Evening Report | December 1, 2022

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EPA’s RFS proposals for 2023-2025... Following are EPA’s proposals for the amount of biofuels oil refiners must blend into their fuel over the next three years.

EPA’s proposal also includes regulatory changes to how credits from renewable electricity (eRINs) would be implemented and managed under the RFS program. Under the plan, one e-RIN would be generated for every 6.5 biofuel-powered kilowatt hours in an EV battery.

Drought footprint mildly retreats but remains prominent... As of Nov. 29, 80% of the U.S. was experiencing abnormal dryness/drought, according to the U.S. Drought Monitor, down two percentage points from the previous week. Drought improvement was most pronounced in Texas and Missouri.

Heading into dormancy, USDA estimated 74% of the winter wheat crop was experiencing drought, down one percentage point from the previous week but 22 points greater than last year.

In HRW areas, dryness/drought covers 84% of Colorado (unchanged), 100% of Kansas (unchanged), 88% of Montana (unchanged), 100% of Nebraska (unchanged), 100% of Oklahoma (unchanged), 100% of South Dakota (unchanged) and 74% of Texas (down 13 points).

In SRW areas, dryness/drought covers 81% of Missouri (down 7 points), 81% of Illinois (unchanged), 98% of Indiana (unchanged), 73% of Ohio (down 3 points), 42% of Michigan (up 3 points), 100% of Kentucky (up 1 point) and 98% of Tennessee (up 1 point).

Click here for more details and to view the related map.

Exchange says more Argentine wheat crop losses likely... Argentina’s wheat production outlook is likely to face more cuts due to lower-than-expected yields, the Buenos Aires Grain Exchange said in its weekly report. The exchange continues to estimate the Argentine wheat crop at 12.4 MMT, but yields are even lower than expected. “If this trend continues, it could affect our current estimate,” the exchange said.

The exchange added the delayed planting of 2022-23 soybeans, estimated at 16.7 million hectares, was still being held up by “the lack of surface humidity and high temperatures,” despite some rains in recent days. Soybean planting, it said, was 29.1% complete, 17.2 percentage points behind last year, and more than 30 percentage points behind in some regions.

Corn planting is 25.4% complete on the 7.3 million hectares projected, the exchange said, while producers have begun to sow batches of late-planted corn.

October soy crush a little stronger than expected... U.S. soy processors crushed 196.6 million bu. of soybeans during October, according to USDA, which was a little stronger than the average pre-report estimate of 196.0 million bushels. The crush pace increased 29.0 million bu. (17.3%) from September but was 300,000 bu. (0.2%) below year-ago.

Soyoil stocks totaled 2.094 billion lbs., up 103 million lbs. from September but 292 million lbs. below October 2021.

Corn-for-ethanol use stronger than expected... Corn-for-ethanol use totaled 448.9 million bu. in October, according to USDA, 15.6 million bu. more than traders expected. Corn-for-ethanol use increased 65.4 million bu. (19.3%) from September but declined 19.1 million bu. (4.1%) from last year.

Production of dried distillers grains with solubles (DDGS) totaled 1.745 million tons, up 132,331 short tons from September but 203,393 tons less than October 2021.

U.S. PCE retreats but remains elevated... The personal consumption expenditure price index increased 6% year-on-year in October, below the 6.3% gain in September. It is the lowest reading so far this year. Prices for goods increased 7.2% and prices for services rose 5.4%. Excluding food and energy, the core PCE price index increased 5%, below the 5.2% gain in September.

U.S. personal income rises the most in more than a year... U.S. personal income increased 0.7% from a month earlier in October, up from a 0.4% rise in September and above market expectations of a 0.4% gain. It was the strongest reading since October 2021, primarily reflecting increases in compensation and government social benefits. The increase in compensation was led by private wages and salaries. Within private wages and salaries, both services-producing industries and goods-producing industries increased. The increase in government social benefits reflected increases in “other” benefits, primarily reflecting one-time refundable tax credits issued by states.

EPA announces another step in WOTUS plans... The Office of Management and Budget (OMB) completed its review of EPA’s final rule to set yet another definition of Waters of the U.S. (WOTUS), this one a final rule to replace the Navigable Waters Protection Rule from the Trump administration with a definition that goes back to the pre-2015 WOTUS rules but tweaked to account for court decisions. EPA is still developing a new definition that would have “further refinements” to the definition that would “take into account additional stakeholder engagement and implementation considerations, scientific developments, and environmental justice values.”

Meanwhile, the U.S. Supreme Court will issue a decision on a case it heard in October on WOTUS that will also impact the agency’s yet-to-be detailed new definition.