 and 2016 and how you continue to grow the industry,” Dinneen said.The original energy law passed in 2007 would have mandated up to 13.8 billion gallons of corn ethanol blending in 2013, 14.4 billion gallons this year and 15 billion gallons next year. In recent years, EPA has lowered the mandate slightly due to smaller-than-expected amounts of cellulosic ethanol production. Last year was the first time it proposed lowering the mandate because of the “blend wall” of 10% of the nation’s gasoline supply. Nearly all cars can use gasoline with 10% ethanol (E10) and most cars on the road, those made in 2001 or later, can use 15% ethanol, but the petroleum industry has resisted adding E15 pumps to dispense the higher ethanol blend.Friday, the EPA appeared to be backing away from its use of the blend wall to justify lowering the mandate.“That would have given the keys to the car to the oil industry,” Buis said.After Friday’s announcement, “EPA is committed to getting the RFS back on track, which we certainly support,” Dinneen added. “Today, they took a big step toward getting it back on track by avoiding a train wreck.” Although many farm groups and ethanol supporters in Congress said they were disappointed with the continuing uncertainty over EPA’s final numbers for mandated blending, the reaction from the American Petroleum Institute (API) and other opponents of the RFS made the EPA announcement seem like more of a victory for biofuels.“The rule is already a year overdue and the administration has no intention of finalizing this year's requirements before the year ends,” API CEO Jack Gerard said in a statement. “It is unacceptable to expect refiners to provide the fuels Americans need with so much regulatory uncertainty. This is an example of government at its worst.” “The Renewable Fuel Standard was flawed from the beginning, horribly mismanaged, and is now broken,” Gerard said. “The only real solution is for Congress to scrap the program and let consumers, not the federal government, choose the best fuel to put in their tanks. Failure to repeal could put millions of motorists at risk of higher fuel costs, damaged engines, and costly repairs.” The National Council of Chain Restaurants also urged Congress to repeal the RFS. “The federal RFS ethanol mandate is irrevocably broken and needs to be repealed immediately,” the group said. “It is time that Congress take the RFS ‘off the menu’ once and for all.”Neither Buis nor Dinneen were surprised by that reaction from long-time opponents of the RFS.“The refiners are going to do everything they possibly can to use today’s announcement to get Congress to repeal the program,” Dinneen said. “I don’t see that happening.”

  • The Environmental Protection Agency announced today that it won't issue a final 2014 rule for blending ethanol into gasoline until next year. The agency sounded as if it were admitting its original proposal announced almost a year ago was flawed.“The proposal has generated significant comment and controversy, particularly about how volumes should be set in light of lower gasoline consumption than had been forecast at the time that the Energy Independence and Security Act was enacted, and whether and on what basis the statutory volumes should be waived,” EPA’s announcement on Friday said. “Most notably, commenters expressed concerns regarding the proposal’s ability to ensure continued progress toward achieving the volumes of renewable fuel targeted by the statute.”Last year’s proposal for implementing the renewable fuel standard (RFS) used the so-called blend wall against ethanol blends above 10% to justify cutting mandates below the the 2007 energy law’s targets and slightly below 2013 use of ethanol made from corn. EPA said, in essence, that the blend wall was reducing the supply of biofuels, an interpretation of the law that surprised ethanol and biodiesel groups. Ethanol trade groups said at the time that the original law was intended to force biofuels into the marketplace even if the oil industry claimed it couldn’t find room for them. Several ethanol industry leaders have said that if EPA continued to use the blend wall justification that EPA would face litigation.Friday, the EPA seemed to acknowledge some of those legal issues.“EPA has been evaluating these issues in light of the purposes of the statute and the administration’s commitment to the goals of the statute to increase the use of renewable fuels, particularly cellulosic biofuels, which will reduce the greenhouse gases emitted from the consumption of transportation fuels and diversify the nation’s fuel supply,” the agency said.Scott Irwin, a University of Illinois economist who follows the ethanol industry and EPA’s blending rules, sees the announcement as a major turning point.“Conventional wisdom up to this week was that the 2014 RVOs [renewable volume obligations] for the RFS would be only slightly modified from the levels proposed by the EPA and Obama administration in the preliminary rulemaking last November. We can throw that conventional wisdom out the window. Clearly, some kind of major rethinking is going on, otherwise the 2014 rulemaking that was already internally reviewed, leaked, and sent to the OMB [White House Office of Management and Budget] would have been released,” Irwin said in an email message to “The exact nature of the rethinking underway is anyone’s guess, but it is hard not to see this as a major victory for biofuels interests,” Irwin added. “It would not surprise me if the EPA and the Obama administration came full circle and eventually went back to the full statutory levels for the 2014 and 2015 RVOs.  