@sdelsad/commodity-desk-daily 1.0.29 → 1.0.30
This diff represents the content of publicly available package versions that have been released to one of the supported registries. The information contained in this diff is provided for informational purposes only and reflects changes between package versions as they appear in their respective public registries.
- package/email.html +122 -0
- package/email.txt +681 -0
- package/package.json +1 -1
package/email.html
ADDED
|
@@ -0,0 +1,122 @@
|
|
|
1
|
+
<!DOCTYPE html>
|
|
2
|
+
<html lang="en">
|
|
3
|
+
<head>
|
|
4
|
+
<meta charset="utf-8">
|
|
5
|
+
<meta name="viewport" content="width=device-width,initial-scale=1">
|
|
6
|
+
<meta http-equiv="X-UA-Compatible" content="IE=edge">
|
|
7
|
+
<meta name="x-apple-disable-message-reformatting">
|
|
8
|
+
<meta name="color-scheme" content="light">
|
|
9
|
+
<meta name="supported-color-schemes" content="light">
|
|
10
|
+
<title>Soft Commodity Trading — Ep 9: Vegetable oils and biofuels</title>
|
|
11
|
+
</head>
|
|
12
|
+
<body style="margin:0;padding:0;background:#ece7db;-webkit-text-size-adjust:100%;">
|
|
13
|
+
<div style="display:none;max-height:0;overflow:hidden;mso-hide:all;">Palm, soy, rape and sun trade as one system, and the spread between them is the switch that rations demand. Then biofuels: how a mandate turns a political decision into a standing bid for a crop, and why a fuel policy is always a protein policy.</div>
|
|
14
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="background:#ece7db;">
|
|
15
|
+
<tr><td align="center" style="padding:20px 10px;">
|
|
16
|
+
<table role="presentation" width="600" cellpadding="0" cellspacing="0" border="0" align="center" style="width:100%;max-width:600px;background:#faf7f1;border:1px solid #e3ddd2;">
|
|
17
|
+
<tr><td style="padding:30px 28px 24px;background:#faf7f1;"><p style="margin:0 0 6px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Soft Commodity Trading</p><p style="margin:0 0 14px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.14em;text-transform:uppercase;color:#8b8375;">Episode 09 · Thursday 20 August 2026 · 11 min 59</p><h1 style="margin:0 0 12px;font-family:Georgia,'Times New Roman',Times,serif;font-size:29px;line-height:1.2;font-weight:normal;color:#16110c;">Vegetable oils and biofuels</h1><p style="margin:0 0 22px;font-family:Georgia,'Times New Roman',Times,serif;font-size:17px;line-height:1.5;color:#4a4238;">Palm, soy, rape and sun trade as one system, and the spread between them is the switch that rations demand. Then biofuels: how a mandate turns a political decision into a standing bid for a crop, and why a fuel policy is always a protein policy.</p><table role="presentation" cellpadding="0" cellspacing="0" border="0"><tr><td bgcolor="#1d4032" style="border-radius:6px;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09.mp3" style="display:inline-block;padding:14px 28px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:15px;font-weight:bold;color:#faf7f1;text-decoration:none;border-radius:6px;">▶ Listen — 11 min</a></td></tr></table></td></tr>
|
|
18
|
+
<tr><td style="padding:0 28px 22px;background:#faf7f1;"><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:13px;line-height:1.6;color:#4a4238;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09.html" style="color:#1d4032;font-weight:bold;">Read this episode online →</a><span style="color:#8b8375;"> · charts, the quiz and the running glossary</span></p></td></tr>
|
|
19
|
+
<tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;"> </td></tr></table></td></tr>
|
|
20
|
+
<tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Market pulse</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Everything in Chicago rallied, and the crusher still had a worse day than the day before.</strong></p>
|
|
21
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Commodity</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Contract</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Price</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Change</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Corn</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Sep (CBOT)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">473 c/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+9¾¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Corn</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Dec (CBOT)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">498 c/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+10¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soybeans</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Sep (CBOT)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">1222¼ c/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+21½¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soybeans</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Nov (CBOT)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">1237¾ c/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+20½¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soymeal</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Sep (CBOT)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">—</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+2.0%</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soyoil</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Sep (CBOT)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">—</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+0.25%</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Wheat SRW</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Sep (CBOT)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">680¼ c/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+15¾¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Wheat HRW</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Sep (KC)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">762 c/bu</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+18¼¢</span></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Crude palm oil</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Sep (BMD)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">RM 4,648/t</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+RM 32</span></td></tr></tbody></table>
|
|
22
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Wednesday was a broad buying day, and the trigger was boots in fields. The Pro Farmer crop tour is walking the belt this week and the early scouting was reported as less than stellar. USDA still carries a corn yield of 180.7 bu/ac. After two days of the tour the trade has started to ask whether that is generous. Flooding in the eastern belt and positioning ahead of the weekly export sales report did the rest. Corn added ten cents in December, beans twenty and a half in November, and wheat took the largest percentage move of the three.</p>
|
|
23
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The move worth reading was inside the bean complex, and it is the mirror image of Tuesday. Meal led, up about 2%. Oil managed a quarter of a percent. Beans rose more than either product in percentage terms. A day on which every price on the screen is green can still be a losing day for a plant, because the crush is a difference, not a level.</p>
|
|
24
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The geopolitical read: this morning the policy risk is a fuel rule, not a war.</strong> Indonesia's B50 blending programme came into full effect in July, with the 2026 biodiesel allocation set at 16.75 million kilolitres. To fund the subsidy, Jakarta raised the crude palm oil export levy from 10% to 12.5%. The transmission is export capacity, but self-inflicted: the oil exists and the mills are running, and it is simply made expensive to leave. That is a supply withdrawal decided in a ministry, and it lands first on the palm–soyoil spread, then on every vegetable oil that competes with either.</p>
|
|
25
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09_chart1.png" width="522" alt="Palm pays you to wait — The curve rises 312 ringgit from September to December, about 76 dollars a tonne. Palm is in carry, and the market is paying to hold oil into the low-production quarter rather than sell it now. — MDEX crude palm oil futures, Wednesday 19 August 2026, closing quotes." title="Palm pays you to wait — The curve rises 312 ringgit from September to December, about 76 dollars a tonne. Palm is in carry, and the market is paying to hold oil into the low-production quarter rather than sell it now. — MDEX crude palm oil futures, Wednesday 19 August 2026, closing quotes." style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table><ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The four vegetable oils are one market with four tickers. A refiner buys a melting point and a price, not a crop, so the spread between the oils is the switch that rations demand between them.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Palm is the volume leader because the yield per hectare is several times an oilseed's, and it is the only major vegetable oil with a futures contract denominated in neither dollars nor euros.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">One cent per pound is $22.05 per tonne. That single factor is what lets a soyoil price in Chicago be compared with a palm price in Kuala Lumpur.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A mandate creates demand that does not respond to price. A food buyer walks away when oil gets expensive; a blender under a legal obligation pays.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Indonesia's 16.75 million kilolitre allocation is roughly 15 million tonnes of palm oil consumed at home — on the order of India's entire annual import demand, decided by one cabinet.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Never multiply a renewable volume by a feedstock factor without checking whether it is stated in physical gallons or RIN gallons. Biodiesel earns 1.5 RINs per physical gallon, so the wrong basis overstates demand by half.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Oil demand and meal demand are joined at the bushel. A billion pounds of incremental oil demand drags in four billion pounds of meal that no fuel policy asked for, which is why the crush captures far less of an oil rally than the oil chart implies.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Vegetable oil balance sheets now contain an energy term. Discretionary blending is live when gasoil trades above the oils and vanishes when crude falls, and no crop model forecasts it.</li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Indonesia funds the blending subsidy from the export levy, and the mandate's purpose is to shrink the exports the levy is collected on. The levy rate is the honest indicator of whether the programme is still affordable.</li></ul>
|
|
26
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Term</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Meaning</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>CPO</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Crude palm oil, the unrefined oil pressed from the fruit of the oil palm and the benchmark grade traded internationally</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>FCPO</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The Bursa Malaysia Derivatives crude palm oil futures contract, 25 tonnes per lot, quoted in Malaysian ringgit per tonne</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Olein and stearin</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The liquid and solid fractions palm separates into when refined, sold into cooking oil and into fats respectively</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Kilolitre</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">One thousand litres, the volume unit Asian governments state biofuel mandates in, converted to tonnes using the fuel's density</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>FAME</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Fatty acid methyl ester, the chemical name for conventional biodiesel made by reacting a vegetable oil with methanol</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>B50</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A blending mandate requiring 50% biodiesel in the diesel pool, the level Indonesia moved to in 2026</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Export levy</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">A tax charged on a commodity leaving the country, used in Indonesia both to discourage exports and to fund the domestic blending subsidy</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>RFS</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The US Renewable Fuel Standard, the rule that sets annual minimum volumes of renewable fuel that must be blended into American transport fuel</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>RVO</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Renewable volume obligation, the share of the national mandate assigned to an individual refiner or importer</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>RIN</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Renewable identification number, the tradable compliance certificate generated with each gallon of renewable fuel, at 1.5 per gallon of biodiesel</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Biomass-based diesel</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The RFS category covering biodiesel and renewable diesel made from fats and vegetable oils</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Renewable diesel (HVO)</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Hydrotreated vegetable oil, a drop-in diesel chemically identical to fossil diesel and unconstrained by blend walls, unlike FAME</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Discretionary blending</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Blending vegetable oil into the fuel pool purely because it is cheaper than gasoil, with no mandate and no subsidy behind it</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Gasoil</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The traded middle distillate that diesel prices off, and the reference against which discretionary blending economics are judged</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Blend wall</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The physical or warranty limit on how much conventional biodiesel an engine or fuel system will tolerate</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Substitution spread</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">The price gap between two competing vegetable oils, which sets the point at which a refiner reformulates from one to the other</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Standing bid</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">Demand that is present regardless of price because it is created by obligation rather than by choice</td></tr></tbody></table></td></tr>
