Glacier FarmMedia COVID-19 & the Farm

Experts

 

The Good, Bad & Ugly

The Good, Bad & Ugly

The Good: Soybean oil eked out another gain today, continuing the bull run that started at the end of April. The global vegetable oil situation is tight, but soybean oil stocks are expected to decrease marginally this year with ending stocks projected to hit 4.19 million tonnes. The increase in soybean oil prices are due mostly to the tight ending stocks expected for palm and rapeseed. The largest concern for vegetable oil markets is how biodiesel demand will be impacted by the expected second wave of CIVID-19.

 

The Bad: The weekly data from the Energy Information Administration (EIA) indicated that production last week increased by only eight million barrels from last week to 963,000 barrels. Now this should be good news, but the trend over the past two months has settled about 100,000 barrels below the average production over the past five years. The lower production level indicates that the demand for ethanol will continue to be a struggle over the next few months. With the potential for a second wave of COVID-19 cases in the U.S. this fall, which would hurt gasoline and ethanol  demand. This does not bode well for ethanol use in the 2020-21 crop year. In the August USDA WASDE report, ethanol use is expected to increase by 350 million bushels in the 2020-21 crop year that begins on September 1st. This may prove to be overly optimistic given the current pace of production.

The Ugly: The U.S. COVID-19 milestones continue this week with the number of cases moving above the 5.5 million people mark. The U.S. death count will reach 175,000 by the weekend. A large number of outbreaks have occurred as grade school and university students return to class. The following graphic is from my alma mater – Kansas State, which has just reported an outbreak of 13 cases from a frat party. Somethings never change!