MN Broker Says Weakness Early Recovery Late Ho Hum Week
It could have been a very active week in the grain markets. Thursday the USDA released the December Supply Demand Report. Typically the December USDA report is kind of an in between report. The USDA normally makes very little if any changes and this year was no exception but there is always a chance for a surprise! It is the January Report that has the reputation of producing limit moves when we will get the final production numbers for the 2021 crop and the Grain Stocks Report.
The other report that could have moved the markets was the Environmental Protection Agency (EPA) releasing the much delayed Renewable Fuel Standard (RFS) or required gallons of ethanol or biodiesel that must be blended in the United States. There was good news and bad news for corn growers. The 2022 ethanol blend numbers were the highest ever and the 65 pending small refinery waivers will be denied. How the EPA can go back and decrease the blending requirements for 2021 and 2020 I do not understand?
Traders seemed to be bearish soybean oil and that selling caused selling in soybeans too. There was very little talk about the RFS standards and soybean based biodiesel. The assumption was that they would be lower. I kept reading all the news releases about the RFS requirements and could never find any reference to biodiesel. Finally Friday afternoon in the Pro Farmer report I saw the numbers, 2.43 billion gallons in 2020, 2.43 billion in 2021 and 2.76 billion in 2022. That is an increase and you would think that would be friendly to bean prices? Click on the link and listen to Grody discuss the market action last week.
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