WAEES Biofuels and Related 

Models Overview

By John Kruse, PhD

Principal and Directory of Quantitative Analysis

Email: jkruse@waees-llc.com
WAEES Scenario Analyses (2015)

Scenario Analysis

1. RFS 2 Policy

- Volume Obligations

- Biodiesel

- Ethanol

- Advanced

- Tax credits

- Ethanol blend wall issues

2. International Policy

- Argentina Policy

- Brazil Policy

- EU-28 Biofuels Policy

3. Biofuels Technology

- Feedstock Conversion

- Renewable Diesel

4. Crude oil prices

5. Biofuels Feed Stocks

- Supply Availability

- Yield growth

- Production shocks

- New sources

- Market changes

- Technology

6. International supply shocks

- Ukraine disturbance

- South America yields

- US yields

7. International demand shocks

- China feed demand

- Africa meat & feed consumption

- Calorie consumption

WAEES Global Partial 

Equilibrium Modeling System

8. Trait & Technology Analysis

- Valuation of GE crops

- Impacts of labeling GE foods

- Impact of new trait introduction

WAEES has run 25 specific scenarios in 2015 as of the end of April.

Over 20,000 equations
Commodity Coverage

 Corn

 Sorghum

 Barley

 Wheat

 Rice

 Cotton

 Soybeans & Derivatives

 Sunflowers & Derivatives

 Rapeseed & Derivatives

 Palm Oil

 Sugarcane, Sugar Beets, & Sugar

 Biodiesel

 Ethanol

 Cattle

 Hogs

 Beef

 Pork

 Broilers

 Dairy & Dairy Products

(Quasi Trend Model)
Geographic Coverage of the WAEES Agricultural 

& Biofuels Partial Equilibrium Models (USDA Regions)

North America

• US

• Canada

• Mexico

Central America & the 

Caribbean

South America

• Argentina

• Bolivia

• Brazil

• Chile

• Paraguay

• Uruguay

• Other South America

The European Union (28 countries)

Area, yield, production individual countries

Other Europe

Former Soviet Union

• Russia

• Ukraine

• Uzbekistan

• Other Former Soviet Union

Middle East

• Iran

• Saudi Arabia

• Turkey

• Other Middle East

East Asia

• China

• Japan

• South Korea

• Taiwan

• Other East Asia

South Asia

• Bangladesh

• India

• Pakistan

• Other South Asia

Southeast Asia

• Indonesia

• Malaysia

• Myanmar

• Philippines

• Thailand

• Vietnam

• Other Southeast Asia

Oceania

• Australia

• Other Oceania

North Africa

• Egypt

• Other North Africa

Sub-Saharan Africa

• Kenya

• Nigeria

• South Africa

• Other Sub-Saharan Africa
Concept Coverage

 Supply Components

 Crops: Area, Yield, Production, Imports, Beginning Stocks

 Livestock: Breeding Herd, Market Animals, Calf Crop, Pig Crop, Slaughter Weight, Production, Imports, 

Beginning Stocks

 Biofuels & RINs: Capacity, Capacity Utilization, Production, Imports, Beginning Stocks

 Demand Components

 Crops: Food, Feed, Industrial, Exports, Ending Stocks

 Livestock: Slaughter, Death Loss, Food Use, Exports, Ending Stocks

 Biofuels & RINs: Consumption, Exports, Ending Stocks

 Commodity Prices (except dairy)

 Regional Crop Costs of Production for the United States, Brazil, Argentina, China, and India

 Assumptions used regarding Real GDP Growth, Population, Inflation, Exchange Rates, 

Crude Oil Prices, and Policy.
Partial Equilibrium Modeling System

(Conceptual Framework Representation for One Country)

