Author - jwasilewski

EPA Grants RFS Waivers on Eve of Inauguration

In the Trump Administration’s final hours, the EPA granted two small refinery exemptions to the Renewable Fuels Standard (RFS) and appears to have reversed a previous denial. EPA does not release information on who has received the waivers, but the Renewable Fuels Association (RFA) notes the two waivers granted for 2019 amount to a loss of 150 million gallons of biofuel demand. The RFA also notes that the EPA website indicates a previously denied 2018 waiver request was reversed, resulting in an additional loss of 110 million gallons of biofuel demand. The RFA immediately threatened to challenge the waivers in court. “This midnight-hour attempt by the Trump administration to damage the Renewable Fuel Standard and sabotage the ethanol industry’s recovery from the COVID pandemic simply cannot be allowed to prevail,” RFA CEO Geoff Cooper said in a statement. “With just hours remaining in his shameful term as EPA Administrator, Andrew Wheeler couldn’t stop himself from doling out a few more Clean Air Act compliance exemptions to his well-connected friends. But the fact remains that today’s action by EPA is completely without legal merit. It flouts both the statute and recent court decisions that clearly limit EPA’s authority and ability to grant these exemptions. And while this action comes as one last sucker punch from the Trump administration, we are confident it will be a hollow victory for the politically connected oil companies receiving today’s waivers, as the new Biden Administration will most certainly act quickly to restore the volumes erased by these waivers.” Biofuel organization Growth Energy notes these latest waivers bring the total number of Small Refinery Exemptions (SREs) granted by the Trump Administration to 88, representing 4.3 billion gallons of biofuel demand. “Farm families and biofuel workers across the country have worked tirelessly to make a living over the past few months despite a global pandemic. And yet, the Trump Administration’s SRE abuse has piled on to the uncertainty and difficulty that rural Americans are facing every day,” added Growth Energy CEO Emily Skor in a press release.  “Given President-elect Biden’s commitments on the campaign trail, we‘re confident his incoming team will swiftly work to reverse the damage these oil handouts have done to rural America by this midnight maneuvering.” Outgoing EPA Administrator Andrew Wheeler had earlier indicated he would wait until the Supreme Court had reviewed a suit over the waivers before making a determination on the outstanding 2019 and 2020 waiver requests.  The court is set to review a 10th Circuit ruling that the waivers were meant to be extension, so refiners could not be granted a waiver to the blending requirements of the RFS if they had not been granted a waiver every year since it was implemented in 2010. “It shouldn’t be a surprise to those who have been paying attention for the last four years that this EPA would undermine corn farmers and the ethanol market on its way out the door. There is no reason for the EPA to take this action now, especially with the Supreme Court set to consider the Tenth Circuit ruling in the new term,” said National Corn Growers Association President John Linder. “Corn farmers need an EPA that will follow the law as written and intended by Congress. NCGA looks forward to working with the Biden Administration to rectify the harm caused by this EPA’s abuse of small refinery exemptions and restore the integrity of the Renewable Fuel Standard.” The EPA website indicates there are still 30 outstanding SRE applications for 2019 and 15 pending applications for 2020.
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USDA Cut Ethanol Demand; USDA Chief Economist Explains Why

Ethanol demand continues to be a question in the new year. As COVID-19 cases continue to rise in the country, some states are still seeing restrictions, which is impacting the number of people on the road. At the same time, ethanol stocks rose to an 8-month high earlier this month. Just how much of a reduction ethanol demand will see in 2021 is still unknown. In the latest World Agricultural Supply and Demand Estimates (WASDE) report, USDA showed corn used for ethanol would be lower this year. The agency said it was based on data through November from the Grain Crushings report, as well as weekly ethanol production data from the Energy Information Administration (EIA). The new USDA Chief Economist Seth Meyer was a guest on U.S. Farm Report and explained USDA’s decision to cut ethanol demand.   “We're looking at corn grind, and we're looking at an ethanol production from EIA, and feel like that number that we have in there [WASDE] is pretty in line with what we're seeing with regard to both the Energy Outlook and where we've seen with grind,” says Meyer. “Folks bring up an issue of how demand and the balance sheet were changed. Well, you're provided with essentially 400 million bushels less supply, and you know, that will ration demand.” Meyer says based on lower supply and the probability of higher prices eating into demand, USDA made other key adjustments in the balance sheet, including 100 million bushels reduction to exports. “You may have to make some adjustments to exports, you take a little bit of it out of stocks, and then you say, what does ethanol look like in regard to corn grind?It may be somewhat less sensitive in terms of its overall demand and other things given underlying policy,” adds Meyer. “So, you're looking at a position coming out of this, where you've got prices back to rationing demand a little bit. Each one of those lines of demand is carefully thought out, in terms of where we're at with that 400-million-bushel smaller supply from the WASDE.”        
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Tyson Foods Agrees To Settle In Poultry Price-Fixing Lawsuit

