� US ethanol markets corrected downward Tuesday, ending gains recorded in the previous two sessions as a supply surplus continues to pressure the marketplace.
� Weaker D4 biomass-based diesel RINs led the market lower Tuesday’s trading session, reversing yesterday’s gains.
� US biodiesel prices weakened amid a pullback in premiums alongside a sell-off of the Nymex ULSD contract.
Licensed to: Cortney Becker, Argus Media Inc (New York)
Chicago (Argo) prompt ¢/USG 138.74New York Harbor prompt ¢/USG 146.02Los Angeles low CI ¢/USG 152.84fob Brazil anhydrous $/m³ 502.50cif Brazil anhydrous $/m³ 442.38
Ethanol deals done
Market Timing Price ¢/USG Volume ’000 USG
Chicago Argo 28 Feb-9 Mar 140.00 5
28 Feb-9 Mar 140.00 5
28 Feb-9 Mar 140.00 5
28 Feb-9 Mar 140.20 5
28 Feb-9 Mar 140.25 5
28 Feb-9 Mar 140.00 10
ETHANoL
EthanolUS ethanol markets corrected downward Tuesday, ending gains recorded in the previous two sessions as a supply surplus continues to pressure the marketplace. Spot values retreated 1-2¢/USG, tracking weaker gasoline markets and corn feed-stocks.
In Chicago’s Argo in-tank transfer hub, prompt availabilities weakened more than a half-cent in daily comparison, changing hands at 140¢ and 140.25¢/USG throughout the day. Discus-sion for dead prompt delivery emerged at between 140¢ and 141.5¢/USG, but failed to stimulate trade.
The Rule 11 market gave back half a penny in thin liquidity. Railcars with this week timing were offered at 141¢/USG early in the day, with talks ranging just under 139¢ in afternoon commerce.
In the New York Harbor, February barge discussion thinned
US
ANNoUNCEMENT
Argus completes and extends annual Ioscoassurance review Argus has completed its fourth external assurance review of its price benchmarks, extending the scope of the process to cover petrochemicals and fertilizers for the first time, as well as again covering crude, products, biofuels, thermal coal, coking coal, natural gas and biomass benchmarks. The review was carried out by professional services firm PwC. Annual in-dependent, external reviews of oil benchmarks are required by international regulatory group Iosco’s Principles for Oil Price Reporting Agencies, and Iosco encourages extension of the reviews to non-oil benchmarks. For more information and to download the review visit our website:http://www.argusmedia.com/About-Argus/How-We-Work
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Issue 16-35 | Tuesday 23 February 2016Argus Americas Biofuels
Argus mArket mAp: ethAnol ¢/USG
Los Angeles
ChicagoNew YorkNebraska
Houston
Sao Paulo
Itaqui
Freight $/t ¢/USG
USGC - Itaqui 54.00 18.06Santos - NYH 52.00 17.39
los Angeles less ChicagoEthanol: +13.88
los Angeles less nebraskaEthanol: +23.00
los Angeles less santosEthanol: -36.22
rule 11 less nebraskaEthanol: +7.50
houston less ChicagoEthanol: +7.00Rbob: -12.62
new York less ChicagoEthanol: +5.88Rbob: -1.85
new York less santosEthanol: -44.22
houston less santosEthanol: -43.09
6
7
8
9
10
11
12
13
8 Dec 15 4 Jan 16 28 Jan 16 23 Feb 16
R11 = 0
new York harbor ethanol vs rule 11 ¢/USG
30
35
40
45
50
55
60
8 Dec 15 4 Jan 16 28 Jan 16 23 Feb 16
USGC = 0
Brazil anhydrous ethanol vs usgC ¢/USG
BrazilOffer levels for delivered ethanol retreated Tuesday, stirring very little interest from Brazilian buyers as contracted volume remain enough to supply the domestic marketplace.
as the month draws to a close. March availabilities weakened 1.5¢ on the day, with discussion surfacing between 148¢ and 148.5¢/USG.
The west coast rail market slid half a penny day-over-day in muted activity. Arizona railcars traded multiple times at 152.5¢/USG.
