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NOPA Crush falls below estimates; oil demand remains strong

Posted on Oct 18, 2017 in Biodiesel, Vegetable Oil, and Grain

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

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Bean Meal Corrects as Harvest Delays Generate Volatility

Bean meal prices started to correct on Tuesday, after running up sharply in the wake of last week’s WASDE report. Bullish sentiment provided the backdrop of the recent runup, following news that bean production would be softer than expected.  The Midwest bean and corn harvest has been delayed, which is provided some indecision amongst traders, which in turn has allowed some volatility to enter the market. The most recent commitment of trader’s report shows that traders squared up positions ahead of the latest USDA-WASDE report.

A few of the mid-western soybean harvest powerhouses are seeing their soybean harvest well behind the historical normal. 45% of Minnesota’s soybeans are harvested which is 37 points behind the average pace. In addition to Minnesota, Iowa and Nebraska are seeing big delays on soybeans. Iowa soybean harvest is 32% complete, and Nebraska 33% complete both 34 points behind. The delay is creating some uncertainty which has provide the back drop for profit taking.

Hedge funds seemed to square up short positions in futures and options just in time, and appear to have avoided most of the pain that would have incurred if they were short into the WASDE number.  According to the most recent commitment of trader’s report released for the date ending October 10, 2017 two days before the WASDE data, managed money reduced short position in futures and options by 9.9K contracts, while increasing long position in futures and options by 1.9K contracts. Traders who are long futures and options outnumber traders who are short in the managed money category by 13K contracts, 49K to 36K.

The technicals show that prices are correcting following last week’s surge, and could fall back to support near the 10-day moving average at 321.7. Resistance is seen near the October highs at 331.8.  A break of this level could lead to a test of target resistance near the July highs at 349.7. Positive momentum is decelerating as the MACD histogram is printing in the black, but the trajectory is declining which reflects consolidation. The RSI (relative strength index) is dipping after failing near 70, which also reflects declining positive momentum.

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For any questions or comments in regards to Bean Meal Corrects as Harvest Delays Generate Volatility, please contact David Becker at Google+, or LinkedIn

 

Crop Progress – Crop conditions improved for soybeans but fell for cotton and peanuts, as harvest rolls on

93% of the corn crop has dented and 51% of the crop is matured. Corn maturation is 13 points behind the 5-year average and trails last season’s pace by 19 points. The corn harvest is 11% complete, up 4 points from last week and 6 points slower than the 5-year average.  Crop conditions held steady this week. 61% of the crop is rated in good to excellent condition, 26% is fair, and 13% is rated poor to very poor. Last year’s crop conditions were 74% good to excellent, 19% fair, and 7% poor to very poor. Pennsylvania and Tennessee are experiencing the best conditions, with 93%/87% in the good/ex category. South Dakota is seeing the worst. 27% of the South Dakota corn crop is rated poor to very poor and 40% good/ex. Drought conditions worsened in Iowa but improved in South Dakota. 37% of Iowa is in a moderate drought. This is up from 33% last week. 11% is experiencing severe drought and 4% is under extreme drought conditions. 72% of South Dakota remains in a moderate drought, 40% in severe, and 6% is experiencing extreme drought. Severe and extreme drought conditions improved by 4 and 1 point respectively.

63% of the soybean crop is dropping leaves, up 22 points from last week and equal to the 5-year average. The soybean harvest is currently 10% complete, a point ahead of last year’s pace but 2 points behind the 5-year average. Crop conditions improved over the past week. 60% of the crop is rated as good to excellent, 28% as fair, and 12% poor to very poor. This is a point better in the Good/Ex category.  Tennessee has the best rated soybean crop, with 82% of its fields seen in good to excellent condition. Kansas is seeing the worst conditions with only 43% of the crop in good to excellent condition and 20% as poor to very poor.

Cotton bolls are opening in 57% of the fields, up 13 points from last week and 4 points below the 5-year average. The cotton harvest is 14% complete, up 3 points from last week and 5 points ahead of the 5-year average.  The condition of the cotton crop moved lower. 60% of the fields are rated in good to excellent condition, 26% are rated fair, and 14% poor to very poor. This is down 1 point in the good to excellent category. Last season 48% of the cotton crop was rated good to excellent and 14% as poor to very poor. In California, crop conditions remain 100% good to excellent. South Carolina has 93% of its crop rated as good to excellent. Less favorable readings are seen in Georgia, where only 41% of the crop is rated good to excellent and 30% as poor to very poor.

The peanut harvest 12% complete, up 6 points from last week and equal to the 5-year average.  The condition of the peanut crop declined over the past week. 75% of the crop is rated good to excellent, 18% as fair, and 7% as poor to very poor. Conditions fell a point in the good to excellent category and worsened two points in the poor/very poor ranking. This year’s crop condition is in much better shape than last year’s, which showed 63% rated as good to excellent and 9% as poor to very poor.

Winter wheat planting is 24% complete, up 11 points from last week but 4 points behind the 5-year average as well as last season’s pace.

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The Closing Numbers

Posted on Oct 18, 2017 in Biodiesel, Vegetable Oil, and Grain

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.

