States Ask EPA for Nationwide Biofuel Waiver

States Ask EPA for Nationwide Biofuel Waiver

• The governors of five U.S. states have asked the administration for a nationwide waiver exempting the oil refining industry from the nation’s biofuel laws to help it survive a collapse in demand.
• The Renewable Fuels Standard requires refiners to blend 15 billion gallons of ethanol in 2020, along with roughly 5 billion more gallons of other types of biofuels.
• The coronavirus pandemic has sharply reduced U.S. demand for gasoline since that mandate was announced, and states believe it’s unfeasible for refiners to hit those targets.
• Refiners can buy credits from those that exceed targets, but prices for blending credits have also recently tripled, raising the costs for refiners.

FBN’s Take On What It Mean:The refining industry is being particularly hard-hit by the global pandemic as it destroys energy demand, breaks transport supply chains and makes labor harder to come by. The waiver request places President Trump, who is seeking re-election in November, in a tough spot between the oil and agriculture industries, two important constituencies. Unfortunately, helping refiners would in turn be negative for US farmers as a biofuel waiver would in turn hurt ethanol/corn and biodiesel/bean-oil demand.

Ukraine Set to Limit Wheat Exports With Worries About New Crop

• Ukraine has exported 18 million tonnes of wheat so far in 2019/20, leaving an additional 2 million tonnes available for export.
• Ukraine harvested a record 75.1 million tonnes of grain in 2019 and exports could reach an all-time high of 52-55 million tonnes in the 2019/20
• The deputy agriculture minister has said Ukraine's 2020/21 wheat exports could fall sharply to 12-15 million tonnes following a reduction in the sowing area caused by poor weather.
• Russia, Romania, and Kazakhstan have already opted to limit exports.

FBN’s Take On What It Means:So far the pace of exports from Ukraine is not expected to exceed the 20 million tonne limit. We believe depleting grain export quotas in the Black Sea region earlier than anticipated could push some demand to the US. However, it is more surprising that Ukraine’s government feels exports for the coming year could be down 20% vs the 17-18 million tonnes expected. It may be more important to monitor conditions for new crop going forward.

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—Kevin McNew