↓ Mar '23 | 6.55 3/4 |-4 3/4
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↓ Dec '23 | 6.01 3/4 |-1/4
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↑ Nov'23 |13.75 1/4|+5 3/4
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↓ Mar' 23 |7.68 1/2|-14 1/2
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Night Trade as of 7:00 am CST.
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Livestock 3-Points Newsletter
We now offer a daily newsletter and Sell Signals for livestock markets. Click here to receive the Livestock 3-Points free for 30-days.
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Sell Signals
• Meal - Day 1
• Soybeans - Ended Day 1
Buy Signals
• Minneapolis Wheat – Day 7
• Kansas City Wheat – Day 8
• Chicago Wheat – Extended Day 17
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During the past 12 months:
• Meal had Sell Signals lasting 19, 8, 6, 5,1, 2, 1, and 3 days.
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During the past 12 months:
• Chicago Wheat had 8 Buy Signals lasting 11, 6, 1, 7, 2, 34, 1, and 9 days.
• KC Wheat had 6 Buy Signals lasting 10, 8, 2, 2, 32, and 8 days.
• Minneapolis Wheat had 6 Buy Signals lasting 1, 13, 29, 3, 7, and 2 days.
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EPA guidance tanked the soybean oil market
Soybean Sell Signal ended
Yesterday the EPA spoiled the first day of our soybean Sell Signal when they released lower than expected 2023-25 Renewable Fuel Standard (RFS) volumes. The advanced biofuel (includes biodiesel) targets set by the EPA were a disappointment to an industry that is currently making huge investments in biofuel production facilities.
For biomass-based diesel, the EPA proposed an increase from 2.76 billion gallons in 2022 to 2.82 billion gallons in 2023, 2.89 billion gallons in 2024 and 2.95 billion gallons by 2025. This is an increase of just 190 million gallons (7%) over the next three years.
The target volumes are also lower than the current production. Data show biodiesel totaled 3.1 billion gallons in 2021 and was already at 2.9 billion gallons through October of this year. Clean Fuels Alliance America stated renewable diesel production capacity could reach 5.5 billion gallons by 2026 if all announced 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 in 2005 '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."
Soybean oil prices plummeted over 6% yesterday and continued another 4% lower overnight, reaching their lowest price level since mid-October.
Soybean prices followed oil lower and after starting the day in the first day of Sell Signal, crashed down through the green line 20-day moving average into downtrend territory. We will be ready for the next bean Sell Signal to complete the sales that we targeted yesterday.
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Weather forecasts in Brazil look favorable for their crops over the next couple weeks. Production estimates remain at record levels for Brazil. Argentine weather remains poor. They do have some rain forecast in the near term, but long range forecasts are still hot and dry.
While soybeans and soybean oil declined, meal prices moved higher and triggered the first day of a Sell Signal overnight.
In more positive news for soybean oil, the US October soybean totaled 196.7 million bushels, which was just below last October’s record crush of 196.9 million bushels.
Wheat fell to new lows
Adding to our frustration with the soybean market, wheat prices fell to new lows overnight, adding days to our Buy Signals in all three wheat classes. The wheat market is clearly weaker than we projected.
US wheat remains pressured by large supplies in the Black Sea region and general global recession worries. Russian President Putin said he is open to talks about a settlement with Ukraine but stated the West must be willing to accept his demands.
Corn dropped below the 20-day moving average
Corn continues to move back and forth within a relatively narrow range. The disappointing EPA proposal yesterday sent the corn market down to the low side of that recent range. However, the ethanol numbers were more in line with expectations than biodiesel.
The EPA also announced plans for electric vehicle manufacturers to receive biofuel blending credits (RINS) however.
Spec funds were certainly selling on the market declines yesterday, accelerating the price decline.
Outside markets and headlines
US equity indexes reached new highs this week following indications that the Federal Reserve may only increase interest rates by 0.5% at their next meeting. Overnight, equities were lower but were not far from the highs of the week. The US Dollar index dropped to its lowest level since late June.
