StatsCan shows 8% YoY reduction in canola acres; mild drop in wheat
- On Tuesday, Statistics Canada, StatsCan, released their farmer based survey of planted acres for the 2019/20 crop year.
- The estimates showed that Canadian canola plantings fell to 21 million acres, down from their plans for 21.3 million as of April and off 8% from last year.
- The contraction of canola acres is the lowest in three years.
- StatsCan estimates the all-wheat acres at 24.6 MA, down slightly from last year's 24.7 MA and below the average trade expectation of 25.7 MA.
- Canadian spring wheat acres rose 8.4% YoY to 18.8 MA.
- Canadian durum acres declined by 21% YoY to 4.9 MA.
- What It Means For The US Farmer: At FBN we believe that the acres restructuring away from canola and into wheat is not a surprise and can be mixed for the U.S. producer. We believe that expanding wheat acres can be a negative for the U.S. wheat producer and possibly a positive for the northern oil seed producer.
U.S. Senators Urge EPA To Maintain Biofuel Waivers
- Citing potential job losses and a potential spike in gasoline and diesel prices, nine U.S. senators urged the Environmental Protection Agency (EPA) to disregard a request to stop issuing production waivers to oil refiners on requirements to blend biofuels into motor fuels.
- Refiner waivers are outlined in the U.S. biofuels law, the Renewable Fuel Standard (RFS), was designed to help American farmers by requiring oil refiners to blend certain volumes of biofuels, such as corn-based ethanol, into their fuel each year or purchase credits from those that do.
- Small refineries with a production capacity of 75,000 barrels per day or less can secure waivers if they prove that compliance with the RFS’s blending requirements would cause financial harm.
- Recently there has been some concern that the EPA and the Department of Energy have been too flexible on issuing the production waivers.
- Issuing production waivers can suppress aggregate demand for ethanol and other biofuels.
- CME listed ethanol futures have climbed by 21% since their low on May 13.
- What It Means For The US Farmer: At FBN we believe that the production waivers of advanced biofuel blending is a thorny topic for many. The downside of issuing the production, or blending, waivers is that it can reduce the demand for ethanol which has the ability to impact local corn basis which can be a negative for the U.S. corn producer.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)