Tyson Foods Inc. has agreed to settle a portion of a class action lawsuit alleging some of the nation’s major poultry companies conspired to fix broiler prices and rig bids. Tyson did not disclose the amount of the settlement in a court filing, but said the agreement is not an admission of the merits of the claims. “Tyson Foods has reached an agreement in principle to settle a class action lawsuit alleging price fixing filed against Tyson and other poultry companies by entities representing direct purchasers of broiler chicken products,” the company said in a statement emailed to Drovers. “Tyson believes the resolution is in the best interests of the company and its shareholders and the settlement does not constitute an admission of liability. This settlement is subject to approval by the U.S. District Court for the Northern District of Illinois. A joint notice of settlement was filed by the direct purchaser plaintiffs Monday, January 11, as a first step in the court approval process.” The agreement was filed the same day that Pilgrim’s Pride Corp. announced it plans to pay $75 million to settle its part in the same lawsuit. Last year the U.S. Department of Justice filed criminal price-fixing and bid-rigging charges against 10 poultry-industry executives. The defendants have pleaded not guilty. Other price-fixing allegations have been made in lawsuits involving the beef and pork processing industries. Nearly 20 processors and affiliated companies were accused of price manipulation in the federal suit filed by such companies as restaurant chains, supermarkets and food distributors.
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Traders Mull USDA Estimates

Average estimates for next Tuesday's important USDA reports have U.S. corn ending stocks at 1.599 billion bushels, soybeans 0.139 bb, and wheat 0.859 bb. All three would represent a decrease from last month's data. Quarterly Grain Stocks is expected to show corn stocks of 11.951 billion bushels as of December 1, soybeans 2.920 bb, and wheat 1.695 bb. All Winter wheat is expected to be reported at 31.528 million acres, consisting of 22.140 Hard Red, 5.884 Soft Red, and 3.514 million acres of white wheat. All three of the above mentioned reports will be released on Tuesday at 11:00 AM CST. Weekly export sales had corn sales of 748,910 metric tonnes reported, within the 500,000 – 1,000,000 trade expectation. Soybean sales were reported at 116,764 tonnes (36,964 for 2020/21 and 79,800 for 2021/22), below the 200,000 – 700,000 expectation. Wheat export sales of 281,313 tonnes were noted, 275,313 for current crop. That was within the 200,000 – 600,000 trade expectation. Argentina's government said on Thursday it would review a decision to temporarily suspend corn exports after a meeting between the farming minister and the leaders of the country's main agricultural associations. (Reuters) The Buenos Aires Grains Exchange raised their estimate of Argentina's wheat harvest from 16.8 million tonnes to now 17.0. USDA's most recent estimate was 18.0. Through the most recent week of reportable trade (through January 5th), managed money funds were estimated to be buyers of 50,000 corn contracts, 55,000 soybean contracts, and 33,500 wheat contracts. The actual data will be released today at 2:30 in the weekly CFTC Commitments of Traders report. Steer weights fell 8 lbs. in this specific week to 913 lbs. Heifers were down by 8 also in just this one week. That dropped weights from +1.9% year/year to +0.9% for steers. Heifers fell from +1.6% to +0.2%. Weekly beef export sales ran -1,228 for the expired old crop, normal for the last week of the year, and only 9,003 tonnes for new. Pork export sales showed -8,593 for the expired 2020 and 23,268 for 2021. Hog weights from two weeks ago fell 1 lb. to 215 lbs. This dropped weights from +1.9% to +0.9%. Dressed beef values were higher with choice up 0.54 and select up 0.51. The Feeder cattle index is 135.35. Pork cut-out values were up 2.17.  
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NCBA’s Lane Discusses Relief Payments, Transition In D.C.

