The US Department of Agriculture will provide $700 million for domestic biofuel producers, the USDA said June 15, an announcement that sent prices of some renewable fuels higher despite a lack of clarity on how the funds would allocated.
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The additional aid is part of the larger USDA Pandemic Assistance for Producers initiative and it will address the gaps left by earlier aid packages, according to a USDA statement.
"USDA is honoring its commitment to get financial assistance to producers and critical agricultural businesses, especially those left out or underserved by previous COVID aid," Secretary Tom Vilsack in the statement.
In March, USDA announced $6 billion in available funds through Pandemic Assistance to support a number of new programs or to modify existing efforts. The additional aid announced June 15 is planned for implementation within 60 days, "which will continue to be focused on filling gaps in previous rounds of assistance and helping beginning, socially disadvantaged and small and medium sized producers that need support most," the statement said.
"We are pleased to see $700 million in emergency relief for biofuel producers included in today's USDA announcement, and we are happy to hear USDA intends to administer the aid in the next 60 days," said Geoff Cooper, CEO of the Renewable Fuels Association.
"This assistance comes at a critical time, as ethanol producers are still struggling to recover from COVID-related market losses and are now facing historically high feedstock costs" Cooper said. "Many plants remain offline or are operating at reduced output rates. We look forward to receiving additional details on the program from USDA and we are eager to work with the department to ensure smooth and successful implementation."
Apportionment not clear
It was not clear how the monies would be distributed among the different segments of the renewable fuel industry as "no disbursement details have been provided at this point," according to the RFA.
After the announcement, ethanol prices in Houston and New York ticked higher by about 1 cent, assessed at $2.4825/gal and $2.4675/gal by Platts on June 15. Chicago prices softened by about 1 cent to $2.356/gal.
During the pandemic, ethanol demand and prices fell in tandem with gasoline demand and prices, due to the lockdowns in 2020 which cut personal mobility.
According to Energy Information Administration data, ethanol production fell to 537,000 b/d in April 2020, about half of the 1.134 million b/d of ethanol-making capacity. Most recent EIA data showed that production averaged 1.067 million b/d for the week ended June 4.
Under the US Renewable Fuel Standard, gasoline sold in the countryis required have a minimum of 10% of ethanol blended into it.
The June 15 announcement gave corn prices a lift, with CBOT front month corn settling at $6.675/bu on June 15, up from the day earlier settle of $6.5925/bu.
However, biodiesel prices weakened, with Chicago and Houston prices falling to $4.9275/gal on June 15, from $5.1965 on June 14.
Sustainable aviation fuel and renewable diesel prices showed the most strength, with RD prices without credits rising over 40% from 42.861 cents/gal on June 14 to 76.684 on June 15. SAF prices with no credits gained over 25% day on day, to $1.2103/gal on June 15 from 88.67 cents/gal on June 14, according to Platts assessments.