Crop Feed Demand

Crop Food Demand

Per Capita Income 

& Distribution 

Other Crop Demand

Population

Age Distribution & 

Health Concerns

Cultural Tastes & 

Preferences

Meat Food Demand

Biofuels Demand

Fuel

Fertilizer

Chemical

Machinery

Crop 

Prices

Area 

Harvested

Yield

Seed

Land

Transport

Labor

Interest

Crop Cost 

of 

Production

Veterinary

Feed

Meat 

Prices

Market 

Animals

Livestock 

Cost of 

Production

Breeding 

Herd

Government 

Policy

Technology

Inflation

Exchange Rates Conditioning Assumptions

Crop Supply & Demand

Livestock Supply & Demand
Country 1

Residual Supplier

WAEES Structural Partial Equilibrium Models

Food

Use

Total

Supply

Production

Net 

Exports

Feed

Use

Ending 

Stocks

Farm 

Price

Beginning 

Stocks

Area 

Harvested Yield

Industrial

Use

Port Price

Food

Use

Total

Supply

Production

Ending 

Stocks

Feed

Use

Net 

Imports

Beginning

Stocks

Area 

Harvested

Yield

Industrial

Use

Farm 

Price

Total

Demand

Transportation 

Cost Import Tariffs Exchange Rates

Country 3 Port Price

Food

Use

Total

Supply

Production

Ending 

Stocks

Feed

Use

Net 

Imports

Beginning

Stocks

Area 

Harvested

Yield

Industrial

Use

Farm 

Price

Total

Demand

Transportation 

Cost Import Tariffs Exchange Rates

Country 2 Port Price

Food

Use

Total

Supply

Production

Ending 

Stocks

Feed

Use

Net 

Imports

Beginning

Stocks

Area 

Harvested

Yield

Industrial

Use

Farm 

Price

Total

Demand

Transportation 

Cost Import Tariffs Exchange Rates

Country N Port Price

...
Data Sources

Macroeconomic

 Real GDP, Inflation: IMF through 2019, WAEES 

thereafter

 Population: United Nations

 Exchange Rates: WAEES model based on IMF 

forecast of real GDP, inflation, and other factors

 Crude oil and other energy prices: U.S. Department of 

Energy, Energy Information Administration (EIA)

Ag Commodity Supply & Demand

 USDA PS&D Database, ERS, & NASS (90%)

 FAO Database

 Eurostat (EU-28 by country supply data)

 USDA Gain Reports

 Country Ministries of Ag

Policies & Tariffs

 USDA FSA & USDA GAIN Reports

 Country Ministries of Agriculture

 WTO

 OECD

 European Commission

Ag Commodity Prices

 USDA ERS & NASS

 Eurostat

 Various spot markets

 The Jacobsen

Biofuels

 US Supply & Demand: EIA, EPA EMTS Data, and 

ERS-FATUS

 US Prices: USDA AMS, Nebraska Government 

Website, The Jacobsen

 Int’l Supply & Demand: USDA Gain Reports, 

European Biodiesel Board, European Commission, 

Argentine Institute of National Statistics and 

Census(INDEC), 

 Int’l Prices: Argentine Secretary of Energy, Center for 

Advanced Studies on Applied Economics (CEPEABrazil), USDA Gain Reports, The Jacobsen
Crop Area Specifications

Preferred Approach

The general approach within the WAEES models for a specific geography is the following:

Corn Area = α1 + β11

ENRCRN

Deflator

+ β12

ENRSBN

Deflator

+ ⋯ + β1n

ENRCOT

Deflator

Soybean Area = α2 + β21

ENRCRN

Deflator

+ β22

ENRSBN

Deflator

+ ⋯ + β2n

ENRCOT

Deflator

⋮

Cotton Area = αn + βn1

ENRCRN

Deflator

+ βn2

ENRSBN

Deflator

+ ⋯ + βnn

ENRCOT

Deflator

Where the variables are defined as:

ENR: Expected Net Returns

CRN: Corn

SBN: Soybeans

... : all other crops

COT: Cotton

βij = βji ∀ i ≠ j

βii ≥ βij

n

j =1

 ∀ i ≠ j

Symmetry

Own elasticity > Sum of 

the cross elasticities
Food Demand Specifications

Soy Oil Consumption

Population

= α1 + β11

PriceSBO

Deflator

+ β12

PriceSFO

Deflator

+ ⋯ + β1n

PricePAO

Deflator

+ γ1

Real GDP

Population

Sun Oil Consumption

Population

= α2 + β21

PriceSBO

Deflator

+ β22

PriceSFO

Deflator

+ ⋯ + β2n

PricePAO

Deflator

+ γ2

Real GDP

Population

⋮

Palm Oil Consumption

Population

= αn + βn1

PriceSBO

Deflator

+ βn2

PriceSFO

Deflator

+ ⋯ + βnn

PricePAO

Deflator

+ γn

Real GDP

Population

Where the variables are defined as:

