US EPA unlikely to reduce ethanol mandate on drought: analyst

platts
Washington (Platts)--6Aug2012/1257 pm EDT/1657 GMT


As a severe drought shrinks the expected US corn harvest, the market should not take it as a given that the Environmental Protection Agency will lift this year's ethanol mandate, a Bank of America Merrill Lynch analyst said Monday, pointing to ample storage, exports and renewable fuel credits.

The prospects of an extremely poor harvest have sent corn futures past $8/bushel to record highs, driving ethanol producers to curb their output while also amplifying calls from livestock groups for cuts in EPA's Renewable Fuel Standard requirement for refiners to blend 13.2 billion gallons of ethanol into the US motor fuel supply in 2012.

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