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Biofuels compliance credits rally amid battle over U.S. mandates

Prices in the niche market for biofuels compliance credits jumped to three-year highs on Monday as traders fretted about supplies because of higher U.S. government mandates to increase the use of biofuels next year.

Trading in the opaque market for Renewable Identification Numbers (RIN) - the paper credits that can be bought and sold to meet government requirements for biofuels - has picked up in recent days. Expectations have mounted that the government's plan for biofuels use through 2017 will potentially use up inventories.

Oil importers and refiners use the credits to show they are meeting annual standards for the amount of ethanol and biodiesel to be blended with gasoline and diesel. The credits are...