|
|
27
|
+
<tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;"> </td></tr></table></td></tr>
|
|
28
|
+
<tr><td style="padding:24px 28px 4px;background:#f4efe4;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Conversion drill 9 of 12</p><h3 style="margin:0 0 12px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Bushels per acre ↔ tonnes per hectare</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Rule:</strong> corn: 1 bu/ac ≈ 0.0628 t/ha · wheat and soybeans: 1 bu/ac ≈ 0.0673 t/ha</p>
|
|
29
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Fast method:</strong> corn: divide by 16. Wheat/soybeans: divide by 15.</p>
|
|
30
|
+
<ul style="margin:0 0 16px;padding-left:22px;"><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">US corn at 182 bu/ac → 182 ÷ 16 ≈ <strong>11.4 t/ha</strong></li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">US soybeans at 53 bu/ac → 53 ÷ 15 ≈ <strong>3.5 t/ha</strong></li><li style="margin:0 0 9px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">French wheat at 7.5 t/ha → 7.5 × 15 ≈ <strong>112 bu/ac</strong></li></ul>
|
|
31
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Why it matters:</strong> US yields are quoted in bushels per acre, European and South American in tonnes per hectare. Comparing crops requires crossing.</p></td></tr>
|
|
32
|
+
<tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;"> </td></tr></table></td></tr>
|
|
33
|
+
<tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Quiz</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q1.</strong> September palm settled at RM 4,648/t with the ringgit near 4.08 to the dollar, and Chicago soybean oil was quoted near 69 c/lb in mid-August. Express both in dollars per tonne and give the substitution spread. A European refiner uses 40,000 t of soybean oil a year and can reformulate up to 30% of that volume into palm. Compute the annual saving at today's spread, then name the two new exposures the switch creates that the refiner did not have while buying soyoil.</p>
|
|
34
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q2.</strong> A rule change is expected to add 1.4 billion pounds of annual US soybean oil demand. Compute the incremental crush in bushels and the incremental soybean meal in short tons. Then explain why a trader who buys the board crush on that headline is likely to be disappointed, and say which single leg he should be positioned against instead.</p>
|
|
35
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q3.</strong> Gasoil rallies 25% and moves above both palm and soybean oil on an energy-equivalent basis. Describe what happens to the palm–soyoil spread, to Indonesia's subsidy bill, and to the reliability of a soyoil balance sheet whose demand side contains only food and mandated volumes. Then say what happens to all three if crude subsequently falls 30%.</p>
|
|
36
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q4.</strong> <em>(Ep 8)</em> Take the board crush formula from ep 8 and start from meal at $325.00/short ton, oil at 69.00 c/lb and November beans at 1217¼. Apply Wednesday's moves: meal +2.0%, oil +0.25%, beans +20½¢. Compute the change in the board crush in cents per bushel, and state whether Wednesday was a good or a bad day for a plant. Then say what this tells you about reading a complex from a screen of green numbers.</p>
|
|
37
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q5.</strong> <em>(Ep 8)</em> Ep 8 established that the plant crush is the board crush adjusted for three separate bases, minus conversion cost, and that the bean basis at the gate is the line that moves most. Suppose a sustained fuel-driven bid pushes the oil share from 52% to 58% and lifts the board crush to a two-year high. Explain the mechanism by which the plant crush can stay flat throughout, and name the one number you would watch to confirm it is happening.</p>
|
|
38
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q6.</strong> <em>(Ep 6)</em> Ep 6 established that corn is a demand story, and that ethanol is one of the two buyers that walks away at a price. On Wednesday ethanol production fell to a one-month low of 1.089 m barrels a day and ethanol stocks rose 1%, and December corn still rallied ten cents. Reconcile those facts. Then state what would have to be true for that divergence to persist for a month rather than a day.</p>
|
|
39
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q7.</strong> <em>(Ep 6)</em> Ep 6 argued that a weather premium decays on the calendar rather than on the forecast. Wednesday's rally was driven by early Pro Farmer tour results rather than by a forecast. Explain what is structurally different about tour-driven buying compared with forecast-driven buying, and what that difference implies for how long the move should be expected to hold.</p>
|
|
40
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Q8 — Conversion drill.</strong> A Mato Grosso soybean field yields 3.72 t/ha. An Illinois field is quoted at 58.5 bu/ac. Convert each into the other's unit and say which is the higher yield. Then take the 91 million bushels of incremental crush from today's worked example and compute how many hectares of Brazilian beans, at 3.72 t/ha, would be needed to supply it. Give the answer in hectares and in acres.</p></td></tr>
|
|
41
|
+
<tr><td align="center" style="padding:20px 28px;background:#f4efe4;border-top:1px solid #e3ddd2;border-bottom:1px solid #e3ddd2;"><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;font-weight:bold;letter-spacing:.12em;text-transform:uppercase;color:#8a2f2f;">Solutions below — answer first</p></td></tr>
|
|
42
|
+
<tr><td height="240" style="height:240px;line-height:240px;font-size:1px;background:#faf7f1;"> </td></tr>
|
|
43
|
+
<tr><td height="240" style="height:240px;line-height:240px;font-size:1px;background:#faf7f1;"> </td></tr>
|
|
44
|
+
<tr><td style="padding:10px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Solutions</p><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A1.</strong> Both sides first, in dollars per tonne.</p>
|
|
45
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Oil</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Quote</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Conversion</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">$/t</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Palm, Sep BMD</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">RM 4,648/t</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">÷ 4.08 RM per $</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$1,139</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soybean oil, CBOT</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">69.00 c/lb</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">× 22.0462</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$1,521</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Substitution spread</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>$382/t</strong></td></tr></tbody></table>
|
|
46
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Thirty percent of 40,000 t is 12,000 t. At $382/t that is <strong>about $4.6 m a year</strong>, which is why formulation teams exist.</p>
|
|
47
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The two new exposures. The first is <strong>currency</strong>. FCPO settles in ringgit, so a refiner hedging palm on the board is short ringgit-denominated futures against a dollar or euro cost base, and the hedge itself creates an FX position of roughly RM 55 m on that volume. Nothing in the physical trade asked for that. The second is <strong>policy</strong>. Palm's FOB price contains an Indonesian export levy that a ministry can change by decree, as it just did from 10% to 12.5%. Soybean oil is exposed to US policy too, but the refiner buying soyoil in Rotterdam is not paying a tax that moves on a fortnight's notice.</p>
|
|
48
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Two further answers deserve half credit because they are real: <strong>basis risk</strong>, since Rotterdam CIF palm does not track BMD futures perfectly, and <strong>specification risk</strong>, since palm and soyoil have different melting points and oxidative stability, so "reformulate" is not a switch you can flip and unflip weekly.</p>
|
|
49
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A2.</strong> The arithmetic runs through the bushel.</p>
|
|
50
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Step</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Working</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Result</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Incremental oil demand</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">given</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">1,400 m lb</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Oil per bushel</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">÷ 11 lb</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>127.3 m bu of crush</strong></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Meal produced</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">× 44 lb</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">5,601 m lb</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">In short tons</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">÷ 2,000</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>2.80 m short tons of meal</strong></td></tr></tbody></table>
|
|
51
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Why the crush buyer is disappointed. The board crush is meal × 0.022 plus oil × 0.11 minus the bean price. The headline lifts one of those three terms. But 127 million bushels of extra crush has to be sourced, so crushers bid the bean, which raises the term being subtracted. And it produces 2.8 million short tons of meal into a market that has no incremental demand for protein, so the meal term falls. Two of the three legs move against the position that the headline appears to justify.</p>
|
|
52
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The clean expression of the view is not the crush. It is <strong>short meal against long oil</strong> — the oil share trade. That isolates the thing the policy actually changes, which is the relative value of the two products, and it does not require you to also be right about the bean basis. A trader who buys the whole crush is expressing a view on the oil rule and an unintended view on the bean market at the same time.</p>
|
|
53
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The deeper point: any demand shock that arrives through only one joint product has to be released through the other. Fixed proportions mean the by-product is always the shock absorber, and the by-product market is where the price damage shows up.</p>
|
|
54
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A3.</strong> Take them in order.</p>
|
|
55
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The palm–soyoil spread narrows.</strong> Discretionary blending is not fussy about which oil it burns — it buys the cheapest tonne of fat that meets spec. So the marginal energy bid lands on palm, which is the cheaper of the two, and pulls it toward soyoil. The spread compresses from the bottom.</p>
|
|
56
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Indonesia's subsidy bill falls.</strong> The blending subsidy exists to cover the gap between the palm-based biodiesel price and the diesel it replaces. If gasoil is above palm, that gap is negative and the mandate becomes self-financing. This is the quiet condition under which aggressive mandates get announced: they are cheapest to promise when energy is expensive.</p>
|
|
57
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The balance sheet becomes unreliable in the direction of understating demand.</strong> A demand side built from food use plus mandated volumes has no line for the tonnes that a fuel trader buys purely on arbitrage. In a high-gasoil regime those tonnes are real and can be large, and they will show up as an unexplained stock draw that the analyst books to "residual".</p>
|
|
58
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">If crude then falls 30%, all three reverse, and not symmetrically. Discretionary blending switches off essentially overnight, because it is a per-cargo economic decision rather than a contracted programme, so the palm–soyoil spread widens again quickly. The subsidy bill reappears immediately, and now has to be paid out of an export levy pot that the mandate itself has shrunk — which is the loop that forces levy increases. The balance sheet swings from understating demand to overstating it, because the analyst who finally added an energy line will carry it forward. The failure mode is the same in both directions: an energy term added at the top of a cycle is a crop analyst's most expensive habit.</p>
