EPA Denies Biofuel Waivers, Offers Alternative Relief

The Environmental Protection Agency denied 36 petitions from oil refiners seeking exemptions from the national biofuel blending laws for the compliance year 2018. However, the agency said last week that it will provide 31 of the refineries with another avenue to get relief. A 2020 court decision narrowed the criteria for exemptions under the Renewable Fuel Standard’s blending quotas, and the EPA says the denial follows the law and recent court decisions. The agency added that the alternative relief it plans to grant to 31 of the refineries will allow them to meet their 2018 compliance requirements without having to purchase blending credits. The EPA says that decision comes from the “extenuating circumstances,” including the fact that the plants had already been granted waivers. Reuters says the agency is taking this approach because the amount of renewable fuel used in 2018 will be unchanged regardless of any action refiners take now.

Biofuel, Ag Groups Respond To EPA Refinery Exemption Decisions

Top farm and biofuel groups reacted to the Environmental Protection Agency’s decision to reverse 31 controversial small refinery exemptions granted in August 2019. They’re disappointed that the agency is allowing the refineries with previously-granted SREs to not have to take additional steps to meet obligations under the RFS. Groups like Growth Energy, the Renewable Fuels Association, National Corn Growers Association, and others say the denial is an important step in reversing past refinery exemption abuses. “However, the decision fails to remedy the economic harms that the improperly granted 2018 SREs have already caused,” the groups say in their statement. “The agency’s readiness to excuse individual refineries from their obligations to comply with the 2018 blending requirements comes at the expense of our biofuel producers, farmers, and American consumers.” The groups say that low-carbon biofuels are the single best tool to deliver immediate relief at the pump, strengthen U.S. energy security, and protect the climate.

USDA Releases April WASDE Report

The USDA’s April World Ag Supply and Demand Estimates report says the Russian military action in Ukraine significantly increased the uncertainty of global supply and demand conditions. The corn outlook is for offsetting changes to feed and residual use and corn used for ethanol production. Corn ending stocks are unchanged at 1.44 billion bushels, and the season-average farm price rose 15 cents to $5.80 a bushel. U.S. soybean supply and use changes for 2021-2022 include increased exports and seed use and lower ending stocks. Soybean ending stocks are projected at 260 million bushels, down 25 million due to a corresponding 25 million bushel increase in exports. The season-average soybean price is unchanged at $13.25 per bushel. The wheat outlook calls for stable supplies, lower domestic use, reduced exports, and higher ending stocks. Exports were lowered by 15 million bushels to the lowest export numbers since 2015-2016. The season-average farm price rose 10 cents to $7.60 a bushel.

Surface Transportation Board to Deal with Rail Issues

The Surface Transportation Board says it will hold public hearings on April 26 and 27 on recent rail service problems and recovery efforts involving several Class One carriers. The Board plans to direct several executive-level officials from many major railways to appear during the hearing. Rail network reliability is essential to the nation’s economy and is a big priority of the Board. Ag Secretary Tom Vilsack and other stakeholders have filed reports about the serious impact of the service trends on rail users, especially those who ship agricultural and energy products. “During my time on the Board, I’ve been concerned about the priority that Class One railroads have placed on cutting costs and satisfying shareholders even at the cost of consumers,” says Board Chair Martin Oberman. “That strategy has led to collectively reducing their workforce by 29 percent.” He also says the Board will ask the executives what they’ll do to fix the issues.

Chinese National Sentenced in Agricultural Espionage Conspiracy

A Chinese national formerly residing in Missouri was sentenced to 29 months in prison and a $150,000 fine for conspiring to commit economic espionage. Xiang (she-AHNG) Haitao pled guilty to the charge in January.  Court documents say Xiang conspired to steal a trade secret from the Climate Corporation, a subsidiary of Monsanto, to benefit a foreign government. “Xiang conspired to steal an important trade secret to gain an unfair advantage for himself and the Chinese government,” says Assistant Attorney General Matthew Olson of the Justice Department’s National Security Division. “The victim companies invested significant time and resources to develop this intellectual property.” Olsen also says espionage is a serious offense that can threaten U.S. companies’ competitive advantage. After leaving Monsanto, Xiang attempted to take Monsanto’s computer algorithm called the Nutrient Optimizer on an electronic device back to China. He was arrested and returned to the U.S. in November 2019.

Monday Watch List

Markets

Traders will return from the weekend, checking the latest weather forecasts and any news regarding Ukraine or Russia. At 10 a.m. CDT, USDA weekly grain export inspections will be released, followed by the second Crop Progress report of 2022 at 3 p.m. At 2 p.m., USDA's Historical Track Records of Crop Production will be available, an annual reference source.

Weather

Scattered showers and thunderstorms are developing along a weak system moving through the Midwest and Delta Monday. Some of these thunderstorms could be strong to severe from northeast Texas into the northern Delta. But the main story for the week is the storm system moving through the West that will bring blizzard conditions to the Northern Plains and multiple rounds of severe weather elsewhere, along with heavy rains. However, the southwestern Plains hard red winter wheat areas are looking to be bypassed yet again as soils continue to be very dry. Cold air following the system will slow down agricultural progress.

Global Beef Demand Continues to Soar

U.S. beef exports turned in another strong performance in February. USDA data compiled by the U.S. Meat Export Federation says the strong month for beef was led by excellent value growth in key Asian and Latin American markets. Beef exports hit 108,500 metric tons in February, five percent higher than last year. Beef’s export value rose 35 percent to over $904 million. “Broad-based growth has become a recurring theme for U.S. beef exports as international demand has never been higher and global supplies remain tight,” says USMEF President and CEO Dan Halstrom. Pork exports trended lower as larger shipments to Mexico and Japan didn’t offset a decline in Chinese and Hong Kong demand. February pork exports totaled 198,530 metric tons: 17 percent lower than a year ago. Pork export value fell 14 percent from last year to $541 million. USMEF says logistical challenges were compounded in February by lower-priced pork offered by competitors.