U.S. senators introduce bill to axe corn ethanol mandate
If the bill eventually became law it could hurt alternative fuel producers such as Archer Daniels Midland Co and private company POET.
But ethanol experts said the EPA's proposed cuts, and backing for ethanol among many lawmakers, discounts chances that the bill would move forward anytime soon.
"I don't think the bill is going to be a high priority on Capitol Hill, especially after the Environmental Protection Agency already gave ethanol opponents much of what they want last month," said Wally Tyner, an energy economist at Purdue University.
Rich Nelson, an analyst at Allendale Inc, said: "While this is a bipartisan effort and does have a chance to cause the grain trade some concern, it's very likely this will not be passed."
The EPA proposed cutting the overall 2014 mandate to 15.21 billion gallons, about 16 percent less than the current 2014 mandate's 18.15 billion gallons, and below this year's requirement of 16.55 billion gallons.
Corn prices fell more than 1.5 percent on Thursday after the senators announced the bill, notching the biggest one-day loss since mid-November. March corn on the Chicago Board of Trade was down 6 cents per bushel at $4.33-1/4 in afternoon trading.
"The proposal had a definite immediate shock to prices, but long-term I don't think it has a chance getting through Congress, it will have a tough time clearing the farm lobby," said Sterling Smith, futures specialist for Citigroup.
"Also, there's a lot of ethanol use ... even without the mandate, so I question how much of an impact ending the mandate would have," Smith said.
A corn ethanol backer blasted the bill, saying expectations for a big surplus in this year's corn crop means more of the grain would simply go unused by next harvest if not needed by the ethanol industry.
"Just how low do they want the price of corn to go?," said Monte Shaw of the Iowa Renewable Fuels Association. "How many farms do they want in foreclosure?"
- Study says neonics are widespread in Iowa waters
- Tremendous response to Iowa’s new nutrient reduction program
- A good corn crop is taking shape
- Drones draw interest to crop scouting and other new farm uses
- Renegotiating cash rents down for 2015
- U.S. farmers resort to giant storage bags to avoid cheap sales