• The USDA released the Acreage and Grains Stocks report last week. The report pushed up US corn and soybean prices last week as planted areas and inventory levels were below consensus estimates. According to the USDA, US farmers are expected to plant soybeans on 87.6mil acres in 2021E/2022F compared with consensus estimates of 89.1mil acres. Soybean stocks stood at 767mil bushels as at 1 June 2021 vs. consensus estimates of 773mil bushels and 1,381mil bushels as at 1 June 2020. Corn planted areas are envisaged to be 92.7mil acres in 2021E/2020F against consensus estimates of 93.8mil acres. Inventory of corn stood at 4,112mil bushels as at 1 June 2021 vs. consensus estimates of 4,130mil bushels and 5,003ml bushels as at 1 June 2020.

• Bloomberg reported that the US Supreme Court has handed oil refiners a win in the US biofuel case. The US Supreme Court has ruled that the Environmental Protection Agency has wide latitude to exempt refiners from federal requirements that renewable fuels be mixed together with gasoline and diesel. According to the Des Moines Register, although disappointed, state and renewable fuel groups said that an important piece of the appeals court decision remained intact i.e. requiring small refiners to prove that they face economic harm from the federal mandate when seeking exemptions. Both the oil and renewable fuel industries are looking to see how the Biden administration will apply the ruling.

• S&P Global Platts cited a USDA report as saying that the EU’s use of palm biodiesel is forecast to decline in the 2021F marketing year (July to June) as high feedstock prices will hamper production from Spain. Palm oil use for making biodiesel is expected to fall to 2.63mil tonnes in 2021F from 2.65mil tonnes in 2020 due to expected lower production of hydrogenation-derived renewable diesel from Spain resulting from high palm oil prices. The EU is the world’s largest biodiesel producer. In 2020, palm oil accounted for 18% of the total feedstock used to make biodiesel after rapeseed oil (38%) and used cooking oil (23%).

• According to Bloomberg, Cofco International (CIL) reported a sharp increase in trading volumes last year as the group prepared for an initial public offering. Trading volumes of grains, oilseeds, cotton and sugar surged 15% to 131mil tonnes in 2020, Geneva-based CIL said in its annual sustainability report. Revenue increased to US$33bil in 2020 from US$31bil in the year before. After struggling for years amid oversupplied markets and a debt hangover from a US$4bil acquisition spree, CIL had record earnings last year. CIL is expected to merge its operations with some assets of parent Cofco Corp, ahead of a potential IPO by the end of the year or early 2022F.

• Euractive.com quoted the European Waste-to-Advanced Biofuels Association (EWABA) as saying that an EU mandate for the use of animal fats and used cooking oils in sustainable aviation fuel is set to enrich large biofuel players such as Total and Neste at the expense of most companies in the industry. The EU is expected to publish plans on 14 July that will oblige aircraft to use green jet fuel when refuelling at EU airports as part of efforts to reduce emissions. Waste lipids are processed by most SMEs in the industry into a type of biodiesel capable of powering trucks and ships but generally unsuitable as an aviation fuel. Processing these waste lipids into a fuel that can be used in airlines known as hydrotreated vegetable oil and hydrotreated esters and fatty Acids, requires an advanced process that only a handful of mega-refineries in Europe can carry out.

Source: AmInvest Research - 5 Jul 2021