The COVID-19 pandemic hit cattlemen – like all of agriculture – hard. Ethan Lane, vice president of governmental affairs for the National Cattlemen’s Beef Association (NCBA) says the group has been pleased with the financial relief provide to cattlemen through the Coronavirus Financial Assistance Program (CFAP). Speaking to AgriTalk host Chip Flory on Tuesday, Lane said, “for not having played this game before, I think we’ve been relatively pleased with the results.” The CFAP program paid cattlemen more than $4 billion in the first round of relief, and almost $2.8 billion through CFAP2. “It’s not something we wanted to do, but boy it’s been a lifeline for many producers,” Lane said. Lane noted that producers were paid $200-plus per head for cattle they owned prior to April 15, 2020, which “could have been a game-changer” for some. Lane also said NCBA is working to clarify what producers need to do to be eligible for an upcoming package of financial relief that will pay on the April 16 to May 14, 2020, window. Cutting CFAP off at April 15 was detrimental to many stocker and backgrounding operators, and Lane said the next package helps with producers who incurred losses in the weeks following the April 15 cutoff. The presidential transition occurring this month will also create turnover in the agencies, and “USDA is going to have to juggle that transition,” Lane said. “But we do know there are resources left. So we hope that USDA follows through on Congressional intent and pushes those resources out to the country.” Lane is optimistic the Biden administration will work with cattle producers. He expects the new administration will be “more focused on issues like climate change, but they also recognize the importance grazing plays in being a solution to climate change, which is music to our ears.” Lane also acknowledged there will be some difference in perspective on land use and private land rights, “age old clashes that we’ve been working on” for years. The beef industry is “a massive industry that has a tremendous impact and employs a lot of people. And we need to help (the Biden administration) understand how we can fit into that equation. And I think they are open to having that conversation.” Regarding the presumptive new director at the EPA, Michael Reagan, Lane said many of the cattlemen that have worked with him previously have been outspoken about the fact he is willing to work with cattlemen. We’re going to engage with him and see where he wants to take EPA and some of those rulemakings that have been so pivotal over the last few years.”
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Court Rejects Meat Institute’s Prop 12 Appeal

The North American Meat Institute’s challenge to California’s Proposition 12 has been rejected for a second time. The U.S. Court of Appeals for the Ninth Circuit rejected the Meat Institute’s challenge to California’s 2018 ballot initiative that imposes new standards for animal housing. The Court’s Dec. 23 decision confirms an initial decision in October. After the October decision, the Meat Institute appealed for the challenge to be heard by the full panel of judges, but the panel “unanimously voted to deny appellant’s petition for panel rehearing.” California voters approved the Prevention of Cruelty to Farm Animals Act with 63% of the vote. The law creates minimum requirements to provide more space for veal calves, breeding pigs, and egg-laying hens. By 2020, the law requires farmers to give egg-laying hens at least one foot of floor space, and to completely eliminate cages by 2022. Farmers must now give veal calves 43 square feet and sows 24 feet of space. Challenges by the Meat Institute and others, however, centered around the fact the law applies to out-of-state producers of meat and eggs who want to sell products in California. Both the federal Department of Justice and 20 states joined the Meat Institute’s challenge, arguing the law will contribute to higher food prices for consumers. “Prop 12 is unconstitutional and not only hurts consumers with higher prices for pork, veal and eggs, it is costly for the federal government’s programs designed to help those facing hunger, including the Emergency Food Assistance Program and the Supplemental Nutrition Assistance Program,” said the Meat Institute’s President/CEO Julie Anna Potts.
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Tyson Reports “Misappropriation” Of Funds By Beef Supplier

Tyson Foods filed corrected financial results on Monday with the Securities and Exchange Commission for its beef segment for fiscal years 2017 through 2020. The report to the SEC – in Form 8-K – specifies that Tyson is reporting “misappropriation of company funds” by one of its beef suppliers. An internal review of the supplier’s accounts is underway, Tyson said, with assistance of outside advisors. That review determined the supplier made “misrepresentations regarding the number of cattle the supplier purchased on behalf of the company’s beef segment.” Tyson said in the Form 8-K that its live cattle inventory for the year-end fiscal 2020, for instance, was overstated by $285 million, and that the cumulative four-year inventory was overstated by $645 million. However, Tyson’s investigations indicate the resulting losses on their books is isolated to one cattle supplier who represented about 2% of the cattle supplied to Tyson each year from 2017 to 2020. Further, Tyson stated in the Form 8-K the losses do not have a material impact on Tyson’s financial results for the years examined. The internal review is ongoing. Tyson also said in the filing its investigation found “no evidence that the company benefitted from the supplier’s unlawful conduct or that anyone at the company took steps to alter financial statements to hide the transactions resulting from the supplier’s unlawful acts.” Tyson also expects to pursue restitution for losses to date. "The Company anticipates that, despite the corrections to previously issued financial statements, general trends in growth and operating profit metrics will remain unaltered, operating cash flow will be largely unaffected, liquidity will not change and the Company will remain in compliance with all debt covenants," it said. Tyson’s independent registered public accounting firm is PricewaterhouseCoopers LLP. As a publicly traded company, Tyson is required to make quarterly earnings reports to the Securities and Exchange Commission.
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Milk Markets Dive as Milk Production Increases 3% Over 2019

