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Scott Irwin Profile picture
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7 Dec, 4 tweets, 2 min read
1. With the RFS RVO rulemaking apparently being released today. Dug out my cheat sheet for the numbers prepared back in September when there was the big leak.
2. Key issue is how close the released RVOs are to the leaked RVOs. Will the Biden Admin crush the 2020/21/22 RVOs as in the leaked proposal? Gonna find out.
3. I think one number will tell the tale. Did the Biden EPA mess with the final RVO for 2020? Refiners badly want this to be lowered.
4. I have no idea which way the Biden Admin is leaning. Crickets from both sides right now. RIN market in recent days has not collapsed and those guys usually know. So if I have to bet would say refiners will be at least mildly disappointed.

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More from @ScottIrwinUI

Scott Irwin Profile picture
7 Dec
1. Different quick take on the RVOs just released today. Try to shed some light on just how much did Biden EPA crush the RVOs in the rulemaking for 20-22? To start, I use the final previous 2020 RVO of 20.090 as the benchmark. I call it the status quo.
2. I then take the difference between the 20.09BG benchmark and total RVOs for each year over 2020-22. Simple. That nets out to a cut of 3.85BG in total for the three years. May I say YUUUUGE.
3. EPA also finally going back and addressing the 2016 remand from the July 2017 court case (gee only took 4 yrs). Adding on 250MG in 2022 and 2023. I am interpreting that as additional to stated total RVO. Still need to check further.
Read 6 tweets
Scott Irwin Profile picture
7 Dec
1. Finally got to the RVO rulemaking. Here are the actual numbers straight from the document. Slightly different than in my previous thread. Implications same. Still surprised there was so little change from the leaked numbers in September.
2. Those that said the leaked numbers in Sep could not be right were wrong. This is only slightly different from the leaked numbers. I gotta dig in and see how in the world they justified cutting the 2020 RVO AFTER a final rulemaking.
3. Biden EPA went with what I call the "little reset" provision to justify crushing the RVOs for 2020 and 2021. That was the only possibility that I could think of back in Sep and that's what they did.
Read 4 tweets
Scott Irwin Profile picture
7 Dec
1. Do new crop corn and soybean futures contain a systematic pre-harvest "weather" premium? Something that @JosephJanzen covered in our IFES webinar last week. Before I review Joe's results on this question, some background.
@JosephJanzen 2. This argument has been around a long time. Back in the 90s, Bob Wisner of Iowa State and Dean Baldwin of Ohio State (better people you will never know) were on one side, arguing there was a pre-harvest weather premium could benefit crop farmers.
@JosephJanzen 3. Carl Zulauf and I were on the other side, basically arguing that under the efficient market hypothesis this did not make sense and that the statistical evidence was weak. Since Carl and I were at Ohio State and so was Dean Baldwin the different views were all in one place!
Read 12 tweets
Scott Irwin Profile picture
3 Dec
1. Weekend Reading: Continuing theme of market impact of USDA crop and livestock reports. Next up is a 2008 JAAE paper with co-authors on "The Impact of Situation and Outlook Information in Corn and Soybean Futures Markets: Evidence from WASDE Reports." ageconsearch.umn.edu/record/45048?l…
2. Focus on this paper for two reasons. #1 My first use of price volatility tests vs. market surprise tests of market impact of USDA reports. #2 My belief that every good empirical paper has to have a money chart.
3. Price volatility tests of market reaction are now a workhorse of event studies. Basically, measure price volatility on report release days vs. non-report release days. If USDA reports contain valuable information then prices should move.
Read 9 tweets
Scott Irwin Profile picture
2 Dec
1. Could not resist one more data exercise on corn and soybean planted acreage for 2022. Gonna reverse engineer things here. Asking how likely is 91 million planted acres for corn given current market incentives?
2. What I do is drop total planted corn/soy acreage back to 181.5 million and then assume corn planted acreage will be 91 million. Certainly some in the market thinking this way. Gives 91 mil for corn and 89 mil for soybeans. Implies a split of 49.3% for soybeans.
3. Now I simply plot current 22 new crop soybean/corn price ratio of about 2.25 vs. 49.3% planted acreage for soybeans. We would be looking at uncharted territory at least in recent history if that were to happen. Certainly not impossible but unlikely.
Read 6 tweets
Scott Irwin Profile picture
2 Dec
1. Yesterday I had a thread on my projection of total planted crop area in the US for 2022. Crucial part of my projection for corn and soybean planted acreage. Oh. I need to also apologize for missing my interview with @MikeAdamsAg. Got my booster and it did not go well :(
@MikeAdamsAg 2. To recap, I projected total planted acreage in 2022 to rebound to 326.5 million acres based on the lagged impact of high grain prices. This would allow all major crops to expand acreage at least somewhat, e.g., corn would not have to steal acres from wheat.
@MikeAdamsAg 3. With that background I can walk through how I go to 96 million for corn. I start by projecting the total combined corn/soybean planted acreage. Pretty steady in recent years around 181-182 million. I jump it to 183 million based on high prices. Note only +1.5 mil over 2021.
Read 10 tweets

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