"Biofuel Foes" Try to Kill RVOs + Soybeans REJECT Fresh Highs

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🌽 Lawmakers are pushing to overturn the EPA's biofuel blending mandates for 2026 and 2027 using the Congressional Review Act. The effort is considered a long shot and is unlikely to gain traction.

🫘 Soybean futures fell Wednesday as soybean oil volatility and fading rumors of Chinese buying weighed on the market. Corn edged higher on strong export demand and favorable rainfall forecasts across the Corn Belt.

🌾 Wheat futures turned lower after two days of gains as expected rainfall in drought-affected areas pressured prices. Cotton pulled back after hitting a near two-year high, with crude oil prices and widespread drought keeping the longer-term outlook supportive.

💊 The USDA is actively working to address surging fertilizer costs, with Agriculture Secretary Brooke Rollins in daily contact with the White House. Russia extended its fertilizer export quotas through year-end amid global supply tightness tied to the Iran war.

⛽ US ethanol production dipped 7% week-over-week but remains above year-ago levels, with margins staying healthy across the Corn Belt. Ethanol stocks rose to 26.95 million barrels.

📦 USDA reported a third consecutive flash sale of corn this week, with 130,000 metric tons sold to unknown destinations. The weekly total now stands at 425,000 metric tons, or 17 million bushels.

Transcript

Biofuel Foes and RVOs

SPEAKER_01 0:08

Good morning, everybody. It's Thursday, April 23rd, 524 a.m. Central Time. Grain markets are higher across the board this morning. May corn futures up one and three quarters at 456. May soybeans up three quarters of a cent at 1165 and a quarter. May Chicago wheat up five and a quarter at 604 and a half. May Kansas City wheat up 11 cents at 648 and three-quarters. May Spring wheat up two and a quarter at 667.5. Biofuel foes in the news this morning. Let's start there.

SPEAKER_00 0:36

So Representative Scott Perry has introduced legislation to overturn the EPA's most recent biofuel blending requirements for 2026 and 2027. The legislation is being co-sponsored by Representative Chip Roy of Texas. The EPA finalized the rule at the end of March, setting the highest biofuel blending volumes in the history of the renewable fuel standard program. The legislation is being advanced under the Congressional Review Act. According to Perry, the mandates harm refiners, contribute to inflation, raise food prices by diverting corn to ethanol, and carry net negative environmental impacts.

Soybeans Reject Old Highs, Weather, Planting

SPEAKER_01 1:17

Yeah, maybe they do. Oil refiners don't uh love this biofuel stuff. So I think they're uh they're talking from their um who they're getting their, it's not kickbacks, but you know, lobbyists, whatever, who probably contribute to their campaigns. Um, I don't agree with the con with the inflation stuff. I also don't agree that this stuff raises food prices. I mean, corn's dirt cheap. I don't really know what they're talking about. Um, these guys, both of them, both of them have a history of opposing things like the RFS and biofuel initiatives. Um, Chip Roy is a Republican from Texas. He's got a uh a strong, strong history of supporting fossil fuels and opposing renewable energy. Being from Texas, I'm gonna say that there's probably some oil ties there. I didn't do a whole lot of research into it. This is very unlikely to gain traction. Very, very unlikely to gain traction, or at least uh that's the optimist in me. I don't think that this will gain traction. But this story was making the rounds yesterday, so we figured we'd cover it here today.

SPEAKER_00 2:13

Soybean futures declined on Wednesday as rising soybean oil prices weighed on the market. The May 26th contract fell 10 cents to settle near 1165 per bushel. Futures came under pressure amid concerns that higher soybean oil prices could lead to increased vegetable oil imports. Corn futures edged higher, supported by strong export demand and forecasts for rainfall across the corn belt. Wheat futures, meanwhile, turned lower after two days of gains, as expected rainfall and drought-affected areas pressured the market.

