EPA announces RVO mandates.

The grain trade overnight worked lower, with soybeans dropping on the collapse of soybean oil as EPA did make their announcement yesterday afternoon for RVO mandates through 2025. The EPA maintained 2023 RVOs as expected, slightly higher than the current year, but the 2024 and 2025 RVOs were raised slightly more than expected. BPA set corn ethanol RVO’s at 15 Bil gallons for 2023, 15.25 bill for 2024 and 2025. The 85 Mil Bu of corn needed to produce extra ethanol in 2024-2025 calendar years was considered disappointing, and the proposal shows the US corn ethanol industry is reaching a mature stage.

Soybeans declined overnight as it was also noted that China bought 6-7 cargoes of Argentine soybeans for export in late December/January, with Argentine farmers already having sold 1.2 MMTs of beans over the past three days on the renewed dollars soybean program. These Chinese purchases of Argentine soybeans reduce China’s need for US beans which are at a higher price in the same time frame. Brazilian bean offers are $0.40/Bu cheaper than US Gulf for February, $0.80 cheaper in March, and a whopping dollar/Bu cheaper in April. Chinese interest in US soybeans will go exclusively to South America in 30 days.

Both weather models agree in South America on the forecast showing favorable weather for Brazilian crops while Argentina maintains a struggle for rain. Some rain has fallen the past 36 hours, but a much more regular pattern is needed for trendline yields. Argentina’s dry weather is forecasted for 5-6 days with intermittent heat. The hottest days are December 5-seven with highs and lower 90s. Rain chances are due to improve on the 10-15 day models and will need to verify as they get closer. Southern crop areas in Brazil do show a return of rain in their areas today.

Live cattle and feeder cattle futures pushed higher to sharply higher yesterday, with a firm outlook expected for this morning’s opening. February cattle were able to drive to a new high for the week, while spot January feeder cattle were able to close back over 180.00 again. Cash trade was then in the South with steady sales at $155 elsewhere, packer bids were quoted steady with asking prices in the South $1-3 higher at $156-158. Cattle slaughter this week has climbed to 384,000 head, down 2000 from last week and 15,000 head from a year ago. Box beef values were slightly mixed with the choice cutout gaining $0.14 and select down $0.81. Cattle trends on futures start to turn better into the new year seasonally.