Evening Report (VIP) -- November 15, 2013

November 15, 2013 08:55 AM

EPA PROPOSES CUTTING 2014 RFS TO 15.21 BILLION GALLONS... The U.S. Environmental Protection Agency today proposed cutting the Renewable Fuels Standard target to 15.21 billion gallons. This aligns with the proposed cuts of an EPA document leaked in October and it compares to the 2007 RFS proposed a target of 18.15 billion gallons and the 2013 standards requiring 16.55 billion gallons of renewable fuels be blended in the U.S. fuel supply.

The agency did not propose specific volume for ethanol made from corn, but the proposed change in advance biofuels implies a reduction in the corn-based mandate to around 13 billion gallons, which is also near levels in the leaked document. This would be down from the 14.4 billion gallons spelled out in law and the 13.8 billion gallon level in place for 2013.

The proposal includes a variety of approaches relative to setting the 2014 standards and includes a number of production and consumption ranges relative to the individual categories of biofuel within the RFS program. EPA is seeking comment on the following volume proposals:

Category Proposed Volume* Range
Cellulosic Biofuel 17 million gallons 8-30 million gallons
Biomass-based diesel 1.28 billion gallons 1.28 billion gallons
Advanced biofuel 2.2 billion gallons 2.0-2.51 billion gallons
Renewable Fuel 15.21 billion gallons 15.00-15.52 billion gallons
* All volumes are ethanol-equivalent, except for biomass-based diesel, which is actual.

EPA is also seeking comment on petitions for this waiver of the RFS. EPA expects that a determination on the substance of the petitions will be issued at the same time that EPA issues a final rule establishing the 2014 RFS. Once the proposal is published in the Federal Register, it will be open to a 60-day public comment period. Once this occurs, it can be found here. Get more details.

NOPA CRUSH HIGHER THAN EXPECTED... NOPA reports soybean crush totaled 157.063 million bu. in October, which came in around 3 million bu. above traders' expectations. This is the first time in five months that crush has posted a month-over-month increase. Meanwhile, soyoil stocks of 1.356 billion lbs. came in below expectations of nearly 1.5 billion pounds.

INFORMA TRIMS 2014 CORN, BEAN PLANTED ACREAGE PROJECTIONS... Informa Economics reportedly trimmed its 2014 corn planted acreage projection by 154,000 acres to 91.546 million acres. It also reportedly pared its soybean planted acreage forecast for the year ahead by 86,000 acres to 83.814 million acres. The firm raised its all wheat planted acreage estimate to 58.105 million, which compares to its previous guess of 57.7 million. Informa reportedly expects winter wheat planted acreage of 43.106 million acres.

FY 2013 AG EXPORTS HIT RECORD HIGH... Agriculture exports for Fiscal Year (FY) 2013 hit a new record-high of $140.9 billion, USDA announced today. This compares to FY 2012 exports of $135.8 billion. The previous record high was $137.4 billion in FY 2011. The 2009 to 2013 period also "stands as the strongest five-year period for agriculture exports in our nation's history," according to USDA Secretary Tom Vilsack's announcement. "In fact, compared to the previous five-year period from 2004-2008, U.S. agricultural exports from 2009-2013 increased by a total of more than $230 billion and the average volume of bulk commodities exported increased by nearly four million tons per year during that same period," he continued.

ST. LOUIS FED: SURVEY SHOWS DROP IN AVERAGE FARMLAND VALUES, RENTS... Farmland values and cash rents declined in the third quarter of 2013 from the previous quarter, according to the Federal Reserve Bank of St. Louis's Agriculture Finance Monitor report. The survey behind the report found an average value for quality farmland of $5,332 per acre for the third quarter, which is a 6% decline from the second quarter. But this figure is still up 9.1% from year-ago. Cash rent for quality farmland in the district averaged $181 per acre for the third quarter, compared to $183 per acre during the second quarter. The survey also found farm income rose slightly for the St. Louis district. However, the St. Louis Federal Reserve cautions that responses to the survey were small, signaling a higher margin of error with the data.

FSA REMINDS OF 7.2% CUT FOR FY 2014 PROGRAMS... USDA's Farm Service Agency today reminded farmers and ranchers who take part in FSA programs to plan accordingly relative to the automatic spending reductions (sequester) for Fiscal Year (FY) 2014. Mandatory programs will be subject to a 7.2% cut in FY 2014. This includes the following programs:

  • Dairy Indemnity Payment Program; Marketing Assistance Loans
  • Loan Deficiency Payments
  • Sugar Loans
  • Noninsured Crop Disaster Assistance Program
  • Tobacco Transition Payment Program
  • 2013 Direct and Counter-Cyclical Payments
  • 2013 Average Crop Revenue Election Program
  • 2011 and 2012 Supplemental Revenue Assistance Program
  • Storage, handling; and Economic Adjustment Assistance for Upland Cotton


FSA also noted that Conservation Reserve Program (CRP) payments are specifically exempt by statute from sequestration.

FSA Administrator Juan M. Garcia did, however, note that Congress may adjust the exact budget percentage reduction. He also noted that FSA doesn't have flexibility to cover payment reductions like it did in 2013 due to the expiration of the farm bill.

HAVE HARVEST LOWS BEEN POSTED?... Traders in the corn and soybean market have turned their attention from the supply-side to focus more on demand. While it appears soybean futures have posted a harvest low, the corn market still hasn’t convinced Pro Farmer editors a harvest low has been posted. Pro Farmer Editor Chip Flory and Digital Managing Editor Julianne Johnston discuss recent price action in this week's Profit Briefing segment on AgDay TV. Click here.

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