|
|
59
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A4.</strong> Build the change leg by leg. Only the changes matter, not the levels.</p>
|
|
60
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Leg</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Move</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Multiplier</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">¢/bu effect</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Meal</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+2.0% of $325.00 = +$6.50/st</span></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">× 0.022</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">+14.3</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Oil</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+0.25% of 69.00 = +0.1725 c/lb</span></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">× 0.11</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">+1.9</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Beans</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><span style="color:#215c44;font-weight:bold;">+20.5 c/bu</span></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">−1</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">−20.5</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Board crush</strong></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>−4.3</strong></td></tr></tbody></table>
|
|
61
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">So the board crush fell about <strong>4.3 c/bu on a day when all three prices rose</strong>. Wednesday was a bad day for a plant.</p>
|
|
62
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">What it tells you: the crush is a <em>difference between large numbers</em>, so its sign is set by relative moves, not by direction. Meal was the strongest product in percentage terms and still could not carry the bean move, because meal's contribution is scaled by 0.022 and the bean's by one. A 2% meal rally is worth 14 cents of crush; a 20-cent bean rally costs 20. The screen of green tells you nothing about the margin, and a trader who reads a complex by looking at how many contracts are up is not reading the complex at all.</p>
|
|
63
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A5.</strong> The mechanism is competition for beans, and it runs through the gate.</p>
|
|
64
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A wide board crush is a public number. Every plant in the country sees it at the same moment, and every plant responds the same way: raise the run rate and buy more beans. Crush capacity cannot be added inside a marketing year, so the only variable that clears the increased demand for beans is the <strong>bean basis at the gate</strong>. Plants bid against each other and against the export elevator, and the basis rises until the marginal plant is indifferent again.</p>
|
|
65
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">That is the whole answer. The board crush went to a two-year high and the bean basis absorbed it. The plant crush — board crush, minus bean basis, minus the meal and oil basis effects, minus conversion cost — is flat because the second line rose by as much as the first.</p>
|
|
66
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">There is a second-order piece worth noting here. The rising oil share means the extra product value arrives disproportionately in oil, but the extra <em>volume</em> arrives in both products in the fixed 44-to-11 ratio. So higher run rates push meal basis down as well, which subtracts a second time. The plant crush can in fact end up lower than before the fuel-driven rally.</p>
|
|
67
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The number to watch is the <strong>bean basis at the plant gate relative to the export elevator's bid</strong> in the same draw area. If the crusher is winning that contest, he is paying up for beans and the board crush is being competed away in exactly the place ep 8 said it would be. Watching the board crush alone tells you the opposite of what is happening.</p>
|
|
68
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A6.</strong> They are not in conflict, because they are statements about different weeks.</p>
|
|
69
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The ethanol print is a <em>demand</em> datapoint about last week's grind: production at a one-month low of 1.089 m bbl/day with stocks up 1% is a mildly negative corn signal, worth a fraction of a cent. Wednesday's rally was a <em>supply</em> datapoint about this year's crop: scouts in the field reporting worse-than-expected conditions, against a USDA yield of 180.7 that the trade already suspected. In August, the supply side of the corn balance sheet has a variance many times larger than the demand side, because a two-bushel yield change moves the carryout by roughly 180 million bushels while a week of soft grind moves it by a few million. The market prices the larger variance first.</p>
|
|
70
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">For the divergence to persist a month rather than a day, the tour would have to be confirmed by something structural, and ethanol margins would have to hold. Specifically: the tour findings would need to be validated by the September and October USDA reports, so that the yield cut becomes a balance sheet fact rather than a rumour; and ethanol's weakness would need to prove seasonal — a maintenance-driven dip — rather than margin-driven. If ethanol grind is falling because the ethanol crush margin is negative at $4.98 corn, then ep 6's point bites: that buyer is walking away at a price, and a rally built on supply will be capped by the demand it destroys. The tell is the ethanol margin itself, not the production number.</p>
|
|
71
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A7.</strong> The difference is what kind of information each contains.</p>
|
|
72
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A <strong>forecast</strong> is a probability distribution over an event that has not happened. It is revised twice a day, it can be wrong, and the market discounts it accordingly. Crucially, it decays on the calendar: once pollination is past, a forecast of heat cannot change the ear count, and the premium bleeds out whether or not the weather actually improves.</p>
|
|
73
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A <strong>crop tour</strong> is a measurement of an event that has already happened. Scouts count ears and pods in fields where the yield is largely already set. That information does not decay, because there is no subsequent event that can falsify it — only a better measurement can, and the better measurement is the USDA survey in September.</p>
|
|
74
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">So the two moves behave differently. Tour-driven buying should be <em>stickier</em> than forecast-driven buying, because it is not waiting on an outcome. But it is also <em>narrower</em>: a tour samples a route, not a population, and its historical relationship to the final national yield is loose. The honest expectation is that a tour move holds until the next authoritative measurement and then gets marked to it, which makes the September WASDE the event risk that matters, not the weekend forecast.</p>
|
|
75
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The practical implication for positioning: a weather premium is something you sell into strength as the calendar runs out. A tour-driven move is something you carry to the next report and then reassess. Treating the second like the first is how a good supply read turns into a bad trade.</p>
|
|
76
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>A8 — Conversion drill.</strong> Soybeans convert at 1 bu/ac ≈ 0.0673 t/ha, or divide by 15 as a fast method.</p>
|
|
77
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Field</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Given</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Converted</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Illinois</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">58.5 bu/ac</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">× 0.0673 = <strong>3.94 t/ha</strong></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Mato Grosso</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">3.72 t/ha</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">÷ 0.0673 = <strong>55.3 bu/ac</strong></td></tr></tbody></table>
|
|
78
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>Illinois is the higher yield</strong>, by about 0.22 t/ha or 3.2 bu/ac — roughly 6%. The fast method gets you there too: 58.5 ÷ 15 = 3.9 t/ha, and 3.72 × 15 = 55.8 bu/ac. Close enough to answer the question in a phone call.</p>
|
|
79
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Now the area. First cross bushels into tonnes, at 36.744 bu per tonne of soybeans:</p>
|
|
80
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Step</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Working</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Result</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Incremental crush</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">91,000,000 bu ÷ 36.744</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">2.476 m t</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Area required</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">÷ 3.72 t/ha</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>666,000 ha</strong></td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">In acres</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">× 2.471</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>1.65 m acres</strong></td></tr></tbody></table>
|
|
81
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Two-thirds of a million hectares of Brazilian soybeans, to feed one billion pounds of American oil demand. It is worth holding that picture next to the mandate that created it: a line in a regulation, denominated in gallons, reaching across a hemisphere and asking for an area roughly the size of a small country's entire arable base.</p></td></tr>
|
|
82
|
+
<tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;"> </td></tr></table></td></tr>
|
|
83
|
+
<tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">The episode, in writing</p>
|
|
84
|
+
<h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">One market with four tickers</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Palm, soybean oil, rapeseed oil and sunflower oil are grown on different continents, harvested on different calendars and traded on different exchanges. They are nonetheless a single market, and the reason is that almost nobody in the chain wants the crop.</p>
|
|
85
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A refiner in Rotterdam, a bottler in Mumbai, a snack manufacturer in Jakarta — each is buying a liquid with a melting point, an oxidative stability and a price. Within limits, the recipe is a choice. Below a certain spread they reformulate toward the cheaper oil; above it they do not. That switching behaviour is what welds four crops into one system, and it means the <strong>substitution spread</strong> between two oils is more informative than either flat price.</p>
|
|
86
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Palm is the volume leader. An oil palm produces several tonnes of oil per hectare where a soybean produces well under one, which is why a crop grown in a narrow equatorial band supplies more vegetable oil than any other single source. Its benchmark is the <strong>FCPO</strong> contract on Bursa Malaysia Derivatives.</p>
|
|
87
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;"><strong>The unit moment.</strong> One FCPO lot is 25 tonnes of crude palm oil, quoted in Malaysian ringgit per tonne, with a minimum tick of RM 1 — so RM 25 per lot. It is quoted in ringgit because it settles against Malaysian physical delivery. That is a detail with teeth: it is the only major vegetable oil benchmark denominated in neither dollars nor euros, so every non-Malaysian hedger acquires a currency position that no part of the underlying trade asked for.</p>
|
|
88
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Crossing into Chicago requires one number. Soybean oil is quoted in cents per pound, 60,000 lb to a contract, and <strong>1 c/lb = $22.05/t</strong>. Commit that to memory and the two halves of the oil world become comparable in a single multiplication.</p>
|
|
89
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Market</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Quote</th><th align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:right;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">In $/t</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Palm, Sep BMD</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">RM 4,648/t at 4.08 RM/$</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$1,139</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Soybean oil, CBOT, mid-August</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">69.00 c/lb</td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;">$1,521</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;"><strong>Spread</strong></td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"></td><td align="right" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:right;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>$382/t</strong></td></tr></tbody></table>
|
|
90
