Corn Price Decline Less Than 1% With Full RFS Waiver

Summary of key findings

If EPA waived the RFS requirements for 2012-2013 (Sept. 1, 2012 to Aug. 31, 2013):

• 2012-2013 corn use for ethanol would fall just 59 million bushels, or -1.3%.
• 2012-2013 corn use for feed and residual would increase just 25 million bushels, or 0.6%.
• 2012-2013 corn exports would increase just 10 million bushels, or 0.8%.
• 2012-2013 ending stocks would increase 23 million bushels, or 3.1%
• These demand shifts result in 2012-2013 corn prices falling from $7.87 to $7.83/bu., or -0.5%.
• Retail pork prices would fall 1¢ from $3.59 to $3.58/lb., a -0.04% reduction.
• Retail beef prices are $5.30/lb., with or without a waiver.




If EPA allowed RINs to continue to be generated during the waiver period and carried forward:

• 2013-2014 corn use for ethanol would fall 354 million bushels, or -6.6%.
• 2013-2014 corn use for feed would increase 112 million bushels, or 2.3%.
• 2013-2014 corn exports would increase 54 million bushels, or 2.9%.
• 2013-2014 corn ending stocks would increase 51 million bushels, or 3.3%.
• These demand shifts would result in 2013-2014 corn prices falling from $5.22 to $5.05/bu., or -3.2%.

 

If RINs are not generated during the waiver period:

• 2013-2014 corn use for ethanol would increase 88 million bushels, or 1.6%.
• 2013-2014 corn use for feed would decrease 42 million bushels, or -0.8%.
• 2013-2014 corn use for exports would fall 19 million bushels, or -1.0%.
• 2013-2014 corn ending stocks would fall 15 million bushels, or -1.0%.
• These demand shifts would result in 2013-2014 corn prices rising from $5.22 to $5.28/bu., or 1.1%.
• Thus, under this scenario, waiving the RFS in 2012-2013 would lead to higher corn prices in 2013-2014.