EPA Proposal, Increase in Ukrainian Shipments & Looks Like a Cold December
Yesterday the EPA announced a lower-than-expected biofuel proposals for 2023-25 RFS volumes which sent soybean markets into a tailspin bringing corn with it. The advanced biofuel (including biodiesel) targets were very disappointing to the soybean industry that has been making huge investments into the construction of additional biofuel production facilities. The EPA proposed a biomass-based diesel target of 2.82 billion gallons for 2023 which is a very small increase from the current 2.76 billion gallons, along with 2.89 in 2024 and 2.95 billion gallons by 2025. While this shows a 7% increase over the next 3 years these proposed targets are actually lower than current production. According to data 3.1 billion gallons were produced in 2021 and as of November 1st of this year 2.9 billion gallons had already been processed. Clean Fuels Alliance America estimates that renewable diesel production has the potential of reaching 5.5 billion gallons if all planned refinery expansions occur.
The American Soybean Association said, “This announcement, including proposed Renewable Volume Obligations for 2023, 2024 and 2025 is deeply disappointing for the biofuels industry and threatens the integrity of the RFS by significantly dialing back annual increases in volume obligations.” “Congress created the RFS program starting 20025 to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on imported oil. However, this latest decision by EPA does not seem to support that intention and could leave farmers and biofuels industry partners who have invested in the government’s goal in the lurch.”
Brazil’s port of Paranagua is the busiest port in the country for exports of grains and sugars. Heavy rainfall across the southern portion of the nation caused a significant mudslide which had cut off roadway access to the port. 80% of all goods received for export at the Port of Paranagua arrive by truck. The port authority initially warned that any lengthy disruptions could cause a backup of ships waiting to be loaded. At the time of the mudslide operators and terminals were able to load stockpiled grain but there was concern that if the situation had not normalized by the weekend, that by Sunday the port would have run out of cargo to fill awaiting vessels. Efforts to clear the mudslide have been successful and trucks have resumed travel along the key access road, with several hundred already reaching the port. (Reuters)
While exports had slowed in Brazil, Ukrainian grain exports, through-the-use of Polish ports, has increased by over 50% above the volume shipped during this past summer. This amounts to around 450,000 metric tons of Ukrainian grain that is being transported into Poland monthly. Ukraine is pushing to increase exports and to accomplish this, leaders are pushing for larger ships to use its crop-export corridor.
Currently ships carrying the grain are stopped near Istanbul where inspections are conducted by teams from Ukraine, Russia, Turkey and the United Nations. This is slowing the rate at which products can reach their destinations. As of Monday, 105 ships were waiting along the Turkish coast, some have been in line for over a month. The Ukrainian Agribusiness Council is asking that the export corridor be restricted to allow only for passage of larger ships and that going forward these larger vessels would be prioritized for inspection vs other smaller vessels that may have arrived earlier. (Bloomberg)
Winds will remain strong through today and tonight as a cold front makes its way into Iowa. There is the possibility of NW wind gusts reaching 45-50 mph for a time Friday night, wind advisories are likely. (Map above)
High pressure is in control in the polar region, especially Greenland. This high pressure is forecast to push cold air southward into the Midwest. (Maps shown below)
Thankfully the MJO is currently in warm phases which should prevent the bitter cold temps but expect colder-than-normal conditions. This is possible because the MJO is expected to offset the high-pressure system which should keep the worst of the cold temps up north. The EURO weekly temperature departure from normal map is shown first and includes the forecast for December 8th through the 15th. As it looks right now the EURO weeklies show similar temps lasting all the way to Christmas as shown in the 2nd and 3rd maps below.
The following map indicates the expected snowfall through January 2nd, 2023.