SBO: Soybean oil

SFO: Sunflower oil

... : all other vegetable oils

PAO: Palm oil

Under the assumption that vegetable oils are seperable from other consumer purchases, then 

the interrelationship among the price elasticities is given by:

( ) j

ij j j i ji

i

w

e w e

w

    

Where the variables are defined as:

eij: Price elasticity of oil i with respect the price of oil j

wi: Share of income spent on oil i 

ηi: Income elasticity of oil i
Feed Demand Specifications

Corn Feed Demand = α1 + β11

PriceCrn

Deflator

+ β12

PriceSrg

Deflator

+ ⋯ + β1n

PriceWht

Deflator

+ γ1GCAU

Sorghum Feed Demand = α2 + β21

PriceCrn

Deflator

+ β22

PriceSrg

Deflator

+ ⋯ + β2n

PriceWht

Deflator

+ γ2GCAU

⋮

Wheat Feed Demand = αn + βn1

PriceCrn

Deflator

+ βn2

PriceSrg

Deflator

+ ⋯ + βnn

PriceWht

Deflator

+ γnGCAU

Where the variables are defined as:

Crn: Corn

Srg: Sorghum

... : all other grains (primarily barley)

Wht: Wheat

βij = βji ∀ i ≠ j

βii ≥ βij

n

j =1

 ∀ i ≠ j

εGrain Consuming Units

Corn Feed Demand = 1
US Biofuels RIN Models

D6 RIN Volume 

Obligation

D6 RIN Ending 

Stocks

D6 RIN 

Price

Domestic D6 RIN 

Production

Carryover RIN 

stocks

Imported D6 RIN 

Production

Demoted D5 RINs 

Supplied

D5 RIN Volume 

Obligation

D5 RIN 

Carryover Stocks

D5 RIN 

Price

Domestic D5 RIN 

Production

Carryover RIN 

stocks

Imported D5 RIN 

Production

Demoted D4 RINs 

Supplied

D5 RINs Demoted 

to D6 RINs

D4 RIN Volume 

Obligation

D4 RIN 

Carryover Stocks

D4 RIN 

Price

Domestic D4 RIN 

Production

Carryover RIN 

stocks

Imported D4 RIN 

Production

D4 RINs Demoted 

to D5 RINs

D3 RIN Volume 

Obligation

D3 RIN 

Price

Domestic D3 RIN 

Production

Imported D3 RIN 

Production

Imported 

Sugarcane Ethanol

Renewable Diesel

Adv Sorghum Ethanol

Renewable Diesel

Biogas

Naptha

Heating Oil

Compressed Gas

Dom Sugarcane Ethanol

Butanol

Biodiesel

Renewable Diesel

Butanol

Corn Ethanol

Renewable Diesel
US Biofuel Feedstock Sources

Sugarcane

Ethanol 

Production

Corn

Biodiesel 

Production

Renewable Diesel 

Production

Soybean Oil

Cellulosic 

Biomass

Butanol 

Production

Sorghum

Canola Oil

DDG Corn Oil

Inedible Tallow

White Grease

Brown Grease

Poultry Fat

Palm Oil

Heating Oil

Naptha

Landfill Waste 

Management Biogas

Animal Waste 

Management

Compressed Gas

Yellow Grease

Boxes with a dashed outline 

are included in the WAEES 

biofuels model as 

assumptions.
US Biofuels Partial Equilibrium Models For Ethanol & Biodiesel

High Blend

Use

Total

Supply

Ethanol 

Production

Ending 

Stocks

Low Blend

Use

Exports

Ethanol

Price

Imports Beginning

Stocks

Exports

Total

Supply

Biodiesel 

Production

Ending 

Stocks Fuel Use

Biodiesel

Price

Imports Beginning

Stocks

Corn Ethanol Biodiesel

Capacity Capacity 

Utilization

Capacity

Capacity 

Utilization

Conventional 

Market Mandate

Biodiesel 

Mandate Market

Glycerin 

Production

Distillers’ Grains 

Production

Corn Oil 

Production

Processing 

Margin

Ethanol 

