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Jun 17, 2021

Rainfall in Forecast Pressures Ag Prices

Renewable fuels mandate in question; weekly export sales update

Renewable Fuels Mandate In Question

  • There have been reports the Biden administration is considering relief from RFS mandates for obligated fuel refiners.

  • The targets will dictate how much corn-based ethanol, bio diesel and other renewable fuels refiners must blend into their products in 2021 and 2022.

  • The agency is reportedly also moving to abandon a plan for incorporating waived quotas to refiners.

  • Lawmakers have held discussions in recent weeks with the head of the EPA, but there has been no official statement.

  • Any change in policy will likely come after the Supreme Court makes a ruling on the EPA’s authority to exempt refiners’ from the mandates.

  • Ethanol and biodiesel RINs have plummeted since posting record prices last week.

FBN’s Take On What It Means: The EPA will probably not release details on a plan until closer to July when the usual comment period for biofuel rule making is in place. The blending mandate is just one part of the demand for renewable fuel sources. Several new plants are set to come online, supported by tax credits and demand for reduced carbon fuels. However, in the meantime, uncertainty about policy has led to liquidation of speculative long positions and may continue to weigh on the market.

FBN
FBN

Weekly Export Sales as of June 10

  • Old crop corn sales were just 0.7 million bushels, but are still at a pace to meet USDA's 2,850 million bushel export projection.

  • China is expected to ship the majority of its 8 million tonnes of outstanding sales still on the books.

  • Total commitments for 2021/22 are at 605 million bushels versus new crop sales last year at this time of 135 million.

  • Old crop soybean sales were minimal again at 2.4 million bushels, but total commitments of 2,265 million bushels are still up 42% from last year.

  • New crop bean sales were just 0.2 million bushels, putting 2021/22 total commitments at 279 million bushels versus 155 million last year.

  • U.S. wheat sales, in the second week of the 2021/22 marketing year, were within market expectations at 10.5 million bushels.

  • Upland cotton sales of 111,300 running bales were up 3% from the previous week, but down 22% from the prior 4-week average.

FBN’s Take On What It Means: Strong foreign demand and reduced competition sharply increased US exports to record levels this year. New crop sales are also record high for this early in the season. Although strong early season sales don’t necessarily mean exports for the year will be higher, they are a good indication of firm demand.

FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory (NFA ID: 0508695)

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Kevin McNew

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Magazine

Marketwatch: Dec, 03

cmdty National Corn Price Idx: ZCPAUS.CM

open: 5.6309
high: 5.6797
low: 5.6159
close: 5.6309

cmdty National Soybean Price Idx: ZSPAUS.CM

open: 11.9852
high: 12.1581
low: 11.9477
close: 12.111

cmdty National Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 8.119
high: 8.2535
low: 8.054
close: 8.2002

cmdty National Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.5939
high: 7.7096
low: 7.5239
close: 7.6525