Milling & Baking News - May 16, 2023 - 24

TUES | 05 16 202 3
prices to shift given diminishing stocks,
which tend to peak in late April, just
ahead of a seasonal ramp up in demand.
" I think the lows are in for the summer
period, " Mr. Harris said.
In the last week of April, soy oil futures
sank to a near two-year low of 50.78¢ a lb,
dragged down by dwindling export opportunities
due to Brazil's mammoth soybean
crop. Ebbing demand from the renewable
diesel sector also added pressure as biofuel
companies leaned into their preference
for other more competitively priced feedstocks
like canola, corn and used cooking
oils. But Mr. Harris said the trade was
noticing stable to upward movement in
soybean oil markets in recent days.
" Basis numbers are on the rise now in
recognition of bigger demand expected
through the summer period for both
renewable diesel biomass and food use, so
it's hard to imagine that oil would need to
go back and retest 50¢ without some kind
of black swan event. "
Predicting a black swan event is definitionally
difficult, but one potentially
volatile issue, specifically for
domestic oilseed markets,
was the forthcoming ruling
from the Environmental
Protection Agency on the
new blending requirements
for the Renewable Fuel Standard
(RFS) program.
The Energy Policy Act
" If the actual RFS numbers
end up higher than what they
showed us in November, then
of 2005 created the RFS
program, which is implemented
by the EPA and
requires a certain volume
of renewable fuels to
replace petroleum-based
fuels. Each year, the EPA
is required to evaluate
renewable fuel usage and adjust RFS volume
requirements. Since the program's
inception, the volume requirements
have risen every year, except in its most
recent update in November 2022, when
the agency stunned the industry by lowall
of a sudden your 50¢ market
looks like a base floor of 60¢
real quick. "
- Brian Harris,
Global Risk Management
Mr. Harris said. " If the actual RFS numbers
end up higher than what they showed us
in November, then all of a sudden your 50¢
market looks like a base floor of 60¢ real
quick. "
The final ruling from the EPA with the
ering the RFS mandate.
" The original numbers we got in November
of last year were very disappointing, "
NEARBY SOYBEAN OIL FUTURE
80
70
May 10, 2023 = 51.85¢
60
50
June 8, 2022 = 76.56¢
updated requirements is expected to be
released on June 14.
The tenuous Black Sea corridor agreement
between Ukraine and Russia, which
will expire May 18, also was a factor for
global oilseed markets. Both countries are
top producers and exporters of sunflowerseed
oil, the world's fourth-most consumed
vegetable oil. Given the ramped-up
saber-rattling rhetoric and militaristic
activities, a renewal of the UN-brokered
agreement was not expected.
LARGE US CORN CROP EXPECTED
It will be another six weeks (the USDA
M Juneay
2022
Source: CME Group
July Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
2023
Feb.
March
April May
JULY SOYBEAN FUTURE
$12.80
$13.60
$14.40
$15.20
$16.00
June 8, 2022 = $15.59½
June 30 Acreage report) before the trade
knows how many acres were planted to
corn in 2023, and more than a month after
that until the first production estimate for
the year is issued (Aug. 11 Crop Production
report). Until confirmation, a much larger
crop than in 2022 is expected. The groundwork
was laid in the March 31 USDA
Prospective Plantings report that showed
farmers intended to plant about 92 million
acres to corn in 2023, up 3.7% from 2022.
Since March 31, July (old crop) and December
(new crop) corn futures have declined
about 6%. In comparison, July and November
soybean futures were down about 3%.
" There's a lot of price premium out of
M Juneay
2022
Source: CME Group
July Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
2023
Feb.
May 10, 2023 = $14.04
March
April May
the market already, " said Daniel Basse,
president of AgResource Co.
December corn futures that were trading
in the range of $5.20 to $5.30 a bu in
early May could drop to the $4.75 to $5 a
24 MILLING & BAKING NEWS
bakingbusiness.com
per bu
cents per lb
http://www.bakingbusiness.com
Milling & Baking News - May 16, 2023

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