Price Corn Price

Processing 

Margins

Biodiesel 

Price

#2 Diesel 

Price

Glycerin 

Price

Feed Stock 

Prices

Technology

DDG Price

DDG Corn 

Oil Price

Other Costs

Unleaded 

Gasoline 

Price

Crude Oil 

Price

Conventional 

RIN Price

Biodiesel RIN 

Price

Advanced 

RIN Price

Brazil Ethanol 

Price

Brazil Ethanol 

Supply

World Sugar 

Price

Brazil Ethanol 

Demand

Cellulosic RIN 

Price

Sorghum 

Ethanol
Industrial

Use

Total

Supply

Oil Production

Ending 

Stocks

Food

Use

Exports

Oil

Price

Imports Beginning

Stocks

Soybean Oil Sunflower Oil Rapeseed Oil

The Structure of the Oilseed Oil Models

Industrial

Use

Total

Supply

Oil Production

Ending 

Stocks

Food

Use

Exports

Oil

Price

Imports Beginning

Stocks

Industrial

Use

Total

Supply

Oil Production

Ending 

Stocks

Food

Use

Exports

Oil

Price

Imports Beginning

Stocks

Industrial

Use

Total

Supply

Oil Production

Ending 

Stocks

Food

Use

Exports

Oil

Price

Imports Beginning

Stocks

Palm Oil

Biofuels

Use

Other 

Industrial

Use

Biofuels

Use

Other 

Industrial

Use

Biofuels

Use

Other 

Industrial

Use

Biofuels

Use

Other 

Industrial

Use
Hog Fat Market Structure

Food Use Inedible 

Use

Lard Supply

Lard Production

(Edible Hog Fat)

White Grease Production 

(Inedible Hog Fat)

Beginning 

Stocks

Ending 

Stocks

Hog 

Slaughter

Lard Price

Imports

Other 

Industrial Use

Methyl Ester 

Use

Exports

White 

Grease Price

White Grease 

Imports

White Grease 

Supply

White Grease 

Methyl Ester 

Use

White 

Grease 

Exports

White 

Grease 

Feed Use

White Grease 

Ending Stocks

White Grease 

Beginning Stocks

White Grease 

Oleo Chemical 

Use

Dashed lines indicate that data is 

not specifically reported
DDG Corn Oil and Other Fat Market Structures

Feed Use Methyl Ester 

Use

Poultry Fat 

Production

Poultry Fat 

Price

Feed Use Methyl Ester 

Use

DDG Corn Oil 

Production

DDG Corn 

Oil Price

DDG 

Production

Feed Use Methyl Ester 

Use

Brown Grease 

Production

Brown 

Grease Price

Dashed lines indicate that data is 

not specifically reported

De-canted Trap 

Waste

Soybean Oil ByProduct Processing Other Sources

Renewable 

Diesel Use
Net Exports

Total

Supply

Biodiesel Production

Ending Stocks

Beginning

Stocks

Biodiesel

Biodiesel Domestic 

Target

Processing 

Margins

Technology

Indonesia Biodiesel and Palm Oil Models

Industrial

Use

Total

Supply

Oil Production

Ending 

Stocks

Food

Use

Exports

Palm Oil

Port Price

Imports Beginning

Stocks

Palm Oil

Biofuels

Use

Other 

Industrial

Use

Palm Oil

Domestic 

Price

Export & 

Specific 

Tariffs

US Biodiesel

Plant Price

US D4 RIN 

Price – US D6 

RIN Price

Supply 

Incentive Price

US Biodiesel

Blenders 

Credit

EU Palm 

Biodiesel

Price
ASSUMPTIONS
Crude Oil Price

West Texas Intermediate

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Nominal Dollars Per Barrel

US DOE-EIA April 14, 2015 Energy Outlook US DOE-EIA May 2014 Energy Outlook
RFS Volume Obligation Assumptions

