December 13

12/13 - Last week, the EPA proposed lowering ethanol blending mandates retroactively for 2020 & 2021, to better match decreased fuel usage, but to increase quotas for 2022. EPA’s proposal also increases biofuel blending to 2.76B gallons, up 14% from 2019/2020 levels. Renewable diesel production is forecast to jump from 60M gallons in 2020 to 5.1B gallons in 2024, consuming 65-75% of total U.S. soy-oil production. In Thursday’s WASDE, the USDA said that soy-oil for biofuel usage will increase by 24.3%, from 8.85B pounds in 2020/21 to 11.00B in 2021/22, representing 43.1% of all U.S. soy-oil output. After averaging just over $.30/lb for the past 3 years (2018-2020), soy-oil futures hit record highs of $.72 in June – but have dropped back to an 8-month low of $.5359/lb (12/10). Buyers should consider taking at least some forward coverage at current levels.