US fuel ethanol output rose over 2% for the week ending Aug. 21 as farm groups fight refinery RFS exemptions
The attorneys general of Iowa, South Dakota, Missouri and Nebraska sent a letter to EPA Administrator Lee Zeldin on Aug. 26 urging the agency not to waive Renewable Fuel Standard blending obligations for refiners now posting record profits. Farm and biofuel groups pressed the White House the same way. The fight is over small refinery exemptions, and for anyone who buys or blends ethanol it is the story that matters this week.
The mechanics are simple. When EPA hands a refiner an exemption, that refiner no longer has to blend renewable fuel or buy RINs to cover the gap. Demand for ethanol and for RINs softens. A wave of exemptions cuts the value of the credits that blenders earn, and it thins the pull on corn ethanol at the margin. The state AGs are making a plain argument: refiners clearing record margins do not need the relief the program reserves for hardship.
The EIA numbers
Production climbed more than 2% for the week ending Aug. 21, per EIA data released Aug. 26, and output is now above the five-year average. Stocks rose slightly. Exports jumped 26% in the week, which is the number to sit with, because export demand is doing some of the work of clearing barrels while the domestic blend rate stays capped by the E10 wall.
Biodiesel wobble
Chicago soybean oil fell 7% in a week on uncertainty over US biodiesel policy. It is the main feedstock for biodiesel and renewable diesel, so producers watching RVO levels and the blenders' credit have little firm ground to price against right now.
Michigan E15/E85
The Michigan House voted 77 to 21 on Aug. 26 for a bill creating a tax credit to push E15 and E85 sales, set to run through the end of 2030. It still needs the state Senate. For jobbers in the region it could nudge higher-blend volume if it becomes law, though a single-state credit moves the national picture very little.
Maersk and marine
Maersk is testing ethanol blends as a marine fuel. That is early, and it is not a US retail story, but a shipping major opening an ethanol pathway is a demand outlet worth tracking if the E10 wall keeps capping domestic gasoline blending.
What to watch
Whether Zeldin grants the exemptions and how many. A large batch would pressure RIN values and ethanol demand. Watch soybean oil for a bottom once biodiesel policy firms, and watch whether Michigan's Senate takes up the E15/E85 credit.