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Nearly four hundred dollars a tonne between two liquids that a refiner can, within limits, use interchangeably. That gap is not a mispricing waiting to be arbitraged. It is the price of two different national policies, and the rest of this edition is about how those policies get there.</p>
|
|
91
|
+
<h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Reading the palm curve</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Wednesday's palm board also carries a shape worth reading, and it is a chance to apply the curve grammar from ep 3 to a market that behaves nothing like Chicago wheat.</p>
|
|
92
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09_chart2.png" width="522" alt="The carry is front-loaded — Most of the 312-ringgit carry sits in the first spread and it shrinks steadily thereafter. The market is paying hardest to move oil out of September, which is a statement about the next few weeks rather than about the fourth quarter. — Derived from MDEX crude palm oil closing quotes, Wednesday 19 August 2026." title="The carry is front-loaded — Most of the 312-ringgit carry sits in the first spread and it shrinks steadily thereafter. The market is paying hardest to move oil out of September, which is a statement about the next few weeks rather than about the fourth quarter. — Derived from MDEX crude palm oil closing quotes, Wednesday 19 August 2026." style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table>
|
|
93
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The curve rises RM 312 from September to December, roughly $76/t, or about 6.7% over three months. On the ep 3 framing that is a <strong>carry market</strong>: the board is paying you to hold oil rather than sell it prompt. But the decomposition matters more than the total. The Sep–Oct spread alone is RM 139, and each subsequent spread is smaller. A carry that is front-loaded is not a general statement that oil is abundant. It is a statement that oil is abundant <em>now</em>, and that the market expects the fourth-quarter production decline — palm's output falls seasonally into the northern winter — to tighten things later.</p>
|
|
94
|
+
<h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">A mandate is a standing bid</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Ordinary demand curves slope downward. Somebody stops buying when the price rises. This is the assumption underneath every balance sheet: the demand lines are estimates of behaviour, and behaviour responds to price.</p>
|
|
95
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A mandate breaks that. A blender legally required to put 50% biodiesel into the diesel pool does not walk away at a higher palm price. He pays, or he does not sell fuel. That converts a political decision into a <strong>standing bid</strong> — demand that exists regardless of price — and it is the single most important structural fact about vegetable oils today.</p>
|
|
96
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Work the Indonesian number, because the arithmetic is the lesson.</p>
|
|
97
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="width:100%;border-collapse:collapse;margin:0 0 20px;"><thead><tr><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Step</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Working</th><th align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;font-weight:bold;letter-spacing:.09em;text-transform:uppercase;color:#4a4238;text-align:left;padding:0 8px 8px 0;border-bottom:1px solid #16110c;">Result</th></tr></thead><tbody><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">2026 biodiesel allocation</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">stated by Jakarta</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">16.75 m kL</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Volume to mass</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">× 0.88 t/m³ (biodiesel density)</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">14.74 m t of fuel</td></tr><tr><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;font-weight:bold;">Fuel to feedstock</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;">× ~1.03 t CPO per t FAME</td><td align="left" style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.45;color:#16110c;padding:9px 8px 9px 0;text-align:left;border-bottom:1px solid #e3ddd2;vertical-align:top;"><strong>≈ 15.2 m t of CPO</strong></td></tr></tbody></table>
|
|
98
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Fifteen million tonnes of palm oil, consumed inside the country that produced it. That is on the order of a third of Indonesian output, and it is roughly the size of India's entire annual vegetable oil import demand. One cabinet decision, sized like the world's largest importer.</p>
|
|
99
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The funding mechanism is where it gets interesting. The blending subsidy is paid out of the <strong>export levy</strong>, which was raised from 10% to 12.5% this year. But the mandate's purpose is to reduce the exports on which the levy is collected. The more successful the programme, the smaller the pot that pays for it. That is not a stable arrangement, and it is why the levy rate — not the mandate headline — is the honest indicator of whether the programme is affordable. Watch the rate.</p>
|
|
100
|
+
<h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">The American version, and the trap in it</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The United States sets its volumes through the Renewable Fuel Standard. The final rule for 2026 put total renewable fuel at 26.81 bn gallons and biomass-based diesel at 8.86 bn gallons, with an advanced biofuel line of 10.82 bn.</p>
|
|
101
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The temptation is to multiply a volume by a feedstock factor and call it demand. Do not, without first checking the basis. Some RFS volumes are stated in physical gallons and some in <strong>RIN</strong> gallons, and biodiesel generates 1.5 RINs per physical gallon. Read the wrong basis and the resulting feedstock estimate is 50% too large. This mistake is made in public, by people who should know better, and it is the fastest way to be confidently wrong about a soybean oil balance sheet.</p>
|
|
102
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The safe method is to work in the <strong>increment</strong>, where the equivalence factors cancel. Suppose a policy change adds one billion pounds of annual soybean oil demand.</p>
|
|
103
|
+
<table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0" style="margin:6px 0 22px;"><tr><td align="center" style="border:1px solid #e3ddd2;background:#faf7f1;padding:10px;"><img src="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09_chart3.png" width="522" alt="One billion of oil, four of meal — The mandate asks for the oil. The bushel delivers four times as much meal alongside it — about two million short tons that no fuel policy requested and no fuel industry can use. — Worked example, episode 9, using the 11 lb oil and 44 lb meal yields per bushel from episode 8." title="One billion of oil, four of meal — The mandate asks for the oil. The bushel delivers four times as much meal alongside it — about two million short tons that no fuel policy requested and no fuel industry can use. — Worked example, episode 9, using the 11 lb oil and 44 lb meal yields per bushel from episode 8." style="display:block;width:100%;max-width:522px;height:auto;border:0;outline:none;text-decoration:none;"></td></tr></table>
|
|
104
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">A bushel of soybeans yields 11 lb of oil and 44 lb of meal, in fixed proportion. One billion pounds of oil therefore requires about <strong>91 million bushels</strong> of additional crush — and that crush produces about <strong>4.0 billion pounds of meal</strong>, or 2.0 million short tons.</p>
|
|
105
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">That meal was not requested by anyone. It has to be fed to an animal, somewhere, at some price, and the price is what adjusts. So the chain runs: a fuel rule bids up oil, crushers raise run rates, meal supply floods, and the meal price falls. Ep 8's board crush formula makes the consequence arithmetic rather than opinion — meal × 0.022, plus oil × 0.11, minus the bean. An oil-driven demand shock lifts the second term, depresses the first, and raises the third as crushers compete for beans. The crush captures far less of the move than the oil chart suggests.</p>
|
|
106
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The general principle is worth stating cleanly: <strong>any demand shock arriving through one joint product must be released through the other.</strong> Fixed proportions make the by-product the shock absorber, and the by-product market is where the price damage lands. A fuel policy is always, whether it intends to be or not, a protein policy.</p>
|
|
107
|
+
<h3 style="margin:26px 0 10px;font-family:Georgia,'Times New Roman',Times,serif;font-size:19px;line-height:1.3;font-weight:normal;color:#16110c;">Why balance sheets now have an energy term</h3><p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">Palm and soybean oil each sit on two bids.</p>
|
|
108
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The first is the mandate: contracted, price-insensitive, known in advance. The second is <strong>discretionary blending</strong> — a refiner buying vegetable oil purely because it is cheaper than gasoil, with no subsidy and no legal obligation. Through the middle of this year that bid was live, because gasoil rallied roughly 30% in a fortnight and inverted above both palm and soybean oil, making the blend profitable on its own economics.</p>
|
|
109
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">That second bid is the energy term, and it has three properties that make it dangerous for a crop analyst.</p>
|
|
110
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">It is <strong>large</strong>. When it is on, it competes directly with food demand for the same tonnes.</p>
|
|
111
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">It is <strong>fast</strong>. Discretionary blending is a per-cargo decision, not a programme. It switches on and off with the gasoil–vegoil relationship, which means it can disappear within a week of a crude sell-off.</p>
|
|
112
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">It is <strong>unforecastable from agricultural data</strong>. Nothing in a crop model, a stocks report or a weather forecast tells you where gasoil will trade. An analyst who adds an energy demand line is importing a variable from a market with its own supply, its own politics and its own volatility.</p>
|
|
113
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The failure mode is symmetrical and worth naming. Build a balance sheet with no energy line during a high-gasoil regime and you will systematically understate demand, and book the missing tonnes to residual. Add the line at the top of the cycle, then carry it forward through a 30% crude decline, and you will overstate demand by exactly the amount you were previously missing. Both errors feel like diligence at the time.</p>
|
|
114
|
+
<p style="margin:0 0 16px;font-family:Georgia,'Times New Roman',Times,serif;font-size:16px;line-height:1.62;color:#16110c;">The discipline is to treat the energy term as a <strong>regime</strong>, not a level: state the gasoil condition under which the line is live, size it, and set it to zero the moment the condition fails. That is a harder forecast than a crop, and it is now unavoidable, because a soybean is no longer only a food.</p></td></tr>
|
|
115
|
+
<tr><td style="padding:0 28px;background:#faf7f1;"><table role="presentation" width="100%" cellpadding="0" cellspacing="0" border="0"><tr><td height="1" style="height:1px;line-height:1px;font-size:1px;background:#e3ddd2;"> </td></tr></table></td></tr>
|
|
116
|
+
<tr><td style="padding:24px 28px 4px;background:#faf7f1;"><p style="margin:0 0 12px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:11px;line-height:1.4;font-weight:bold;letter-spacing:.16em;text-transform:uppercase;color:#a8813c;">Glossary</p><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:14px;line-height:1.6;color:#4a4238;">Every unit and expression the show has introduced lives on the episode page, and it stays up to date. <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09.html#glossary" style="color:#1d4032;">Open the glossary →</a></p></td></tr>
|
|
117
|
+
<tr><td style="padding:22px 28px 30px;background:#ece7db;border-top:1px solid #e3ddd2;"><p style="margin:0 0 6px;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;line-height:1.7;color:#4a4238;"><strong>Soft Commodity Trading</strong> — a daily briefing on physical commodity trading.</p><p style="margin:0;font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:12px;line-height:1.7;color:#8b8375;"><a href="https://storage.googleapis.com/podcast-audio-2647223968/index.html" style="color:#4a4238;">All episodes</a> · <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/feed.xml" style="color:#4a4238;">Subscribe by RSS</a> · <a href="https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09.html" style="color:#4a4238;">This episode online</a></p></td></tr>
|
|
118
|
+
</table>
|
|
119
|
+
</td></tr>
|
|
120
|
+
</table>
|
|
121
|
+
</body>
|
|
122
|
+
</html>
|
package/email.txt
ADDED
|
@@ -0,0 +1,681 @@
|
|
|
1
|
+
SOFT COMMODITY TRADING
|
|
2
|
+
Episode 09 · Thursday 20 August 2026 · 11 min 59
|
|
3
|
+
|
|
4
|
+
Vegetable oils and biofuels
|
|
5
|
+
Palm, soy, rape and sun trade as one system, and the spread between them is
|
|
6
|
+
the switch that rations demand. Then biofuels: how a mandate turns a
|
|
7
|
+
political decision into a standing bid for a crop, and why a fuel policy is
|
|
8
|
+
always a protein policy.
