Global Ag News for Feb 23.24

TOP HEADLINES

Biden Grants Gasoline Shift to Boost Ethanol in Corn Belt

• Year-round sales of higher-ethanol gas unlocked in Midwest
• Rise in gas prices and reduced supply expected in region

The Biden administration granted a fuel policy change designed to boost sales of corn-based ethanol — but delayed the shift until next year amid concerns a rapid pivot could spur gasoline price spikes this summer.

The approach underscores how election-year politics are complicating energy policymaking in Washington, as President Joe Biden seeks to propel climate and farmer-friendly initiatives without stoking higher fuel costs that could turn off voters.

The Environmental Protection Agency’s final rule — demanded by eight Midwestern US governors — is meant to encourage more filling stations in the region to sell E15 gasoline that contains 15% ethanol, instead of the conventional 10% variety known as E10.

It’s a victory for some of the nation’s top corn- and ethanol-producing states, including politically important Iowa and Wisconsin, because it will allow filling stations there to offer E15 year-round, instead of being hindered by air pollution limits that have long curbed summertime sales.

The rule removes special treatment for E10 gasoline that exempts it from volatility limits. The shift effectively puts E10 and E15 on the same regulatory footing — and allows both varieties to use the same raw gasoline blendstock.

For fuel refiners and pipeline operators, the change will necessitate construction of storage tanks and other infrastructure. Oil industry leaders had warned the Biden administration the cost of those investments could be passed on to consumers at the gas pump — and said a too-fast transition would risk even bigger disruption and price spikes.

It will cost an extra 2 to 12 cents more per gallon to produce a less-volatile gasoline blendstock for the affected region, the EPA estimated, adding refiners would likely pass that onto consumers. A possible resulting reduction in gasoline supply could boost fuel prices even more, the agency said.

The agency is delaying the effective date for the change to April 28, 2025 — potentially forestalling any of those price impacts until after Election Day. The extension “reduces the risk of gasoline supply issues this summer and the price impacts that could have come with 2024 implementation,” the agency said in an emailed statement.

That’s is still not enough time to adjust, said Patrick Kelly, a senior director at the American Fuel and Petrochemical Manufacturers that represents refiners. “Studies show that even with at least a two-year lead time,” the “change will reduce overall supply, increase costs and make the region more vulnerable to supply disruptions,” Kelly said.

The delay was panned by biofuel advocates who called it unnecessary given Midwestern governors first sought the change in 2022. “With the 2024 summer driving season just a few months away, we are urging the administration to take additional action that will ensure consumers have uninterrupted access to lower-cost, lower-carbon E15 this summer,” said Geoff Cooper, head of the Renewable Fuels Association.

The EPA is expected to issue emergency waivers allowing E15 sales this summer, adopting a strategy used in 2023 and 2022.

The rule issued Thursday could add impetus to a broader congressional push to enable year-round E15 sales nationwide. Legislation has stalled amid resistance from some independent refiners, despite the backing of biofuel groups and the American Petroleum Institute, the oil industry’s lobbying powerhouse.

Emily Skor, head of the Growth Energy advocacy group, said the measure offers a more seamless solution for all 50 states. “The fuel supply chain is going to prefer a nationwide solution to a patchwork of regulations,” Skor said by email. “This rule calls attention to that fact.”

FUTURES & WEATHER

Wheat prices overnight are up 5 1/4 in SRW, up 1 in HRW, up 3 3/4 in HRS; Corn is up 2 1/2; Soybeans up 3/4; Soymeal up $0.30; Soyoil down 0.03.

For the week so far wheat prices are up 25 1/2 in SRW, up 11 in HRW, up 3 3/4 in HRS; Corn is down 8 1/2; Soybeans down 23; Soymeal down $7.20; Soyoil down 1.31.

For the month to date wheat prices are down 20 3/4 in SRW, down 47 3/4 in HRW, down 38 3/4 in HRS; Corn is down 37 1/2; Soybeans down 79 1/2; Soymeal down $32.40; Soyoil down 1.77.

Year-To-Date nearby futures are down 6.2% in SRW, down 10.2% in HRW, down 9.4% in HRS; Corn is down 13.3%; Soybeans down 11.2%; Soymeal down 13.3%; Soyoil down 7.5%.

Chinese Ag futures (MAY 24) Soybeans down 30 yuan; Soymeal unchanged; Soyoil down 24; Palm oil down 76; Corn up 18 — Malaysian Palm is up 14. Malaysian palm oil prices overnight were up 14 ringgit (+0.36%) at 3853.

There were changes in registrations (-199 SRW Wheat). Registration total: 573 SRW Wheat contracts; 0 Oats; 6 Corn; 219 Soybeans; 125 Soyoil; 1 Soymeal; 56 HRW Wheat.

Preliminary changes in futures Open Interest as of February 22 were: SRW Wheat down 837 contracts, HRW Wheat down 659, Corn down 8,642, Soybeans down 11,818, Soymeal down 2,361, Soyoil down 2,385.

Brazil: Wet season showers in central Brazil have been heavy recently. The heavy rain is preferred as most of the safrinha corn planting has been completed and the region is short of subsoil moisture. Scattered showers continue in central states through this weekend before becoming isolated. Southern areas could use more rainfall, however. A front coming north from Argentina will bring heavier showers this weekend into next week for southern areas.

Argentina: A front moving through on Thursday should bring some needed showers and another on Monday should do something similar. A more active pattern is forecast into early March, though precipitation may not be heavy overall. Still, it should be favorable for reproductive to filling corn and soybeans.

