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It appeared nip and tuck for a while Wednesday, but the House ultimately passed standalone legislation that would allow year-round sales of E15, gasoline blended with 15% ethanol, in a 218-203 vote.
Corn growers and biofuel groups are elated. The American Soybean Association, however, has some reservations about the bill. A Bloomberg report noting that the ASA, while not opposing the legislation, had told members it also couldn’t endorse it made for some added drama ahead of the vote.
Following passage, the ASA, in a statement, said that while it supports year-round access to E15, “the legislation passed today contains more than just E15 provisions.” The group cited a study by the Food and Agricultural Policy Research Institute at the University of Missouri and Congressional Budget Office analyses, which also weighed the impact of permanent small-refinery exemptions from blending requirements included in the bill. The findings show the House version of the bill would result in “reduced net farm income and negative economic impacts for soybean growers and the broader agricultural economy,” the ASA said. Read more about the FAPRI study here.
The Renewable Fuels Association has disputed the FAPRI findings. The National Corn Growers Association hailed House passage of the bill and urged the Senate to quickly take action.
“Passage of this bill is essential to the success of corn farmers and rural communities, particularly as our growers face their fourth year of net losses and struggle with high input costs,” said NCGA President Jed Bower. ” It would also help drivers across the country who could save 10 to 30 cents per gallon on gas as fuel prices continue to rise.”
Indeed, rising fuel costs are seen helping build momentum for the legislation ahead of the midterm elections, though opposition from oil-state senators means some heavy lifting remains to be done to get the bill to the president’s desk.
For ASA’s part, it said it would continue working to “advance solutions that enable year-round E15 without rewarding petroleum refiners who do not comply with the Renewable Fuel Standard at the expense of a critical domestic market for U.S. soy. Year-round E15 legislation must be pursued with a collective goal of strengthening farm income and supporting markets for both soybean and corn farmers.”
Ethanol stocks drop more than expected: The Energy Information Administration said ethanol inventories for the week ended May 8 totaled 24.87 million barrels, down 1.15 million barrels from the prior week. That is a bigger decrease than the 25.3 million barrels to 26.2 million barrels expected by analysts, according to Dow Jones Newswires. The EIA put average ethanol production at 1.082 million barrels a day, exceeding analyst estimates of 1.025 million barrels to 1.05 million barrels.
Warsh confirmed as Fed chair: Over in the Senate, Kevin Warsh won confirmation to become the next chair of the Federal Reserve when Jerome Powell’s term at the helm comes to an end this month. The 55-45 vote was the slimmest margin in the history of Fed chair confirmation votes, according to Bloomberg.
More bad inflation news: Warsh will be presiding over a Fed wrestling with a significant pickup in inflation resulting from the oil supply shock created by the war with Iran. That’s served to squelch market expectations that Warsh will lead the central bank on the sort of aggressive rate-cutting plan President Donald Trump has repeatedly insisted upon.
Data released Wednesday morning showed wholesale prices jumped 1.4% in April, the biggest rise in more than four years. Over the past 12 months, the producer price index rose 6%. The figures follow the release of the consumer price index on Wednesday, which showed retail prices rose 0.6% from March, putting the year-over-year pace at 3.8% – the highest in three years.
“We expect the Fed to be on hold for the time being due to a stable labor market and concerns that inflation could accelerate,” said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research, in a note.
India bans sugar exports: India on Wednesday prohibited sugar exports until Sept. 30 or until further notice, Reuters reported, in a bid by the world’s second-largest sugar producer to rein in domestic prices.The move is seen supporting global white and raw sugar prices as rival producers Brazil and Thailand grab market share in Asia and Africa.
The report said India allowed mills to export 1.59 million metric tons, betting output would exceed domestic demand. But production is now expected to lag consumption for a second consecutive year as cane yields weaken in major growing regions. Forecasts that El Nino weather conditions could disrupt this year’s monsoon have also heightened fears that next season’s output could come in short of initial forecasts.