September Pricing Analysis - North America Biofuels

SUMMARY

Biofuel feedstock costs dipped early in September, climbed to a peak in the fourth week, then eased again in the final days. RINs weakened through mid-month as cheaper soybean oil made biodiesel and renewable diesel more profitable to produce. Biodiesel and renewable diesel followed diesel higher early on, though biodiesel gave back part of those gains late in the month while renewable diesel held up. Ethanol firmed in the second half as Midwest production fell and stocks drew down, while corn sold off at month end on a larger-than-expected stocks report. Diesel export policy and year-round E15 are the main items to watch going into October.

BLENDED FEEDSTOCK INDEX (W1=100)

Week	WoW (%)	Index
W1 (Sep 1-4)		100.00
W2 (Sep 8-11)	-1.46	98.54
W3 (Sep 14-18)	+0.63	99.15
W4 (Sep 21-25)	+2.00	101.13
W5 (Sep 28-30)	-3.24	97.86

Source: GX Go

PRICE ACTION

Product	W2 (Sep 8-11) %	W3 (Sep 14-18) %	W4 (Sep 21-25) %	W5 (Sep 28-30) %
D4	-1.71	-5.75	+1.39	-1.49
D6	-1.87	-5.91	+0.97	-1.33
RD California	-3.53	+7.04	+3.16	+3.09
RD USGC	-3.52	+6.26	+4.51	+3.21
B99 USGC	+5.59	+6.69	-7.20	+1.57
B99 California	+5.16	+6.20	-6.71	+1.45
B99 Midwest	+5.26	+6.31	-6.82	+1.48
B99 East Coast	+4.88	+4.85	-5.46	+1.38
Chicago Ethanol	-1.90	+2.72	+4.29	-0.31

Source: GX Go

USDA found far more old-crop corn in storage than expected, putting 1 Sep stocks at 2.095 billion bushels, 171 million above the average forecast. This saw a drop in corn prices matching the move in futures.
EIA data showed Midwest ethanol production falling from 1,040 kb/d in the week to 11 Sep to 948 kb/d in the week to 25 Sep. Chicago ethanol saw a rise in prices in both weeks 3 and 4 as supply fell. Midwest ethanol inventories also dropped 294,000 bbl in the week to 25 Sep.

CROSS-MARKET DYNAMICS

Soybean oil got cheap relative to diesel, and the BO-HO spread fell to its lowest level since May 2019. That made biomass-based diesel more profitable to produce, encouraging more biomass-diesel production, which weighed on RIN prices.
Higher diesel prices pushed both biodiesel and renewable diesel upwards, with all four biodiesel hubs gaining in weeks 2 and 3, and renewable diesel gaining in week 3.

SOMETHING TO WATCH

A confirmed ban on US diesel exports would likely pull diesel futures lower, and biodiesel and renewable diesel with them, so any White House or Department of Energy announcement is the trigger to watch.
A full Senate vote on the Farm Bill would decide whether E15 can be sold all year, which would lift demand for ethanol, corn and D6 RINs.

Note: All figures, prices and market activity referenced in this report are based on the period covered by this monthly update.