Cotton Rally and Acres

SPEAKER_01 2:43

Let's look at soybeans first. So we told you guys yesterday about uh this time, 24 hours ago. Hey, new crop soybean futures are basically on the highs. They're they're testing the highs that were posted in March. Those highs were rejected for a couple of reasons. There were these rumors regarding potential Chinese interest in U.S. soybeans floating around, and it seems right now that they're unfounded. Maybe they re-emerge, but for the moment it appears as if the rumors were unfounded, maybe not true, maybe fake rumors. I also think there was probably some farmer selling that came in and uh some guys forward contracted some beans when we got back up to the old highs that uh very easily could have pressured the market. So I'm not gonna say that the reality is over. This chart actually still looks pretty constructive to me, but uh that was definitely a rejection of um the highs, the previous highs in new crops or being futures. Here's corn, still looks good to me. Uh nice recovery out of the early April lows, uh very clear resistance in the 492 to 498 and a half zone. If you get back into the 490s, December futures, you're gonna see uh some more farmers selling emerge, certainly. Let's look at some cornbelt weather above normal. Uh, cornbelt rainfall will continue and uh planting disruptions may continue in some areas here over the next uh week or two. Rainfall will be closer to normal in the extended period. Let's look at this in a different way. Based on Euromodel data, our friends at Crop Profit estimate that U.S. corn areas will see 165% of their normal rainfall over the next seven days. That's a lot of rain. When you get into the uh eight to 14 day period, however, it's uh more normal rainfall. You're talking 110% of normal rainfall across U.S. corn growing areas. So I think there is a little bit of concern, perhaps, regarding planting disruptions. I know like the eastern half of Iowa in particular, there's uh been some areas that are very slow or haven't started yet. I think some areas of Missouri, uh, same situation, and there are more problematic areas than that. Here is Kansas City wheat. I think it's very possible that we post fresh highs this week. We're only a nickel away here this morning. We'll look at some weather here for the southern plains. Very little rain expected for U.S. uh HRW wheat areas in the west over the next five days. Now, the five to ten looks a little wetter. Uh, looks like there could be some rain in western Kansas, eastern Colorado, those type of places. These extended forecasts have all failed though as of late, and I'll be curious to see if this one pans out. And if it does pan out, if these rains do fall, is it too little, too late for the HRW wheat crop in those areas that's in very tough shape? You guys tell me what you think. Here is spring wheat, which posted some fresh highs this week. Um, it's been dry across U.S. spring wheat areas, but it's gonna be really cold. Temperatures in the uh 20s uh on the lows expected, uh, I believe Friday, Saturday, Sunday. Spring wheat planting was on par with its five-year average through Sunday, but uh maybe these cold temperatures slow things down a little bit. Maybe the market's a little bit concerned about that. If you guys have opinions or thoughts on the spring wheat situation, uh drop them in the YouTube comments, or you can email me info at standardgrain.com.

SPEAKER_00 5:44

Cotton futures retreated yesterday after reaching a new, a near two-year high. After rising to their highest level since May 2024, futures fell more than 1% on profit taking. Higher crude oil prices have driven cotton's recent rally. Analysts expect futures could continue to trend higher if tensions in the Middle East remain elevated with little to new, with little to no progress toward a U.S. Iran peace deal. The market is also finding support from adverse weather conditions as roughly 97% of U.S. cotton growing areas are experiencing some level of drought.

