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Heavy rainfall floods Brazil's Rio Grande do Sul

  • Market: Agriculture
  • 03/05/24

Brazil's southern Rio Grande do Sul state continues to flood after heavy rainfall since 29 April, leading the government to declare an emergency yesterday.

The highest volumes reached the central areas of Rio Grande do Sul, with cities receiving rainfall of 150-500mm (6-20 inches), regional rural agency Emater-RS data show. The monitoring station of Restinga Seca city, in the center of the state, recorded rainfall of about 540mm.

Rainfall in Rio Grande do Sul overall surpassed 135mm in most of the state, according to the US National Oceanic and Atmospheric Administration (NOAA). Meanwhile, dry weather prevailed in other Brazilian regions.

NOAA expects rainfall to abate in the next week, but adverse weather conditions are set to remain.

As of today, 154 sections of 68 highways were totally or partially blocked, according to the state's emergency service.

The 100MW 14 de Julho hydroelectric plant also partially ruptured.

The Rio Grande port has not suspended operations, but handling is slower. Despite the heavy rainfalls, demurrage rates and waiting queues for docking and unloading were not altered. Demurrage rates were stable at $1/metric tonne (t) and the total cost for handling fertilizers remained at $19/t.

But market participants expect the situation to change in the coming days, which may increase demurrage rates. If the rain does not stop and the level of the Guaiba River continues to rise, some areas in the port are likely to flood in the coming days, as is the case in part of the Porto Alegre port.

Amid slower cargo release, logicitical difficulties and the already-low demand for fertilizer transport services, fertilizer freight rates on the Rio Grande-Dourados route, monitored weekly by Argus, fell by R20/t ($4/t), on average, to R225-250/t.

Excessive rainfall to damage 2023-24 soybean crop

Rio Grande do Sul is harvesting its 2023-24 soybean crop, set to be the second largest in the country this season.

Works reached 76pc of the state's expected acreage by 2 May, posting an weekly advancement of 10 percentage points despite the excessive rainfall, according to the rural agency Emater-RS.

Farmers seized shorter windows of more favorable weather — or when rainfall subsided — to intensify field activities, especially in areas expected to register higher yields and that were not deeply affected by a drought earlier in the year.

The moisture levels of grains harvested are considered above average and will require more investment in their drying processes. Some areas reported premature germination and plant decay because of the humidity excess.

Emater-RS maintains the state's average yields estimated at 3,329 kg/hectare, with recent results remaining within prior projections, according to the agency's weekly report released on 2 May. Thus, soybean production in Rio Grande do Sul is still set to reach a record 22.2mn metric tonnes (t).

But market participants agree that forecasts for the state may be revised down in the next weeks, as field surveys begin to accurately assess the excessive rainfall's total damages.


