Renewable Energy Report

September 2017 Monthly Renewable Energy Report

Brought to you by the Iowa Grain Quality Initiative and Decision Innovation Solutions.

 

 

Looking at Current Iowa Ethanol Gross Production Margins

The ethanol crush spread is a dollar value calculated as the difference between the combined sales values of ethanol, distillers dried grains with solubles (DDGS) and corn distillers oil (CDO) and the cost of corn in producing ethanol. This is commonly known as the gross production margin (GPM). In most previous analysis, including the AgMRC March 2017 report, CDO price was not included in the GPM calculation. In this month’s report, we include CDO prices in the GPM analysis to represent a real plant situation, and demonstrate the importance of the ethanol co-product market on the ethanol plant profitability.

Ethanol producers often use this spread to hedge the purchase price of corn and sales prices of ethanol and DDGS. The spread relationship between corn, ethanol, and DDGS varies over time and offers many opportunities for speculative actions. Note that the GPM calculation is not intended to show precise ethanol plant margins.

Table 1: Weekly Average Iowa Ethanol and Co-Products Processing Values and Indicators of Average Gross Production Margin; August 2015 – August 2017. 

 

Argentina's Biodiesel Exports to the U.S. Increased 77 Percent

In 2016, the United States imported a record volume of 692.9 million gallons of biodiesel, increasing 96 percent from the volume imported in 2015 (352.8 million gallons). Almost 65 percent (448.5 million gallons) of the biodiesel imported by the United States last year came from Argentina. Imports from Argentina were up 129 percent in 2016 compared with the previous year (195.6 million gallons). According to a USDA Global Agricultural Information Report (GAIN report) published in July 2017, Argentina exported 488.8 million gallons of biodiesel in 2016. This indicates the U.S. imported 92 percent of Argentina’s total biodiesel exports.

Other countries supplying large volumes of biodiesel to the United States in 2016 were Indonesia and Canada. 2016 U.S. imports from these two countries increased year over year: 71.8 million gallons in 2015 to 107.3 million gallons from Indonesia, and 61.2 million gallons in 2015 to 104.7 million gallons in 2016 from Canada. 

 

The Feature of the Month - September 2017

Ethanol organizations presented testimony to the Environmental Protection Agency September 6, 2017, saying high-octane ethanol blends in optimized engines would be the lowest cost means for the United States to meet 2022-2025 fuel economy and greenhouse gas emissions standards. Cindy Zimmerman from EnergyAgwired.com summarized the testimony in a recent article.

Prices and Profitability Models

The spreadsheets listed below provide data and trends for various components of the renewable energy industry. These files are updated with new information each month. Energy prices and their grain feedstock prices are commodity prices that are vulnerable to large swings over time.