The recent protests in China may have had an impact on President Xi and his leadership. News stories are again stating that China is preparing to begin rolling back their zero covid stance and policies.
The US Senate voted 80 to 15 to use Congressional authority to impose a labor agreement between rail workers and railroad companies. The action is heading to President Biden’s desk for approval and will prevent the looming strike set to begin next week on December 9.
The EU has asked its members to cap the price of Russian oil at $60/barrel, which is below the expected $65-70 range, and well below the current $87/barrel Brent crude price. OPEC+ meets on Sunday to consider oil production cuts ahead of the EU sanctions on Russia.
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Regional Basis Summary
Click here for the Regional Basis Summary.
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Click here to read the EPA’s proposed Renewable Fuel Standards for 2023-25.
EPA will hold a virtual public hearing on January 10, 2023, for the proposed rule. An additional session will be held on January 11, 2023, if necessary, to accommodate the number of testifiers that sign-up to testify. This hearing will be held virtually-only using Zoom (i.e., there will be no in-person hearing).
In order to attend the virtual public hearing, all attendees (including those who will not be presenting verbal testimony) must register by sending an email to RFS-Hearing@epa.gov. A separate registration form must be submitted for each person attending the hearing. Please register no later than January 3, 2023.
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Weekly Brazil Update
Click here to watch our Weekly Brazil Update video. Aaron Edwards talks about the homestretch of Brazil’s soybean planting season and harvest time frame, current Brazilian weather, farmer selling pace. Aaron also discusses the Brazilian exchange rate, which he feels is a key issue to watch.
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Monthly Jobs Report Stronger than Expected
Total nonfarm payroll employment increased by 263,000 in November, and the unemployment rate was unchanged at 3.7%, the U.S. Bureau of Labor Statistics reported today. The monthly jobs number was much larger than the 200,000 expected by analysts prior to the report.
Notable job gains occurred in leisure and hospitality, health care, and government.
Employment declined in retail trade and in transportation and warehousing.
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Source: : U.S. Bureau of Labor Statistics
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Fats & Oils and Grain Crushings
Two monthly crush reports were released by the USDA yesterday. Total US soybean crush for October totaled 196.7 million bushels, which was larger than the average trade estimate of 195.9 million bushels and up from 167.6 million bushels in September. Crush nearly reached last October’s record crush of 196.9 million bushels.
Soybean oil stocks totaled 2.09 billion pounds, up from 1.99 billion last month, but below 2.39-billion-pound stocks last year.
Corn used for ethanol during October was 449 million bushels, up sharply from 383 million bushels last month, but down from 468 million bushels a year ago.
DDGs produced were 1.745 million short tons, up from 1.613 million in September but below 1.949 million last October.
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Recent USDA Daily Flash Sales – Corn and Soybeans
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U.S. – Thursday's observed precipitation (inches)
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Source: NOAA
It is an active day for US weather. A winter storm will continue to produce heavy snow in the Mountain West, snow and mix are forecast across the northern Plains extending into the Upper Midwest, and rain & thunderstorms are forecast across the mid-South and Eastern US.
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GFS Model - U.S. 7-day precipitation forecast
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European Model - U.S. 7-day precipitation forecast
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US 15-day precipitation forecast relative to normal
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U.S. 6-10 day temperature outlook
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U.S. 6-10 day precipitation outlook
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Brazil’s 1-3 day precipitation forecast
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Argentina’s 1-3 day precipitation forecast
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ABOUT US
Roach Ag. Marketing is a full service advisory firm founded in Perry, Iowa back in 1978 to help farmers do a better job of marketing their crops and livestock. Learn more...
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CONTACT US
Roach Ag Marketing
568 E Yamato Rd
Ste 200
Boca Raton, FL 33431
Telephone: 800.622.7628
FAX: 561-994-9240
E-mail: dailygrainplan@roachag.com
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