Europe: A large storm system will move through in several waves going into next week with widespread precipitation across most of the continent. In addition to widespread precipitation, temperatures will drop across the western half of the continent, but only back to normal. Eastern areas will remain warm and winter wheat should be waking up.

Australia: Eastern areas continue to see showers this week. Southwestern areas will watch for the potential of tropical remnants to move through this weekend. Soil moisture is low in many areas well ahead of the harvest and subsequent wheat planting and will need much more rain to fall over the next couple of months.

Northern Plains: It should be mostly warm and dry through the weekend. A larger storm system is likely to move through early next week with widespread precipitation, including some snow. Temperatures will dip only briefly before becoming above-normal again later next week.

Central/Southern Plains: It should be dry through the weekend. A larger system will move through early next week with potential for widespread precipitation, including some snow, and a brief drop in temperatures before they rise a day or two later.

Midwest: A system moving through on Thursday will spread rain across the southern half of the region. A smaller clipper system may bring showers to eastern areas this weekend. A larger storm will move through Tuesday and Wednesday of next week, with widespread precipitation including thunderstorms and snow. A drop in temperatures will only be brief as they rise again a day or two later.

Delta: A system will move through on Thursday with scattered rain showers and a larger storm will move through next Wednesday, likely with more showers. The region continues to see the building of soil moisture ahead of spring planting.

The player sheet for Feb. 22 had funds: net buyers of 1,500 contracts of SRW wheat, sellers of 5,000 corn, buyers of 5,500 soybeans, sellers of 4,500 soymeal, and sellers of 2,000 soyoil.

TENDERS

• SORGHUM SALE: The U.S. Department of Agriculture confirmed private sales of 126,000 metric tons of U.S. sorghum to China for shipment in the 2023/24 marketing year.
• WHEAT SALE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 115,921 metric tons of food-quality wheat from the U.S., Canada and Australia in a regular tender that closed on Thursday.
• VEGOIL SALE: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Thursday it bought 60,250 metric tons of vegetable oils in an international tender.
• WHEAT TENDER: A group of South Korean flour mills has issued a tender to buy an estimated 136,400 metric tons of milling wheat sourced from the United States, Canada and Australia
• WHEAT TENDER: Tunisia’s state grains agency has issued an international tender to purchase about 100,000 metric tons of soft wheat
• WHEAT TENDER UPDATE: The lowest offer in an international tender from Bangladesh’s state grains buyer to purchase and import 50,000 metric tons of wheat which closed on Thursday was assessed at $279.95 a metric ton liner out.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 88,800 metric tons of rice to be sourced from the United States and China
• FEED GRAIN TENDERS: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 120,000 tonnes of animal feed corn, 120,000 tons of feed barley and 120,000 tons of soymeal
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
• MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.

 

TODAY

 

DOE: US Ethanol Stocks Fall 1.2% to 25.502M Bbl

According to the US Department of Energy’s weekly petroleum report.

• Analysts were expecting 25.982 mln bbl
• Plant production at 1.084m b/d, compared to survey avg of 1.079m

GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Friday for week ending Feb. 15.

• Corn est. range 700k – 1,500k tons, with avg of 1,020k
• Soybean est. range 300k – 800k tons, with avg of 515k

Argentina’s February rains to keep boosting crops after heat wave, exchange says

Argentina corn and soybean crops are continuing to improve thanks to recent rains, the Buenos Aires grains exchange said on Thursday, with more rainfall expected in coming days after the wet weather helped curb damages from a late January heat wave.

As a result of the rains, the exchange said some 52% of the country’s soy crop benefited from “normal/excellent” conditions, and this was increasing on a weekly basis. For corn, it added, 57% of the crop boasted these conditions.

Farmers in Argentina, one of the world’s largest exporters of soy meal and the third-largest supplier of corn, are set to begin harvesting the 2023/24 crops in April. The exchange expects some 52.5 million metric tons of soybeans and 56.5 million tons of corn this season.

One of Argentina’s state weather agencies had on Wednesday predicted some 10 to 40 millimeters of rain across the southern part of Argentina’s agricultural frontier on Thursday, and a similar level in the heartland on Friday. Northeastern Argentina is meanwhile forecast to receive rain from Sunday to Tuesday, it added.

French Soft Wheat, Winter Barley Continue to Trail 2023: AgriMer

Some 69% of France’s soft-wheat crop was rated in good or very good condition as of Feb. 19, versus 95% this time last year, FranceAgriMer data showed on Friday.

• Winter barley rated good or very good was at 71%, versus 94% last year
• Spring barley was 26% planted, versus 77% at this time last year

US Miss. River Grain Shipments Fall, Barge Rates Decline: USDA

Barge shipments down the Mississippi river declined to 535k tons in the week ending Feb. 17 from 584k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn rose 22.5% from the previous week
• Soybean shipments down 33% w/w
• St. Louis barge rates were $12.97 per short ton, a decline of $1.64 from the previous week

LIVESTOCK: US Red Meat Production Rose 0.1% Y/y in January

Commercial beef and pork production rose to 4.77b pounds in Jan., according to the USDA’s monthly livestock slaughter report.

• Beef production down 1.9% y/y to 2.28b pounds
• Jan. cattle slaughter totaled 2.73m head, a 3.4% decline from a year ago
  • Avg live weight rose by 9 pounds from last year to 1,389 pounds
• Pork production up 2% y/y to 2.47b pounds
• Hog slaughter increased 2.1% y/y to 11,369m head
  • Avg live weight was 292 pounds vs 293 pounds a year ago

 

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