[00:00:00] Speaker A: I've got the canola markets up about three and a half dollars a ton this morning. 731 and a half soybeans up half a penny at 1160.
Bean oil was flat last I checked at 68.42. We've got spring wheat up four cents at $6.56. KC wheat up six cents at $6.32.
Corn giving up about four cents this morning at $4.51. Canadian dollar weaker as well. We'll talk about that in just a second.
Hovering around 72 cents. And West Texas, I have at about $102.5 per barrel. All right, so that's down just slightly here this morning. Now, I did go on a little bit of a rant yesterday on X. Sometimes my X account stays a little bit quiet and then all of a sudden I'll pop up with something.
I don't wanna say negative but gets a little ranty at times.
And yesterday I wanted to just highlight that we have a discrepancy going on in wheat prices across the prairies. We have a big round hold number of $8, which is getting many people excited.
And in Saskatoon, Swift Current, central Saskatchewan, we've seen this price hit for fall delivery, but yet the same price or barely above that, is triggering in parts of Alberta. What I want to say is, Alberta, guys, you got to pump the brakes here a little bit because the merchants are still putting a bit of a discount in these prices and you should be seeing something like 30, 40, 50 cents a bushel higher than what the guys in Saskatoon are seeing. I know we farm in the Saskatoon region and it's consistently $0.50 better in the Edmonton region. Consistently for years, for decades now. And so I just don't give it up. All right, guys, just don't give it up. I know that 8 is a nice whole number, but in Alberta, you should be doing just a little bit better than that. All right, we've got Susan Stroud with no Bull Ag joining me here in just a second.
Before we get to that, I got a little bit of news, some headlines to get through. The biggest one maybe being the USDA acreage numbers, which are going to come out here in just a couple of hours.
The market is expecting less spring wheat, more soybeans and less corn. To what degree we're going to find out. And maybe Susan has some insights for us there as well.
Russian wheat crops, 97 good or satisfactory. So that was a bit noteworthy this morning.
And then I also have here, I don't know why I wrote this one down even, but I have Trump tells AIDS that he could end the war with Iran even with the Strait of Hormuz closed. I put in quotations, AIDS and pillow talk. I don't know if this is just him, Trump going to sleep at night and just kind of blurts this out to the people around him and then they jump on X and, and get us, you know, going one way or the other.
Last two for news.
This is a big one for prairie farmers. Government of Canada has authorized a time limited and controlled emergency registration of Strict 9 to control the Richardson ground squirrel infestation.
If I need to pick something that's trending across the prairie since last night, that is the headline there. That's the storyline. So I thought Susan might appreciate that. And then as I bring in our guest here, I've got Indonesia.
They have increased their biodiesel blend to 50% from 40% due to rising energy costs.
Susan, welcome to the show this morning. How are you?
[00:03:42] Speaker B: I'm good. I just, I was googling Richardson ground squirrel.
[00:03:47] Speaker A: I figured you might, you might like that one.
[00:03:49] Speaker B: I didn't know that was a thing.
[00:03:50] Speaker A: It's a problem. It's a big problem. Yeah. We need an effective tool, honestly, relief for prairie farmers to get access to strychnine at least temporarily here to get this under control. Indonesia, this biodiesel blend to 50%. Is this something that was expected and do you have any comments around it? I know it's kind of fresh news, but.
[00:04:14] Speaker B: Yeah, well, I wrote about it for my Pro plus subscribers. I wrote about it early yesterday morning because palm was up 3% or something like that in Sunday night trades. So the president of Indonesia had been at an event, I believe it was in Japan and said that they would be implementing B50 later on in the year sometime. So they've been at B40 for a bit now. They've kicked around B50 for years.
And I think you're at B40. It takes, it's not, it's not like going from a 30 to a 40. Going to 50, I think is substantial is a larger challenge. But what's happening is, it's because of what's going, you know, it all goes back to what's happening in the Middle east.