Baseline and Scenarios

Calendar Year 2014 2015 2016 2017 2018

billion gallons

Baseline - EPA Proposed Rule (May 2015)

 Overall RFS 15.930 16.300 17.400

 Conventional Gap (Implied Ethanol) 13.250 13.400 14.000

 Advanced 2.680 2.900 3.400

 Biodiesel 1.630 1.700 1.800 1.900

 Cellulosic 0.033 0.106 0.206

 Advanced Gap 0.120 0.159 0.404

 California CARB (sugarcane ethanol)* 0.120 0.180 0.240

NBB: Minimum Biodiesel Volume Obligations

 Overall RFS 15.930 16.300 18.000 18.000 18.000

 Conventional Gap (Implied Ethanol) 13.250 13.400 14.000 14.000 14.000

 Advanced 2.680 2.900 4.000 4.000 4.000

 Biodiesel 1.630 1.700 2.000 2.300 2.300

 Cellulosic 0.033 0.106 0.206 0.256 0.306

 Advanced Gap 0.120 0.159 0.694 0.179 0.129

 California CARB (sugarcane ethanol) 0.120 0.180 0.240 0.300 0.360

* WAEES Assumption, not specified by EPA
Brazil Exchange Rate

Reals per US dollar

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

2011 2012 2013 2014 2015 2016 2017 Reals Per US Dollar

WAEES Forecast July 2015 USDA ERS - July 8, 2015

USDA ERS - Dec 18, 2014 WAEES Forecast December 2014
US Corn Yields

100

110

120

130

140

150

160

170

180

190 2010 2011 2012 2013 2014 2015 2016 2017 Bushels Per Acre

USDA* NBB Yield Assumption

* USDA estimates based on June 2015 WASDE for 2015, and the 2015 USDA Baseline thereafter.
US Corn Production and Harvested Area

NBB Minimum Scenario

76

78

80

82

84

86

88

90

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0 2010 2011 2012 2013 2014 2015 2016 2017 Million Acres Billion Bushels

USDA Production* NBB Production

USDA Harvested Area* NBB Harvested Area

* USDA estimates based on June 2015 WASDE for 2015, and the 2015 USDA Baseline thereafter.
US Soybean Yields

30

35

40

45

50

55 2010 2011 2012 2013 2014 2015 2016 2017 Bushels Per Acre

USDA* NBB Yield Assumption

* USDA estimates based on June 2015 WASDE for 2015, and the 2015 USDA Baseline thereafter.
US Soybean Production and Harvested Area

68

70

72

74

76

78

80

82

84

86

1.5

2.0

2.5

3.0

3.5

4.0

4.5 2010 2011 2012 2013 2014 2015 2016 2017 Million Acres Billion Bushels

USDA Production* NBB Production

USDA Harvested Area* NBB Harvested Area

* USDA estimates based on June 2015 WASDE for 2015, and the 2015 USDA Baseline thereafter.
Extraction of corn oil from DDG’s

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pounds of oil per bushel Percent

Share of DDG's with corn oil extracted Corn oil extraction rate from DDG's
DDG Corn Oil Production and Use

Minimum Scenario – Marketing Year

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 Billion Pounds

Biodiesel Use Feed Use DDG corn oil production
SCENARIO RESULTS
Determining US Sugarcane Ethanol Imports

 Step 1: Model Minimum – CA CARB Requirements

 Step 2: Check to see if Brazil ethanol is competitive with starch ethanol production (Brazil anhydrous 

FOB price*Brazil exchange rate*(1+ad valorem tariff)) vs conventional ethanol plant price). If Brazil 

prices are lower, then turn on the ethanol import equation. The US will import ethanol until the arbitrage 

is no longer profitable. If Brazil prices are higher proceed to Step 3.

 Step 3: Determine excess of advanced gap over CARB requirements

If Advanced VO – Biodiesel VO*1.55-Cellulosic VO – CARB>0 and Ethanol VO < (Ethanol Blend Wall 

+ High Ethanol Blend Consumption)

then check the advanced ethanol price (conventional ethanol price – conventional RIN price + advanced 

RIN price) vs . Brazil anhydrous FOB price*Brazil exchange rate*(1+ad valorem tariff)). If the advanced 

price is higher, turn on the advanced ethanol import equation. The model will import sugarcane ethanol 

until the arbitrage is no longer profitable, is equivalent to the biodiesel costs of advanced RINs, or reaches 

the level determined by Advanced VO – Biodiesel VO*1.55-Cellulosic VO – CARB . 

