In somewhat of a rare occurrence, heating oil and soybean oil finished the day unchanged. Leaving the BOHO spread at 69 cents per gallon. Opposition to Scott Pruitt seems to be growing as a group of Senators had lunch with him in an effort to back him off his opposition to the RFS. According to Senator Grassley, the meeting he is spearheading, will get Pruitt and the EPA “back on track”. Senator Tammy Duckworth contributed to an opinion piece published by the Hill, which outlines some of the Trump administration’s efforts to undermine the biofuels industry through actions, while attempting to publically appease rural constituents.
The RINs market seemed to follow HO and SBO. Values and finished the day largely unchanged across the board. California’s LCFS credit edged higher though, as bids moved up to 93 and offers to 95. 94 traded earlier in the day.
Bean Oil Rallies as Bullish Sentiment Follows WASDE Report
Thursday’s WASDE report released by the USDA, generated bullish sentiment, and helped prices gain traction. Declining yields, was described as the catalyst for the estimated drop in production which allowed prices to move higher. The most recent commitment of trader’s report showed that hedge funds were poised for a move higher ahead of the WASDA report.
Bean oil prices moved higher on Monday, following a surge higher on Friday, as bullish sentiment perpetuated in the wake of the WASDA report. U.S. oilseed production for 2017/18 is now projected at 132.3 million tons, lower by 0.5 million from last month. Soybean production is forecast at 4,431 million bushels, flat from last month with higher harvested area offsetting lower yields. Global oilseed production for 2017/18 is projected at 577.0 million tons, down 1.6 million as reductions for soybeans. Some of the decline was offset by replacements from competing oils.
Since the latest CFTC report is released for the date ending October 10, (last Tuesday) and the WASDE report was on October 12, (last Thursday), bullish sentiment will likely be reflected in next week’s report. What we can garner from the latest report is that hedge funds were long futures and options, and although there was some profit taking, which reduced last week’s open interest in the managed money space by 2.7K contracts. Simultaneously, hedge fund increased short positions by 4.8K contracts. Total open interest shows that those that are long futures and options outnumber open interest that is short by 23K contracts, 71K to 48K.
The technicals on the bean oil contract show that prices are attempting to form a bottom, with support near the 10-day moving average at 33.22. Prices could rumble up to resistance which is seen near the September highs at 36 cents per pound. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD index (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the index).
NOPA Crush falls below estimates; oil demand remains strong
NOPA’s crush data for September came in lighter than expected, but was the highest total in ten years for the month of September. 136.419 million bushels of soybeans were crushed during the month, which was the first month of the new crush season. September’s crush was down 4.22% from last month but 4.75% higher than the amount crushed last September. Analysts expected the crush to come in at 138.071 million bushels according to an average of analyst estimates in a Reuters survey. Meal exports totaled 487,397 tons, up 14.17% month over month and 10.87% more than September of 2016.
Soybean oil stocks were lower than anticipated. Analysts had been expecting stocks to fall to 1.332 billion pounds. However, strong demand pulled stocks down to 1.302 billion, 8.12% lower than August and 5.38% less than September of 2016.
Cumulative bushels crushed by NOPA members during the 2016/17 season are 136.42 million. The USDA is expecting to grow the crush by 2.16% to a new record of1.940 billion bushels. The 2016/17 crush totaled 1.899 billion bushels. Through September, NOPA crush members have crushed 4.75% more soybeans than last season. This exceeds the USDA projection. However, we are only one month into the current crush season.
NOPA September Crush Data
Oct 17 (The Hill) A vote for Bill Wehrum is a vote against the RFS – There is a reason that the Renewable Fuel Standard (RFS), our nation’s policy governing the production and sale of biofuels, has broad bipartisan support in Congress. This policy is helping us revive rural economies, reduce our greenhouse gases, and become less dependent on foreign oil. Despite these benefits, in the ten months that Donald Trump has been president, his administration has launched unprecedented attacks on the program – attacks that fly in the face of promises Trump made as a candidate to our nation’s farmers that he would champion the RFS program if elected. READ MORE
Oct 13 (The Washington Post) The Energy 202: The EPA is targeting biofuels. Chuck Grassley isn’t happy – As chairman of the Senate Judiciary Committee, one of the congressional committees investigating Russian interference in last year’s election, Charles E. Grassley is in a better position than most other Republicans in Congress to tighten the screws on the Trump administration. READ MORE
Oct 09 (CNN) Pruitt announces withdrawal of Clean Power Plan – Environmental Protection Agency Administrator Scott Pruitt announced Monday his agency’s plans to withdraw the Clean Power Plan, the sweeping Obama-era rule regulating greenhouse gas emissions. While speaking in Kentucky at an event with Senate Majority Leader Mitch McConnell, Pruitt said he will sign the proposed rule repealing Obama’s plan Tuesday. “When you think about what that rule meant, it was about picking winners and losers. Regulatory power should not be used by any regulatory body to pick winners and losers,” he said at the event. READ MORE