Anhydrous ethanol on a cif Brazil basis ticked $1/m³ lower to $472/m³ on the offer side, while appetite in Brazil re-mained limited for the specification amid sufficient inventories and better remunerations for imported diesel.
On the export front, export economics remained sealed off amid stout domestic spot values and weak prices on the US physical market. Anhydrous ethanol hovered in the $445-560/m³ in thin commerce, while hydrous fuel ethanol fail to stir interest abroad as prompt offers were still seen at $520/m³ while potential buyers maintained bids at $425/m³.
Licensed to: Cortney Becker, Argus Media Inc (New York)
Issue 16-35 | Tuesday 23 February 2016Argus Americas Biofuels
RINsWeaker D4 biomass-based diesel RINs led the market lower Tuesday’s trading session, reversing yesterday’s gains.
Current year D6 renewable ethanol RINs traded at 73¢ and 73.25¢/RIN on the day, moving flat from yesterday’s mark. Prior year ethanol credits held a marginal premium to the 2016 D6s, changing hands at 73¢ and 73.25¢/RIN in the first half of the session before bids and offers climbed to around 73.5¢/RN.
The 2016 vintage year D4 biomass-based diesel RINs re-treated a quarter of a cent today, changing hands at 78¢/RIN with heard trades at 77.5¢ and 78.5¢/RIN. The D4/D6 spread narrowed to 4.88¢/RIN.
Concurrent year D3 cellulosic RINs received a lone offer at 188¢/RIN today and were heard trading at 180¢/RIN yesterday. The 2015 vintage D3s were talked between 131.5¢ and 135¢/RIN in the morning, with discussion narrowing to between 131¢ and 133¢/RIN later in the day.
The costs of compliance as measured by Argus Renewable Volume Obligation (RVO) fell by 0.01¢ to 7.61¢/USG.
California carbonCalifornia and Quebec carbon allowances fell by about 2pc today, as a sell off left the February- and December-delivery contracts below the program's price floor.
The February-delivery contract fell by 24¢ to $12.50/metric tonne, with 3.2mn t traded today. Over 7.1mn t went in the December-delivery contract, which dropped by 32¢ to $12.70/t. The December 2017-delivery CCAs lost 63¢ to end the
CaLIfORNIa CaRbON
Licensed to: Cortney Becker, Argus Media Inc (New York)
Issue 16-35 | Tuesday 23 February 2016Argus Americas Biofuels
BiodieselUS biodiesel prices weakened amid a pullback in premiums alongside a sell-off of the Nymex ULSD contract.
Physical biodiesel markets were relatively active in today’s session. In the New York Harbor, B99 RIN-less material was talked between Nymex -50¢ and -38¢/USG with March-April delivery timing, translating to either side of Nymex +743/USG with RINs. Offer interest for B99 RIN-less Gulf Coast availabili-ties surfaced at Nymex -40¢/USG for March delivery and at Nymex -35¢/USG on a Q2 basis.
In the Midwest, B99 June fob Kentucky material received discussion between Nymex +72¢ and +80¢/USG. B99 Q3 fob Indiana sellers cars found bid and offer interest at Nymex +70¢ and +74¢/USG, respectively.
Margins continued to improve Tuesday, as the soybean oil/heating oil (HOBO) spread added more than 2¢ to measure at -128.42¢/USG.
California carbon allowances (CCA) $/tVintage Delivery Bid Ask Price ±
2016 Dec 2 12.45 12.55 12.50 -0.242016 Dec 16 12.65 12.75 12.70 -0.322017 Dec 17 12.90 13.00 12.95 -0.63
CCA volume-weighted averages $/tVintage Delivery Low High VWA MTD
2016 Dec 16 12.70 13.01 12.85 12.97
Vintage Delivery Trades MTD Volume MTD
2016 Dec 16 19 61 7,126,000 14,277,000
CCA price for gasoline, diesel ¢/USGWinter 23 Feb ± Summer
California low-carbon fuel standard (LCFS) credits $/tVintage Bid Ask Price ±
2015 121.00 127.00 124.00 0.00
VWA Trades Volume MTD
2015 3.00 12,500 124.20
Avg
Jan index 120.34
California LCFS cost for gasoline, diesel ¢/USGFuel Price ±
Carbob 4.38 0.00Ultra low-sulfur diesel 3.40 0.00
LCFS premium per carbon intensity point ¢/USGPrice ±
Ethanol 1.01 0.00Biodiesel 1.56 0.00
BiODieSeL
US
day at $12.95/t. The declines were among the largest for the market since 2013.