|
|
9
|
+
|
|
10
|
+
Listen: https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09.mp3
|
|
11
|
+
Read online: https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09.html
|
|
12
|
+
|
|
13
|
+
MARKET PULSE
|
|
14
|
+
============
|
|
15
|
+
|
|
16
|
+
Everything in Chicago rallied, and the crusher still had a worse day than
|
|
17
|
+
the day before.
|
|
18
|
+
|
|
19
|
+
Commodity Contract Price Change
|
|
20
|
+
----------------------------------------------
|
|
21
|
+
Corn Sep (CBOT) 473 c/bu +9¾¢
|
|
22
|
+
Corn Dec (CBOT) 498 c/bu +10¢
|
|
23
|
+
Soybeans Sep (CBOT) 1222¼ c/bu +21½¢
|
|
24
|
+
Soybeans Nov (CBOT) 1237¾ c/bu +20½¢
|
|
25
|
+
Soymeal Sep (CBOT) — +2.0%
|
|
26
|
+
Soyoil Sep (CBOT) — +0.25%
|
|
27
|
+
Wheat SRW Sep (CBOT) 680¼ c/bu +15¾¢
|
|
28
|
+
Wheat HRW Sep (KC) 762 c/bu +18¼¢
|
|
29
|
+
Crude palm oil Sep (BMD) RM 4,648/t +RM 32
|
|
30
|
+
|
|
31
|
+
Wednesday was a broad buying day, and the trigger was boots in fields. The
|
|
32
|
+
Pro Farmer crop tour is walking the belt this week and the early scouting
|
|
33
|
+
was reported as less than stellar. USDA still carries a corn yield of 180.7
|
|
34
|
+
bu/ac. After two days of the tour the trade has started to ask whether that
|
|
35
|
+
is generous. Flooding in the eastern belt and positioning ahead of the
|
|
36
|
+
weekly export sales report did the rest. Corn added ten cents in December,
|
|
37
|
+
beans twenty and a half in November, and wheat took the largest percentage
|
|
38
|
+
move of the three.
|
|
39
|
+
|
|
40
|
+
The move worth reading was inside the bean complex, and it is the mirror
|
|
41
|
+
image of Tuesday. Meal led, up about 2%. Oil managed a quarter of a percent.
|
|
42
|
+
Beans rose more than either product in percentage terms. A day on which
|
|
43
|
+
every price on the screen is green can still be a losing day for a plant,
|
|
44
|
+
because the crush is a difference, not a level.
|
|
45
|
+
|
|
46
|
+
The geopolitical read: this morning the policy risk is a fuel rule, not a
|
|
47
|
+
war. Indonesia's B50 blending programme came into full effect in July, with
|
|
48
|
+
the 2026 biodiesel allocation set at 16.75 million kilolitres. To fund the
|
|
49
|
+
subsidy, Jakarta raised the crude palm oil export levy from 10% to 12.5%.
|
|
50
|
+
The transmission is export capacity, but self-inflicted: the oil exists and
|
|
51
|
+
the mills are running, and it is simply made expensive to leave. That is a
|
|
52
|
+
supply withdrawal decided in a ministry, and it lands first on the
|
|
53
|
+
palm–soyoil spread, then on every vegetable oil that competes with either.
|
|
54
|
+
|
|
55
|
+
[chart] Palm pays you to wait — The curve rises 312 ringgit from September
|
|
56
|
+
to December, about 76 dollars a tonne. Palm is in carry, and the
|
|
57
|
+
market is paying to hold oil into the low-production quarter rather
|
|
58
|
+
than sell it now. — MDEX crude palm oil futures, Wednesday 19 August
|
|
59
|
+
2026, closing quotes. — https://storage.googleapis.com/podcast-
|
|
60
|
+
audio-2647223968/commodity-desk-daily/ep09_chart1.png
|
|
61
|
+
|
|
62
|
+
* The four vegetable oils are one market with four tickers. A refiner buys
|
|
63
|
+
a melting point and a price, not a crop, so the spread between the oils
|
|
64
|
+
is the switch that rations demand between them.
|
|
65
|
+
|
|
66
|
+
* Palm is the volume leader because the yield per hectare is several times
|
|
67
|
+
an oilseed's, and it is the only major vegetable oil with a futures
|
|
68
|
+
contract denominated in neither dollars nor euros.
|
|
69
|
+
|
|
70
|
+
* One cent per pound is $22.05 per tonne. That single factor is what lets
|
|
71
|
+
a soyoil price in Chicago be compared with a palm price in Kuala Lumpur.
|
|
72
|
+
|
|
73
|
+
* A mandate creates demand that does not respond to price. A food buyer
|
|
74
|
+
walks away when oil gets expensive; a blender under a legal obligation
|
|
75
|
+
pays.
|
|
76
|
+
|
|
77
|
+
* Indonesia's 16.75 million kilolitre allocation is roughly 15 million
|
|
78
|
+
tonnes of palm oil consumed at home — on the order of India's entire
|
|
79
|
+
annual import demand, decided by one cabinet.
|
|
80
|
+
|
|
81
|
+
* Never multiply a renewable volume by a feedstock factor without checking
|
|
82
|
+
whether it is stated in physical gallons or RIN gallons. Biodiesel earns
|
|
83
|
+
1.5 RINs per physical gallon, so the wrong basis overstates demand by
|
|
84
|
+
half.
|
|
85
|
+
|
|
86
|
+
* Oil demand and meal demand are joined at the bushel. A billion pounds of
|
|
87
|
+
incremental oil demand drags in four billion pounds of meal that no fuel
|
|
88
|
+
policy asked for, which is why the crush captures far less of an oil
|
|
89
|
+
rally than the oil chart implies.
|
|
90
|
+
|
|
91
|
+
* Vegetable oil balance sheets now contain an energy term. Discretionary
|
|
92
|
+
blending is live when gasoil trades above the oils and vanishes when
|
|
93
|
+
crude falls, and no crop model forecasts it.
|
|
94
|
+
|
|
95
|
+
* Indonesia funds the blending subsidy from the export levy, and the
|
|
96
|
+
mandate's purpose is to shrink the exports the levy is collected on. The
|
|
97
|
+
levy rate is the honest indicator of whether the programme is still
|
|
98
|
+
affordable.
|
|
99
|
+
|
|
100
|
+
Term Meaning
|
|
101
|
+
----------------------------------------------------------------------------
|
|
102
|
+
CPO Crude palm oil, the unrefined oil pressed from the
|
|
103
|
+
fruit of the oil palm and the benchmark grade traded
|
|
104
|
+
internationally
|
|
105
|
+
FCPO The Bursa Malaysia Derivatives crude palm oil
|
|
106
|
+
futures contract, 25 tonnes per lot, quoted in
|
|
107
|
+
Malaysian ringgit per tonne
|
|
108
|
+
Olein and stearin The liquid and solid fractions palm separates into
|
|
109
|
+
when refined, sold into cooking oil and into fats
|
|
110
|
+
respectively
|
|
111
|
+
Kilolitre One thousand litres, the volume unit Asian
|
|
112
|
+
governments state biofuel mandates in, converted to
|
|
113
|
+
tonnes using the fuel's density
|
|
114
|
+
FAME Fatty acid methyl ester, the chemical name for
|
|
115
|
+
conventional biodiesel made by reacting a vegetable
|
|
116
|
+
oil with methanol
|
|
117
|
+
B50 A blending mandate requiring 50% biodiesel in the
|
|
118
|
+
diesel pool, the level Indonesia moved to in 2026
|
|
119
|
+
Export levy A tax charged on a commodity leaving the country,
|
|
120
|
+
used in Indonesia both to discourage exports and to
|
|
121
|
+
fund the domestic blending subsidy
|
|
122
|
+
RFS The US Renewable Fuel Standard, the rule that sets
|
|
123
|
+
annual minimum volumes of renewable fuel that must
|
|
124
|
+
be blended into American transport fuel
|
|
125
|
+
RVO Renewable volume obligation, the share of the
|
|
126
|
+
national mandate assigned to an individual refiner
|
|
127
|
+
or importer
|
|
128
|
+
RIN Renewable identification number, the tradable
|
|
129
|
+
compliance certificate generated with each gallon of
|
|
130
|
+
renewable fuel, at 1.5 per gallon of biodiesel
|
|
131
|
+
Biomass-based diesel The RFS category covering biodiesel and renewable
|
|
132
|
+
diesel made from fats and vegetable oils
|
|
133
|
+
Renewable diesel (HVO) Hydrotreated vegetable oil, a drop-in diesel
|
|
134
|
+
chemically identical to fossil diesel and
|
|
135
|
+
unconstrained by blend walls, unlike FAME
|
|
136
|
+
Discretionary blending Blending vegetable oil into the fuel pool purely
|
|
137
|
+
because it is cheaper than gasoil, with no mandate
|
|
138
|
+
and no subsidy behind it
|
|
139
|
+
Gasoil The traded middle distillate that diesel prices off,
|
|
140
|
+
and the reference against which discretionary
|
|
141
|
+
blending economics are judged
|
|
142
|
+
Blend wall The physical or warranty limit on how much
|
|
143
|
+
conventional biodiesel an engine or fuel system will
|
|
144
|
+
tolerate
|
|
145
|
+
Substitution spread The price gap between two competing vegetable oils,
|
|
146
|
+
which sets the point at which a refiner reformulates
|
|
147
|
+
from one to the other
|
|
148
|
+
Standing bid Demand that is present regardless of price because
|
|
149
|
+
it is created by obligation rather than by choice
|
|
150
|
+
|
|
151
|
+
|
|
152
|
+
CONVERSION DRILL 9 OF 12 — BUSHELS PER ACRE ↔ TONNES PER HECTARE
|
|
153
|
+
================================================================
|
|
154
|
+
|
|
155
|
+
Rule: corn: 1 bu/ac ≈ 0.0628 t/ha · wheat and soybeans: 1 bu/ac ≈ 0.0673
|
|
156
|
+
t/ha
|
|
157
|
+
|
|
158
|
+
Fast method: corn: divide by 16. Wheat/soybeans: divide by 15.