I think they realize that a court case regarding their imaginative interpretation of ‘inadequate domestic supply’ is stacked against them, and with the Republican victory in the Senate, important ethanol supporters will be even more powerful. By the way, this was also fully anticipated by the RINs market earlier this week. On Tuesday, D6 ethanol RINs rose by more than 10% after being flat for months. Coincidence? I think not. One more example of the very leaky decision-making process at the EPA regarding the RFS.”The RFS works through a trading scheme where blenders who don’t meet their obligations can buy RINs, or renewable identification numbers. Friday’s announcement leaves the exact number of obligations for blenders up in the air. Brian Jennings, executive vice president of the American Coalition for Ethanol in Sioux Falls, South Dakota, said he can only speculate at this point, but he expects EPA to tally up the RINs traded for corn ethanol, for biodiesel, and for cellulosic ethanol in 2014 and make that the requirement. “Whatever the oil companies use is what we’re going to finalize,” Jennings told In spite of that uncertainty, Jennings agrees with Irwin that the announcement looks like good news for ethanol. When asked if the EPA was admitting they were wrong last year, he replied, “That’s precisely how this should be read between the lines.”A year ago, Jennings’ group was more concerned about last year’s rationale for lowering the RFS mandate than the exact numbers.“We were all led to believe they (the EPA) were on the verge of completely rewriting the RFS,” Jennings said.By last fall it was obvious that the nation had used less gasoline that Congress expected after it passed the energy law in 2007, partly because of declining demand from the Great Recession and from improved fuel efficiency in newer cars. Currently, about 13 billion gallons of ethanol are blended into the nation’s motor fuel supply each year, slightly more than 10%. Under the original targets of the law, more than 14 billion gallons would have been mandated in 2014 and by next year, the mandate that is implied for corn ethanol in the RFS would have topped out at 15 billion gallons. The oil industry has been resisting adding fuel pumps with 15% ethanol (E15), which EPA has approved for cars made in 2001 or later. Continuing to ramp up ethanol use would have cut into the oil industry’s market share for gasoline sales.“Just because life gets a little uncomfortable for the oil companies…doesn’t mean the oil companies and the EPA can rewrite the law,” Jennings told While the industry was pleased that EPA signaled it might be backing off its earlier goals, some didn’t welcome the lack of blending numbers yet for 2014.The latest EPA announcement “continues the atmosphere of uncertainty for the advanced biofuel industry,” the Biotechnology Industry Organization (BIO) said.“Unfortunately, the delay in this year’s rule already has chilled investment and financing of future projects, even as first-of-a-kind cellulosic biofuel plants are right now starting up operations, said BIO CEO Jim Greenwood. “The industry needs a final rule that is legally appropriate and continues to support our efforts.”Representative Collin Peterson of Minnesota, the ranking Democrat on the House Agriculture Committee, also decried further delay.“Today's announcement leaves the future of ethanol, biodiesel, and other advanced biofuels up in the air,” he said in a statement. “The RFS has played a major role in keeping the rural economy strong, and continued inaction could put that in jeopardy. Our farms, rural communities, and the economy as a whole could all feel the impact.“The proposed reductions to the RFS were unacceptable and, while the uncertainty created by today's announcement is not helpful, I hope that it will give the EPA the time needed to do the right thing,” Peterson added.Iowa Secretary of Agriculture Bill Northey saw some good in the announcement. “It is good news that the EPA has withdrawn the misguided rule they proposed last year and responded to the thousands of public comments opposing their efforts to undermine the RFS. Unfortunately, the ongoing uncertainty continues to hurt the entire renewable fuels industry,” Northey said in a statement.Chip Bowling, a Maryland farmer who heads the National Corn Growers Association, promised that his group will keep the pressure on EPA.“Congress created the RFS to help reduce our dependence on foreign oil and to provide cleaner fuel choices for consumers,” Bowling said. “We will continue working to defend the interests of corn farmers and consumers by holding EPA accountable for implementing the law as enacted by Congress.“Corn farmers have produced a second record crop in two years –resulting in corn prices that have fallen below the cost of production in many parts of the country. Our members have been frustrated by the uncertainty and delays surrounding the RFS. When the time came for them to speak up, they did so – loudly and forcefully. Our growers and allies sent the EPA a clear signal when this proposal was first issued, with nearly 200,000 people responding to the public comment opportunity in opposition to the reduction. Nearly 10,000 farmers called the White House directly. We have never before seen so much grassroots interest in a particular issue. Our farmers will continue to raise our voices as necessary in defense of this important policy.”

