Good morning!
Corn and soybeans weaker, wheat narrowly mixed this morning... Corn and soybeans faced price pressure overnight, while wheat traded narrowly on both sides of unchanged. As of 6:30 a.m. CT, corn futures are trading 2 to 3 cents lower, soybeans are mostly 8 lower and wheat futures are trading within a penny of either side of unchanged. The U.S. dollar index is down more than 200 points and front-month crude oil futures are about $2.25 lower.
Vilsack: USDA seeks easier rules for crops to be used for SAF... USDA is pushing for eased tax credit requirements regarding crops used as feedstocks in the production of renewable fuels, according to Secretary Tom Vilsack. Current regulations for subsidies for the production of sustainable aviation fuel (SAF) require farmers to plant cover crops, no-till farming and use of efficient fertilizers. The biofuels industry is awaiting guidance from the Treasury Department on the 45Z clean fuel credit, which will take effect in January. USDA is working on a proposal with the aim of giving farmers flexibility to “choose from a menu of activities and actions” under the new rules, Vilsack said during an ethanol conference in Nebraska. Another goal is to make sure that crops potentially benefiting from the new subsidies are not restricted to corn and soybeans, he said. Vilsack also warned against a push to prevent U.S. biofuels made with foreign ingredients from reaping the benefits of the 45Z tax credit, saying it could hurt American trade.
CARB proposes major LCFS changes... The California Air Resources Board (CARB) proposed significant changes to its Low Carbon Fuel Standard (LCFS), particularly affecting soy-based biofuels. They include:
• A 20% cap on vegoils like soy and canola for biofuel production; anything beyond that being classified as fossil fuels.
• Starting in 2031, CARB may stop accepting new biodiesel pathway applications if zero-emission vehicle sales reach a certain threshold, potentially curbing biodiesel.
• By 2026, fuel producers must provide data on farm boundaries for soybean sourcing.
• Conservative land use change values depending on the feedstock production region, assigning different scores based on geographic areas.
• Raising carbon intensity reduction targets from 5% in 2025 to 9%, stabilizing at a 30% reduction by 2030.
The American Soybean Association expressed concerns about these changes, especially the cap on soyoil, which could hurt the soy biodiesel market by shifting focus toward used cooking oil and imported waste feedstocks.
U.S. biofuel output capacity rose last year amid new renewable diesel plants... Five new renewable diesel production plants opened last year, boosting U.S. output of the diesel substitute and other emerging biofuels by 44% to 282,000 barrels-per-day (bpd), U.S. Energy Information Administration (EIA) data showed. Two renewable diesel plants opened in both the U.S. Gulf Coast and West Coast, while one facility opened on the East Coast, taking the countrywide total to 22, according to EIA. Three biofuel plants shuttered over the past year, one each on the East Coast, West Coast and in the Midwest, the EIA data showed. One plant ethanol shuttered on the East Coast but a larger facility opened on the Gulf Coast, boosting output capacity by 2% to 1.18 million bpd from the 187 plants in operation at the start of this year.
Heavy late-season rains cut German wheat production... Germany’s wheat production is expected to fall 12.8% to 18.76 MMT as the crop suffered from repeated rain ahead of harvest, the country’s association of farm cooperatives said. The country’s total grain production is expected to fall 8.2% to 39.11 MMT. Germany is typically the European Union’s second largest wheat producer after France, which also suffered major crop losses due to excessive wetness through the growing season.
Ukraine’s wheat production up modestly from year-ago... Ukraine completed its wheat harvest totaling 21.7 MMT, the country’s ag ministry said. That was up 100,000 MT from last year. A total of about 28.5 MMT of grain had been harvested as of Friday, including 5.5 MMT of barley, the ministry said. The ministry raised its total grain production forecast by 3.6 MMT to 56 MMT, while the country’s oilseed crop is expected to be an additional 11 MMT.
Canada rejects CN Rail’s request for binding arbitration in labor dispute... Canadian Labor Minister Steven MacKinnon rejected a request by Canadian National Railway to initiate binding arbitration in a labor dispute with the Teamsters union. In a letter to CN Rail’s lawyers, MacKinnon said it was the shared responsibility of the company and the union to negotiate in good faith. Talks between CN Railway and Canadian Pacific Kansas City – Canada’s two largest rail companies – and the Teamsters remain deadlocked. The companies say they will start locking out workers on Aug. 22 if they cannot reach a labor deal, while the union says it is ready to call a strike for that date.
Fed study: Corporate price gouging not a significant factor in U.S. inflation surge... Earlier this year, a study published by economists at the Federal Reserve Bank of San Francisco concluded that corporate price gouging has not been a significant factor in the recent surge of U.S. inflation. The study, led by researchers Sylvain Leduc, Huiyu Li and Zheng Liu, found that while there were spikes in markups for specific sectors like motor vehicles and petroleum products, the overall markups for U.S. goods and services have remained relatively stable. This suggests that rising corporate profits and price increases were not the primary drivers of inflation during the post-pandemic recovery. The study contradicts the narrative that corporate greed, often referred to as “greedflation,” is a major cause of inflation. Instead, it attributes the inflationary pressures to supply chain disruptions, a decrease in labor supply, and a surge in consumer demand during the recovery period.
Johnson considering 6-month stopgap funding measure... House Speaker Mike Johnson (R-La.) is considering a six-month continuing resolution (CR) to maintain government funding beyond the end of Fiscal Year 2024, which concludes on Sept. 30. This proposal aims to extend funding into the next Congress, potentially aligning with the preferences of ultraconservatives in the House who are advocating for addressing spending issues in 2025, anticipating a potential Republican victory in the presidential election. However, this approach faces opposition from appropriators and other lawmakers who favor a shorter CR, extending only until late November or early to mid-December. This shorter timeframe would allow Congress to work on annual spending measures during the lame-duck session after the elections, potentially pushing some spending bills into 2025.
Delayed cash cattle trade... A limited number of cash cattle traded so far this week at weaker prices, though most feedlots continued to hold out in hopes of steady to possibly firmer bids. It’s possible the bulk of this week’s cash activity could take place after the cattle futures market closes.
Slide stalls in cash hog index... The CME lean hog index is up 2 cents to $90.20 as of Aug. 14, ending an eight-day slide that saw the value decline $3.48. The pork cutout firmed 56 cents on Thursday as all cuts except picnics firmed.
Overnight demand news... Exporters reported no tenders or sales.
See ‘Policy Updates’ for late-breaking morning news updates... For updates to items in “First Thing Today” or any late-breaking morning news stories, check “Policy Updates” on www.profarmer.com.
Today’s reports
· 2:00 p.m. Livestock, Dairy, and Poultry Outlook: August 2024 — ERS
· 2:00 p.m. Sugar and Sweeteners Outlook: August 2024 — ERS
· 2:00 p.m. Peanut Prices — NASS
· 2:30 p.m. Commitments of Traders — CFTC