The drop comes a day before California and Quebec an-nounce the results of the first auction of the year, which was held last week with a reserve price of $12.73/t. If demand for allowances at that price was less than the amount on offer, unsold CCAs will be held by California until a future auction.
ArgentinaIn Argentina, prompt values of crude soybean oil corrected downward in an overbought paper market in Chicago.
March discounts inched 0.2¢/lb higher to -0.5¢/lb, only partially mitigating a selloff on the paper market. In Chicago, March futures fell sharply, losing 0.75¢/lb over the course of the session to 30.75¢/lb. Soybean oil to be acquired in April also added 0.2¢/lb to CBOT -0.85¢/lb, while May to July prod-uct climbed 0.28¢/lb higher to CBOT-1.2¢/lb in thin discussion.
Dropping feedstock values filtered into the biodiesel mar-ket, which plunged $12/t lower. Conventional biodiesel could be had for $627/t in the Parana upriver region, while EPA-certified SME biodiesel was quoted at $790/t.
Assessment rationaleIn the absence of trades for Houston B100, an offer for B99 RIN-less March availabilities at Nymex -40¢/USG was calculated
ASSeSSMenT rATiOnALe
against today's current year D4 RIN assessment, multiplied by 1.5, and adjusted to account for a 100pc share of the blending credit, setting the upper end of the range for the day's assess-ment at Nymex +177¢/USG. A 10¢ range was held for today's premiums, setting the lower end of the range at Nymex +167¢/USG.
Validated trades done in the Argo prompt timing period were used to set the range for the day's Argus prompt Argo assessment.
Licensed to: Cortney Becker, Argus Media Inc (New York)
Soybean oil cif Sao Paulo with 12% ICMS* BRL/t 2,900.00/3,000.00 +90.00
Methanol cif Paranagua* $/t 292.00/323.00 0.00
Glycerine cif China* $/t 170.00/185.00 +12.50
Beef tallow cif Sao Paulo with 12% ICMS* BRL/t 2,750.00/2,800.00 -25.00
*assessment is as of 19 Feb
Current month-to-date averages, FebAverages
SME Houston fob B100 ¢/USG 284.65
SME Chicago fob B100 ¢/USG 289.32
SME fob Paranagua $/t 726.83
SME fob Argentina upriver $/t 634.88
Brazil ex-mill biodiesel prices per regionMar-Apr ± Jan-Feb Mar-Apr ± Jan-Feb
BRL/m³ BRL/m³ $/m³ $/m³
North 2,700 -108 668 -51
Northeast 2,814 -86 696 -46
Centre-West 2,543 -141 629 -58
Southeast 2,636 -123 652 -54
South 2,523 -104 624 -48
$/m³ values are calculated considering Thursday s exchange rate
Data last updated on 19 Feb
— ANP data
In the absence of trades, bids, or offers for February barges, the spread to March barges was held at -2.25¢/USG, setting the range for the day's Argus New York barge assess-ment. A bid of 148¢ and offer of 148.5¢/USG for March barges were used to set the range for the March assessment.
In the absence of trades, bids, or offers for prior year D5 advanced biofuel RINs, available participants indicated that the spread to prior year biodiesel RINs held at -2¢/RIN, setting the range for the day's assessment.
In the absence of trades, bids, or offers for current year D5 advanced biofuel RINs, available participants indicated that the spread to current year biodiesel RINs held at -1.5¢/RIN, setting the range for the day's assessment.
In the absence of trades, bids, or offers for 2014 vintage year D5 advanced biofuel RINs, available participants indicated that the spread to prior year advanced biofuel RINs held at -1¢/RIN, setting the range for the day's assessment.
In the absence of trades, bids, or offers for prior year D4 biomass-based diesel RINs, the spread to current year biodies-el RINs was held at +0.25¢/RIN, setting the range for the day's assessment.
