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UPDATE for April 14th 2023

Changes Possible for EPA Emission Standards & Developing El Niño and What it Means

Corn prices have had little news to encourage prices to move higher so they just continue to chop around. Last fall the price range seemed to move around between $6.60 to $7.00. Then that range weakened and moved down to the $6.60 to $6.80 area and now has fallen to a range between $6.00 to $6.40. We seem to have reached the point in the market of lower highs and lower lows, not the trend we would like to see. In the soybean market, exports have been strong but still have not reached the pace needed to meet the USDA projection and now that an abundant supply of cheaper Brazilian soybeans have entered the market U.S. exporters may end up short of the goal.

Production levels of renewable diesel in the U.S. have been increasing and in January reached 5 million gallons per day for the first time. State and federal incentives have helped to upgrade refining facilities to enable this growth to happen. The industry is relying heavily on vegetable oils as feedstocks which could cause soybean oil prices to rise. This possibility has the EPA concerned that the increase in demand for renewable diesel could push food costs higher. In June the agency will announce the updated biomass-based diesel blending mandates that will be in place through 2025. At the Ag Outlook Forum in February the USDA projected a 4% year over year increase in soybean demand from domestic processors.

Millions of Americans drive pickups and utilize heavy duty equipment and semis. Farmers and blue-collar workers, this applies to us! Be aware that Wednesday the latest and most aggressive emissions rule promoting “green energy” was proposed by U.S. President Biden. This proposal would mean tighter emission standards beginning in 2027. Standards for light and medium-duty vehicles (full-size pickups and vans) as well as heavy duty vehicles used in construction and hauling freight (semi’s) will be in the cross-hairs. This would likely mean that electric vehicles will account for around 66% of all light-duty trucks and 50% of all medium-duty truck sales by 2032.

Both the biofuels and the fossil fuels industry groups have criticized the proposal and the impacts it will have on customers. The Renewable Fuels Association said that the Biden Administration is “blatantly tipping the scales in favor” of EV’s and have ignored the near-term benefits and carbon reductions that could be achieved from the high-octane, low-carbon ethanol blend.

The current Black Sea Grain Deal that allows for “safe passage” of goods leaving Ukrainian ports is “not good” according to the Kremlin. The original agreement reached last July has been renewed 2 times. Each of the first two agreements were for 120 days but the latest renewal was only extended for 60 days, half of the usual amount, and is set to expire on May 18th. Turkey and Ukraine had pressed for a 120-day extension but Dmitry Peskov, a spokesman for the Kremlin said, “Exactly half of this deal has not worked and is not working so far.” In this statement he is referring to Russian demands placed on the West that call for:

• Allow the reconnection of Russian Agricultural Bank to the SWIFT payment system.

• Resume the availability of supplies including agricultural machinery and parts.

• Remove restrictions on insurance and reinsurance which have affected exports of Russian grain and fertilizer products.

• Access to ports.

• Resumption of the Togliatti-Odesa ammonia pipeline.

• Unblock accounts of Russian companies involved with food and fertilizer exports.

Russian Foreign Minister Sergei Lavrov says that if these demands are not met then Ukraine will have to resort to the use of land and river routes to export their products. (Reuters)

For 2+ consecutive years La Niña had been in control of global weather patterns causing hot and dry conditions. That is changing and now as an El Niño weather pattern is developing and will be taking charge. In recent months sea-surface temps have begun to warm from the below-long-term average which indicates La Niña to higher than the long-term average which is an indicator of El Niño. The full development of El Niño takes time, but some recent trends show an acceleration of the process and the possibility that this could be an extremely strong El Niño by the end of the summer. In the meantime, we are currently in a “neutral” phase of the ENSO (El Niño-Southern Oscillation) cycle which typically means more normal weather with less extremes will exist until the developing pattern takes over. Given the timing of this event it means we should see a spring planting season with less extreme weather patterns. Changes in the sea-surface temps has an enormous effect on weather patterns around the globe. 6 of the main things to know about El Niño:

1. Temperatures across the world are constantly changing and water temps in the oceans are no different. Specific regions in the Pacific Ocean are monitored by satellites and other data for variations and changes in temperatures because this if one of the first indicators that a pattern change is occurring. What may seem like an insignificant variation causes many profound effects.

2. Drastic alterations to the jet stream occur affecting weather across the globe. The jet stream produces and steers weather systems and warmer waters help to form larger and more intense thunderstorms. As the location of the warmer waters moves closer to the central or eastern region of the Pacific Ocean instead of the central and western area the source of energy is also altered.

3. For the Northern Hemisphere effects from El Niño are typically strongest during the winter months.

4. The stronger sub-tropical jet stream that develops as a result of the warmer water temps sends systems into the California coast, across the southwestern U.S., and into the Southern Plains before it makes its way to the southeastern U.S or occasionally shifts to the north and exits as a Nor-easter. This track helps to replenish the dry conditions left in the wake of the previous La Niña.

5. Since the sub-tropical jet stream is strong it over-powers the polar jet stream which leads to warmer temps in the central U.S. It does not block precipitation from moving through this region like its counterpart La Niña but instead keeps totals near normal.

6. Keep in mind though that every El Niño season is different. Slight changes in ocean temps or shifting of that zone in the Pacific can vary the actual effects.

One of the strongest El Niño events occurred in 1982-1983. During this period every continent experienced some weather driven disaster. During this event Trade Winds not only disappeared for a time they actually reversed. This actually led to a change in the angular momentum of the Earth and the lengthening of days by 0.2 milliseconds. Some researchers feel that the effects from the 1982-83 El Niño were so significant it contributed to the intensity of the next 1997-98 El Niño which is one of the most severe ever recorded.

Dr. Mike McPhaden, a senior research scientist at NOAA, the most extreme of El Niño weather patterns, known as “super El Niño’s” develop about every 10 to 15 years. The last super El Niño occurred in 2015-16 and is blamed for pushing global temps to the highest on record. Knowing this, it would make sense that the developing El Niño we have now should not be as strong as 2015-16 event but as Dr. McPhaden warned, “Nature has a way of tripping us up just when we think we know it all.” (NOAA, The Guardian, National Geographic, WMO)

A blocking pattern that has been in place since Monday is breaking down and as it does we will again see a more active weather pattern. Sunday temps are forecast to drop low enough for snow to once again enter the region, currently models vary widely with expected totals. The GFS map is very extreme and less likely to occur compared to the EURO and NAM models also shown below.

Don’t expect Monday’s temps to resemble this last week. Forecasts show highs reaching only into 40’s in the northern areas with low 50’s to the south. Temps improve Tuesday and Wednesday with highs back into the 60’s but with this warm-up brings the chance of showers and storms as well.

The 2-week GFS model outlook which brings us up to April 29th shows the expected rainfall totals.

New forecasts indicate that there is a 50% chance of flooding along the Mississippi River. If the 2-week rainfall outlook shown in the previous map verifies it will only add to the current situation and could increase the odds of major flooding along the Mississippi River from Dubuque to Burlington in the coming weeks.

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