READ the NAFB’s National Ag News for Friday, July 7th

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READ the NAFB’s National Ag News for Friday, July 7th

RFS Pulls Back on Some Biofuels

The Environmental Protection Agency released its proposals on how much biofuels will go into the national fuel supply next year and it was a mixed bag. Politico’s Morning Agriculture Report says there were some pleasant surprises and some disappointments. Ethanol producers wanted the continuation of an Obama-era requirement of 15 billion gallons of ethanol in the nation’s fuel supply and that’s precisely what they got. Advanced biofuels didn’t fare as well. EPA Administrator Scott Pruitt cut the requirement for advanced biofuels by 40 million gallons, reducing the total amount of biofuel required under the program. Pruitt also cut the cellulosic ethanol mandate by almost a quarter. But the EPA chief didn’t stop there, starting down a path to possible significant changes to the guidelines. He’s starting an analysis for a possible reset of the volumes allowed under the law. He’s looking for comments on imported ethanol and biodiesel. Pruitt is also opening the door to examine the market with zero percent ethanol. Meantime, the EPA will accept comments on its current proposals until November 30th, analyze them, and come up with a final rule.

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Ag Groups React to RFS Volumes for 2018

Some advanced biofuels were cut when the Environmental Protection Agency released its proposed renewable fuels volumes for 2018. The American Soybean Association wasn’t pleased with the lack of growth proposed by the EPA in biomass-based diesel volumes as well as a reduction in advanced biofuels. A.S.A. President and Illinois farmer Ron Moore called it disappointing and a missed opportunity for the administration to demonstrate support for biodiesel and soybean farmers. “A.S.A. believes the volumes for the biomass-based diesel category and the over-arching advanced biofuels category should be higher to capitalize on the opportunity to boost domestic biodiesel production,” says Moore. The National Farmers Union was pleased that the conventional biofuels obligation remained consistent but said the overall proposal falls short of preserving the integrity of the RFS. “President Trump and his administration have assured family farmers and rural residents that this administration plans to support biofuels and uphold the intent of Congress as it relates to the RFS,” says NFU President Roger Johnson. “But today’s disappointing proposal seems to back off these assurances.” Iowa Senator Chuck Grassley called the lack of any biodiesel increase a “missed opportunity.”

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EU and Japan Finalize Trade Deal Framework

The European Union and Japan have formally agreed to the outline of a new free trade deal. It will eventually lead to an agreement allowing free trade between two of the world’s biggest economies. BBC Dot Com says there are few specific details available yet and a full and workable agreement may still take some time. The agreement is seen as a boon for the Japanese auto industry and agricultural products from the E.U. The outline was formally signed this week in Brussels. Donald Tusk, President of the European Council, says the agreement shows the E.U.’s commitment to world trade. “We did it,” he says. “We were able to conclude political and trade talks with Japan. E.U. is more and more engaged globally.” Japan is the third-largest economy in the world and Europe’s seventh biggest export market. European Union dairy farmers have struggled with dropping domestic demand at the same time that Japan’s appetite for milk and dairy products has grown in recent years. Even with a signed agreement in place, it will likely take up to 15 years before the agreement is fully in effect. The delay gives businesses in both areas time to adjust to increased outside competition.

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Optimism Returning to the Ag Producers Barometer

The Purdue/CME Group’s June survey shows producers are a little more optimistic about their financial position than they were last year. The shift is why the June index reading of 131 was unchanged from the May survey. The index has held steady for three straight months and remains well above the low levels of last November. The shift in producer expectations is a long-term trend. At this time last year, just three percent of the producers who responded felt their operation was better off financially than the previous year. That number jumped to 10 percent last fall, dropped a bit in winter, and rebounded to its current level of 13 percent, the highest reading since the survey began in 2015. The shift is likely based on several factors, including farm revenues, which increased after large yields in 2016. Production costs also dropped from the previous year, as did many farmland rental rates.

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Brazil Delays Decision on Ethanol Import Tariff

Brazil’s Chamber of Foreign Trade announced this week it would delay a decision to put an import tarrif of 17 percent on U.S. ethanol. U.S. Grains Council President and CEO Tom Sleight, Renewable Fuels President and CEO Bob Dineen, and Growth Energy CEO Emily Skor put out a joint statement on the decision this week. The groups were encouraged by the decision to postpone the tariff proposal. The release says, “Imposing tariffs on U.S. ethanol imports will hurt Brazilian consumers by driving up their costs at the pump. It also goes against Brazil’s own long-held view that ethanol tariffs are inappropriate and will harm the development of the global ethanol industry.” The groups added that they’ll continue to work on the issue and they appreciate Brazil giving thoughtful consideration to the issue and how it will affect both countries’ industries and the global fuel supply.  

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Rabobank Issues Report on Declining Wheat Acres

Rabobank issued a report this week saying U.S. wheat acres have been on the decline for 35 years. This growing season, wheat acres are at their lowest point in 100 years. Those lower acres over a long period of time are going to have some ripple effects. Raboresearch Grains and Oilseed Analyst Stephen Nicholson found that the decreasing number of planted acres is going to have a domino effect that will spill down the supply chain. Fewer acres means less supply available, which means more imports and higher prices for raw goods. That’ll mean higher prices for consumer goods. Nicholson said the biggest decline has come in winter wheat acreage, primarily hard red winter. He says this is a concern for the baking industry as most bread flours are milled with hard red winter wheat. Due to the lower number of HRW acres and a higher probability of production and/or quality issues, both hard red wheat prices and spreads between U.S. wheat classes are likely to be wider and more volatile in the future. 

SOURCE: NAFB News Service

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