Current year D4 biomass-based diesel RIN trades meeting the Argus minimum volume requirement of 500,000 RINs were used to set the midpoint for the day's assessment, while heard trades at 77.5¢ and 78.5¢/RIN were used to set the range.
In the absence of trades, bids, or offers for 2014 vintage year D4 biomass-based diesel RINs, the spread to prior year biodiesel RINs was held at -3¢/RIN, setting the range for the day's assessment.
A prior year D6 ethanol RIN trade meeting the Argus minimum volume requirement of 500,000 RINs was used to set the lower end of the range for the day's assessment, while a bid/offer midpoint of 73.5¢/RIN was used to set the upper end of the range. Bids and offers observed at between flat and +0.25¢/RIN to the current year ethanol RINs further confirmed the midpoint.
Current year D6 ethanol RIN trades meeting the Argus minimum volume requirement of 500,000 RINs were used to set the range for the day's assessment.
In the absence of outright trades for 2014 vintage year D6 ethanol RINs, a validated trade for the 2014/2015 ethanol RIN spread at +0.25¢/RIN was used to set the range for the day's assessment.
Licensed to: Cortney Becker, Argus Media Inc (New York)
Issue 16-35 | Tuesday 23 February 2016Argus Americas Biofuels
Argus mArket mAp: Biodiesel
Chicago
New York
Houston
Paranagua
Rosario
Rotterdam
Freight $/t ¢/USG
Paranagua - Rotterdam 67.50 21.54Argentina - New York Harbor 80.00 25.53Argentina - US Gulf coast 71.00 22.66
Houston less Chicago$/t ¢/USG
-26.91 -9.00
New York less Chicago$/t ¢/USG
-23.92 -8.00
Houston less Argentina$/t ¢/USG
+198.35 +66.33
New York less Argentina$/t ¢/USG
+201.34 +67.33
paranagua less rotterdam$/t ¢/USG
+58.50 +19.56
Argentina less rotterdam$/t ¢/USG
+146.29 +48.92
hhh
80
100
120
140
160
180
200
18 Nov 15 21 Dec 15 22 Jan 16 23 Feb 16
GC ULSD = 0
Houston B100 sme vs gulf Coast ulsd ¢/USG
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
8 Dec 15 4 Jan 16 28 Jan 16 23 Feb 16
Biodiesel riNs vs ethanol riNs (prior year) ¢/RIN
us gasoline usage down even as travel risesThe Energy Information Administration (EIA) expects US motor gasoline consumption to remain below peak levels seen in 2007 despite an uptick in miles driven.
Improved light-duty vehicle fuel economy kept consump-tion from exceeding peak levels last year even as US motorists increased their vehicle travel by nearly 4pc in 2015 compared to levels recorded in 2007.
lAtest News The EIA’s Short-Term Energy Outlook (STEO) estimates motor gasoline consumption in both 2016 and 2017 to average 9.23mn b/d, which would be 0.6pc below its peak in 2007.
Vehicle travel is expected to increase by 5pc in 2016 and by 7pc in 2017 compared to 2007 levels, the EIA said.
Brazil ethanol output breaks new recordMills in Brazil’s center-south region produced 132mn l (55,350 b/d) of ethanol in the first half of February as 32 mills contin-ued to process cane beyond the traditional harvest season,
Licensed to: Cortney Becker, Argus Media Inc (New York)
Issue 16-35 | Tuesday 23 February 2016Argus Americas Biofuels
Futures
Timing Settlement ±
CBOT ethanol ¢/USG
Mar 141.80 -0.90
Apr 143.40 -0.80
May 144.00 -0.90
Jun 143.60 -0.90
CBOT corn ¢/bushel
Mar 362.00 -5.50
May 366.75 -5.50
Jul 372.00 -5.25
Sep 377.50 -4.75
CBOT soybean oil ¢/lb
Mar 30.75 -0.74
May 31.01 -0.73
Jul 31.25 -0.73
Aug 31.34 -0.72
hhh
10
20
30
40
50
60
70
80
18 Nov 15 21 Dec 15 22 Jan 16 23 Feb 16
Rbob = 0
Gulf coast ethanol vs Colonial Rbob ¢/USG
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8 Dec 15 4 Jan 16 28 Jan 16 23 Feb 16
Ethanol RIN = 0
Advanced RINs vs ethanol RINs (prior year) ¢/RIN
hhh
120
125
130
135
140
145
150
155
18 Nov 15 21 Dec 15 22 Jan 16 23 Feb 16
Chicago ethanol ¢/USG
according to Brazil’s leading sugar and ethanol producers’ association Unica.
