• HEADLINES: Supreme Court allows EPA to grant biofuel waivers; Drought improvement unlikely in Plains, Upper Midwest.

• Ag markets are widely mixed at midday, with spring wheat and canola (rapeseed) rising on renewed yield threats in Canada, while Chicago markets shed additional premium following the news the US Supreme Court will allow the EPA to grant blending waivers to small refineries. The collision of this morning’s SCOTUS decision with active Midwest precipitation has triggered additional liquidation. Very few aim to hold large positions ahead of NASS’s stocks and seedings release.

• It is now left to the EPA to determine whether and when waivers will actually be granted. Today’s decision provides little/no clarity over ethanol and biodiesel/renewable diesel production and consumption longer term. And new renewable diesel capacity expansion is still on track, with a possible $550 million refinery in Louisiana being announced just this morning. The market remains incredibly sensitive to even minor changes in future supply and demand, but a material impact on soy crush rates and ethanol grind is not anticipated. The Biden administration overall commitment to green fuels is most important.

• FAS’s daily reporting system featured 112,000 mt of US soymeal sold to Mexico, of which 28,000 is for old crop delivery. Mexico is a traditional buyer of US origin meal, but this does reflect US soymeal’s competitive position in the world marketplace.

• US meal for Jul-Aug delivery is quoted $5-10 per ton below Brazilian origin. Argentine meal basis is just $2 per ton below the US Gulf and has rallied some $15 per ton in the last week alone. This follows US meal being offered at a sizeable premium to Brazilian origin throughout the 2021/22 marketing years. Weekly sales of 250-400,000 mt will be commonplace moving forward. The return of strong US soymeal export demand lends support to the rate of crush through the balance of summer.

• Other input is lacking. Market fear over a potential 4-5 million hike in corn seedings next Wednesday along with always unknowable quarterly corn and soy residual use has clearly triggered an exiting of the spec community. The entirety of US soy and corn balance sheets will be fine-tuned/reset early next week, but only amid massive surprises in residual disappearance will the data be taken as bearish. Long term research suggests that the odds of stocks-building in 2021/22 are low.

• Paris milling wheat futures are down €3.50 per ton as harvest there looms. EU corn futures are down €3.50-4.00 per ton amid favourably wet short and long-term forecast offered to key areas of Western Europe’s corn belt. Spot WTI crude is up $0.75 at $74.

• The midday GFS weather forecast is again much drier across the Plains and Western Midwest compared to the early morning run. An active pattern of showers continues across the eastern Plains and Midwest into next Tues/Wed. Thereafter, the return of expansive high pressure to the Western US confines meaningful precipitation and favourably cool temperatures to the Delta/Southeast and far Eastern Midwest. Climate guidance across the Eastern Midwest has trended wetter in July amid the recent and upcoming boost in soil moisture, but drought improvement remains unlikely in KS, NE, MN and the Dakotas. Key to July weather will be soil moisture anomalies in the next 10 days.

• And too much rain will plague crops in Illinois and Indiana. SRW harvest will be delayed further.

• This is and will remain a big market. Yet, not until old crop balance sheets are finalised and Northern Hemisphere yields are better understood will it be known that highs have been scored. It doesn’t take much yield loss to trigger record low new crop corn and soy stocks/use amid record demand. We strongly caution against chasing breaks.

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