|
|
159
|
+
|
|
160
|
+
* US corn at 182 bu/ac → 182 ÷ 16 ≈ 11.4 t/ha
|
|
161
|
+
|
|
162
|
+
* US soybeans at 53 bu/ac → 53 ÷ 15 ≈ 3.5 t/ha
|
|
163
|
+
|
|
164
|
+
* French wheat at 7.5 t/ha → 7.5 × 15 ≈ 112 bu/ac
|
|
165
|
+
|
|
166
|
+
Why it matters: US yields are quoted in bushels per acre, European and South
|
|
167
|
+
American in tonnes per hectare. Comparing crops requires crossing.
|
|
168
|
+
|
|
169
|
+
|
|
170
|
+
QUIZ
|
|
171
|
+
====
|
|
172
|
+
|
|
173
|
+
Q1. September palm settled at RM 4,648/t with the ringgit near 4.08 to the
|
|
174
|
+
dollar, and Chicago soybean oil was quoted near 69 c/lb in mid-August.
|
|
175
|
+
Express both in dollars per tonne and give the substitution spread. A
|
|
176
|
+
European refiner uses 40,000 t of soybean oil a year and can reformulate up
|
|
177
|
+
to 30% of that volume into palm. Compute the annual saving at today's
|
|
178
|
+
spread, then name the two new exposures the switch creates that the refiner
|
|
179
|
+
did not have while buying soyoil.
|
|
180
|
+
|
|
181
|
+
Q2. A rule change is expected to add 1.4 billion pounds of annual US soybean
|
|
182
|
+
oil demand. Compute the incremental crush in bushels and the incremental
|
|
183
|
+
soybean meal in short tons. Then explain why a trader who buys the board
|
|
184
|
+
crush on that headline is likely to be disappointed, and say which single
|
|
185
|
+
leg he should be positioned against instead.
|
|
186
|
+
|
|
187
|
+
Q3. Gasoil rallies 25% and moves above both palm and soybean oil on an
|
|
188
|
+
energy-equivalent basis. Describe what happens to the palm–soyoil spread, to
|
|
189
|
+
Indonesia's subsidy bill, and to the reliability of a soyoil balance sheet
|
|
190
|
+
whose demand side contains only food and mandated volumes. Then say what
|
|
191
|
+
happens to all three if crude subsequently falls 30%.
|
|
192
|
+
|
|
193
|
+
Q4. (Ep 8) Take the board crush formula from ep 8 and start from meal at
|
|
194
|
+
$325.00/short ton, oil at 69.00 c/lb and November beans at 1217¼. Apply
|
|
195
|
+
Wednesday's moves: meal +2.0%, oil +0.25%, beans +20½¢. Compute the change
|
|
196
|
+
in the board crush in cents per bushel, and state whether Wednesday was a
|
|
197
|
+
good or a bad day for a plant. Then say what this tells you about reading a
|
|
198
|
+
complex from a screen of green numbers.
|
|
199
|
+
|
|
200
|
+
Q5. (Ep 8) Ep 8 established that the plant crush is the board crush adjusted
|
|
201
|
+
for three separate bases, minus conversion cost, and that the bean basis at
|
|
202
|
+
the gate is the line that moves most. Suppose a sustained fuel-driven bid
|
|
203
|
+
pushes the oil share from 52% to 58% and lifts the board crush to a two-year
|
|
204
|
+
high. Explain the mechanism by which the plant crush can stay flat
|
|
205
|
+
throughout, and name the one number you would watch to confirm it is
|
|
206
|
+
happening.
|
|
207
|
+
|
|
208
|
+
Q6. (Ep 6) Ep 6 established that corn is a demand story, and that ethanol is
|
|
209
|
+
one of the two buyers that walks away at a price. On Wednesday ethanol
|
|
210
|
+
production fell to a one-month low of 1.089 m barrels a day and ethanol
|
|
211
|
+
stocks rose 1%, and December corn still rallied ten cents. Reconcile those
|
|
212
|
+
facts. Then state what would have to be true for that divergence to persist
|
|
213
|
+
for a month rather than a day.
|
|
214
|
+
|
|
215
|
+
Q7. (Ep 6) Ep 6 argued that a weather premium decays on the calendar rather
|
|
216
|
+
than on the forecast. Wednesday's rally was driven by early Pro Farmer tour
|
|
217
|
+
results rather than by a forecast. Explain what is structurally different
|
|
218
|
+
about tour-driven buying compared with forecast-driven buying, and what that
|
|
219
|
+
difference implies for how long the move should be expected to hold.
|
|
220
|
+
|
|
221
|
+
Q8 — Conversion drill. A Mato Grosso soybean field yields 3.72 t/ha. An
|
|
222
|
+
Illinois field is quoted at 58.5 bu/ac. Convert each into the other's unit
|
|
223
|
+
and say which is the higher yield. Then take the 91 million bushels of
|
|
224
|
+
incremental crush from today's worked example and compute how many hectares
|
|
225
|
+
of Brazilian beans, at 3.72 t/ha, would be needed to supply it. Give the
|
|
226
|
+
answer in hectares and in acres.
|
|
227
|
+
|
|
228
|
+
|
|
229
|
+
============================================================================
|
|
230
|
+
SOLUTIONS BELOW — ANSWER FIRST
|
|
231
|
+
============================================================================
|
|
232
|
+
|
|
233
|
+
|
|
234
|
+
|
|
235
|
+
|
|
236
|
+
|
|
237
|
+
|
|
238
|
+
|
|
239
|
+
|
|
240
|
+
|
|
241
|
+
|
|
242
|
+
|
|
243
|
+
|
|
244
|
+
|
|
245
|
+
|
|
246
|
+
|
|
247
|
+
|
|
248
|
+
|
|
249
|
+
|
|
250
|
+
|
|
251
|
+
|
|
252
|
+
|
|
253
|
+
|
|
254
|
+
|
|
255
|
+
|
|
256
|
+
|
|
257
|
+
|
|
258
|
+
SOLUTIONS
|
|
259
|
+
=========
|
|
260
|
+
|
|
261
|
+
A1. Both sides first, in dollars per tonne.
|
|
262
|
+
|
|
263
|
+
Oil Quote Conversion $/t
|
|
264
|
+
--------------------------------------------------------
|
|
265
|
+
Palm, Sep BMD RM 4,648/t ÷ 4.08 RM per $ $1,139
|
|
266
|
+
Soybean oil, CBOT 69.00 c/lb × 22.0462 $1,521
|
|
267
|
+
Substitution spread $382/t
|
|
268
|
+
|
|
269
|
+
Thirty percent of 40,000 t is 12,000 t. At $382/t that is about $4.6 m a
|
|
270
|
+
year, which is why formulation teams exist.
|
|
271
|
+
|
|
272
|
+
The two new exposures. The first is currency. FCPO settles in ringgit, so a
|
|
273
|
+
refiner hedging palm on the board is short ringgit-denominated futures
|
|
274
|
+
against a dollar or euro cost base, and the hedge itself creates an FX
|
|
275
|
+
position of roughly RM 55 m on that volume. Nothing in the physical trade
|
|
276
|
+
asked for that. The second is policy. Palm's FOB price contains an
|
|
277
|
+
Indonesian export levy that a ministry can change by decree, as it just did
|
|
278
|
+
from 10% to 12.5%. Soybean oil is exposed to US policy too, but the refiner
|
|
279
|
+
buying soyoil in Rotterdam is not paying a tax that moves on a fortnight's
|
|
280
|
+
notice.
|
|
281
|
+
|
|
282
|
+
Two further answers deserve half credit because they are real: basis risk,
|
|
283
|
+
since Rotterdam CIF palm does not track BMD futures perfectly, and
|
|
284
|
+
specification risk, since palm and soyoil have different melting points and
|
|
285
|
+
oxidative stability, so "reformulate" is not a switch you can flip and
|
|
286
|
+
unflip weekly.
|
|
287
|
+
|
|
288
|
+
A2. The arithmetic runs through the bushel.
|
|
289
|
+
|
|
290
|
+
Step Working Result
|
|
291
|
+
----------------------------------------------------------
|
|
292
|
+
Incremental oil demand given 1,400 m lb
|
|
293
|
+
Oil per bushel ÷ 11 lb 127.3 m bu of crush
|
|
294
|
+
Meal produced × 44 lb 5,601 m lb
|
|
295
|
+
In short tons ÷ 2,000 2.80 m short tons of meal
|
|
296
|
+
|
|
297
|
+
Why the crush buyer is disappointed. The board crush is meal × 0.022 plus
|
|
298
|
+
oil × 0.11 minus the bean price. The headline lifts one of those three
|
|
299
|
+
terms. But 127 million bushels of extra crush has to be sourced, so crushers
|
|
300
|
+
bid the bean, which raises the term being subtracted. And it produces 2.8
|
|
301
|
+
million short tons of meal into a market that has no incremental demand for
|
|
302
|
+
protein, so the meal term falls. Two of the three legs move against the
|
|
303
|
+
position that the headline appears to justify.
