Argus US US and market prices and analysis Issue 13-55 Price Summary Price +/- Chicago (Argo) 258.50 +0.50 New York Harbor 270.50 0.00 Fob Brazil Anhydrous USD/m3 680.00 0.00 Los Angeles Low CI 288.00 0.00 CBOT Corn /bushel 733.00 +0.50 SME New York Harbor B100 474.63 +0.42 SME Houston fob B100 465.63 +0.42 SME Chicago fob B100 479.63 +7.42 CBOT Soybean oil /pound 50.42 +0.58 Biofuel Spreads Crush Spread $/bushel -0.14 Heating Oil/Soybean Oil Spread +0.11 LA ethanol Overview US ethanol closed Thursday relatively flat with the day before as trade appeared slow in many markets; however Chicago Rule 11 saw a 5c drop in price. The RINs market saw unusually low activity Thursday compared to recent buying trends as ethanol and biodiesel credits traded flat with Wednesday s Argus assessed prices. Physical biodiesel markets were seen as firm to strong Thursday, with Chicago strengthening by 7c/USG as other markets remained flat. The heating oil/soybean oil spread narrowed by 3.93c, trading at 11.48c/USG. The physical market in Brazil remained illiquid Thursday as many traders and producers have been in attendance at F.O. Lichts Sugar & conference in Sao Paulo. Bids and offers for Anhydrous EPA specification ethanol remained at parity as market activity was low. 300 275 -- hhh 250 225 US ethanol closed Thursday relatively flat with the day before as trade appeared slow in many markets; however Chicago Rule 11 saw a 5c drop in price. May corn futures rose again Thursday, at 7333c/bushel, up 1.5c/ bushel from Wednesday s assessed price. futures conversely fell, decreasing by 1.6c/USG from Wednesday, ending the day at 256.9c/USG. NYH ethanol vs Buckeye RBOB 0 Chicago Rule 11 dropped 5c/USG Thursday, as bids were seen at 261c/USG in the early morning, and offers at 267c/USG. A trade was confirmed for delivery this week at a price of 263.5c/USG and another trade was reported for the following week at a 1.5c/ USG discount. -20 -- -40 hhh -60-80 According to market sources New York Harbor prices remained at flat compared to Wednesday s Argus assessed price with April prices seen at parity. Argo prices strengthened by 0.5c/USG Thursday, closing the day at 258.5c/USG. A deal was confirmed in the early afternoon for prompt delivery at 258.5c/USG. Two more deals were seen later in the afternoon session, trading at 257.75 and 258.5c/USG. Page 1 of 6
Argus US Issue 13-55 Low High +/- Chicago Argo Prompt 256.50 260.50 +0.50 Argo Any Mar 256.50 260.50 +0.50 Rule 11 Prompt 261.00 264.00-5.00 New York Any Mar 270.00 271.00 0.00 US Gulf Coast/South Gulf Coast (Houston) 261.50 265.50 0.00 Tampa 280.50 283.50-3.50 Atlanta 272.50 275.50-4.50 Dallas 259.50 263.50 0.00 Nebraska Union Pacific (UP) 259.00 264.00-2.50 Burlington Northern (BNSF) 255.00 260.00-4.50 US West Coast Los Angeles Low CI 286.00 290.00 0.00 Los Angeles High CI 285.00 289.00 0.00 Brazil Fob Anhydrous ($/m3) 660.00 700.00 0.00 Fob Anhydrous (BRL/m3) 1322.11 1402.24 +8.37 Fob Hydrous ($/m3) 600.00 625.00 0.00 Fob Hydrous (BRL/m3) 1201.92 1252.00 +7.54 Cif Anhydrous ($/m3) 750.00 790.00 0.00 Cif Anhydrous (BRL/m3) 1502.40 1582.53 +9.47 Low/High Diff Low/High Price +/- SME New York Harbor B100 Apr +180.00/+190.00 469.63/479.63 +0.42 SME Houston fob B100 Apr +171.00/+181.00 460.63/470.63 +0.42 SME Chicago fob (rail) B100 Apr +185.00/+195.00 474.63/484.63 +7.42 RINs /RIN Low High +/- RINs 2012 60.00 62.00 2013 69.00 70.00 RINs 2012 66.50 69.50 2013 79.00 81.00 Cellulosic RINs 2012 77.00 79.00 2013 41.00 43.00 Advanced Biofuel RINs 2012 68.00 72.00-1.00 2013 73.00 75.00-1.00 Forward Curves Chicago New York Mar 256.50/260.50 270.00/271.00 Apr 256.50/260.50 270.00/271.00 May 253.50/257.50 267.00/268.00 Jun 249.50/253.50 262.75/263.75 Futures Settlement +/- CBOT Apr-13 256.90-1.60 May-13 254.40-1.20 Jun-13 250.40-1.40 Jul-13 245.20-1.40 CBOT Corn /bushel May-13 733.00 +0.50 /bushel Jul-13 717.25 +0.00 /bushel Sep-13 598.25 +3.25 /bushel Dec-13 568.50 +1.50 CBOT Soybean Oil /pound May-13 50.42 +0.58 /pound Jul-13 50.67 +0.57 /pound Aug-13 50.57 +0.56 /pound Sep-13 50.37 +0.57 CBOT Soybeans /bushel May-13 1449.00 +29.25 CBOT Soybean meal $/t May-13 422.90 +9.10 Nymex RBOB Apr-13 307.06-4.57 Nymex RBOB Crack Spread $/barrel May-13 +36.06-1.86 Nymex Heating Oil Apr-13 +289.63 +0.42 California Carbon Allowances $/mt Vintage Delivery Bid Ask Price +/- 