Today in Biofuels: “like a collective global groan”, “expression of rage and anger” prompts US shift at Bali; record global grain harvest; record US farm income

Top Story:

Reports continue to flow out of Washington and Bali regarding the United States’ dramatic reversal on emission targets, that set the stage for an announcement that the nations had agreed to negotiate a successor to the Kyoto Treaty by 2009. Sen. Barbara Boxer (D- CA), chairwoman of the Senate Environment Committee, said “In Bali, the president tried to treat the world the way he treats Congress — ‘my way or the highway. The difference is that in Congress he has supporters but in Bali he had no supporters.” From an eyewitness at Bali came a dramatic report of the climatic scene: “Then occurred one of the most remarkable sounds that has perhaps ever been heard in the annals of international diplomacy — like a collective global groan … a murmer, then increasing in volume to a full-throated expression of rage and anger and booing and jeering, lasting for a full minute, so that finally the Minister had to call the meeting back to order.”

Producer News:

In Kansas, Arkalon Ethanol LLC closed $113 million in senior debt financing for its 110 Mgy ethanol plant. The plant is planned for construction near Liberal.

In Oregon, Willamette Biomass plans to complete its 4.2 Mgy canola crushing facility at Rickreall, from a converted grain elevator. The plant will be one of the first of its kind in the state.

South Dakota Oilseed Producers has announced that they plan to construct a soybean crush plant near Miller. Company executives say that the company has raised $8.5 million in equity financing for the $19 million project.

International News:

In India, reports are streaming in that the country is far from ready for the E10 mandate that will be imposed next October. Oil companies were directed to commence blending E5 blending in October, but have not procured enough ethanol to meet the mandate. Reports have been published stating that the industry have procured less than 40 million gallons towards their expanded ethanol goal for next year. Further, older vehicles will not be E10 compatible, and new cars from Suzuki and Hyundai are not E10 compatible also.

India Glycols acquired a a 96.56% stake in Shakumbari Sugar & Allied Industries for $12 million. Shakumbari Sugar has a sugarcane ethanol output of 4 Mgy. India Glycols will double the sugarcane crushing capacity and increase the ethanol production capacity to 25 Mgy.

In China, the Ministry of Agriculture announced that it is reviewing the land allocations for biofuels crops, with clear indications that food would be given priority over fuel. COFCO, operator of a 200,000 ton ethanol plant in Guangxi, is seeking feedstocks from Vietnam and Thailand. But biodiesel producers, who depend largely on non-food crops, expect to be largely spared from curbs on production.

In India, Mahindra & Mahindra launched the first biodiesel compatible tractor for the Indian market, the Arjun International 75757. The trucks will run on B5 and the company is seeking to introduce B10 compliant vehicles in the future.

Research News:

The USDA Economic Research Service projected that US farm income would reach a record $87.5 billion in 2007, up $28.5 billion over 2006. Crop production is expected to increase by $30 billion and livestock production by $20 billion. Subsidy payments to US farmers are expected to decrease $3.7 billion in 2007 compared to 2006.

The International Grains Council projected that global grain stocks would fall for 2007-08 compared to 2006-07, despite record output. Ethanol-related demand increased 44 percent to 100 million tonnes. http:/

Policy and Policymakers:

In Washington, USA Today ran a recap story on Presidential candidate positions on biofuels. Mike Huckabee has pledged to make the United States energy-independent in just 10 years and backs the 36 billion gallon ethanol mandate. Mitt Romney supports the continuation of tax subsidies but not the mandate, while supporting increased development of infrastructure and cellulosic ethanol research. Rudy Giuliani said the United States should “get ahead” of Brazil on ethanol but otherwise has not issued major policy statements. Arizona Sen. John McCain and former Tennessee Sen. Fred Thompson don’t support biofuel mandates. McCain support repeal of the ethanol tariff and hybrid vehicle development.

On the Democratic side, Hillary Rodham Clinton of New York, Barack Obama of Illinois, Joe Biden of Delaware and Chris Dodd of Connecticut voted for the Senate energy bill. Clinton also supports $2 billion in additional biofuel development, while Obama proposes a $150 billion fund to finance new plant construction, and would require all new cars to be flex-fuel. Former North Carolina Sen. John Edwards would require oil companies to sell E85. Bill Richardson, the New Mexico governor and former U.S. energy secretary, plans to accelerate development of cellulosic ethanol.

Consumer and Fleet News:

Renault launched new eco²-compliant Modus and Grand Modus models. To qualify for the eco² designation, Renault cars must emit less than 140g of CO2 per km or else run on biofuels; must be manufactured at ISO 14001-certified factories; must be 95% end-of-life reusable and contain at least 5% of plastics sourced from recycling.

Financial News:

The Biofuels Digest Indexâ„¢, a basket of public biofuel stocks, rose 2.29 percent to close at 114.31, a 52-week high. All sectors were up for the day as winners led losers nearly 2 to 1. Among diversified agribusiness large caps, Archer-Daniels-Midland (ADM) was up 2.04 percent to $39.07. Among ethanol pure play mid caps, Aventine (AVR) gained 11.18 percent to close at $11.44, while Pacific Ethanol (PEIX) also leaped, up 9.60 percent to $6.62. The increased prospects for the Energy Bill to become law before the end of the year enthused investors. AMong small caps Green Energy Resources (GRGR.PK) was down 12.50 percent to close at $0.14, while Intrepid Technology (IESV.OB) was up 17.39 percent to $0.027.

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