February 26, 2016
BY Rick Kment, DTN
Ethanol demand slowly grew at the end of February, even as supplies continued to expand. Corn futures of $3.80 per bushel allowed ethanol production to remain strong, even though margins were extremely limited to negative. However, the focus continues to be on support through the spring and summer, not on immediate demand. It is typical at this time for production and inventory to well outpace demand. The expectation is that low gasoline prices and increased driving as the weather warms could spark aggressive product movement in the coming months.
Ethanol continues to carry a large premium over RBOB gasoline futures, currently 44 cents per gallon. With front-month March RBOB futures still under $1 per gallon, the wide spread limits additional buyer support for ethanol. Crude oil futures hover at $30 per barrel. Looming uncertainty in financial markets makes it extremely unlikely buying will move back into the energy sector. But prices will not move significantly lower unless a total economic meltdown occurs, which at this point does not seem likely.
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Regional Ethanol Prices ($/gallon) | |||
Front Month Futures Price (RBOB) $1.3500 | |||
REGION | SPOT | RACK | |
West Coast | 1.560 | 1.600 | |
Midwest | 1.390 | 1.585 | |
East Coast | 1.470 | 1.702 |
Regional Gasoline Prices ($/gallon) | |||
Front Month Futures Price (RBOB) $0.9675 | |||
REGION | SPOT | RACK | |
West Coast | 0.756 | 1.286 | |
Midwest | 0.887 | 1.159 | |
East Coast | 0.941 | 1.476 |
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The U.S. exported 31,160.5 metric tons of biodiesel and biodiesel blends of B30 and greater in May, according to data released by the USDA Foreign Agricultural Service on July 3. Biodiesel imports were 2,226.2 metric tons for the month.
CARB on June 27 announced amendments to the state’s LCFS regulations will take effect beginning on July 1. The amended regulations were approved by the agency in November 2024, but implementation was delayed due to regulatory clarity issues.
Legislation introduced in the California Senate on June 23 aims to cap the price of Low Carbon Fuel Standard credits as part of a larger effort to overhaul the state’s fuel regulations and mitigate rising gas prices.
The government of Brazil on June 25 announced it will increase the mandatory blend of ethanol in gasoline from 27% to 30% and the mandatory blend of biodiesel in diesel from 14% to 15%, effective Aug. 1.
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