RINs stocks drawn down in 2012, but plenty available for 2013
For the first time since the renewable identification number (RIN) system was established, there will be no RIN carryover on this year’s production, due to high corn prices resulting in reduced ethanol production levels. RIN stocks won’t be depleted, however, suggests University of Illinois economist Nick Paulson in an analysis in the FarmDocDaily newsletter, offering additional flexibility for 2013, if needed.
In earlier analyses, Paulson estimated 2011 ended with approximately 2.64 billion gallons RINs which could be used for mandate compliance in 2012, “providing up to 960 million bushels of flexibility in revealed demand for corn-for-ethanol.”
Using data from the Energy Information Administration for 2012, Paulson concluded: “Assuming monthly production of 1.035 billion gallons and monthly exports of 50 million gallons from September through the end of the year implies a domestic production level of just under 13.2 billion gallons and exports of 742 million gallons for 2012. This results in net ethanol RIN generation for the year of just under 12.5 billion gallons. Given the 13.2 billion gallon renewable ethanol mandate in 2012, this will require RIN stocks to be drawn down somewhere below the 2 billion gallon level. The implication for 2013 is continued flexibility in the demand for corn-for-ethanol of approximately 700 million bushels relative to total demand implied by the 2013 non-advanced mandate of 13.8 billion gallons (more than 5 billion bushels of corn).”
RIN prices have mirrored corn crop futures, falling steadily throughout the year until drought conditions shot the values up.