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24/07/24

Feedstock imports shake up US biofuel production

Feedstock imports shake up US biofuel production

New York, 24 July (Argus) — Waste from around the world is increasingly being diverted to the US for biofuel production, helping decarbonize hard-to-electrify sectors like trucking and aviation. But as refiners turn away from conventional crop-based feedstocks, farm groups fear missing out on the biofuels boom. Driven by low-carbon fuel standards (LCFS) in states like California, US renewable diesel production capacity has more than doubled over the last two years to hit a record high of 4.1bn USG/yr in April according to the Energy Information Administration. Soybean and canola processors have invested in expanding crush capacity, expecting future biofuels growth to lift vegetable oil demand. But policymakers' growing focus on carbon intensity, a departure from the long-running federal renewable fuel standard (RFS) that sets volume mandates for broad types of fuel, primarily benefits waste feedstocks, which generate larger LCFS credits because they are assessed as producing fewer emissions. Argonne National Laboratory's GREET emissions model, which has been modified by federal and California regulators for clean fuels programs, factors in emissions sources like fertilizers and diesel use on farms for virgin vegetable oils but not for used oils sourced from cooking operations. Refiners trying to maximize government subsidies are thus sourcing waste-based feedstocks from wherever they can find them. Through May this year, imports to the US under the tariff code that includes used cooking oil (UCO) and yellow grease rose 90pc from year-prior levels to more than 1.8bn lb (844,000t). While China represents most of that, sources are diverse, with significant sums coming from Canada, the UK, and Indonesia. Imports of inedible and technical tallow, waste beef fat that can be turned into biofuels, have also risen 50pc so far this year to 800,000lb on ample supply from Brazil. While soybean oil was responsible for nearly half of biomass-based diesel production in 2021, that share has declined to around a third over the first four months this year as imports surge (see graph). "Every pound of imported feedstock that comes in displaces one pound of domestically sourced soybean oil or five pounds of soybeans," said Kailee Tkacz Buller, chief executive of the National Oilseed Processors Association. Even as LCFS and RFS credit prices have fallen over the last year, hurting biofuel production margins and threatening capacity additions , imports have not slowed. Feedstock suppliers, many from countries with less mature biofuel incentives and limited biorefining capacity, might have few options domestically. And exporting to the US means they can avoid the EU's more prescriptive feedstock limits and mounting scrutiny of biofuel imports. More ambitious targets in future years, particularly for sustainable aviation fuel, "will create a lot of competition for UCO in the global market," said Jane O'Malley, a researcher at the International Council on Clean Transportation. But for now, "the US has created the most lucrative market for waste-based biofuel pathways." Incentives for US refiners to use waste-based feedstocks will only become stronger next year when expiring tax credits are replaced by the Inflation Reduction Act's 45Z credit, structured as a sliding scale so that fuels generate more of a subsidy as they produce fewer greenhouse gas emissions. While essentially all fuel will receive less of a benefit than in past years since the maximum credit is reserved for carbon-neutral fuels, the drop in benefits will be most pronounced for fuels from vegetable oils. Granted, President Joe Biden's administration wants the 45Z credit to account for the benefits of "climate-smart" agriculture, potentially helping close some of the assessed emissions gap between crop and waste feedstocks. But the administration's timeline for issuing guidance is unclear, leaving the market with little clarity about which practices farmers should start deploying and documenting. "While a tax credit can be retroactive, you can't retroactively farm," said Alexa Combelic, director of government affairs at the American Soybean Association. Squeaky wheel gets the soybean oil The concerns of agricultural groups have not gone unnoticed in Washington, DC, where lawmakers from both parties have recently called for higher biofuel blending obligations, prompt 45Z guidance, and more transparency around how federal agencies scrutinize UCO imports. There are also lobbying opportunities in California, where regulators are weighing LCFS updates ahead of a planned hearing in November. At minimum, agricultural groups are likely to continue pushing for more visibility into the UCO supply chain, which could take the form of upping already-burdensome recordkeeping requirements for clean fuels incentives and setting a larger role for auditors. Fraud would be hard to prove, but two external groups told Argus that the Biden administration has indicated that it is looking into UCO collection rates in some countries, which could at least point to potential discrepancies with expected supply. More muscular interventions, including trade disincentives, are also possible. Multiple farm associations, including corn interests frustrated that the country's first alcohol-to-jet facility is using Brazilian sugarcane ethanol , have asked the Biden administration to prevent fuels derived from foreign feedstocks from qualifying for 45Z. The possible return of former president Donald Trump to the White House next year would likely mean sharply higher tariffs on China too, potentially stemming the flow of feedstocks from that country — if not from the many others shipping waste-based feedstocks to the US. Protectionism has obvious risks, since leaving refiners with fewer feedstock options could jeopardize planned biofuel capacity additions that ultimately benefit farmers. But at least some US agriculture companies, insistent that they can sustainably increase feedstock production if incentives allow, see major changes to current policy as necessary. By Cole Martin Waste imports crowd out soybean oil Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Bipartisan bill would extend blenders tax credit