  • Weekend weather shift on the way.Though some of it's melted in the last few days, there is snow cover in most of the northern Plains and Corn Belt (with most of Illinois being snow-free, according to MDA Weather Services maps). Look for that to change in the next two or three days, though, with warmer temperatures and rainfall expected in many areas over the weekend. "Warmer temperatures and rainfall in the Midwest this weekend will melt snow further; however, snow cover should rebuild in northern and eastern areas later next week," says MDA Weather Services senior ag meteorologist Don Keeney. One bright spot in the weather lately: The young winter wheat crop in the Plains is looking better at this stage than it has in years . . .for now."As long as we can get average winter and spring moisture, the wheat has potential since we've had the best fall conditions that we've had for several years," says Marketing Talk veteran adviser Shaggy98. "That being said, we sure could use a little moisture right now as the top is getting dry."Check out the latest Freese-Notis Weather report Chat Friday's 'Big 3' in Marketing TalkWill cash basis continue to improve?In some areas, basis levels are still near $1 for soybeans and widening for corn and wheat. Are improvements in the cards? Market analyst Roy Smith says in his area of Nebraska, the tightening moves are sometimes tough to see, but they're happening. "Corn bids continue to plug along, pennies up and pennies down. The net result has been a gradually improving cash bid. That is better than having violent large moves up and down but not going anywhere," Smith says. "At least the price today is such that market analysts have stopped taking about cash corn prices below $3.00. With the size of the 2014 crop, it may take until spring for corn to be above production cost if indeed it ever gets there for most of us."See more from RoyImmigrant farm workers safe in the U.S. . . . if they meet criteria.President Barack Obama took to the airwaves Thursday night to lay out his executive order on immigration reform. Now, undocumented immigrants will be able to stay in the U.S. -- for now -- provided they meet a few criteria, including at least five years of residence in the U.S. and the ability to pass a background check. The announcement was met with the expected partisanship from lawmakers, but was lauded by farm labor groups. Around .25 million farm workers will avoid deportation now, according to the United Farm Workers (UFW). Don't expect a ton of market reaction to Thursday's announcement, though, in the grains or outside markets. "My first thought was the Obama announcement would have negative implications for the equity markets as this would seem to be pretty polarizing, but it seems they are a little firmer overnight," says Dan Hueber, market analyst with The Hueber Report and The Center for Agriculture in Sycamore, Illinois. "I suspect since there was nothing terribly surprising in the announcement, markets just took it in stride. Just another day in Washington with an administration and Congress that are deeply divided on most issues."See more on the immigration plan

  • In his address to the nation focusing on steps moving forward on federal immigration policy, President Barack Obama outlined his plan -- enacted via executive order -- to allow to-date undocumented immigrants to stay in the country if they meet certain criteria and will agree to a few steps. The president's announcement Thursday allows, among others, immigrant farm laborers to "temporarily stay in the U.S. without fear of deportation" if they:Have been in the country for at least five years.Pass a background check.Pay taxes.In addition, Obama said Thursday he'll continue efforts to "crack down on illegal immigration at the border" and will continue "deporting felons, not families" and "holding accountable certain undocumented immigrants by requiring they pass a background check and pay taxes." Securing the border from future illegal immigration, the president added, will remain a high priority and will be bolstered by "continuing to deploy more resources to the border to strengthen enforcement" and focusing on deporting undocumented immigrants who recently crossed the border."See more on the President's immigration planThe plan yielded a partisan response from Congressional leaders. Kentucky Republican Senator Mitch McConnell called the plan one that "rejects the voice of voters" and "ignores the law" in its initiative as an executive order rather than an act of Congress."What does