Trump to Announce Plan to Increase Biofuel Demand
Any attempts to increase the RFS production levels will be positive for corn and soybean markets
President Trump To Announce Plan To Increase Biofuel Demand
Secretary of Agriculture Sonny Perdue said on Wednesday that President Trump will announce a plan to boost domestic demand for biofuels.
Secretary Perdue did not announce any specifics or a timeline for the plan.
Last week the administration decided to increase biofuel blending quotas to account for the waived volumes but there has been disagreement over when to start the program.
The decision to raise the annual ethanol mandate to 15.5 billion gallons comes after the production level has been fixed at 15.0 billion gallons for the past three years.
The administration also agreed to raise the biodiesel mandate by 250 million gallons. The 2020 biodiesel mandate had been proposed at 2.43 billion gallons versus 2.10 this year.
What It Means: At FBN we believe that the recent activity inside the domestic biofuels program has been confusing and potentially damaging for the U.S. farmer. The administration's decision to grant production, or blending waivers, for the oil and gas industry is a negative for the U.S. corn producer. We, at FBN, believe that any attempts to increase the RFS production levels can be a positive for the U.S. corn and soybean producers.
China To Increase Pork Imports; Releases Meat From Reserves
China's commerce ministry said it will boost pork imports and also release frozen pork, beef and mutton from state reserves to increase the supply of meat in the market.
China often releases some of its meat from storage when prices are high, or during peak demand periods such as the Lunar New Year holiday, the country's biggest festival.
Imports of the meat are already up 36% in the first seven months of this year, and analysts expect them to double from 2018 levels in 2020.
China has been importing pork from the EU, Brazil, and has recently certified plants in Argentina.
The country's hog herd has shrunk by an estimated 30% since 2018 and pork prices have soared over the last few months.
FBN’s Take on What It Means: We believe that China’s aggressive moves inside the global pork export market can be a positive for the U.S. producer. With China trying to secure pork supplies from any major global exporter, U.S. export volume to the country is encouraging despite the 25% import tariff.
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