23/07/24
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23/07/24

Bipartisan bill would extend blenders tax credit

New York, 23 July (Argus) — A bipartisan group of lawmakers has proposed legislation to extend an expiring tax credit for biodiesel and renewable diesel that are blended into the US fuel supply. The bill, which was introduced by representative Mike Carey (R-Ohio) and is pending before the House of Representatives' Ways and Means Committee, would specifically extend a credit offering $1/USG for blenders of biomass-based diesel through 2025. The credit is otherwise set to expire at the end of this year and be replaced in January by the Inflation Reduction Act's 45Z credit, which will be more generous to fuels with lower carbon intensities. The text of the bill has not yet been released. But a draft version shared with Argus by an external group would restrict fuel that is "allowed" a credit under 45Z from also qualifying for the reinstated credit for blenders, a provision that seems to primarily benefit fuel imports. The expiring biodiesel credit allows fuel produced outside the US to qualify, since the credit is claimed by blenders instead of producers, while the new 45Z credit is specifically for refiners producing fuel in the US. The US administration's timeline for finalizing guidance around 45Z is unclear, to the frustration of biofuels groups that have warned that prolonged uncertainty could jeopardize planned investments aimed at boosting production and feedstock supply. An extension of the existing biodiesel credit could potentially provide more certainty to the biofuels supply chain. Fuel retailers that had previously warned that shifting the credit from blenders to producers will raise fuel prices for consumers, including the National Association of Truck Stop Owners and the Society of Independent Gasoline Marketers of America, commended Carey's proposal. But the tax credit extension would also upend other incentives driving biofuel production. The 45Z credit offers up to $1/USG for road fuels, but incentives are more generous the fewer greenhouse gas emissions a fuel produces, whereas the expiring credit does not adjust benefits based on carbon intensity. In addition, prolonging incentives to import fuels could hurt domestic producers and lead to wider biodiesel and renewable diesel availability, potentially weighing on prices of renewable identification number (RIN) credits that refiners submit to regulators to comply with the renewable fuel standard. Market participants have generally expected that prices for RINs, which also act as a source of revenue and incentive to produce low-carbon fuels, will rise next year to account for 45Z providing less of a subsidy than the expiring credit. Clean Fuels Alliance America, which represents biomass-based diesel and sustainable aviation fuel companies, declined to comment or take a position on the legislation. But the group said that it would continue advocating for President Joe Biden's administration to swiftly propose and finalize 45Z guidance. The bill currently has four sponsors, three Republicans and one Democrat, but it is tough to gauge how broad support for any credit extension would be within Congress. It is not uncommon for Congress to pass legislation near the end of the year extending or reinstating tax credits that would have otherwise expired, and various energy tax credits were extended in Congress' lame duck session after the 2020 presidential election. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US House passes waterways bill


23/07/24
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23/07/24

US House passes waterways bill

Houston, 23 July (Argus) — The US House of Representatives overwhelmingly approved a bill on Monday authorizing the US Army Corps of Engineers (Corps) to tackle a dozen port, inland waterway and other water infrastructure projects. The Republican-led House voted 359-13 to pass the Waterways Resources Development Act (WRDA), which authorizes the Corps to proceed with plans to upgrade the Seagirt Loop Channel near Baltimore Harbor in Maryland. The bill also will enable the Corps to move forward with 160 feasibility studies, including a $314mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. Water project authorization bills typically are passed every two years and generally garner strong bipartisan support because they affect numerous congressional districts. The Senate Environment and Public Works Committee unanimously passed its own version of the bill on 22 May. That bill does not include an adjustment to the cost-sharing structure for lock and dam construction and other rehabilitation projects. The Senate's version is expected to reach the floor before 2 August, before lawmakers break for their August recess. The Senate is not scheduled to reconvene until 9 September. If the Senate does not pass an identical version of the bill, lawmakers will have to meet in a conference committee to work out the differences. WRDA is "our legislative commitment to investing in and protecting our communities from flooding and droughts, restoring our environment and ecosystems and keeping our nation's competitiveness by supporting out ports and harbors", representative Grace Napolitano (D-California) said. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US House to vote on waterways bill