the President have to say to the countless aspiring immigrants who’ve spent years waiting patiently in line? To the people who’ve played by all the rules?" McConnell said in a statement Thursday. “What does the President have to say to the millions of Americans who still can’t find work in this economy? The President can’t reach across the aisle to secure a serious jobs plan for them, but he’s willing to put everything he’s got into this one executive action?"On the other side of the aisle, Nevada Democratic Senator Harry Reid called President Obama's announcement "great news for families in Nevada and across the country," adding that, though it's a temporary measure, it continues the Senate's passage of its immigration bill in 2013 that later failed in the House of Representatives. “The President’s executive action is a good first step; however it is only a temporary solution. President Obama is doing what he can within his well-established constitutional authority but nothing replaces Congress acting on comprehensive immigration reform. So today, while I thank President Obama for his decisive action, I ask my Republican colleagues to put their partisan politics aside and focus their efforts on passing legislation that will permanently fix our broken immigration system," Reid said Thursday. "I will continue to fight until we make immigration reform a reality.”The implications to Thursday's executive order for agriculture are yet unknown, but it will temporarily secure immigrant farm workers who, if here illegally, can meet the criteria laid out by President Obama. Because it's a temporary measure, ag industry leaders are now calling upon Congress to act once the next session begins."As we look forward to the start of the new Congress in January, we strongly urge the House and Senate, Democrats and Republicans, Congress and the administration, to come together and pass legislation that both deals with the reality of the current agricultural workforce and recognizes the need for a new, market-based visa program to meet farmers’ future labor needs," according to a statement released Thursday by the Agriculture Workforce Coalition, a group representing agricultural employers in the U.S. "Without such legislation, farmers will continue to be unable to find the workers they need to pick crops or care for livestock; more food production will go overseas; local economies across the country will suffer; and the American consumer will pay more for the food they eat. What farmers, ranchers and growers need, and what the American people deserve, is for policymakers in Washington to do their jobs and act to solve the country’s broken immigration system."In the meantime, it's estimated .25 million farm workers, half of those in California alone, will not face immediate deportation, according to a statement from Arturo Rodriguez, president of United Farm Workers (UFW)."We were pleased to learn from the president today that at least 250,000 farm workers will be eligible for deportation relief under his executive action," Rodriguez said in a UFW statement. "The president committed to working with UFW to do everything possible to make sure that every farm worker who qualifies for the program gets enrolled, and we are prepared to work with him and Congress to finish the job by passing legislation that fully addresses this issue once and for all." Though the farm labor side of agriculture is pleased with the reform plan announced Thursday, it still isn't enough. Right now, the crop sector is well short of meeting its full labor needs, and even though President Obama's plan will allow many workers to remain in the U.S., the industry will continue to incur major costs because of a general labor shortage, says American Farm Bureau Federation president Bob Stallman. That will be the case until a more comprehensive visa program can be enacted.“In practical terms, we do not expect the president’s initiative to help America’s farmers deal with the real labor challenges they face. Our nation loses millions of dollars in fruit and vegetable production every year because farmers cannot find labor to harvest everything they grow. This order will not change that," Stallman says. “Farmers and ranchers need a new, flexible visa program that ensures long-term access to an expanding workforce by allowing foreign-born workers to enter the U.S. We also need to permit some current workers, many of whom have helped sustain our operations for years, to remain working in America."See more on President Obama's plan announced Thursday