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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.

Technicals

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).

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For any questions or comments in regards to Bean Oil Rallies as Bullish Sentiment Follows WASDE Report, please contact David Becker at Google+, or LinkedIn

 

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

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INDUSTRY-RELATED NEWS


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

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A Quick Look At The September WASDE Numbers

Posted on Sep 14, 2017 in Biodiesel, Vegetable Oil, and Grain

Soybean yield per harvested acre increased by 0.5 bushels for the 2017/18 crop year, moving from 49.4 bushels per acre to 50.  This bumped production/supply higher by 50 million bushels. However, there was no increase to ending stocks since exports were forecast 25 million bushels higher and beginning stocks were reduced by 25 million bushels.   Crush expectations for the 2016/17 crop year were increased from 1.89 billion bushels to 1.895 billion.  2016/17 soybean exports were also raised by 20 million bushels to 2.17 billion. 2017/18 crush expectations remain unchanged at 1.940 billion bushels, a 2.37% increase from the 2016/17 crush forecast.

Soybean oil saw numerous adjustments made to both the 2016/17 estimated numbers and the 2017/18 crop year projections.  For the 2016/17 crop year, soybean oil production was increased by 95 million pounds.  This was more than offset by biodiesel production running stronger than forecast and domestic disappearance being greater than anticipated.  Each category is now projected to use 50 million pounds more.  Biodiesel consumption is forecast at 6.05 billion pounds, while ‘food/feed/other’ is projected at 13.65 billion.  Exports were also raised 150 million pounds.  These adjustments brought a forecasted reduction of 155 million pounds to 2016/17 crop season ending stocks.  The 2017/18 soybean oil productions started with the previously calculated 155-million-pound reduction to ending stocks.  Due to the countervailing duties imposed on Argentina and Indonesian biodiesel, domestic biodiesel production is now forecast much higher and a corresponding addition of 550 million pounds of soybean oil demand is projected by the biodiesel industry.  This increased projected use to 7 billion pounds.  Partially offsetting the increased biodiesel demand is 200-million-pound demand reduction from the export market and a 20-million-pound reduction in domestic disappearance other than biodiesel.  These changes have led to 2017/18 ending stocks being forecast 305 million pounds lighter, at 1.757 billion pounds.

2016/17 corn estimated ending stocks were forecast 20 million bushels lower, at 2.35 billion bushels.  This reduction stems from a 70 million bushel increase in export demand.  2016/17 exports are now projected to be 2.295 billion bushels.  Partially offsetting the increased export demand was reductions in domestic use, including a 15-million-bushel reduction in ethanol production demand.  2017/18 crop year projections started with a projected yield increase of 4 tenths of bushel per harvested acre, pushing projections to 169.9 bushels per acre. This led to increased production projections of 31 million bushels, which more than offset the 20 million bushel decrease to beginning stocks. Domestic foo, feed and industrial use was lower.  This included a 25-million-bushel reduction in ethanol corn demand due to lowered export projections. With supply rising and use falling, corn ending stocks are forecast 62 million bushels higher from last month for the 2017/18 crop season.

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Weekly LCFS Credit Trading

Posted on Sep 14, 2017 in Biodiesel, Vegetable Oil, and Grain

Weekly LCFS Credit Trading

Trading of LCFS credits during the week ending Sep 10th increased 2.2%.  Per California’s Air Resource board (CARB), 211,900 credits traded between Sept 4th and Sep 10th.  This is up 4,530 credits week over week and the fourth highest weekly volume seen this year. The trading activity during the week raised the year’s weekly average from 108,447 to 111,320 credits weekly.

CARB data shows that the price range the credits traded in held very close to what was seen the week before.  Credits traded between $70.00 and $95.00, with the average price being $88.84. The prior week saw a range of $71.00 and $97.00, with an average price of $88.83.  There were 20 transfers recorded during the week, 12 fewer than were recorded during the prior week but 5 more than the 2017 weekly average of 14 transfers per week.

The average CARB credit trading price is in line with the range outside brokers had been indicating the market to be over the same time frame. CARB’s weekly report excluded 5 transfers involving 22,636 credits that traded at, or near, zero in price. CARB only includes transfers that were completed in the given week.  Any transfers proposed and still pending confirmation are excluded.

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DDGS Output Remains Elevated on Strong Ethanol Production

Posted on Aug 24, 2017 in Biodiesel, Vegetable Oil, and Grain

Per the EIA’s Weekly Petroleum Status Report, average weekly ethanol production remained very strong over the latest reporting period. During the week ending Aug 18th, production averaged 1.052 million barrels per day, down 7,000 barrels a day from the week prior. Gasoline demand increased by 107,000 barrels per day to 9.63 million. Ethanol stocks narrowed 319,000 barrels to 21.509 million. Ethanol imports reverted to zero. The decrease in ethanol production lowered corn demand by up to 104,000 bushels per day. DDGS output fell in sync with ethanol production, edging 0.66% lower, week over week.