22/07/24
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22/07/24

US House to vote on waterways bill

Houston, 22 July (Argus) — The US House of Representatives is expected to vote on 22 July on a waterways bill that would authorize new infrastructure projects across ports and rivers. The Water Resources Development Act (WRDA) is renewed typically every two years to authorize projects for the US Army Corps of Engineers (Corps). The bipartisan bill is sponsored by representative Rick Larsen (D-Washington) and committee chairman Sam Graves (R-Missouri). The full committee markup occurred 26 June, where amendments were added, and the bill was passed to the full House . A conference committee will need to be called to resolve the different versions of the bill. The major difference between the bills is that the House bill does not include an adjustment to the cost-sharing structure for the lock and dam construction and other rehabilitation projects. The Senate Committee on Environment Public Works passed its own version of the bill on 22 May, with all members in favor of the bill. The House version of the bill approves modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland, along with 11 other projects and 160 feasibility studies. One of these studies is a $314.25mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Large US corn, soy acreage remains unplanted


19/07/24
News
19/07/24

Large US corn, soy acreage remains unplanted

New York, 19 July (Argus) — Considerable US corn and soybeans acreage has yet to be planted this season, with the ongoing drop in prices offering little incentive for farmers to complete sowing. But potentially record yields for both crops has at least some market participants less worried. The slower planting could lead to the US Department of Agriculture (USDA) revising down corn and soybeans acreage figures, the US balance sheet tightening, and ending stock projections potentially being cut. Market participants are currently focused on summer weather, as it plays a major role in determining the final yield for both corn and soybeans. But if corn acreage decreases by 1mn acres to 90.5mn acres, corn yields would have to increase by 2 bushels per acre — or 1.1pc — to keep corn production flat. Similarly, a 1mn acre decrease in soybeans planted to 85.12mn acres would require yields to increase by 0.6 bushels per acre, or by 1.2pc, to have production remain stable. And while the increase in yields might not seem large, it would be record yields for both corn and soybeans if achieved. In its 28 June acreage report, the USDA said 3.3mn acres of corn, or 3.7pc of the total corn acreage, and 12.8mn acres of soybeans, 14.8pc of total soybean acreage, were left to be planted. The latest available data for the week ending 7 July shows that there were 1.9mn acres of corn unplanted, 23pc more than the three-year average, and 1.5mn acres of soybeans unplanted, 25pc above the three-year average. The year 2022 serves as a good comparison for 2024. In 2022, 4mn acres of corn, or 4.5pc of corn acreage, and 15.8mn acres of soybean (18pc), were still unplanted when the USDA published its annual report at the end of June. The actual planted acres for 2022 showed that 1.8mn acres of corn and 875,000 acres of soybeans were not planted, according to the USDA. In 2022, the main contributors to the lower final acreage were states that initially had the largest increase in the June acreage report. Corn and soybean prices, as measured by the Chicago Board of Trade (CBOT) futures price, were down 11pc in June 2022 causing farmers to rethink their planting intentions. During June 2024, CBOT corn prices fell by 11pc and soybean prices were down by 5pc. The latest farmers can plant their crops is June, as any crop planted later would mature too late and be at risk of frost damage. The states of Kansas, Iowa and Nebraska had the largest projected increase in corn acreage in the June acreage report, at 1.15mn acres. That report forecast soybean acreage to increase by 600,000 acres for Kansas, Illinois and Minnesota. But the lower corn and soybean prices might lead those farmers to reconsider some of those acres. That said, at least some market participants were not too concerned with lower acreage. The favorable July weather in the Midwest has some market participants anticipating record yields for both corn and soybeans, above the 181 bushels per acre for corn and 52 bushels per acre for soybeans that the USDA currently forecasts. By Eduardo Gonzalez Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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