Calendar Year 2014 2015 2016 2017

billion gallons

 California CARB (sugarcane ethanol) 0.120 0.180 0.240 0.300
U.S. Ethanol Consumption

Minimum Scenario – Sep/Aug Marketing Year

0

2

4

6

8

10

12

14

16

00/0101/0202/0303/0404/0505/0606/0707/0808/0909/1010/1111/1212/1313/1414/15

 15/16 16/17 Billion Gallons

 E10 Blends Higher Blends Blend Wall
US Biodiesel Production & Imports

Minimum Scenario – Calendar Year

0

500

1,000

1,500

2,000

2,500

3,000

2014 2015 2016 2017 Million Gallons

Methyl Ester Production Methyl Ester Imports

Renewable Diesel Production Renewable Diesel Imports
US Methyl Ester Production By Feedstock Source

Minimum Scenario – Oct/Sep Marketing Year

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

13/14 14/15 15/16 16/17 Million Gallons

Soybean Oil Corn Oil Canola Oil Inedible Tallow White Grease

Yellow Grease Brown Grease Poultry Fat Other
Biodiesel Plant Prices

Minimum Scenario – Calendar Year

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2010 2011 2012 2013 2014 2015 2016 2017 Dollars Per Gallon
RIN Prices

Minimum Scenario – Oct/Sep Marketing Year

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

10/11 11/12 12/13 13/14 14/15 15/16 16/17 Dollars Per Gallon

Biodiesel Advanced Conventional
Soybean Oil Price

Minimum Scenario – Oct/Sep Marketing Year

0.00

10.00

20.00

30.00

40.00

50.00

60.00

10/11 11/12 12/13 13/14 14/15 15/16 16/17 Cents Per Pound
Biodiesel Returns and Variable Costs

Minimum Scenario – Oct/Sep Marketing Year

0.00

1.00

2.00

3.00

4.00

5.00

6.00

09/1010/1111/1212/1313/1414/15

 15/16 16/17 Dollars Per Gallon

Biodiesel Glycerin

Variable Costs (Soy Oil) Variable Costs (Weighted Average Feedstocks)
Argentine Biodiesel Exports

 Biodiesel production in Argentina is estimated as a function of the biodiesel 

margin.

 The margin is defined on a dollar per metric ton basis as:

Expected biodiesel price – cost of soy oil – other costs

 The expected price of biodiesel is the international market price (US plant price) 

* (1- 9% export tariff).

 The price of soybean oil is the AR port price * (1-32% export tariff).

 Argentine net exports are determined by production – domestic use – change in 

ending stocks. (Domestic use determined by their blending mandates with some 

lag in actual consumption versus mandated blend levels).

 US biodiesel trade is the residual of the rest of the world biodiesel trade.
Argentina Biodiesel Exports

Minimum Scenario – Calendar Year

0

100

200

300

400

500

600

2011 2012 2013 2014 2015 2016 2017 Million Gallons
US Farm Program Payments

(ARC & PLC)

5.15

9.87 9.53

3.56

5.15

9.83 9.48

3.27

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2015 2016 2017 2018 Billion Dollars

Baseline: EPA Proposed SC 1: Minimum D4 VO
US Farm Program Payments

(ARC & PLC)

5.15

9.87 9.53

3.56

5.15

9.83 9.48

3.27

5.15

9.60 9.40

2.70

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2015 2016 2017 2018 Billion Dollars

Baseline: EPA Proposed SC 1: Minimum D4 VO SC 2: Realistic D4 VO
Thank You!

