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It could have been worse.
That seems to be the reaction from farm and biofuel groups after the Environmental Protection Agency on Monday announced small refinery exemptions (SREs). The agency granted exemptions totaling 1.76 billion blending credits, known as RINs – far above the roughly 900 million credits it had previously penciled in. Talk that EPA could grant upward of 1.8 billion in exemptions sparked furious pushback by farm and biofuel groups and farm-state lawmakers in recent weeks. It also put pressure on soybean oil futures, which have seen significant volatility.
Softening the blow, EPA said it would reallocate 100% of the difference between the projected and actual exempted volumes for 2025 SREs into the 2026 and 2027 Renewable Volume Obligations before the end of October. In other words, the required blending will be shifted from refiners who won exemptions to other refiners.
- “While we continue to believe most of the SREs issued today are completely unjustified, we are somewhat encouraged that EPA is taking steps to minimize the damage through reallocation,” said RFA President and CEO Geoff Cooper. “The proposed plan laid out by EPA today creates a pathway for ensuring no net loss in renewable fuel demand, and it is crucially important that the agency moves quickly to faithfully implement this approach.
The American Soybean Association, which last week warned that exemptions on the order of 1.8 billion RINs would eliminate around 500 million gallons of biomass-based diesel demand and cost U.S. soybean farmers around $1 billion in lost revenue, welcomed EPA’s Monday decision but urged policymakers to move quickly.
- “We appreciate the administration’s commitment to reallocating 100% of these additional exemptions and their intention to enter into supplemental rulemaking soon, but timing is critical,” said Dave Walton, ASA vice president and an Iowa soybean farmer. “Any delay in reallocation risks undermining the domestic market demand that soybean farmers urgently need as we enter harvest season. EPA must move quickly to fully reallocate these RINs and ensure soybean farmers are held harmless.”
Market recap: Grain markets ended a strong August with a muted performance, with wheat futures feeling pressure on end-of-month profit taking around reports Turkey is pushing for an agreement that would free up grain shipments out of the Black Sea.
- December soft red winter wheat lost 10 cents to end at $7.74.
- December corn rose 1 ¼ cents to $5.37 ¾ after hitting a contract and three-year high overnight.
- November soybeans ended unchanged at $12.88 after hitting a contract and 2.5 year high overnight.
- December cotton jumped 176 points to close at 93.14 cents, hitting a contract and 2.5 year high.
- October live cattle rose 95 cents to $212.675, while November feeders gained 50 cents to $310.425 on further short covering after hitting eight-month lows last week. USDA on Monday announced a new “Ranchers First Initiative” in an effort aimed in part at mitigating the financial risk of retaining breeding heifers (see item below).
- October lean hogs rose $1.775 to $83.675, hitting a three-week high on another bout of short covering.
Condition update: Corn conditions held steady the past week, with 57% of the crop rated “good” or “excellent” as of Sunday, unchanged from the previous week and defying expectations for a one percentage point drop, according to a Reuters survey of analysts.
- The Pro Farmer Crop Condition Index (0 to 500 scale, 500 equals perfect), which uses state data to provide a weighted figure to track the crop through the growing season, fell 1.6 points, mainly due to minor deteriorations in the Dakotas and lower Midwest from hot, dry weather. See detailed Pro Farmer CCI ratings here.
USDA said 58% of the soybean crop was rated good or excellent, down two percentage points from the previous week and a point below the average estimate. It was the fourth straight weekly decline for soybean ratings.
- The Pro Farmer CCI for soybeans fell 1.44 points to 357.55. Minnesota saw the largest change of any state this week, down 0.99 point, but small improvements in a combination of other states limited the decline.
USDA said 77% of the spring wheat crop was harvested as of Sunday, up from 62% a week earlier and ahead of the five-year average for this time of year of 68%. Analysts had expected the harvest to be 75% complete.
USDA details beef plan: USDA Secretary Brooke Rollins on Monday announced the Ranchers First Initiative, which the department says is aimed at rebuilding the U.S. beef herd. Getting close attention is a new endorsement, dubbed Beef Retention and National Development (BRAND) for the Livestock Risk Protection (LRP) program. According to USDA, the endorsement will allow producers to insure the economic value of retaining a heifer for breeding over a two-year period. The endorsement would establish a protected value based on the expected slaughter value of the heifer at the time of enrollment. If, at any time during the endorsement period, the heifer’s projected or realized slaughter value exceeds the economic value of retaining her as breeding stock, the policy would provide for the difference, USDA says.
Other elements of the initiative include allowing producers to use the Emergency Conservation Program on Grassland Conservation Reserve Program acres to speed recovery after wildfires and other natural disasters. USDA is also creating a guaranteed loan program it said would help support regional processors, including establishing processor co-ops, expanding small businesses and increasing the variety of animal proteins being processed.
Also see: “Stay Out of Our Lane:" Cattle Producers Say Trump’s Beef Import Plan Feels Like Betrayal
‘Backwards and poor’: President Donald Trump on Monday pushed back against growing bipartisan opposition to artificial-intelligence data centers, an issue that has become an increasingly important issue ahead of this fall’s midterm elections.
- “The only reason that communities throughout the U.S.A. should not want Data Centers is if they want to end up being backwards and poor,” Trump wrote in a post on Truth Social. “If they want to be successful and rich, with far lower taxes and jobs all over the place, let Data Reign,” he added.
Trump-Xi summit betting frenzy: Chinese leader Xi Jinping’s September visit to the U.S. has prompted a plethora of wagers on betting platforms, notes the South China Morning Post:
- Will Trump and Xi announce a trade deal, cut tariffs, make progress on artificial intelligence, or discuss semiconductor controls? Will they say something about Taiwan, or at least strike a conciliatory tone? Sub-markets linked to Trump’s May visit to Beijing even included the prospect of the two leaders embracing, with “yes” odds that at one point ran into the teens before the market later resolved to “no”.
Samuel Lazarus, a research associate at the Council on Foreign Relations, told the newspaper that a “litany” of contracts are likely to emerge around the summit, but cautioned against reading too much into market movements. “Markets and analysts are hardly pricing in a major shift in bilateral relations, such as major changes to baseline tariff levels or the status quo in the Taiwan Strait,” he says.