Year to date, ethanol production has averaged 1,023,242 b/d, which is up 898,000 barrels per day from last week and remains above last year’s average of 981,000 b/d. At its current pace, the industry is on track to produce 15.67 billion gallons, well beyond the 2017 finalized ethanol RVO of 15 billion gallons. Whether the industry can blend enough to meet the mandate remains the question.  Average ethanol production for the latest week is 24,000 barrels a day more than it was a year ago (1,052K bpd vs. 1,028K bpd). Domestic gasoline demand increased by 1.12%. Ethanol inventories narrowed 1.46% to 21.51 million barrels.  Ethanol production as a percent of gasoline demand dropped to 10.93%. 2017 gasoline demand is, on average, 9.02 million gallons less per day than it was over the same period in 2016.

Approximately 15.59 million bushels of corn were used daily in the production of ethanol and, as a co-product of production, 112,499 metric tons of livestock feed was produced daily. DDGS production accounted for 100,054 metric tons, with the balance comprised of 10,501 MT of corn gluten feed and 1,945 MT of corn gluten meal.  Additionally, 6.82 million pounds of distillers’ corn oil was produced daily from dry mill ethanol plants.

The estimated ethanol-processing margin decreased 3.5%. Revenue derived from ethanol and DDGS sales fell by 15 cents per bushel, while the cost of corn slipped 9 cents per bushel.  This allowed the margin to narrow by 4 cents to $1.10 per bushel.

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The Closing Numbers

Posted on Aug 24, 2017 in Biodiesel, Vegetable Oil, and Grain

Not quite the follow through that some anticipated following the Commerce Departments announcement on their preliminary findings and countervailing duties on Argentine and Indonesian biodiesel imports. However, RINs did push higher, and with the B17’s trading at 118, prices closed at their highest level since December. The B17/E17 RIN spread expanded to 29 cents, continuing to expand as biodiesel RIN prices move higher while ethanol RIN values remain somewhat steady.  The spread had been as narrow 14 cents just over a week ago.

Soybean oil also received a significant boost in price. The September and December contracts both closed more than 60 points higher, with the Dec contract trading as high as 35.37 cents per pound before pulling back and settling at 35.06.  Heating oil rose 3 cents to $1.62 per gallon.  The stronger move in soybean oil prices pushed the bean oil/heating oil spread to 93 cents per gallon.  It’s highest showing in more than four weeks.

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Weekly LCFS Credit Trading

Trading of LCFS credits during the week ending Aug 20th saw an increase of more than 500%.  Per California’s Air Resource board (CARB), 193,767 credits traded between Aug 14th and Aug 20th. The number of credits changing hands jumped 162,125 week over week and increased the year’s weekly average from 103,523 to 106,257 credits weekly.

CARB data shows that the price range the credits traded in expanded and moved higher.  Credits traded between $72.00 and $95.00, with the average price being $84.26. The prior week saw a range of $74.78 and $87.50, with an average price of $76.08.  There were 27 transfers recorded during the week, 27 more than were recorded during the prior week and 13 more than the 2017 weekly average of 14 transfers.

The average CARB credit trading price is in line with the range outside brokers had been indicating the market to be over the same time frame. CARB’s weekly report excludes 3 transfers totaling 19,288 credits because they were reported at zero or near-zero dollar prices.  CARB only includes transfers that were completed in the given week.  Any transfers proposed and still pending confirmation are excluded.

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For any questions or comments in regards to Bean Oil Rebounds but Market Remains Subject to Further Downside, please contact David Becker at Google+, or LinkedIn

 

INDUSTRY-RELATED NEWS


Aug 15 (Reuters) EPA erred in denying renewable fuel hardship exemption: courts – The U.S. Environmental Protection Agency used too strict of a test when it wrongfully denied Sinclair Oil’s request for an exemption from the country’s biofuel regulations, a U.S. appeals court ruled on Tuesday.   The ruling could potentially broaden the rules governing such exemptions, forcing the EPA to grant more in future years under the controversial Renewable Fuel Standard program. READ MORE

Aug 08 (Biomass Magazine)  Neste reports record quarterly renewable diesel sales – Neste has released financial results for the second quarter of 2017, reporting record-high sales volumes of renewable fuels. The company sold 674,000 tons of renewable diesel during the three-month period.  During the second quarter, the company’s renewable products division recorded a comparable operating profit of EUR 101 million ($118.61 million), compared to EUR 119 million during the same period of last year. According to Neste, the segment was able to keep its result at a good level with the support of higher sales volumes and a more favorable market despite the expiration of the blenders tax credit in the U.S.  READ MORE

Aug 08 (Canada Newswire)  BIOX Announces 2017 Third Quarter Results –  BIOX sold 16.1 million litres and 45.0 million litres of biodiesel in Q3 2017 and YTD 2017, respectively, compared to 34.8 million litres and 78.2 million litres in the corresponding periods in fiscal 2016. The changes in sales and volume sold for both Q3 2017 and YTD 2017 are primarily due to lower sales of third-party product. The Company sold less than 0.2 million litres and 0.3 million litres of third-party product in Q3 2017 and YTD periods, respectively, compared to 22.1 million litres and 32.8 million litres of third-party product sales in the corresponding periods in fiscal 2016. READ MORE

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