The biomass-based diesel blender’s tax credit (BTC) has been agreed upon and is now part of a spending package set to be voted on before the end of the week. The BTC agreement is for a five-year package that spans from 2018 – 2022 to cover the lapsed years and give the industry a three-year runway forward. D4 RINs plummeted below 40 cents per gallon, as expected, but the Jacobsen is not certain that there is longevity to the weakness in the D4 market based on weaker fourth quarter production and first quarter feedstock already in place. The question at hand are now, how quickly can the industry snap back into action and fill out production capacities in the first quarter including buying and receiving feedstock and even brining idled plants back into operational status?

The robust BTC package naturally equals the decline in D4 RIN values, but will also result in strength in soybean oil futures and all cash feedstock markets. Feedstock buying from prompt immediate delivery to the calendar year 2020 can now happen with confidence.