SPEAKER_01 6:18

Yeah, I think this is a drought rally, uh, probably more so than anything. Fresh highs posted yesterday, they were rejected, but this is still a very sharp but orderly uptrend from the March low to April high. This thing rallied uh 14 bucks or 20 percent. Uh here's the thing there's been some chatter about a drastic increase in cotton acres because of this big rally. I just I don't know that that's necessarily gonna be reality. With new crop futures trading just below 80 this morning, they're probably like really close to production cost. I think most growers are gonna need a price right around 80, like a cash price to break even. So it's really no better than corn, maybe slightly better than soybeans from a profitability standpoint. USDA peg 2026 U.S. cotton plantings at 9.64 million acres, uh, which is up from nine and a quarter last year. I think acreage switching into cotton amid the rally will probably be pretty minimal. I mean, maybe you're talking a couple hundred thousand, maybe four hundred thousand at most, that would be my guess. You got to remember that um a massive increase or any increase in cotton acreage, it's limited by geography, in addition to the fact that cotton requires a totally different setup and set of equipment versus corn or soybean. So you're not gonna have like a whole bunch of corn and soybean operations switching into cotton. You're gonna have people who have grown cotton before say, oh yeah, maybe I'll do a little bit more of that this year. But I just I don't the the if there is an acreage increase, it could have an impact on the cotton market. I just don't see that it has much of an impact on corn or soybean acres, uh, big picture. I mean, there's there's really just a few pockets of the country where we grow cotton. Uh 9.6 million acres, as I mentioned, is up from last year, anyways. So are we going to increase much more than that? I mean, maybe by a little bit, but I just I don't think this is gonna be something that impacts our row crop acreage situation a whole lot.

SPEAKER_00 8:04

If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers about some of our recent premium videos?

USDA Fertilizer Action

SPEAKER_01 8:10

Matt Bennett was on yesterday for a 20 questions segment. In these videos, we take questions from our premium subscribers and we answer them. A lot of questions about 2027 production amid the fertilizer situation, a lot of fertilizer specific questions. We talked about the wheat market, which has acted better, but maybe could be acting even better than it has been, given some of the uh weather stuff. Chris Barron was on and did an excellent conversation about hidden interest costs and your farm's uh cost of carry. I read this statistic yesterday. I'm gonna read it again. If you've got 100,000 bushels of corn in storage that are unpriced and you're paying interest because you got money borrowed against them, say you got a seven and a quarter um interest rate um on your operating line against this stuff, you're talking hidden interest payments of nearly$2,400 per month,$85 per day, or three cents per bushel monthly. It's really not enough to uh cover the carry that's in the market. And um, if you had to write a check for that amount, if you had to write a check for$2,400 every single month on that 100,000 bushels, you'd probably sell them today, but people just don't consider it. Chris had a lot of details and nuance and a lot of things to consider in this video. This is what I would call hardcore grain marketing information. You should absolutely absolutely check this out. Ryan Bennis was on and did uh something that was also very much hardcore grain marketing information on a Monday this week, calculating insurance payments. Um, basically ran through a calculator and some marketing scenarios as it relates to new crop corn, the uh RP program, and then SEO ECO and how your uh price floor may look amid different scenarios, uh, different yield scenarios, different price scenarios, different marketing scenarios. Again, absolutely like if you don't know this stuff, you're way behind. Check out the premium stuff today, guys. Go to standardgrain.com. You can sign up. It takes like 30 seconds to do. I know you're busy. Sign up on your phone. It takes 30 seconds. We do Apple Pay, Google Pay, Cash App, all that stuff. Um, all of the emails are very easily accessible on your phone. All of our premium videos are sent via private links in the email. So you just click to play. There's no messy login instructions or anything like that. It's a piece of cake. Uh, give that deal a shot this morning, guys.

SPEAKER_00 10:11

According to Ag Secretary Brick Rollins, the USDA is in daily communication with the White House and other federal agencies to address surging fertilizer costs. The USDA will announce measures to address the issue soon, while Rollins is also engaging directly with major fertilizer companies. Meanwhile, Russia announced it will extend its fertilizer export quotas through the end of December due to global supply shortages linked to the Iran War. Russia is the world's second largest fertilizer producer, accounting for roughly 20% of global trade.

