Daily Biofuels Summary for October 16: USDA lowers corn ethanol demand projection for 2008

Top Story: The USDA confirmed its 2007 corn production estimate of 13.3 billion bushels, lowered its soybean production estimate to 2.6 billion bushels from 2.62 billion, and reduced its projected use of corn by the ethanol industry in 2007-08 for the second month in a row. The revised 2007-08 corn ethanol forecast is 3.2 billion bushels, down from 3.4 billion forecast in August. For the year ending August 31, 2007, the corn ethanol industry used 2.1 billion bushels. At current industry yields of 2.7 gallons per bushel, this translates to 8.6 billion gallons of ethanol.

Producer News: In Kansas, Spanish biofuels company Abengoa expects to commence full-scale cellulosic ethanol production in 2011. The company is currently constructing its production facility in Hugoton, Kansas, and has a pilot-scale plant now in operation at York, Nebraska. Abengoa received a total of $76 million in Department of Energy grants to assist in the cost of research and development….BioFuel Energy announced that it will stop construction on a third new ethanol facility, owing to low ethanol prices. The company initiated a $7.5 million buyback of its stock in response to a 35 percent fall in its share price in the past 30 days….In New England, an investor group has proposed a $135 million ethanol plant in North Kingstown, Rhode Island. The proposed Atlantic Ethanol plant would produce up to 60 Mgy of corn ethanol for New England markets….In Illinois, One Earth Energy has closed its financing for its 100 Mgy corn ethanol plant in Gibson City. Construction will commence this month, and the plant will commence operation in July 2009. $110 million in debt financing was provided by First National Bank of Omaha’s Renewable Fuels Group, with equity provided by Alliance Grain; Fisher Farmers Grain; Grand Prairie Co-op; Ludlow Cooperative Elevator; and Topflight Grain Cooperative.

International News: In Australia, two $80 million ethanol plants planned for Swan Hill and Murtoa in western Victoria have been cancelled because of low global ethanol prices, and lack of Government and community support. The Swan Hill plant would have produced 30 Mgy of ethanol….Also in Australia, a $120 million ethanol plant in Condobolin, in western New South Wales, has been halted. The project’s developer, Agri Energy, had previously announced that it would re-center its operations around its US investments in response to uncertain grain supplies, and lack of community and government support for biofuels in Australia….Brazilian President Luiz Ignacio Lula da Silva began a four-country African tour in Burkina Faso, and said that “At an hour when Africa is taking up the path of growth again, ethanol and biodiesel provide a way to guarantee the continent’s energy autonomy and economic sovereignty.” Silva also announced that  Brazil and Ecowas had agreed to mutually develop ethanol programs. Brazil has also started working with African crop scientists in Ghana on biofuel initiatives….In India, ethanol producers still face major challenges even after the Indian government permitted the production of ethanol directly from sugar. Production prices in Uttar Pradesh are currently $2.50 compared to a government purchase price of $2.06 per gallon.  Producers say that, while there is a 20 percent gross profit on ethanol production at current cane and ethanol prices, transportation costs of the fuel are prohibitive and eliminate profits….In Kenya, the Green Power East Africa jatropha biodiesel plant in Nairobi is attracting much attention from local farmers, as jatropha continues to be a hot topic across the continents.  D1Oils and Sun Biofuels are offering seeds and technical assistance to farmers in several countries in return for production contracts, and  Brazilian and US organizations have invested $500 million in the development of jatropha in Mali. Jatropha seeds yield up to 40 percent oil and waste matter is sold as fertilizer. However, with current yields of 1.7 tonnes of oil per acre, jatropha lags behind the 4 tonnes per acre realized from palm oil.

Research News: In Virginia, researchers at Old Dominion University in Norfolk have demonstrated small-scale production of a B10 blend from algae oil. The University plans to increase production scale by moving three tanks from ODU’s campus to the Hampton Roads Sanitation District plant.

Policy and Policymakers: In Florida, state regulators and fuel blenders plan to meet to design alternatives to regulatory roadblocks, primarily the state’s T-50 specification, that prevents year-round ethanol use due to concerns about fuel volatility.  that is currently preventing widespread ethanol use in the summer….In Oregon, a debate continues over whether large-scale national producers or small-scale local producers should be the base for meeting Oregon’s new renewable fuel standard (RFS).  The B2 mandate in the RFS takes effect only after local producers hit the 5 million gallon production mark. However, Green Fuels in Klamath County, fell short of its 1 million gallon production goal due to a shortage of canola oil at affordable prices for a small-scale production. Another problem: testing costs $1400 per batch, a prohibitive expense for the small-scale producer but required in order to provide fuel under most contracts. SeQuential Pacific, a local producer, said that local producers can make a maximum of 20 million gallons of biodiesel a year….The Christian Science Monitor released a brief overview of several US presidential candidates’ positions on climate change initiatives. For a carbon tax: Sen. Christopher Dodd. For a cap-and-trade system on greenhouse gases: Sen. John McCain. For a 80 percent reduction in greenhouse gases by 2050: Former Sen. John Edwards and Se. Barack Obama. For 40 Mpg fuel efficiency (CAFE) standards: Sen. Joe Biden.

Consumer and Fleet News: In Washington, Propel Biofuels opened a new biodiesel station, the first to distribute Washington-state produced biodiesel made from canola oil. US Senator Maria Cantwell was on hand for opening day. Meanwhile, an E85 station opened in Longmont, Colorado with an 85-cent ethanol promotion, as the result of a partnership between the Colorado Corn Growers Association, the Governor’s Biofuels Coalition, Regional Air Quality Council and Western Convenience Stores.

Financial News: Yesterday, the Biofuels Digest Indexâ„¢, a basket of public biofuels stocks, fell 1.47% to 102.69 after reaching a record close of 104.22 on Friday. Diversified companies Archer-Daniels-Midland (ADM) and The Andersons (ANDE) fell 1.61% and 1.56% on the day to close at $34.91 and $46.65 as investors scaled back from Monday’s highs.Pure-play mid caps such as VeraSun (VSE) and Pacific Ethanol (PEIX) were down les than 1 percent, continuing a downward slide that has lasted over two months. Small-cap stocks continued a sharp downward trend with only Nova Biosorce (NBF), Bio Solutions Manufacturing (BSLM.OB) and MGP Ingredients showing gains for the day. Overall, losers led winners more than 3 to 1 on the day.