Ouch! Soybeans got smacked today. A disappointing weekly sales figure from USDA for soybeans and soybean oil greeted the trade first thing this morning. Then, Informa reminded the world that U.S. producers are likely to plant a record number of soybean acres next year. Finally, the EPA rolled out some negative news late in the session. A proposed cut in the RFS mandate for bio-diesel hit the soybean market hard in the closing minutes. The January bean contract was down more than 35 cents at the low of the day. March corn was down 6 1/2 cents at the low as the news was bearish for ethanol as well.
Rumors have been swirling for at least a week that the EPA was going to make a major announcement about the Renewable Fuels Standard. They did in fact roll out a proposal about 15 minutes before the session ended that (if approved) will slash 2014 biofuel requirements by 16%. Big Oil got what they wanted in the proposal. It’s the same proposal that was leaked last month that also spooked the marketplace. They say it’s all about the “blend wall”. In effect, the refiners are saying that the RFS requirement will require the use of more ethanol than can be blended into gasoline at the 10% level. And, that if it’s left in place it will force refiners to export more fuel or produce less gasoline, leading to shortages and higher prices at the pump. Seems to us that a logical fix would be to blend 15% ethanol into the gasoline supply. But, that’s another fight and another argument for another day.
It’s hard to say at this point if there’s more downside in corn and soybean prices due to this development. The EPA stated that these are proposals only. A 60-day comment period will be opened up soon for the pros and cons to be forwarded for review. The EPA says it will likely be next spring before the new minimum requirements are instituted. It should also be pointed out that the levels we’re referring to here are MINIMUMS only. Ethanol production has exceeded these RFS mandated levels in 6 of the past 7 years. That being said, we are concerned that some in the trade (the funds, weak longs and perhaps farmers) will view this development as a “tipping point”. Last week’s low of $4.15 1/2 could be a target to start next week. The bears will be gunning for it and the bulls may want to test it for signs of stability.
Weekly export sales were announced this morning. The corn number at 47 million bushels was well above expectations and puts sales to date at DOUBLE the amount we had on the books a year ago this time. The sales figure for soybean meal was about as expected. Everything else was under expectations.
Trade Range of Estimates This week Last Week
Corn 31 – 39 mln bu 47.4 mln bu 67.7 mln bu
Beans 33 – 44 mln bu 31.2 mln bu 37.4 mln bu
Wheat 13 – 20 mln bu 10.6 mln bu 15.3 mln bu
Meal 200 – 350(000) tonnes 283,200 tonnes 287,800 tonnes
Oil 25 – 50 (000) tonnes 7,200 tonnes 65,900 tonnes
See below for the Informa planted acreage numbers released this morning. Their corn and soybean acres were trimmed just slightly from last month. They now see 3.9 million less corn, 1.2 million more wheat and a whopping 7.4 million more beans. Informa did not update their yield and production numbers. However, we’ve posted their numbers from last month and the latest estimates from USDA for this year’s crops.
Total Production Planted Acres Yield
INFM Oct 2014 Corn 13.692 bln bu 91.7 mln acres 163.0 bpa
INFM Nov 2014 Corn 91.5 mln acres
USDA Nov 2013 Corn 13.989 bln bu 95.4 mln acres 160.4 bpa
INFM Oct 2014 Beans 3.684 bln bu 83.9 mln acres 44.5 bpa
INFM Nov 2014 Beans 83.8 mln acres
USDA Nov 2013 Beans 3.258 bln bu 76.5 mln acres 43.0 bpa
Here’s a quick snapshot of corn basis bids as of this afternoon. The first four bids are processor bids across the Corn Belt. Of course, the New Orleans bid is at the Gulf of Mexico. The landscape has sure changed. It’s hard to believe that the best bid in the Corn Belt the month of November is at a land-locked location in NC Iowa. A brand new 150,000/day Cargill ethanol facility that’s opened right across the road from a 100,000/day VeraSun ethanol facility has created a “black hole” of demand.
Blair, NE Ft Dodge, IA Decatur, IL Lafayette, IN New Orleans, LA
+ 5 +35 +10 -10 +85
That’s all for now. Have a great weekend!
CBOT Closes Today Wkly Chg Yearly Highs
Dec 13 Corn $ 4.22 - 4 1/2 - 4 3/4 $ 6.05
May 14 Corn $ 4.30 1/2 - 6 - 8 $ 6.14
Jul 14 Corn $ 4.45 3/4 - 6 1/2 - 8 $ 6.21
Dec 14 Corn $ 4.59 3/4 - 6 3/4 - 8 3/4 $ 5.87 3/4
Dec 15 Corn $ 4.76 1/4 - 7 - 5 1/2 $ 5.68 3/4
Jan 14 Beans $12.80 1/2 - 33 - 15 1/2 $14.06
Mar 14 Beans $12.65 3/4 - 31 3/4 - 11 $13.77 3/4
Jul 14 Beans $12.45 - 30 3/4 - 8 1/4 $13.50 3/4
Nov 14 Beans $11.53 1/2 - 23 1/2 - 7 1/2 $13.15
Nov 15 Beans $11.45 - 23 1/2 - 10 1/4 $12.71 1/2
Dec 13 Wheat $ 6.44 1/2 - 1/4 - 5 1/4 $ 8.34 1/2
Mar 14 Wheat $ 6.54 1/2 - 3/4 - 7 $ 8.45
Jul 14 Wheat $ 6.55 3/4 - 3 1/2 - 12 3/4 $ 8.22 1/4
KCBT Closes
Dec 13 Wheat $ 6.98 1/4 - 4 3/4 - 10 1/4 $ 8.90
Mar 14 Wheat $ 7.00 1/4 - 4 1/2 - 11 $ 8.90 1/2
Jul 14 Wheat $ 6.90 3/4 - 6 - 15 3/4 $ 8.39
MPLS Close
Dec 13 Wheat $ 6.96 3/4 - 3 1/4 - 11 1/4 $ 9.03 1/4
Mar 14 Wheat $ 7.06 1/2 - 3 1/2 - 13 $ 9.06 1/2
Jul 14 Wheat $ 7.21 1/4 - 1 3/4 - 11 1/2 $ 8.90
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