With the increase in output, ethanol production during the 2015/16 reached a record 27.57bn l, up nearly 6pc over the 2014/15 season.
Nearly 80pc of the cane harvested in the 15-day period went to ethanol production, with mills favoring hydrous etha-nol, which generates cash flow more quickly than sugar. Mills have also been giving priority to ethanol over sugar to fulfill sales contracts and meet regulatory inventory requirements.
Unica attributed the large number of mills still harvesting the crop to significant volumes of unharvested cane. Mills lost nearly 50 days of cane harvesting between 1 April 2015, when the 2015/16 harvest officially began, and 31 December 2015, up from roughly 42 days in the same time period during the 2014/15 harvest.
An estimated 40mn t of cane was still standing in the fields on 1 January, according to estimates by the National Ethanol Technology Laboratory (CTBE).
Unica highlighted that strong returns on hydrous ethanol have also provided incentives for mills to continue harvest-ing. Unica estimates that 25 mills continued to operate in the second half of February.
Unica said ethanol sales were down by 4pc in the first half of February to 996.5mn l, compared to 1.03bn l in the first half of February 2015.
Hydrous ethanol consumption declined by 3.2pc in January to 1.21bn l, compared to 1.25bn l in the same period of 2014, according to oil regulator ANP.
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illuminating the marketsPetroleum
Issue 16-35 | Tuesday 23 February 2016Argus Americas Biofuels
Trademark noticeARGUS, ARGUS MEDIA, the ARGUS logo, ARGUS AMERICAS BIoFUELS, other ARGUS publication titles and ARGUS index names are trademarks of Argus Media Ltd.Visit www.argusmedia.com/trademarks for more information.
DisclaimerThe data and other information published herein (the “Data”) are provided on an “as is” basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party’s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.
Argus Americas Biofuels Methodology
Argus uses a precise and
transparent methodology to
assess prices in all the markets it
covers. The latest version of the
Argus Americas Biofuels Methodol-
ogy can be found at:
www.argusmedia.com/methodology.
For a hard copy, please email info@
argusmedia.com, but please note
that methodogies are updated fre-
quently and for the latest version, you should visit the internet site.
Last Updated: May 2014
The most up-to-date Argus Americas Biofuels Report Methodology and Specifications guideis available on www.argusmedia.com
Met
hod
oLog
y an
d sp
ecif
icat
ion
s gU
ide
argUs aMericas BiofUeLsMethodoLogy
www.argusmedia.com
Contents:Methodology rationale 2Definition of trading day 2Survey process 2Market data usage 2Verification of transaction data 3Primary tests applied by reporters 3Transaction tests 3Transparency and confidentiality 3Basis differentials and absolute prices 3Swaps and forwards markets 4Publications and price data 4Swaps and forwards markets 4Publications and price data 4Corrections to assessments 4Ethics and compliance 4Consistency in the assessment process 4Review of methodology 4Changes to methodology 4Updates to methodology 5
ANNOUNCEMENTS
Following consultation, Argus will cease publication of its 2013 vintage RIN assessments due to a lack of liquidity. This will result in the removal of year 1 (2013) from the following as-sessments: RIN Renewable fuel (Ethanol) D6 category (code PA0005337)RIN advanced biofuel D5 category (code PA0008647)RIN biomass-based diesel D4 category (code PA0006832)RIN cellulosic biofuel (code PA0006833).
Argus Assessment Rationale DatabaseFor prices used in financial benchmarks, Argus publishes daily explanations of the assessment rationale with sup-porting data. This information is available to permissioned subscribers and other stakeholders.
Subscribers to this report via Argus Direct or MyArgus may access the database here.
other subscribers may request access here or contact us by email at [email protected].
The last day on which the 2013 vintage is published will be 24 February.For further information, contact Zander Capozzola at [email protected] or 713-429-6332.
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