|
|
304
|
+
|
|
305
|
+
The clean expression of the view is not the crush. It is short meal against
|
|
306
|
+
long oil — the oil share trade. That isolates the thing the policy actually
|
|
307
|
+
changes, which is the relative value of the two products, and it does not
|
|
308
|
+
require you to also be right about the bean basis. A trader who buys the
|
|
309
|
+
whole crush is expressing a view on the oil rule and an unintended view on
|
|
310
|
+
the bean market at the same time.
|
|
311
|
+
|
|
312
|
+
The deeper point: any demand shock that arrives through only one joint
|
|
313
|
+
product has to be released through the other. Fixed proportions mean the by-
|
|
314
|
+
product is always the shock absorber, and the by-product market is where the
|
|
315
|
+
price damage shows up.
|
|
316
|
+
|
|
317
|
+
A3. Take them in order.
|
|
318
|
+
|
|
319
|
+
The palm–soyoil spread narrows. Discretionary blending is not fussy about
|
|
320
|
+
which oil it burns — it buys the cheapest tonne of fat that meets spec. So
|
|
321
|
+
the marginal energy bid lands on palm, which is the cheaper of the two, and
|
|
322
|
+
pulls it toward soyoil. The spread compresses from the bottom.
|
|
323
|
+
|
|
324
|
+
Indonesia's subsidy bill falls. The blending subsidy exists to cover the gap
|
|
325
|
+
between the palm-based biodiesel price and the diesel it replaces. If gasoil
|
|
326
|
+
is above palm, that gap is negative and the mandate becomes self-financing.
|
|
327
|
+
This is the quiet condition under which aggressive mandates get announced:
|
|
328
|
+
they are cheapest to promise when energy is expensive.
|
|
329
|
+
|
|
330
|
+
The balance sheet becomes unreliable in the direction of understating
|
|
331
|
+
demand. A demand side built from food use plus mandated volumes has no line
|
|
332
|
+
for the tonnes that a fuel trader buys purely on arbitrage. In a high-gasoil
|
|
333
|
+
regime those tonnes are real and can be large, and they will show up as an
|
|
334
|
+
unexplained stock draw that the analyst books to "residual".
|
|
335
|
+
|
|
336
|
+
If crude then falls 30%, all three reverse, and not symmetrically.
|
|
337
|
+
Discretionary blending switches off essentially overnight, because it is a
|
|
338
|
+
per-cargo economic decision rather than a contracted programme, so the
|
|
339
|
+
palm–soyoil spread widens again quickly. The subsidy bill reappears
|
|
340
|
+
immediately, and now has to be paid out of an export levy pot that the
|
|
341
|
+
mandate itself has shrunk — which is the loop that forces levy increases.
|
|
342
|
+
The balance sheet swings from understating demand to overstating it, because
|
|
343
|
+
the analyst who finally added an energy line will carry it forward. The
|
|
344
|
+
failure mode is the same in both directions: an energy term added at the top
|
|
345
|
+
of a cycle is a crop analyst's most expensive habit.
|
|
346
|
+
|
|
347
|
+
A4. Build the change leg by leg. Only the changes matter, not the levels.
|
|
348
|
+
|
|
349
|
+
Leg Move Multiplier ¢/bu effect
|
|
350
|
+
--------------------------------------------------------------------
|
|
351
|
+
Meal +2.0% of $325.00 = +$6.50/st × 0.022 +14.3
|
|
352
|
+
Oil +0.25% of 69.00 = +0.1725 c/lb × 0.11 +1.9
|
|
353
|
+
Beans +20.5 c/bu −1 −20.5
|
|
354
|
+
Board crush −4.3
|
|
355
|
+
|
|
356
|
+
So the board crush fell about 4.3 c/bu on a day when all three prices rose.
|
|
357
|
+
Wednesday was a bad day for a plant.
|
|
358
|
+
|
|
359
|
+
What it tells you: the crush is a difference between large numbers, so its
|
|
360
|
+
sign is set by relative moves, not by direction. Meal was the strongest
|
|
361
|
+
product in percentage terms and still could not carry the bean move, because
|
|
362
|
+
meal's contribution is scaled by 0.022 and the bean's by one. A 2% meal
|
|
363
|
+
rally is worth 14 cents of crush; a 20-cent bean rally costs 20. The screen
|
|
364
|
+
of green tells you nothing about the margin, and a trader who reads a
|
|
365
|
+
complex by looking at how many contracts are up is not reading the complex
|
|
366
|
+
at all.
|
|
367
|
+
|
|
368
|
+
A5. The mechanism is competition for beans, and it runs through the gate.
|
|
369
|
+
|
|
370
|
+
A wide board crush is a public number. Every plant in the country sees it at
|
|
371
|
+
the same moment, and every plant responds the same way: raise the run rate
|
|
372
|
+
and buy more beans. Crush capacity cannot be added inside a marketing year,
|
|
373
|
+
so the only variable that clears the increased demand for beans is the bean
|
|
374
|
+
basis at the gate. Plants bid against each other and against the export
|
|
375
|
+
elevator, and the basis rises until the marginal plant is indifferent again.
|
|
376
|
+
|
|
377
|
+
That is the whole answer. The board crush went to a two-year high and the
|
|
378
|
+
bean basis absorbed it. The plant crush — board crush, minus bean basis,
|
|
379
|
+
minus the meal and oil basis effects, minus conversion cost — is flat
|
|
380
|
+
because the second line rose by as much as the first.
|
|
381
|
+
|
|
382
|
+
There is a second-order piece worth noting here. The rising oil share means
|
|
383
|
+
the extra product value arrives disproportionately in oil, but the extra
|
|
384
|
+
volume arrives in both products in the fixed 44-to-11 ratio. So higher run
|
|
385
|
+
rates push meal basis down as well, which subtracts a second time. The plant
|
|
386
|
+
crush can in fact end up lower than before the fuel-driven rally.
|
|
387
|
+
|
|
388
|
+
The number to watch is the bean basis at the plant gate relative to the
|
|
389
|
+
export elevator's bid in the same draw area. If the crusher is winning that
|
|
390
|
+
contest, he is paying up for beans and the board crush is being competed
|
|
391
|
+
away in exactly the place ep 8 said it would be. Watching the board crush
|
|
392
|
+
alone tells you the opposite of what is happening.
|
|
393
|
+
|
|
394
|
+
A6. They are not in conflict, because they are statements about different
|
|
395
|
+
weeks.
|
|
396
|
+
|
|
397
|
+
The ethanol print is a demand datapoint about last week's grind: production
|
|
398
|
+
at a one-month low of 1.089 m bbl/day with stocks up 1% is a mildly negative
|
|
399
|
+
corn signal, worth a fraction of a cent. Wednesday's rally was a supply
|
|
400
|
+
datapoint about this year's crop: scouts in the field reporting worse-than-
|
|
401
|
+
expected conditions, against a USDA yield of 180.7 that the trade already
|
|
402
|
+
suspected. In August, the supply side of the corn balance sheet has a
|
|
403
|
+
variance many times larger than the demand side, because a two-bushel yield
|
|
404
|
+
change moves the carryout by roughly 180 million bushels while a week of
|
|
405
|
+
soft grind moves it by a few million. The market prices the larger variance
|
|
406
|
+
first.
|
|
407
|
+
|
|
408
|
+
For the divergence to persist a month rather than a day, the tour would have
|
|
409
|
+
to be confirmed by something structural, and ethanol margins would have to
|
|
410
|
+
hold. Specifically: the tour findings would need to be validated by the
|
|
411
|
+
September and October USDA reports, so that the yield cut becomes a balance
|
|
412
|
+
sheet fact rather than a rumour; and ethanol's weakness would need to prove
|
|
413
|
+
seasonal — a maintenance-driven dip — rather than margin-driven. If ethanol
|
|
414
|
+
grind is falling because the ethanol crush margin is negative at $4.98 corn,
|
|
415
|
+
then ep 6's point bites: that buyer is walking away at a price, and a rally
|
|
416
|
+
built on supply will be capped by the demand it destroys. The tell is the
|
|
417
|
+
ethanol margin itself, not the production number.
|
|
418
|
+
|
|
419
|
+
A7. The difference is what kind of information each contains.
|
|
420
|
+
|
|
421
|
+
A forecast is a probability distribution over an event that has not
|
|
422
|
+
happened. It is revised twice a day, it can be wrong, and the market
|
|
423
|
+
discounts it accordingly. Crucially, it decays on the calendar: once
|
|
424
|
+
pollination is past, a forecast of heat cannot change the ear count, and the
|
|
425
|
+
premium bleeds out whether or not the weather actually improves.
|
|
426
|
+
|
|
427
|
+
A crop tour is a measurement of an event that has already happened. Scouts
|
|
428
|
+
count ears and pods in fields where the yield is largely already set. That
|
|
429
|
+
information does not decay, because there is no subsequent event that can
|
|
430
|
+
falsify it — only a better measurement can, and the better measurement is
|
|
431
|
+
the USDA survey in September.
