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3 Big Things Today, May 9

Wheat Futures Lower Overnight; Senators Conflicted on Whether Ethanol-Oil Deal Reached.

1. Wheat Futures Lower Overnight Ahead of WASDE Report

Wheat futures were lower overnight amid slightly improved crop ratings ahead of the USDA’s monthly Supply and Demand Report.

The U.S. winter wheat crop was rated 34% good or excellent as of Sunday, up 1 percentage point from the prior week, the USDA said. While that’s not much better, any improvement is welcome considering some parts of the Southern Plains, where hard red winter wheat is grown, haven’t seen rain in more than six months.

Storms are in the forecast this week, but the National Weather Service said in a report that it’s unlikely much rain will actually reach the ground. Instead, the storms are more likely to produce strong winds, which can sap soil of what little, if any, moisture they have.

Wheat for July delivery fell 4¼¢ to $5.10¼ a bushel overnight on the Chicago Board of Trade. Kansas City futures lost 4¾¢ to $5.33½ a bushel.

Corn fell ¼¢ to $4.03 a bushel overnight.

Soybean futures for July delivery rose ½¢ to $10.20¾ a bushel in Chicago. Soy meal added 20¢ to $386.10 a short ton, while soy oil gained 0.28¢ to 30.97¢ a pound.

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2. White House Says Deal Reached on Ethanol, Oil Companies, But RFA, Grassley Says Otherwise             

The White House said a deal was reached between ethanol producers and the oil industry that would allow E15 to be sold year-round while offering concessions on Renewable Identification Numbers (RINs) to oil refiners, but farm groups say the battle to ensure strong ethanol prices isn’t yet over.

President Trump met with Senators Chuck Grassley and Joni Ernst from Iowa, Ted Cruz from Texas, and Pat Toomey from Pennsylvania, all republicans, to discuss the Renewable Fuels Standard (RFS). The meeting seemed to yield two definite outcomes, both of which are good for farmers.

The use of E15 year-round was approved, a “positive step forward for the ethanol industry,” according to the Renewable Fuels Association (RFA), and there will be no artificial cap imposed on RINs.

But the industry group is still worried about the number of waivers offered to refiners who don’t want to comply with the RFS requirements on blending.

“Great concern remains regarding the number and impact of recent RFS compliance exemptions that have been granted to highly profitable refining companies,” the RFA said in a statement. “The RFA continues to believe an effort should be taken to reallocate the exempted volumes, which likely total 1.6 billion gallons or more.”

Cruz said in a statement after yesterday’s meeting that the deal is a “win-win” for corn farmers “and will help struggling blue collar refinery workers by allowing exported ethanol to provide much-needed RINs relief.”

RFA President Bob Dineen said allowing exports to count toward oil companies’ RFS obligations is “extremely” problematic.

“Depending on potential implementation, allowing exports to qualify for RFS compliance could dramatically reduce domestic ethanol demand, while most certainly resulting in retaliatory trade barriers from the countries importing U.S. ethanol,” he said. “Our trade partners in the international market certainly would not understand why the lowest-priced ethanol in the world requires an export subsidy.

“The real disgrace with a proposal of this nature, however, is that ethanol producers and farmers would bear the brunt of any retaliatory tariffs; they would be subsidizing highly profitable oil companies, who would benefit from the reduced RINs costs. In no way will that ever be acceptable or considered a win for our industry.”

Senator Grassley said in a statement that he appreciates the fact that E15 will be available year-round and that there will be no pursuit of an artificial cap on RIN prices, but he also effectively said negotiations between the Environmental Protection Agency (EPA) and USDA would be ongoing.

“I told the president and the EPA Administrator Pruitt that EPA’s ‘hardship’ waivers for billionaires are hurting biofuels and undermining the RFS,” Grassley said. “They also undercut the president’s commitment to meet the annual 15-billion-gallon volume obligation set by Congress under the RFS. There was discussion about how to reallocate the waived obligations so that demand for biofuels wouldn’t be hurt. While details weren’t decided, I look forward to reviewing a plan being developed by Secretary Perdue and Administrator Pruitt. Any fix can’t hurt domestic biofuels production.”

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3. Thunderstorms With Damaging Hail, Wind Expected in Mississippi, Ohio Valleys

Scattered thunderstorms are expected in the Mississippi and Ohio valleys starting today, according to the National Weather Service.

The storms will likely produce damaging winds and large hail across the regions, the NWS said in a report early Wednesday morning. Scattered “severe” windstorms also will be possible across the northeast tomorrow.

In the Southern Plains, meanwhile, warm, dry weather will again prevail, though some rainfall is possible.

“Unseasonably warm afternoon temperatures will again push relative humidity down to the 20% to 25% range,” the NWS said. “Light southeast winds will keep the risk of fire spread limited. Scattered showers and thunderstorms are expected tonight. The risk of severe weather is marginal; however, some outflow wind gusts of 50 to 60 mph are possible.”

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