John Kruse, PhD

Principal & Director of Quantitative Analysis, WAEES

Jkruse@waees-llc.com

573-228-9842
Crop Area Specifications

Alternative Approach 1

βij = βji ∀ i ≠ j

βii ≥ βij

n

j =1

 ∀ i ≠ j

Symmetry

Own elasticity > Sum of 

the cross elasticities

The gross returns approach within the WAEES models for a specific geography is the following:

Corn Area = α1 + β11

EGRCRN

Deflator

+ β12

EGRSBN

Deflator

+ ⋯ + β1n

EGRCOT

Deflator

Soybean Area = α2 + β21

EGRCRN

Deflator

+ β22

EGRSBN

Deflator

+ ⋯ + β2n

EGRCOT

Deflator

⋮

Cotton Area = αn + βn1

EGRCRN

Deflator

+ βn2

EGRSBN

Deflator

+ ⋯ + βnn

EGRCOT

Deflator

Where the variables are defined as:

EGR: Expected Gross Returns

CRN: Corn

SBN: Soybeans

... : all other crops

COT: Cotton
Crop Area Specifications

Alternative Approach 2

βij = βji ∀ i ≠ j

βii ≥ βij

n

j =1

 ∀ i ≠ j

Symmetry

Own elasticity > Sum of 

the cross elasticities

Derived directly from economic theory where no technology changes are forthcoming, this 

approach is the traditiona l approach to estimating crop area. 

Corn Area = α1 + β11

EPCRN

Deflator

+ β12

EPSBN

Deflator

+ ⋯ + β1n

EPCOT

Deflator

Soybean Area = α2 + β21

EPCRN

Deflator

+ β22

EPSBN

Deflator

+ ⋯ + β2n

EPCOT

Deflator

⋮

Cotton Area = αn + βn1

EPCRN

Deflator

+ βn2

EPSBN

Deflator

+ ⋯ + βnn

EPCOT

Deflator

Where the variables are defined as:

EP: Expected Price

CRN: Corn

SBN: Soybeans

... : all other crops

COT: Cotton
Other

Use

Total

Supply

Barley 

Production

Ending 

Stocks

Feed

Use

Exports

Barley

Price

Imports Beginning

Stocks

Other

Use

Total

Supply

Corn Production

Ending 

Stocks

Feed

Use

Exports

Corn

Price

Imports Beginning

Stocks

Other

Use

Total

Supply

Sorghum 

Production

Ending 

Stocks

Feed

Use

Exports

Sorghum

Price

Imports Beginning

Stocks

Corn Barley Sorghum

The Structure of the Grains Models

Area 

Harvested Yield Area Harvested Yield Area Harvested Yield

Biofuels

Use

Food

Use
Yellow Grease Market Structure

Yellow 

Grease Price

Yellow Grease 

Imports

Yellow Grease 

Supply

Yellow Grease 

Methyl Ester 

Use

Yellow 

Grease 

Feed Use

Yellow 

Grease 

Ending Stocks

Yellow Grease 

Beginning Stocks

Yellow Grease 

Production

Yellow Grease 

Exports

Frying Oil Use High FFA Animal 

Fats

Dashed lines indicate that data is 

not specifically reported
Tallow Market Structure

Food Use Inedible 

Use

Edible Tallow 

Supply

Edible Tallow 

Production

Beginning 

Stocks

Ending 

Stocks

Edible 

Tallow Price

Imports

Cattle Slaughter

Fatty Acid 

Use Feed Use

Inedible 

Tallow Supply

Inedible Tallow 

Production

Beginning 

Stocks

Ending 

Stocks

Inedible 

Tallow Price

Imports

Methyl Ester 

Use Exports
WAEES Partial Equilibrium Models

Global Crops Module

• Feed Grains

• Corn

• Sorghum

• Barley

• Food Grains

• Wheat

• Rice

• Cotton

• Sugar

• Oilseeds, Meals & Oils

• Soybeans

• Sunflowers

• Rapeseed

• Palm Oil

Global Livestock Module

• Live Animals

• Cattle

• Hogs

• Meat

• Beef

• Pork

• Poultry

Biofuels Module

• Ethanol

• Biodiesel

• RINs

Quasi-Trend Models

• Dairy

• Milk

• Cheese

• Butter

• Non Fat Dry Milk

Recursive Models

• Exchange Rates

• Partial US Macro

• US Farm Income

• PPI/Cost of Prod

• Food Exp/CPI

Over 20,000 equations