Afternoon Soybeans: A roller coaster of a day.
The soybean market had a roller coaster day that ended with November futures settling 8 ¾ higher.
There were no 8 am export sales announced this morning but the price action in beans acted like there is business around, as rumored, with flat price and the bull spreads showing some resiliency. The cash markets show signs of export demand, CIF bids at the Gulf firmed by a nickel today to +75. There were even some firmer processor bids around for a change as physical supply runs tight ahead of harvest. Cargill's Sidney, OH crush facility bumped its quick ship bid by 40 cents to +40x through the end of the week.
In the product trade, soybean oil was able to build on yesterday's reversal trade with gains of 1.06 or 1.9% while meal finished unchanged on the other side of the oil share spreading. Board crush margins gained 3 cents and appear to have stabilized over the past week in the 85-90 cent/bushel range. Veg oil strength was a feature today with canola gaining $6.8 or .79% and Malaysian palm oil closed 139 ringgit or 3.3% higher as exports month to date are seen up by 36.7% according to SGS. The discount of palm oil to bean oil has narrowed to $150/mt after widening out to $600/mt in May. There was additional support from the energy side with strength in the crude oil market that is quietly trade back to within $1.50 of contract highs.
Just before 10 am, we had yet another biofuel mandate headline that disrupted the market and temporarily erased the day's gains in bean oil and beans. Reuters put out a story citing documents that show the US EPA is considering lowering the US biofuel blending requirements for 2020, 2021, and 2022. The report said the US EPA did not respond with comments however Biden admin officials say the numbers were not final and could be revised before final release.
The details of the proposed changes were reported after the initial 'splashy headline'. The EPA could potentially reduce the mandates for 2020 and 2021 to about 17.1 billion gallons and about 18.6 billion gallons from the 20.1 billion gallons that was finalized for 2020 before the coronavirus pandemic. However, the agency also would set the level for 2022 at about 20.8 billion gallons.
As the markets digested this piecemeal reporting, they came to the conclusion that 1) this is not exactly new news as we've had multiple mandate challenges in the news in recent months and 2) with 2021 nearly ¾ over the reduced mandate this year is not a game changer, particularly when factoring in the increased mandate level for 2022. Bean oil and beans recovered and traded into new highs for the session the second half of the day. The indebted oil refiners no doubt were ready to scoop up discounted RINs that broke on this news.
Looking ahead tomorrow we'll have weekly export sales in the morning,
Elsewhere in the news, Egypts GASC paid $1,288/mt cf for 12,000 mt of Sunflower Oil at today's tender. The vegoil is for delivery in FH December. GASC last purchased 19,000 mt of Sunflower Oil on Sept 2nd, at that time paying $1240.00/mt cf. No purchase was made today in the tender for 30,000 mt of Soyoil.
Brazil's ANEC sees soybean exports in September reaching 5.041 mmt vs. 4.833 mmt forecast last week.
US Gulf up 1 to +71
Brazil Paranagua off 5 to +225x
Cedar Rapids, IA steady -20x
Mankato, MN steady -30x
Decatur, IL steady -10x
Claypool, IN steady -5x
Columbus, OH steady -10x
Davenport, IA steady -54x
Morris, IL off 1 to -42x