Ethanol Production

SPEAKER_01 10:43

Here's Brooke Rollins on X yesterday. We're launching a full-scale, all-of-government effort to lower fertilizer prices for American farmers and strengthen our long-term supply security. Daily calls are taking place at the highest levels with the White House, EPA, DHS, Commerce, and Treasury Department for to drive immediate relief in the short term. We are also confronting a critical long-term reality. America has offshored far too much of its fertilizer production, leaving us dangerously reliant on Russia and China. This is a national security issue, and the president is fixing it. Okay. Very few details here, right? So what are the what are the details? What are they going to do? I mean, behind curtain number one, you've got some sort of direct farmer subsidy, which would be the very easy, quick, uh, uh, quick and dirty solution to this. Hey, let's just send the farmers a check. We'll call it a fertilizer subsidy, and uh, we'll just keep going. More, are they gonna try to encourage more domestic production? That's something that's gonna take years. It's gonna take years. It's not, it's not gonna provide immediate relief. Are they talking about the DOJ investigation, which is ongoing? I believe we just haven't heard anything about it. I mean, I don't know. That that doesn't seem like it's gonna happen fast either. Are they gonna try to fertilizer company is gonna agree to lower prices to farmers on the retail level, despite the fact that fertilizer in the U.S. is probably cheaper than it is in a lot of places? I don't know. I just I don't know exactly what they're what they're talking about here, like which direction they're gonna go. I mean, it's the great sounding rhetoric, but I want to hear details and um I don't know what the details are gonna be. If you guys have ideas, uh let me know.

SPEAKER_00 12:18

U.S. ethanol production declined last week. Weekly out weekly output was reported at 1.04 million barrels per day, down 7.1% compared to the prior week, but up 2.8% versus the same week last year. Ethanol stocks rose to 26.95 million barrels. The print was up 1% compared to the previous week and up marginally compared to the same week last year. According to Reuters data, U.S. ethanol margins range from 15 cents to 40 cents positive across the corn belt.

Corn Flash Sale, China??

SPEAKER_01 12:46

A little bit of a dip in production, which is fairly normal from a seasonal standpoint. Production likely ramps up as we get into the uh early summer months. Ethanol stock still pretty high, but not totally unprecedented by any means. Production has been strong. It's a very uh it's very much a bright spot with regard to corn demand. USDA may be overstating corn usage via ethanol by a little bit, but it's probably not by a lot.

SPEAKER_00 13:09

We saw another flash sale of corn yesterday. U.S. exporters sold five million bushels of corn to unknown destinations for delivery during the current marketing year. This marks the third flash sale of corn so far this week, totaling 17 million bushels.

SPEAKER_01 13:22

We had a question in the uh 20 questions segment with Matt yesterday about this. There's then there's been an increase in corn sales to unknown destinations. And the question was like, who is who is unknown? And um, does it ever, do we ever find out who unknown is? Yeah, you do find out who it is. You'll see it in the export sales report. You'll see like X amount of uh bushels or metric tons were switched from unknown to Mexico or switched from unknown to South Korea or Japan. You'll you'll see it happen eventually. Now, who's buying this corn to unknown destinations? It's probably one of the usual suspects. It's probably Mexico, Japan, one of those. I I heard it suggested, hey, maybe it's China. Maybe it is, but the market isn't really acting as if this was this is China. If China were to come in and buy some old crop US corn, that is a potentially game-changing scenario. And I just don't see the market reacting in such a manner right now. I'd I would love to, I'd love to see it. I just I don't think that that's what's going on necessarily. Uh, what did cattle do yesterday?

SPEAKER_00 14:20

Cattle futures were lower uh yesterday. Live cattle were 40 cents to a buck 32 lower. Feeder saw losses ranging from seven cents down to 50 cents, with the exception of the front month contract, which gained 22 cents. Box beef prices were lower, choice was down a buck 99 at 384.19, and select was down 387 at 383.33.

SPEAKER_01 14:38

Outside markets pretty quiet this morning. The SP's off 33 points, it's about uh four tenths of a percentage point. The Dow's off 340. I think they posted some, I don't know if it was all time highs yesterday, but pretty damn close. Bonds are off just a little bit, treasury's off a little bit, crude oil is up a dollar forty five in the June WTI 94.44, still kind of in consolidation mode. Have a great day, guys. We'll be back on Friday.