And this is, this is a way for them to keep, I guess, in their opinion, keep domestic energy costs under control, that kind of thing. So came out this morning and said that they will officially be putting this mandate into effect July 1. We'll see if it, if it actually happens. Either way, this is kind of, I think we have to be really careful here because we're, you know, we just have this substantially higher mandate here in the US for 26 and 27, which raises the amount of biomass based diesels required to be blended into petroleum fuel supplies by more than 60% year on year. So what that means is that we're going to need effectively 60% more feedstocks. And you know, we have, I don't want to say it's a limited amount of waste oils and greases and that kind of thing, but the easiest way that you fill that void would be through crop based feedstocks like soybean oil and canola oil. Now in the US we, we cannot use anything that would be palm related, cannot be used in biofuel production. It wouldn't qualify.
It doesn't have a pathway in the renewable fuel standard. But palm is always, you know, as any vegetable oil is, they're interchangeable. And so when you have the US making the move that it just did, and that's a lot of the reason that we see not only soybean oil, but canola trading at these really high prices.
And then you have this situation going on in Indonesia. I, I don't know, I think longer term it just means we're setting ourselves up for some food inflation or it just exacerbates that piece of it. So I don't know. Market's really sensitive to this. I think we're going to reignite the food versus fuel thing a lot quicker than most people realize, depending on, and depending on how long this mess and the Middle east tags on. I mean that's ultimately one of the biggest drivers here.
[00:07:22] Speaker A: So I have some questions here prepared as well. But I, I did want to ask from a, like a Middle east war perspective, like, do you have any additional insights on when this could shut down or slow down? Or is there any talk in your group of, of peers, like as you
[00:07:41] Speaker B: mentioned in the intro, not to cut you off, but it does. Yeah. I mean, who knows, who knows? We're four full weeks into it and it just, when it's much. Honestly it feels very similar to the, the trade war that we've been in forever, except it's moving at a much faster pace. Who could believe that that's actually possible?
But you know, the back and forth and then it's very messy because you have so many different countries, countries that are also involved. And Trump was calling out, I think it was like Great Britain or the UK or something I saw in a tweet earlier today. I. It's just, it's a mess and I, I don't know. To your point.
[00:08:26] Speaker A: Absolutely.
[00:08:26] Speaker B: You made the point earlier.
I don't know. I'm.
If you couldn't tell, I'm, I've grown very tired of.
I, I've really, for the most part, stopped even taking screenshots of the things that hit Truth Social. It's an incredibly challenging time. And, you know, and to kind of get back to where we are today. It's the 31st and where do we go from here?
There have been so many, so many things to write about that didn't even have anything to do with acres. And the bad thing is that even what we get today is probably not representative of really where the acreage was, where acres shake out at the moment. We've had a lot of things that have happened in the few weeks since USDA or NAS cut off the, you know, the end of the survey window. Yeah, yeah.
[00:09:20] Speaker A: Is there like, less wheat, more beans, less corn? To what degree? We'll find out in June, I guess. But yeah. Now, I did want to turn the conversation over to a hypothetical here real quick.
So going back to Friday's announcement.
If I, if I have built a brand new crush plant in Regina, Saskatchewan, completely hypothetical, that has started to accept some canola seed now and will be crushing later this year, am I thrilled about Friday's announcement from the, from the epa? Like, was this a good day for my business?
[00:09:56] Speaker B: It was a really good day. I really feel like canola was the thing that, that stole the show. But unless you dive into the 400 plus. Well, actually, if you consider all of it together, there's almost 800 pages of this rule that EPA released.
You have to really dive in to figure out that canola is. That EPA is viewing. Canola is actually the biggest winner of this.
So, you know, there are a few different things that are really working in Canola's favor in 2026.
So in 2025, when we had the original, the 45Z, which is completely separate from the renewable fuel standard. And what happened on Friday.
So with 45Z in 2025, we were still. You're still able to generate credits from. It doesn't matter where the feedstock is from, but it had to be below a particular threshold. The final fuel has to be below a particular CI threshold. Well, Canola was excluded because canola was too high. It wasn't blue. I think it's 50 or something.
So the big change in 26 is not only does Canola qualify for a credit. Now, it's a relatively small credit, but it's still a credit. But the feedstock pool just got a lot smaller because it's restricted to US Canada and Mexican origins only.
