The U.S. ethanol industry has seen good numbers in recent USDA reports, says analyst Pete Meyer of PIRA Energy Group. But as stocks for fuel blending continue to grow, it’s a sign the Memorial Day driving season can’t come soon enough.

Beyond bigger stocks, headwinds for ethanol include “not really friendly RFS [renewable fuel standard] names” appointed to leadership roles within President Donald Trump’s administration, Meyer tells “AgDay” host Clinton Griffiths on the Agribusiness Update segment for Tuesday, Feb. 14, 2017. They include Scott Pruitt, nominated to lead the EPA, and Carl Icahn, Trump’s special adviser on trade.

Icahn “wants to get rid of the point-of-origination obligation, and you’ve seen RINs [renewable identification numbers used to trade renewable fuels] come down to half price,” Meyer explains. “… It sort of rules out any discretionary blending. When you have a higher RIN price, you get a little bit more discretionary blending.”

Export channels continue to show promise for ethanol. Buyers are acquiring U.S. ethanol in northern Brazil because it can be obtained at a lower cost than transporting sugarcane for ethanol from southern Brazil, Meyer points out. Although China recently introduced a 30% tax on ethanol imports, the policy move says less about demand for U.S. ethanol than it does about China’s desire to turn its own large corn stockpiles into fuel, he says.

Farmers should consider investing fewer financial resources to lobby the EPA on biofuels and more to open develop markets for ethanol, Meyer says. “Maybe it’s time we take a harder look at it,” he says.

Fount: http://www.agweb.com/article/ethanol-industry-faces-hope-and-headwinds-naa-nate-birt/