End of the Year Updates
Update for December 23rd, 2019
The Trump Administration has confirmed that they plan to move forward with the EPA’s original proposal regarding blending requirements for 2020 first disclosed in October. In an attempt to quiet anger from corn producers and ethanol proponents President Trump has announced his plans to give the industry substantial funding for E15 infrastructure.
Recently the EPA released an update showing that 16 SRE’s have been filed for 2019 under the RFS. All of those appeals are pending at this time. Looking at the compliance years of 2015 through 2018 there were 99 SRE’s received by the EPA and 85 of those were granted, exempting 38.31 billion gallons of fuel from the RFS blending requirement.
Allendale Inc. reports that some details regarding the Phase 1 agreement are slowly being released and the news is better than what many had expected. President Trump said “We just achieved a breakthrough on a trade deal and we will be signing it very shortly”. Under the new deal the U.S. agrees to lower some tariffs in exchange for a sizable increase in Chinese purchases of U.S. farm products. The latest rumors indicate that the Phase 1 deal could bring purchases of 45 MMTs of Chinese purchases in 2020. Of course there are nay-sayer that disagree with that estimate siting the ongoing battle with AFS and the devastating toll it has had on hog numbers. And history which shows that the most U.S. soybeans exported to China in one year occurred in 2016 when 33MMTs were purchased. The USDA is preparing for the signing of the Phase 1 agreement by developing a new internet site that will answer many questions about the specifics of the new agreement and how it will unfold.
U.S. Senator Chuck Grassley (R-IA) expects that Senate Finance Committee action on the USMCA will begin in January immediately following the Christmas break. In a recent tweet Grassley explained that he plans to have markup of USMCA reviewed by the Senate Finance Panel on January 7th. “Passing USMCA trade deal delivers much needed certainty + modernizes NAFTA.” He looks for strong support for the agreement across party lines and expects that it should reach the president’s desk in early 2020.
The holiday season has arrived which typically brings choppy and unpredictable trade as the trade volume declines through the end of the year. Now everyone’s attention turns to the January 10th USDA report. Several market analysts have advised producers to pay attention to the money flow and price movement as we move closer to the report. During this period, between now and the January report, we could see a rally in prices giving producers an opportunity to sell a portion of their bushels.
The map below shows the predicted highs for Christmas Day...ENJOY!! There are some indications that there may be some changes by next weekend but in the meantime enjoy the warmth.