So there are a lot of feedstocks, for instance, Brazilian tallow that we might still be importing and they're still eligible under this new renewable fuel standard rule to receive a full RIN.
But they don't get that 45c credit. And so it makes a big difference when you start to do the math on margins. Canola now not only generates the 45C credit, but it also will still qualify for that 40 full ren because they've, they've kicked the can down the road for a couple years on that RIN discount on imported feedstocks. So that's a really big, big thing. So I'm kind of jumping around here a little bit, but getting back to why Friday is so impactful. So we have this massive uptick in the amount of D4Rens biomass based diesel wrens that are required in the mandate for 26 and 27.
When you look at it on a gallon fuel basis, it's increasing the physical amount of biofuels that are required to be blended biomass based diesels to be blended into petroleum supplies by more than 60%.
When you get into the numbers and you look at how EPA sees it playing out by feedstocks, they're seeing, and I'm using 2024 as a base year because 25 is complicated. Like I said, canola went to next to nothing for a while and that's because of its exclusion from 45Z and other things and tariffs and such that were already questionable. But when you compare their projection for the minimum amount of canola that's likely used in biomass based diesel production in 2026, it more than doubles from that 2024 base. It has the biggest growth out of anything.
Soybean oil. On the other hand, they're projecting a 20% increase in fuels made from soybean oil that are part of the mandate. But canola oil is set to more than double.
So it's a really, it's a really big thing. And I think a lot of it too is because you have to consider west coast renewable diesel capacity.
They're limited. With 45Z, you can't, you know, not only is used cooking oil, no matter the origin excluded, but if the feedstock is not coming from North America, then you have all of these California producers that they're looking for a way to Capitalize on all of these things. And if they want something out of 45Z, canola oil is going to be the feedstock that's most available and in closest proximity in the cheapest compared to Midwest US Soybean oil.
[00:14:20] Speaker A: So if canola was the big winner in, in all of this for the next couple of years, you know, why did it sell off on Friday? Was this kind of penciled in already? Was.
[00:14:32] Speaker B: Was this, I mean, I think, available news?
Yeah, a lot of it. Soybean oil also sold off on Friday. At the end of the day, these things are really complicated. Like I said, There were nearly 800 pages that a person needed to go through to figure out, okay, here are the numbers. But how did USDA actually arrive at these? And then how do. How is USDA projecting that these mandates are met?
You know, so they show their work. You just have to dig for it. I guess that's the.
That's where someone like myself comes into play.
[00:15:11] Speaker A: Do they send you like a hard copy? Like, is this like a book that they just shipped to you? And they're like, here you go, Susan. We know you're diving into this. Here's the hard copy.
[00:15:20] Speaker B: Lovely EPA website that you get to sift through. I mean, the thing when it comes to the renewable fuel standard and any biofuel policy in general, but especially the renewable fuel standard, it's really complicated. I mean, it's probably one of the more complex government messes that is a real driver of demand for, you know, not only US Soybean oil, but Canadian canola oil, because we're importing the majority of our supply supplies, and they're coming from Canada. So it's really important. But. And I really, I do think that canola has been overlooked for far too long as far as its importance.
And it's a huge shift. And I think that this is something that we're going to. We're going to continue to see. At least we have this locked in for two years. Then the question becomes beyond that, then what? Because 2028 will be the next year that the EPA will have to be working on.
[00:16:24] Speaker A: So in regards to 2028, the. We didn't get a clear message on Friday from. From our side, from the.
Is it Canadian oilseeds?
Copa, I think, is maybe what it's called. You know, you correct me, but there was like.
And I don't know about 2028. Is that just as real of a statement as you can make on the crushing side of 2028? Just being completely kind of up in the air or is there some guidelines in place and we just need to finalize.