2013 Dec-13 14.45 14.55 14.50 2014 Dec-14 14.00 15.20 14.60 California Low-Carbon Fuel Credits* $/mt Vintage Bid Ask Price +/- 2013 33.00 40.00 36.50 +4.00 *Assessment updated weekly. Assessment is as of 15-Mar. Current Month to Date Averages March 2013 Averages Chicago (Argo) Prompt 253.82 New York Harbor Prompt 263.82 Los Angeles Low CI 277.80 SME Houston fob B100 482.34 SME Chicago fob B100 474.44 Related Markets Low High +/- New York RBOB Barge (83.7) 288.06 288.56-5.19 New York CBOB Barge (83.7) 286.56 287.06-5.19 Houston RBOB Colonial (83.7) 298.56 299.31-4.94 Houston CBOB Colonial (85) 278.06 279.06-5.07 Los Angeles CARBOB (84) month 297.06 302.06 +0.43 Houston ULSD Colonial 295.13 296.98-0.03 Mont Belvieu Natural Gasoline 210.50 214.00 +0.38 Page 2 of 6
Argus US Issue 13-55 In South Dakota, a rail was confirmed at 254c/USG for delivery in the current week. RINs The RINs market saw unusually low activity Thursday compared to recent buying trends as ethanol and biodiesel credits traded flat with Wednesday s Argus assessed prices. The 2013 ethanol RINs were seen trading once again at 70c/ RIN, with all confirmed deals reported within a 1c spread. 2012 ethanol RINs were also talked at parity, with confirmed trades at 60 and 62c/RIN. credits continued to be traded at 80c/RIN, bids were later seen as low as 78.5c/RIN however no offers were seen in response. Talks on 2012 and 2013 advanced biofuel RINs were once again sparse Thursday with few bids/offers seen. Advanced biofuel credits were bid at a 1c/RIN premium over Wednesday. Physical biodiesel markets were seen as firm to strong Thursday, with Chicago strengthening by 7c/USG as other markets remained flat. The heating oil/soybean oil spread narrowed by 3.93c, trading at 11.48c/USG. Chicago biodiesel saw a 7c/USG increase to April Nymex +190c/USG Thursday in day-over-day assessment, according to market sources. Both Houston and New York Harbor were seen at parity with the previous day s assessment, with New York trading at April Nymex +185 and Houston at April Nymex +176. No trades were confirmed for either market. The May Cbot soybean contract strengthened 29.25c/bushel Thursday to settle at 1,449c/bushel. Meanwhile soybean oil was Chicago ethanol vs Chicago CBOB 25 0-25 -- hhh -50-75 -100 Deals Done Market Price () Volume '000 Chicago Argo 26 Mar - 5 Apr 257.75 5 bl 26 Mar - 5 Apr 258.50 5 bl prompt 258.50 5 bl Chicago Rule 11 21-23 Mar 263.50 203 USG 24-30 Mar 262.00 406 USG South Dakota - Burlington Northern 21-23 Mar 254.00 116 USG RINs Deals Done Market Price ( /RIN) Volume '000 RINs Advanced Biofuel 2013 75.00 2,000 2013 80.00 200 2013 80.00 500 2012 62.00 2,000 2012 62.00 2,000 2012 60.00 5,000 2013 70.00 500 2013 69.00 3,000 also up, trading at 50.42c/lb, 58pts above Wednesday s assessment. The heating oil/soybean oil spread narrowed to 11.48/USG, a 3.93c/USG drop from Wednesday. The April heating oil contract was slightly stronger Thursday at 289.63c/USG, coming up 42pts from the day before. Meanwhile, 2013 biodiesel RINs were talked at parity with the previous day s market. Few trades were reported for the day. Latin America The physical market in Brazil remained illiquid Thursday as many traders and producers have been in attendance at F.O. Lichts Sugar & conference in Sao Paulo. Bids and offers for Anhydrous EPA specification ethanol remained at parity as market activity was low. May Anhydrous EPA specification ethanol was seen bid at $690/ m³, with offers seen at $700/m³, flat with the day before. June and July shipments were offered at parity with the May price. No other bids were heard Thursday. The fob Brazil hydrous markets continued to be discussed for Page 3 of 6
