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3 Big Things Today, December 8, 2021

Soybeans Plunge Overnight; Ag Groups Generally Pleased With EPA Proposal.

1. Soybeans Drop in Overnight Trading

Soybean futures plunged overnight ahead of tomorrow’s World Agricultural Supply and Demand Estimates (WASDE) report from the U.S. Department of Agriculture and amid signs of improving crop conditions in South America.

The USDA is expected to raise its domestic and global ending stocks estimates in tomorrow’s report, according to a survey from Reuters.

Soybean stockpiles likely will be pegged at 352 million bushels by the USDA tomorrow, which would be up from the November outlook for 340 million bushels.

Global inventories will be seen at 104.1 million metric tons, up from 103.8 million a month earlier, the survey said.

Corn inventories in the U.S. will probably be forecast at 1.487 billion bushels, down slightly from last month’s outlook for 1.493 billion bushels. Global stocks are pegged at 304.5 million metric tons, up from 304.4 million tons in November.

Traders also are looking at improving weather conditions in parts of South America. 

Wetter weather models show reduced risk for parts of Brazil, and rains will favor northern areas this weekend, Commodity Weather Group said in a report. 

Recent rains in eastern Argentina will keep moisture levels up even amid a “modest” rain deficit in the next couple of weeks, the forecaster said. 

Still, 25% to 30% of soybeans and corn in Brazil and Paraguay are under stress, and while some areas may see temporary relief, major producing state Rio Grande do Sul likely will miss out on any precipitation, CWG said. 

Soybean futures for November delivery dropped 10¾¢ to $12.39½ a bushel overnight on the Chicago Board of Trade. Soymeal lost $2 to $347.70 a short ton, while soy oil fell 1.59¢ to 55.51¢ a pound.

Corn futures for December delivery were down 1¼¢ to $5.84¾ a bushel.

Wheat futures for December delivery lost 6¾¢ to $8.01¾ a bushel, while Kansas City futures declined 7¢ to $8.20½ a bushel.

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2. Ag Groups Mostly Approve of EPA Proposal, Retroactive Reduction Raises Ire

Farm and ethanol groups are mostly positive on the Environmental Protection Agency (EPA) proposed increasing biofuel blending volumes in 2022.

The EPA yesterday suggested raising the blending mandate to 20.77 billion gallons next year, up from 18.52 billion this year, according to a statement from the agency.

For 2022, that would imply an ethanol volume of 15 billion gallons.

All 65 pending applications from small refiners that would exempt them from having to follow the renewable fuels standards (RFS) will be denied under the proposal, a response to a court case brought by the Renewable Fuels Association in 2020, which narrowed instances when the EPA can grant such waivers.

“Denying pending refinery exemption petitions and restoring gallons improperly waived in the past are important steps toward restoring RFS integrity,” National Corn Growers Association President Chris Edgington said in a statement. “These actions help move renewable fuels forward.”

Renewable Fuels Association Chief Executive Geoff Cooper said in a statement that the organization is “extremely pleased to see the Agency shutting the floodgates on these destructive waivers.”

The Iowa Soybean Association and Iowa Biodiesel Board said they welcomed the news that biofuel volumes were raised.

“Overall, we are pleased with the EPA’s proposal, which provides growth for advanced biofuels like biodiesel in 2022,” the groups said in a statement. “We are also optimistic this proposal will finally shut the door on the past abuse of small refinery exemptions, which came at the expense of the biofuels industry.”

Still, not everything in the proposal was acceptable.

The EPA proposal retroactively sets renewable fuels volumes at 17.13 billion gallons for 2020, down from the previous rule for 20.09 billion gallons, which was set before the pandemic.

The Renewable Fuels Association said while it was pleased with the intended requirement for 2022, retroactively lowering the blending requirement may not be legal.

“We don’t believe a retroactive reduction of this nature is legally permissible,” Cooper said. “The 2020 volumes were finalized nearly two years ago. Revising them now would undermine investment, create uncertainty, and go against EPA’s long-standing position that it does not have the authority to change RVOs once they are finalized.”

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3. Winter Weather Forecast For Parts of Nebraska, Iowa

Winter weather is headed for parts of northern Nebraska and Iowa starting tomorrow as storm watches have been issued, according to the National Weather Service.

As much as 6 inches of snow – possibly more – is forecast in a narrow band that stretches from the Nebraska panhandle, through northern Iowa, and into western Wisconsin, NWS maps show.

In northeastern Nebraska and northwestern Iowa, travel could become very difficult.

“Patchy blowing snow could significantly reduce visibility,” the NWS said.

In the Southern Plains, meanwhile, fire weather conditions are expected today and tonight.

Strong winds and low humidity will create extremely dry conditions in the Texas and Oklahoma panhandles, the agency said.

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