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OK_Grains
Contributor

Re: Marketeye II.........

Would it? This is a blending credit that they are discussing - and right now there is a 40c/gallon margin to use ethanol, so even if they removed the blender credit, the economics still maximize ethanol production and blending.

Vote is at 2.15EST today in Washington, I would assign a 25% probability for the Senate to get enough votes to pass it.  

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OK_Grains
Contributor

Re: Marketeye II.........

Just to correct, RBOB gasoline is currently trading 305c in spot and spot ethanol racks are 272c so there is actually a 32c positive blending margin before the ethanol blender credit ( which is clearly un-necessary ) is added on. Still, plenty of incentive to max blend ethanol.

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marketeye
Veteran Advisor

Re: Marketeye II.........

Ethanol faces showdown today. A story written by my colleague, Dan Looker, spells out what's at-stake:

 

Here's the link: http://www.agriculture.com/news/policy/ethol-faces-showdown-tuesday_4-ar17141

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OK_Grains
Contributor

Re: Marketeye II.........

 

For those bored enough, the vote can be watched live at 2.15EST on this live link

 

http://www.c-span.org/Live-Video/C-SPAN2/

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marketeye
Veteran Advisor

Re: Marketeye II.........

OK_Grains,

 

The word from the floor is that the trade is worried about the vote. Keep in mind, nearly 40% of the U.S. corn crop is used to make ethanol. It's a big deal, psychologically, when ethanol is being batted around on 'the hill'. 

 

Thanks for sharing the link to today's vote.

 

 

Mike

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NCcorntrader
Senior Contributor

Re: Marketeye II.........

Ive said this many times here before but i will say it again- ethanol has 66% the energy content of gasoline by volume, so it is a more expensive fuel than gasoline right now. At $3.05 ethanol would have to be $2.01 to be equal. With the blenders credit in the $2.40 range. It is currently at $2.70.

 

The bottom line is that ethanol blending is making fuel more expensive right now.

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OK_Grains
Contributor

Re: Marketeye II.........

Yes, but you would use the same amount of volume in E10 irrespective of the energy output.....the consumer is the one who cops this given that the pump price is not affected by the poorer energy output. Its not as if the blender has a choice and can use 100% gasoline given the mandates

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SouthWestOhio
Senior Contributor

Re: Marketeye II.........

Another thing to keep in mind with any congressional vote is the effective date of legislation. I have not read this proposed bill but would anticipate it would not become effective until Sept 30th at the earliest. That would mean it will have no effect on old crop corn consumption.

 

edit: Oh crap I just looked at the bill and they have a July 1 effective date. Can they really do that? I guess they could but I'm also reading they probably don't have the votes.

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NCcorntrader
Senior Contributor

Re: Marketeye II.........

thats true and you have hit upon why the government mandating the purchase or use of anything is almost always a bad idea.

 

nevertheless,the fact remains that fuel is more expensive, yes to the the consumer, than it would be without ethanol blending.

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NCcorntrader
Senior Contributor

Re: Marketeye II.........

another thing to keep in mind, by that logic, why do we care about the blenders credit at all? i mean if they have to blend it anyway what does the extra 45 cents matter except to the bottom line of the oil companies?

 

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