WILTON, IOWA (RFD NEWS) — The Environmental Protection Agency’s decision to fully reallocate biofuel credits tied to newly granted small refinery exemptions is providing some relief to soybean producers heading into harvest.
The EPA granted 29 full or partial small refinery exemptions totaling 1.76 billion Renewable Identification Number, or RIN, credits. The agency says it will reallocate the difference through future blending requirements.
Dave Walton, vice president of the American Soybean Association (ASA), joined us on Thursday’s Market Day Report to explain why the original proposal raised concerns about the potential impact on soybean oil and biodiesel demand.
Reallocation Helps Protect Biofuel Demand
Walton says the initial announcement that the credits would not be reallocated could have significantly reduced demand for soybean oil and biodiesel.
The American Soybean Association urged soybean growers to contact lawmakers, the EPA and the White House about the potential impact.
Walton estimates the original approach could have cost soybean farmers as much as 22 cents per bushel, or roughly $1 billion in lost revenue nationwide.
The decision to reallocate 100% of the credits above the expected 990 million-gallon baseline provided a more favorable outcome for the soybean industry.
Stability Important for Biodiesel Market
Walton says the reallocation also provides greater certainty for the biodiesel and soybean crush industries.
“Biodiesel plants like consistency,” Walton said. “The market likes consistency.”
Knowing that expected biofuel obligations will remain in place allows biodiesel producers and other industry participants to plan investments, expansions and upgrades with greater confidence.
Timing Comes as Harvest Approaches
The timing of the EPA announcement was particularly important as farmers prepare to harvest their soybean crops.
Walton said some producers in the South were already nearing the end of soybean harvest, while farmers in Iowa were roughly three weeks away.
The initial announcement immediately hurt soybean markets, he said, before the subsequent decision to reallocate the credits helped bring strength back to the market.
“That was really good for us as farmers,” Walton said.
Iowa Crop Conditions
As harvest approaches, Walton says the soybean crop in his area is looking promising.
He noted that soybeans are beginning to turn color, signaling that harvest is getting closer.
Corn conditions are more variable.
Walton said the crop received significant moisture in the middle of the growing season, making final yields harder to predict.
“We won’t know till the end what we got,” he said.
