• EPA Biodiesel Program Complicates The Soybean Oil Demand Picture

    November 06, 2017 11:12 PM

    If implemented, a new U.S. Environmental Protection Agency (EPA) standard will negatively impact the volume of soybean oil needed to produce biodiesel, somewhat offsetting the U.S. Commerce Department’s duties on Argentinian and Indonesian biodiesel imports imposed in August.

    On October 4, 2017, the EPA issued a Notice of Availability of Supplemental Information to provide public notice and an opportunity to comment on potential reductions in biomass-based diesel and overall advanced biofuel categories in the Renewable Fuel Standard program.1

    There are two potential reductions in the standard. The first is a reduction in biomass-based diesel and advanced biofuel volumes from 2.1 billion gallons—the same volume previously set by the Obama administration for the 2018 compliance year. The second aims to reduce advanced biofuel volumes for 2018 to 4.24 billion ethanol-equivalent gallons, down from 4.28 billion gallons this year.2

    In the August 2017 USDA World Agricultural Supply and Demand Estimates (WASDE), the U.S. Department of Agriculture (USDA) increased soybean oil usage for biodiesel production in the current marketing year by almost 10 percent  (7 billion pounds) as a result of the Commerce Department action. In its October 12, 2017 WASDE, the USDA made no change in its forecast of biodiesel usage, which seems to lack credibility. 3

    Consequently, the USDA made no changes in its soybean oil price forecasts for this year from last month’s report.

    Watch for the final action by the EPA regarding reductions in biomass-based diesel and overall advanced biofuel categories in the Renewable Fuel Standard.

    1. “Renewable Fuel Standard Program: Standards for 2018 and Biomass-Based Diesel Volume for 2019; Availability of Supplemental Information and Request for Further Comment.” https://www.epa.gov/renewable-fuel-standard-program/renewable-fuel-standard-program-standards-2018-and-biomass-based United States Environmental Protection Agency. October 4, 2017.
    2. “EPA Blindsides Biodiesel Industry with ‘Outrageous’ Proposed Cuts.” Biodiesel. September 26, 2017. http://www.biodieselmagazine.com/articles/2516150/epa-blindsides-biodiesel-industry-with-outrageous-proposed-cut
    3. “World Agriculture Supply and Demand Estimates.” http://usda.mannlib.cornell.edu/usda/waob/wasde//2010s/2017/wasde-10-12-2017.pdf United States Department of Agriculture. October 12, 2017.

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Richard GallowayAbout the Expert

Richard Galloway is president of Galloway and Associates, LLC, a business consulting firm serving domestic and foreign agricultural processing, vegetable oil refining, biodiesel and grain handling industries. Galloway is a consultant to the QUALISOY Board, a collaborative effort among the soybean industry to help market the development and availability of trait-enhanced soybean oils, including high oleic soybean oil. Read More...