Ethanol Lobby Expects Opponents to Ask EPA to Suspend Law

The Renewable Fuels Association, the largest U.S. ethanol trade group, said it expects livestock and poultry industry supporters to ask the Obama administration to suspend the nation’s ethanol requirement as early as today.

The groups may ask the Environmental Protection Agency to waive the mandate requiring refiners to use 13.2 billion gallons of ethanol this year and 13.8 billion in 2013 because of higher corn prices caused by drought in the grain-rich U.S. Midwest.

Corn prices jumped to a record $8.1225 a bushel on the Chicago Board of Trade on speculation that U.S. yields may fall 18 percent below the government’s estimate on July 11, according to a Bloomberg survey. A supply shortage would raise costs for ethanol producers and food processors.

Livestock and poultry producers have scheduled a conference call with media members today at 11 a.m. New York time to outline plans to “address a short corn supply.”

Matt Hartwig, a spokesman for the Washington-based Renewable Fuels Association, said “we are expecting” the livestock and poultry groups to seek a waiver.

Arkansas Governor Mike Beebe supports the concept of suspending the mandate, which is formally known as the Renewable Fuels Standard, Matt DeCample, a spokesman, said today in a telephone interview.

“We do plan to get word to EPA” that it should suspend the RFS, DeCample said.

He said the governor may contact the agency on his own or may join with lawmakers from other states to petition the EPA to cease the blending requirement because of corn prices.

Ethanol producers have responded to higher feedstock costs by slashing output 17 percent to 796,000 barrels a day in the week ended July 20 from a record 963,000 on Dec. 30.

Poet LLC, is the largest U.S. ethanol producer, followed by Archer Daniels Midland Co. (ADM), in Decatur, Illinois, and Valero Energy Corp. (VLO)

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net

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