Biodiesel RIN values are down four cents so far this week while heating oil prices are up six cents

A three percent rise in oil prices spurred by a massive draw on oil inventories combined with a one percent decline in soybean oil prices to send the bean oil/heating oil (BOHO) spread 46 percent lower to seven cents per gallon.  The BOHO has reached its lowest level in nearly a month. The large draw on inventories isn’t the only factor pushing oil prices higher.  The embattled PES refinery that received a very controversial RIN bailout last year from then acting EPA chief Scott Pruitt, is now reportedly in the process of shuttering its South Philly refinery after an explosion and fire last Friday.  Despite the RIN bailout, which saved PES hundreds of millions of dollars, the company says it does not have the resources to rebuild. PES was a large supplier to the Northeast.

Ethanol 2019 RINs closed more than two cents higher today and are up five cents for the week.  Biodiesel RINs are moving lower due to the falling BOHO spread and to continued strong production numbers.  The latest EPA monthly EMTS report showed May to have had the strongest D4 output for any past month of May.  The D4 mandate is 51 percent complete and current production levels are on track to satisfy both the D4 and D5 mandates.  Ethanol production has only satisfied 41 percent of its mandate, although small refinery exemptions could play a factor once again this year in lowering all renewable fuel mandated levels.

Weekly LCFS Credit Transaction Volume Slows After Hitting Six-Week High

California’s Low Carbon Fuel Standard (LCFS) credit volume pulled back after reaching its fourth highest weekly transaction rate this year.  Weekly credit volume of 86,403 was down 73 percent from last week’s report and 54 percent below the same weekly period last year.  The average weekly credit volume for the year dropped from 194,924 to 190,402. Second quarter credit volume is 6 percent aver first quarter volume but down 19 percent compared to the same quarterly period last year.

Trading activity was heaviest on Wednesday with 38 percent of the transactions taking place.  The highest average daily price was $191, which also occurred on Wednesday. The price range credits traded in narrowed from $175 – $198 the week prior to $182 – $194. The weighted-average credit price was $189.12, up from $188.84.  At the top of the range 5,000 credits traded and 5,000 traded at the bottom of the range. 43 percent of the credits traded at a price of $190 or higher, 94 percent traded above 185.

The Jacobsen continues to expect credit volume to rise relative to last year. An additional 284 million gallons of biodiesel and renewable diesel are forecast to be produced during 2019. There were 11.18 million LCFS program credits generated during 2018 and there are 13.7 million forecast for 2019.

CARB only includes transfers that are completed in the given week. Transfers for future dates, proposed and still pending confirmation, are excluded.  CARB’s weekly report excluded 4 transfer of 5,297 credits. CARB will exclude transfers that trade at, or near, zero in price.

INDUSTRY-RELATED NEWS

June 20 (AgPro)  President Trump Takes Action On Farmer RIN Waiver Concerns –  When President Trump visited an Iowa ethanol plant in June, farmers attending the event took the opportunity to help President Trump understand how Renewable Identification Number (RIN) hardship waivers are undermining the Renewable Fuel Standard (RFS). It appears he may have heard them. READ MORE

May 28 (Bloomberg Environment Magazine) EPA Ready to Scrap Biofuel Market Reform in Bid to Boost Ethanol – The EPA is poised to jettison proposed trading restrictions on a $5.2 billion market for biofuel compliance credits, casting aside changes sought by independent refiners complaining of hoarding and wild price swings. READ MORE

May 28 (Biofuels Intl)  US Representatives introduce Renewable Fuel Standard Integrity Act 2019   – Last week, Chairman of the US House Committee on Agriculture, Collin Peterson, together with Representatives Dusty Johnson, Dave Loebsack, Rodney Davis and Roger Marshall introduced the bipartisan Renewable Fuel Standard Integrity Act of 2019. READ MORE

I always look forward to hearing from our customers.  Please feel free to contact me with any questions, comments, or suggestions you may have.  If you buy, sell, or trade any of our products, I would like to hear from you.  Bob Lane at [email protected]  847-549-3640.