Argus US Issue 13-55 parcels delivering in the forward months of May to July. Offers held at parity for each of the three months at $625/m³, with a May bid heard at 600/m³. Latest News NOAA predicts dry spring for the US Most of the US should experience a warm and dry spring in 2013, with no relief in sight for some already drought-stricken areas, according to forecasters with the National Oceanic and Atmospheric Administration (NOAA). The agency s new forecast predicts warmer-than-average temperatures across most of the continental US and northern Alaska. The Pacific northwest and extreme northern Great Plains should see cooler-than average weather. Areas in the western US, the Rocky Mountains, parts of the southwest including much of Texas and the Gulf coast and Florida should experience drierthan-normal conditions, offering little help for already droughtstricken areas, deputy director of NOAA s National Weather Service Laura Furgione said. Moderate to exceptional drought conditions are expected to persist in 51pc of the US, down from two-thirds of the country last year, she said. New drought development is possible in California, the southwest, the southern Rockies, Texas and Florida. But NOAA s spring outlook favors some drought improvement in the US midcontinent, the northern and central Great Plains, Georgia, the Carolinas and Alaska. There is a risk of wildfires due to extreme dryness in the upper midcontinent, while Oklahoma has already seen some fires this year continuing last year s threat of wildfires in that region, the agency said. Spring flooding has an increased chance in eastern North Dakota and northwest Minnesota. Devils lake and Stump lake in northeast North Dakota have a 50pc chance of rising two feet, which could flood roughly 20,000 acres of farmland and roadways, according to the report. The melting of late-season snow could cause minor to moderate flooding in the upper Mississippi river basin. Parts of Montana, South Dakota and Iowa could also experience similar flooding. NOAA said that the spring flood risk is highly dependent on rainfall and the speed of the snowmelt. Areas along the middle Mississippi, lower Missouri and Ohio river basins have already experienced minor flooding this year a threat that will continue through the spring. Those areas include portions of Kansas, Missouri, Illinois, eastern Iowa, Indiana, Ohio, Kentucky and Tennessee. The 2013 NOAA spring outlook issued today covers April through June. Renewable fuel rules will harm US economy API The American Petroleum Institute (API) today released a study showing that the US renewable fuels standard will reduce GDP and increase the cost of producing gasoline and diesel. US rules mandate the use of 36bn USG of biofuels by 2022. Prices for renewable identification numbers (RINs), which are used by refiners and importers to comply with US biofuel blending mandates for ethanol and biodiesel, have spiked over the past year, sparking complaints from US refiners who warn that US pump prices will rise. RIN prices have risen sharply along with concerns that federal biofuel blending volumes set by the fuels standard outstrip the amount of blending possible in the US market. Obligated buyers face fines for failing to meet their mandated volumes. Argus today assessed 2013 ethanol RINs at 70c/RIN, down from $1/USG earlier this year but up from 7c/RIN at the start of the year. The API called the RIN program irretrievably broken, citing a study it commissioned from NERA Economic Consulting that Physical Chicago vs CBOT corn futures Houston B100 SME vs Nymex heating oil 50 250 0 200 -- -50 hhh -- 150 hhh -100 100-150 50 Page 4 of 6
Argus US Issue 13-55 CANADA Argus Market Map LA less Chicago USA : +29.50 LA less NE : +26.50 Nebraska Rule 11 less NE : +1.00 Chicago NY less Chicago : +12.00 Rbob: -18.25 New York Los Angeles Houston less Chicago : +5.00 : -14.00 Rbob: -7.63 NY less Santos : +13.09 LA less Santos : +30.59 MEXICO Houston São Paulo, Brazil showed the program would cut $800bn from the US GDP by 2015, add 300pc to the cost of manufacturing diesel and 30pc to the cost of making gasoline. The study predicts possible severe rationing of diesel and other commercial transportation disruptions, and warns that it will encourage the export of refined products. The Renewable Fuels Association (RFA), which lobbies for ethanol producers, said that because RINs are free for every gallon of ethanol used, the problem is self-inflicted. RFA president Bob Dinneen said an expected deficit of 500mn USG in output can be covered by existing RINs. There are 2.5bn RINs that are overflowing the marketplace today that have already been provided to refiners at no cost whatsoever, and they re trading these amongst themselves. So there really shouldn t be any impact to consumers, Dinneen said. You ll have winners and losers among the oil companies as they trade their free RINs among themselves, but to suggest there should be a consumer impact is just wrong and