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3 Big Things Today, July 19
1. Soybeans, Grains Little Changed on Large Stocks Vs. Lower Crop Conditions
Soybeans were slightly lower overnight and grains were little changed as investors weigh potentially large supplies with declining crop conditions.
The USDA last week bumped its outlook for domestic soybean stockpiles to a record 580 million bushels from the prior month’s outlook for 385 million.
The USDA also cut its outlook for exports by 250 million bushels to 2.04 billion amid an ongoing trade spat with China that, at least so far, shows no signs of abating.
On Monday, however, the USDA released its Weekly Crop Progress Report that showed crop conditions decline for both corn and soybeans on a weekly basis. Extremely hot weather in some areas, including Missouri and eastern Kansas, have cooked plants.
Parts of the areas are under an “exceptional drought,” the worst-possible rating, according to the U.S. Drought Monitor.
Soybean futures for November delivery fell 2½¢ to $8.55¼ a bushel overnight on the Chicago Board of Trade. Soy meal rose 70¢ to $326.30 a short ton, and soy oil lost 0.13¢ to 28.34¢ a pound.
Corn future for December delivery fell ¼¢ to $3.60¾ a bushel overnight.
Wheat for September delivery declined 1¼¢ to $4.92¾ a bushel, while Kansas City futures gained ½¢ to $4.88¼ a bushel.
2. Renewable Fuels Association Asks EPA to Honor 2019 Obligations on Blending
The Renewable Fuels Association asked the EPA yesterday to use the 2019 Renewable Volume Obligation (RVO) process to fix the “extensive” damage done by former EPA Administrator Scott Pruitt when setting requirements under the Renewable Fuels Standard.
The RVO for next year would require refiners to blend 19.88 billion gallons of biofuels total, including 4.88 billion gallons of advanced biofuels. That leaves a requirement for refiners to blend 15 billion gallons of conventional renewable fuels such as ethanol made from corn.
“On the surface, the proposed rule raises the total 2019 RVO by 3% over the 2018 requirement and maintains a 15 billion-gallon requirement for conventional biofuels like corn ethanol,” said RFA Vice President of Government Affairs Samantha Slater. “But due to EPA’s failure to stem the tide of small refinery waivers, its refusal to reallocate lost blending volumes, and its brazen repudiation of binding court decisions, the proposed rule is superficial and toothless, and it undermines President Trump’s commitment on the RFS.”
The Renewable Fuels Association said the EPA recently approved waivers on the equivalent of 2.25 billion gallons of ethanol to oil refiners and hasn’t yet indicated it would change its approach to the exemptions.
The Renewable Fuels Association and several Corn Belt lawmakers have complained about the waivers that were doled out by Pruitt, who resigned earlier this month as EPA administrator among several scandals. The RFA said at the time it was happy to see him go due to his overuse of the waiver program for refiners.
The EPA had indicated last week that it would change course and would reallocate the exempted renewable fuels volumes, but suddenly altered its trajectory, saying it wouldn’t after lobbying efforts by the oil and gas industry, Slater said.
“Administrative cuts to the RFS have resulted in significantly lower RIN prices, reduced corn and ethanol demand, avoided legal obligations for highly profitable businesses, and provided windfall profits for certain oil refiners,” she said. “The final rule should do less to cater to the whims of the oil industry in implementing the nation’s renewable fuel program and more to create demand for ethanol, lowering prices at the pump for consumers and creating economic opportunities for farmers across the country.”
Ethanol production, meanwhile, rebounded from the lowest level since May in the week that ended on July 13, the Energy Information Administration said in a report.
Output of the biofuel jumped to 1.064 million barrels a day, on average, from 1.033 million the prior week, which was the lowest level since May 18, according to the EIA.
Stockpiles, meanwhile, dropped to 21.768 million barrels, down from 22.393 million a week earlier and the lowest level since June 22, the government said.
3. Heat Wave Continues in Southern Corn Belt With Indexes Reaching Up To 115˚F.
The heat wave affecting parts of Missouri and Kansas continues as extremely hot weather is forecast for much of the southern Midwest into Texas and the Gulf Coast today.
In western Missouri and eastern Kansas, where little rain has fallen in recent weeks and temperatures have been unusually high, the heat index this afternoon is expected to reach 110˚F. Outside work is not advised, according to the National Weather Service.
Farther south in Oklahoma, the heat index is expected to reach up to 115˚F., the NWS said in a report early Thursday morning.
Temperatures in Arkansas will be in the triple digits with indexes of around 110˚F. The excessive heat warnings are expected to last for days, in some cases until Sunday evenings, the NWS said.