[00:16:56] Speaker B: It's up in the air as far as everything goes. This was called the set to rule. And this just means that in the timeline it's 2026 and 2027 that is now a final rule set three will be 2028 and beyond. I don't know if they bundle that with other years or not, but you know, one of the biggest things with this RVO is this potential 50% RIN haircut. We found out, or I realized Friday when going through this that EPA has given it official, an official name. It's the 50% import RIN reduction, the IRR because we love our acronyms. But they specifically said in their documents. We intend, however, to establish the import ren reduction provisions that will take effect beginning in the 2028 compliance year or shortly thereafter. So they're saying that they intend to bring this 50% WREN haircut into the mix, which if that was the case, as it's written there, imported or using Canadian canola oil to produce renewable Diesel in the US as it states here, 2028 would mean it only generates half a RIN and so it would be at a disadvantage as compared with a US domestic feedstock. But 2028 is forever down the road, especially when you're talking from a policy perspective. The bad thing is that because you can have change.
Let's see now, I'm trying to remember when is Trump out of office 2028. Will we be working on a new administration by that point?
Maybe.
[00:18:43] Speaker A: I think so.
[00:18:44] Speaker B: Math is hard. So that piece of it. Additionally, if you are a Canadian oilseed processor, what are you thinking about? Well, if things could potentially change in a huge way by 2028, it you're not going to go and invest in new crushing facilities based on, you know, based on that alone, I think that there's still, there's still a lot of, a lot of challenges and unknowns. But right now what we do know is that canola oil will see a windfall, I feel like, of biofuel demand out of this.
It will be important to watch upcoming USDA reports to, to see how USDA handles some of this as far as biofuel demand going forward for canola oil, not only as you look at Canadian balance sheets, like what how do they see exports of canola oil, which obviously are predominantly going to the US Versus how do they see the US side of the balance sheet for canola oil? What amount is going into fuel versus food?
[00:19:56] Speaker A: Okay.
All right, one, one last one for you because we are at time. We've been on a bit of a Cinderella run here. But are there any bullish cards left? Like you have to keep feeding the bull, you know, for markets to climb from a biofuel perspective space, is there any bullish cards left or have they been played now? And this is what it is. And we can go back to weather and war and everything else when it comes to oil suit pricing.
[00:20:21] Speaker B: I think that this is probably just the not implying that we're at the beginning of some big bull run, but we've set very high mandates. And then especially if you bring Indonesia into the mix and them looking at B50 that, you know, every time that you were increasing the biofuel, the blend mandate in Indonesia by X percent, that means that it's increasing the amount of palm oil that is needed for that mandate.
So it's pulling more veg oil supplies away from the rest of the world because it directly hits, you know, it's, it, it impacts exportable supplies.
So I do think that this is sets us up for a situation where we can't afford to have a weather scare.
I just think it makes it that much more important that we have large crops and it's not just here, but other places in the world because we're directing so much of our global veg oil production more than ever before going into biofuels. And I just think that in combination with this energy crisis that we're in the midst of it, we're kind of teetering on the edge. We don't need a weather scare or things might get really interesting.
[00:21:50] Speaker A: Yeah. And the weather, from what I can see, is interesting right now, so.
[00:21:56] Speaker B: Yeah. Yeah.
[00:21:57] Speaker A: All right. All right, folks. Well, we, we didn't get to questions today. I'll get to them on Friday's episode of what the Futures. Wanted to get the biofuel stuff covered with. Susan, really appreciate you jumping on last minute as well. I do have just a couple things, folks, for farmers tuning in going back to wheat as well, because we love growing our wheat here in Western Canada. Susan, targets. I know you hate targets, guys, but if you want to get a more accurate representation of your basis, you have to throw that target out there. You have to put it out there, you know, let the merchant see it and they'll give you a proper little more, I guess, a better basis than what's posted. So don't forget about that. Also on Friday's episode of what the Futures I'm going to talk about if I'm crazy for considering buying nitrogen for 2027. We got offered some nitrogen for the 2027 crop.
Am I crazy to be considering that? This week's cup of coffee brought to you by AG i3. You use precision tech in the field. Why not in your risk management?
Egg i3 uses advanced data to build custom insurance layers that protect your yields and now lock in your revenue. Upgrade your Strategy today at egg i3AI. I'm out of coffee, folks. So that's it for this week. Thank you, Susan. You can check out her
[email protected] and I'll see you guys Friday. On what the futures.