misleading. The RFA has also proposed that rather than buy RINs, refiners could opt to blend more ethanol into gasoline, creating more E15 or E85. The API said there are concerns about the safety of running such blends in today s automobiles. will shield consumers from rising gasoline costs as a result of higher-priced RINs. US refiner Valero has said that because it sells unblended gasoline, buying RINs could cost it $500-750mn this year. Valero is pushing for the renewable fuel rules to be dropped, reduced or for responsibility to be shifted to blenders rather than producers and importers of gasoline and diesel. Canadian refiner Irving Oil said it will continue to export gasoline to the US northeast despite uncertainty over higher costs caused by biofuel mandates, saying they take a hit from the policy but do not plan to shift sales to other markets. Expanded Latin American Coverage Argus has recently expanded its coverage of Latin American crude, refined products, ethanol and LPG markets as part of Argus Latin Markets. The improved service includes a comprehensive list of 40 price assessments for actively traded energy commodities as well as insightful market data and analysis on the rapidly changing global oil markets and trade flows. API downstream group director Bob Greco said that RIN costs will be passed to consumers. Both groups said they expect Congress to hold hearings on the issue. US senators David Vitter and Lisa Murkowski have asked the Environmental Protection Agency to outline how the agency Contact us at moreinfo@argusmedia.com for more information. Page 5 of 6
Argus US Issue 13-55 Price Assessment Methodology Argus US biofuels prices represent the market over the course of the entire trading day. Argus believes that a fair and representative price will include trade throughout the day. For biofuels in the US, Argus publishes the low and the high of deals done. In illiquid markets, Argus looks to assess the range within which product could have traded, based on bids and offers through the day, movements in similar grades, and a market consensus following extensive polling of participants. The Argus assessment is an intelligent range of trade not a mechanistic system. Price assessments in Argus US rely on a wide variety of sources for information, including discussion with refiners, marketers, importers, traders and brokers. Argus works to verify all deal prices, counterparties, and volumes. Argus values transparency, so we publish as much price, volume, and specification information as we discover. This allows you to cross check and verify the deals against the published prices. The details of our methodology are available at www.argusmedia.com or by calling any Argus office. Argus US is published by Argus Media Inc. Registered office: Argus House, 175 St John St, London, EC1V 4LW Tel: +44 20 7780 4200 Fax: +44 870 868 4338 email: sales@argusmedia.com ISSN 2049-4696 Copyright notice. All rights reserved. By reading this publication you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of the publisher. Trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, ARGUS US ETHANOL, other ARGUS publication titles and ARGUS index names are trademarks of Argus Media Ltd. Visit www.argusmedia.com/trademarks for more information. Disclaimer The data and other information published herein (the Data ) are provided on an as is basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law. Publisher Adrian Binks Chief operating officer Neil Bradford CEO Americas Euan Craik Global compliance officer Jeffrey Amos Commercial manager Karen Johnson Editor in chief Ian Bourne Managing Editor, Global Cindy Galvin Managing Editor, Americas Jim Kennett Editor: David Ruisard Tel: +1 713 429 6306 houstonproducts@argusmedia.com Customer support and sales: email: support@argusmedia.com Technical support: email: technicalsupport@argusmedia.com Argus Media Inc, Houston, US Tel: +1 713 968 0000 Argus Media Inc, New York, US Tel: +1 646 376 6130 Argus Media Inc, Washington DC, US Tel: +1 202 775 0240 London, UK Tel: +44 20 7780 4200 Astana, Kazakhstan Tel: +7 7172 54 04 60 Beijing, China Tel: + 86 10 6515 6512 Dubai Tel: +971 4434 5112 Moscow, Russia Tel: +7 495 933 7571 Rio de Janeiro, Brazil Tel: +55 21 3514 1402 Singapore Tel: +65 6496 9966 Tokyo, Japan Tel: +81 3 3561 1805 Page 6 of 6