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EPA Draft Rule on Reallocation of RFS Refinery Exemptions Creates Possible Good, Bad, & Ugly Outcomes… The U.S. Environmental Protection Agency (EPA) today issued a draft rule regarding the potential reallocation of recently granted Renewable Fuel Standard (RFS) refinery exemptions (SREs) from years 2023 and 2024 as well as for the estimated amount SREs expected for 2025. Combined, this rule will impact over two billion gallons of renewable fuels demand. In the draft rule, EPA proposed reallocating 100% of the RFS exemptions or only 50%, while also soliciting comment on doing no reallocation at all. Any reallocated volumes would be added to the 2026-2027 RFS blending volumes under the proposal.
“Just a few weeks ago IRFA praised the EPA for committing to full reallocation in the 2026-2027 RFS rule, but that commitment should start now with 2023-2025 exemptions – not in 2026,” stated Iowa Renewable Fuels Association Executive Director Monte Shaw. “IRFA strongly supports the EPA proposal for full reallocation. The co-proposal that would reallocate only 50% of the SREs would be bad news for farmers. Make no mistake, not reallocating any RFS exemption is a direct cut to renewable fuels demand.” -source: IRFA Press Release
Exports, ethanol boost corn futures heading into harvest… USDA Chief Economist Seth Meyer made comments regarding corn futures’ rise in wake of Friday’s reports from USDA saying quote “They’re pushing a lot of that corn into ethanol production. We had a record corn export program last year. And we actually reduced carryout stocks this month for the coming crop year, or the current crop year, because we raised exports.”
The Energy Department says ethanol exports were up 36 percent by the first week of September, having crossed the 1 billion-gallon threshold earlier. Renewable Fuels Association’s Troy Bredenkamp says year-round E15 sales nationwide, if Congress approves, would supercharge corn and ethanol demand.
Beef cow inventory may have more upside to give prices… The U.S. beef cow inventory has reached its lowest point since 1962, reports Drovers, marking what appears to be the bottom of the current cattle cycle. Tight supply is driving the strong pricing environment beef producers are enjoying today.
“For cow-calf producers right now, things are as good as they’ve probably ever been,” says Troy Rowan, University of Tennessee assistant professor. Agreeing with Rowan, South Dakota cattleman Ken Odde adds that while profits are currently strong, inflation quickly erodes economic gains. “The beef industry is not currently in herd expansion mode, with producers hesitant to retain heifers due to high costs and economic uncertainties,” says Dave Weaber, Terrain senior animal protein analyst.
While the USDA reports showed the smallest U.S. herd in history and continuing tightening numbers on feed, analysts predict producers have not experienced the highest cattle prices, yet.
As soybean farmers harvest their crop after a difficult growing season, they are facing a farm economy that resembles “death by a thousand cuts,” Tennessee Soybean Promotion Council Executive Director Stefan Maupin said. Persistent inflation since the pandemic has made it more expensive for farmers to produce crops, and weather extremes over the last year mean they will see a significant loss in yield, he said.
On top of that, bushels will soon hit a market where prices are low and the largest soybean export partner, China, is entirely absent amid trade negotiations with the Trump administration. “We’re in a significant and desperate situation where … none of the crops that farmers grow right now return a profit,” Maupin said. “They don’t even break even.” Another year in the red will be tough to survive for farmers still struggling to recover from last year’s losses, he added.
Notable Closes…
USDA says 67% of the U-S corn crop is in “good” to “excellent” condition with harvest just getting started. That slight deterioration of crop conditions, however, pales in comparison to what some crop-watchers are confirming from the field in the middle of the country.
- December corn futures were 6 ¼ cents higher at $4.29 1/2
- March corn up 6 cents to $4.47
- May corn futures closed at $4.56 3/4, up 5 1/2 cents
October lean hog futures opened higher, rallied to a new contract high then fell back to post a downside key reversal.
- October hogs 15 cents lower at $97.37 ½
- December hogs down 62 ½ cents to $88.22 ½