Thursday’s milk market moved sharply lower. Speculations continue on what is included in the Covid-19 aid bill being negotiated in Washington. We also got the USDA Milk Production report for November. Price has encouraged dairyman to produce milk and we see it in numbers from November. In November, 12,000 cows were added to the herd and October was adjusted 5,000 head higher, for a net increase of 17,000 head to the U.S. dairy herd. Milk production grew 3% over 2019, the largest increase year over year since 2014. Class III milk anticipated these bearish tones all day. December fell 14 to $15.63, January fell 49 to $15.64, and February fell 67 cents to $16.53/cwt. The balance of 2021 was 4-36 cents lower. Class IV saw small gains in a few months. Dec and January held unchanged at $13.42, and $13.91. February gained 7 cents to $14.32/cwt.   The CME spot trade was mixed though. Butter was unchanged at $1.45 ¼, Cheddar blocks unchanged at $1.65/lb, and Barrels fell 2 ¼ cents to 1.43 1/2/lb. Grade A Non-Fat Dry Milk gained a quarter of a cent to $1.15 ¼, withy Dry Whey falling ¾ of a cent to $0.45 3/4/lb. Grain markets witnessed our first close for soybeans over $12. January beans finished at $12.01 ¼, Corn at $4.32 ½, and soybean meal sitting at $397.90/ton.
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Flush with Cash, Chinese Hog Producer Builds World’s Largest Pig Farm

Behind the walls of a hulking industrial compound in rural China, top pig producer Muyuan Foods is trying to raise more hogs on a single site than any company in the world - a risky investment with deadly African swine fever lingering. The new farm, which began construction in March and started operations at the first of its 21 buildings in September, epitomises the breakneck pace at which huge, industrialised hog breeding facilities are replacing small, traditional farms, many of which were wiped out by the worst animal disease outbreak in recent history. The shift, under way for years, has accelerated sharply, fueled by huge profits at corporate producers since African swine fever ravaged the country's herd and sent pig prices soaring to double the previous record. Corporate farms weren't spared by the epidemic, but as prices jumped, they quickly recouped their losses. Muyuan's profits grew 1,413% in the first nine months of 2020 to 21 billion yuan  ($3.21 billion). "We have hit a very favourable period for development. Pig prices are very high, our profits are really good, and cash flow is really ample," Qin Jun, Muyuan's vice general manager, told Reuters at the company's headquarters in Nanyang city in central China. In the race to take share, companies like Muyuan are designing higher-density automated farms, betting they can keep disease out while increasing efficiency to satisfy the country's huge appetite for pork. Muyuan's new mega farm near Nanyang, which will eventually house 84,000 sows and their offspring, is by far the largest in the world, roughly 10 times the size of a typical breeding facility in the United States. It aims to produce around 2.1 million pigs a year. If it works as planned - and other producers follow suit - the world's top pork consumer could reduce purchases from the global market, upending a booming meat trade that has supported farmers across the world.
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Wheat Acres To Expand For First Time In 8 Years

Farmers will be planting more total wheat acres for 2021, thanks to stronger demand, higher grain prices and good weather conditions. USDA predicts 46 million total acres of wheat will be planted—a 1.7-million-acre increase over the 44.3 million acres of wheat planted in 2020. The increase marks the first expansion of U.S. wheat acres in the past eight years. Winter wheat is the first cash crop that farmers have planted since the agricultural commodity price rally began in late summer. However, the U.S. government will not release a farmer survey specifically on winter wheat plantings until January, reports a Reuters article posted earlier this month. Reuters reports that private analytics firm IHS Markit Agribusiness forecast U.S. winter wheat plantings at 31.5 million acres, up 3.6% from the 30.4 million acres seeded a year ago.
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