|
|
432
|
+
|
|
433
|
+
So the two moves behave differently. Tour-driven buying should be stickier
|
|
434
|
+
than forecast-driven buying, because it is not waiting on an outcome. But it
|
|
435
|
+
is also narrower: a tour samples a route, not a population, and its
|
|
436
|
+
historical relationship to the final national yield is loose. The honest
|
|
437
|
+
expectation is that a tour move holds until the next authoritative
|
|
438
|
+
measurement and then gets marked to it, which makes the September WASDE the
|
|
439
|
+
event risk that matters, not the weekend forecast.
|
|
440
|
+
|
|
441
|
+
The practical implication for positioning: a weather premium is something
|
|
442
|
+
you sell into strength as the calendar runs out. A tour-driven move is
|
|
443
|
+
something you carry to the next report and then reassess. Treating the
|
|
444
|
+
second like the first is how a good supply read turns into a bad trade.
|
|
445
|
+
|
|
446
|
+
A8 — Conversion drill. Soybeans convert at 1 bu/ac ≈ 0.0673 t/ha, or divide
|
|
447
|
+
by 15 as a fast method.
|
|
448
|
+
|
|
449
|
+
Field Given Converted
|
|
450
|
+
----------------------------------------------
|
|
451
|
+
Illinois 58.5 bu/ac × 0.0673 = 3.94 t/ha
|
|
452
|
+
Mato Grosso 3.72 t/ha ÷ 0.0673 = 55.3 bu/ac
|
|
453
|
+
|
|
454
|
+
Illinois is the higher yield, by about 0.22 t/ha or 3.2 bu/ac — roughly 6%.
|
|
455
|
+
The fast method gets you there too: 58.5 ÷ 15 = 3.9 t/ha, and 3.72 × 15 =
|
|
456
|
+
55.8 bu/ac. Close enough to answer the question in a phone call.
|
|
457
|
+
|
|
458
|
+
Now the area. First cross bushels into tonnes, at 36.744 bu per tonne of
|
|
459
|
+
soybeans:
|
|
460
|
+
|
|
461
|
+
Step Working Result
|
|
462
|
+
-------------------------------------------------------
|
|
463
|
+
Incremental crush 91,000,000 bu ÷ 36.744 2.476 m t
|
|
464
|
+
Area required ÷ 3.72 t/ha 666,000 ha
|
|
465
|
+
In acres × 2.471 1.65 m acres
|
|
466
|
+
|
|
467
|
+
Two-thirds of a million hectares of Brazilian soybeans, to feed one billion
|
|
468
|
+
pounds of American oil demand. It is worth holding that picture next to the
|
|
469
|
+
mandate that created it: a line in a regulation, denominated in gallons,
|
|
470
|
+
reaching across a hemisphere and asking for an area roughly the size of a
|
|
471
|
+
small country's entire arable base.
|
|
472
|
+
|
|
473
|
+
|
|
474
|
+
THE EPISODE, IN WRITING
|
|
475
|
+
=======================
|
|
476
|
+
|
|
477
|
+
|
|
478
|
+
|
|
479
|
+
One market with four tickers
|
|
480
|
+
----------------------------
|
|
481
|
+
|
|
482
|
+
Palm, soybean oil, rapeseed oil and sunflower oil are grown on different
|
|
483
|
+
continents, harvested on different calendars and traded on different
|
|
484
|
+
exchanges. They are nonetheless a single market, and the reason is that
|
|
485
|
+
almost nobody in the chain wants the crop.
|
|
486
|
+
|
|
487
|
+
A refiner in Rotterdam, a bottler in Mumbai, a snack manufacturer in Jakarta
|
|
488
|
+
— each is buying a liquid with a melting point, an oxidative stability and a
|
|
489
|
+
price. Within limits, the recipe is a choice. Below a certain spread they
|
|
490
|
+
reformulate toward the cheaper oil; above it they do not. That switching
|
|
491
|
+
behaviour is what welds four crops into one system, and it means the
|
|
492
|
+
substitution spread between two oils is more informative than either flat
|
|
493
|
+
price.
|
|
494
|
+
|
|
495
|
+
Palm is the volume leader. An oil palm produces several tonnes of oil per
|
|
496
|
+
hectare where a soybean produces well under one, which is why a crop grown
|
|
497
|
+
in a narrow equatorial band supplies more vegetable oil than any other
|
|
498
|
+
single source. Its benchmark is the FCPO contract on Bursa Malaysia
|
|
499
|
+
Derivatives.
|
|
500
|
+
|
|
501
|
+
The unit moment. One FCPO lot is 25 tonnes of crude palm oil, quoted in
|
|
502
|
+
Malaysian ringgit per tonne, with a minimum tick of RM 1 — so RM 25 per lot.
|
|
503
|
+
It is quoted in ringgit because it settles against Malaysian physical
|
|
504
|
+
delivery. That is a detail with teeth: it is the only major vegetable oil
|
|
505
|
+
benchmark denominated in neither dollars nor euros, so every non-Malaysian
|
|
506
|
+
hedger acquires a currency position that no part of the underlying trade
|
|
507
|
+
asked for.
|
|
508
|
+
|
|
509
|
+
Crossing into Chicago requires one number. Soybean oil is quoted in cents
|
|
510
|
+
per pound, 60,000 lb to a contract, and 1 c/lb = $22.05/t. Commit that to
|
|
511
|
+
memory and the two halves of the oil world become comparable in a single
|
|
512
|
+
multiplication.
|
|
513
|
+
|
|
514
|
+
Market Quote In $/t
|
|
515
|
+
--------------------------------------------------------------
|
|
516
|
+
Palm, Sep BMD RM 4,648/t at 4.08 RM/$ $1,139
|
|
517
|
+
Soybean oil, CBOT, mid-August 69.00 c/lb $1,521
|
|
518
|
+
Spread $382/t
|
|
519
|
+
|
|
520
|
+
Nearly four hundred dollars a tonne between two liquids that a refiner can,
|
|
521
|
+
within limits, use interchangeably. That gap is not a mispricing waiting to
|
|
522
|
+
be arbitraged. It is the price of two different national policies, and the
|
|
523
|
+
rest of this edition is about how those policies get there.
|
|
524
|
+
|
|
525
|
+
Reading the palm curve
|
|
526
|
+
----------------------
|
|
527
|
+
|
|
528
|
+
Wednesday's palm board also carries a shape worth reading, and it is a
|
|
529
|
+
chance to apply the curve grammar from ep 3 to a market that behaves nothing
|
|
530
|
+
like Chicago wheat.
|
|
531
|
+
|
|
532
|
+
[chart] The carry is front-loaded — Most of the 312-ringgit carry sits in
|
|
533
|
+
the first spread and it shrinks steadily thereafter. The market is
|
|
534
|
+
paying hardest to move oil out of September, which is a statement
|
|
535
|
+
about the next few weeks rather than about the fourth quarter. —
|
|
536
|
+
Derived from MDEX crude palm oil closing quotes, Wednesday 19 August
|
|
537
|
+
2026. — https://storage.googleapis.com/podcast-
|
|
538
|
+
audio-2647223968/commodity-desk-daily/ep09_chart2.png
|
|
539
|
+
|
|
540
|
+
The curve rises RM 312 from September to December, roughly $76/t, or about
|
|
541
|
+
6.7% over three months. On the ep 3 framing that is a carry market: the
|
|
542
|
+
board is paying you to hold oil rather than sell it prompt. But the
|
|
543
|
+
decomposition matters more than the total. The Sep–Oct spread alone is RM
|
|
544
|
+
139, and each subsequent spread is smaller. A carry that is front-loaded is
|
|
545
|
+
not a general statement that oil is abundant. It is a statement that oil is
|
|
546
|
+
abundant now, and that the market expects the fourth-quarter production
|
|
547
|
+
decline — palm's output falls seasonally into the northern winter — to
|
|
548
|
+
tighten things later.
|
|
549
|
+
|
|
550
|
+
A mandate is a standing bid
|
|
551
|
+
---------------------------
|
|
552
|
+
|
|
553
|
+
Ordinary demand curves slope downward. Somebody stops buying when the price
|
|
554
|
+
rises. This is the assumption underneath every balance sheet: the demand
|
|
555
|
+
lines are estimates of behaviour, and behaviour responds to price.
|
|
556
|
+
|
|
557
|
+
A mandate breaks that. A blender legally required to put 50% biodiesel into
|
|
558
|
+
the diesel pool does not walk away at a higher palm price. He pays, or he
|
|
559
|
+
does not sell fuel. That converts a political decision into a standing bid —
|
|
560
|
+
demand that exists regardless of price — and it is the single most important
|
|
561
|
+
structural fact about vegetable oils today.
|
|
562
|
+
|
|
563
|
+
Work the Indonesian number, because the arithmetic is the lesson.
|
|
564
|
+
|
|
565
|
+
Step Working Result
|
|
566
|
+
----------------------------------------------------------------------------
|
|
567
|
+
2026 biodiesel allocation stated by Jakarta 16.75 m kL
|
|
568
|
+
Volume to mass × 0.88 t/m³ (biodiesel 14.74 m t of fuel
|
|
569
|
+
density)
|
|
570
|
+
Fuel to feedstock × ~1.03 t CPO per t FAME ≈ 15.2 m t of CPO
|
|
571
|
+
|
|
572
|
+
Fifteen million tonnes of palm oil, consumed inside the country that
|
|
573
|
+
produced it. That is on the order of a third of Indonesian output, and it is
|
|
574
|
+
roughly the size of India's entire annual vegetable oil import demand. One
|
|
575
|
+
cabinet decision, sized like the world's largest importer.
|
|
576
|
+
|
|
577
|
+
The funding mechanism is where it gets interesting. The blending subsidy is
|
|
578
|
+
paid out of the export levy, which was raised from 10% to 12.5% this year.
|
|
579
|
+
But the mandate's purpose is to reduce the exports on which the levy is
|
|
580
|
+
collected. The more successful the programme, the smaller the pot that pays
|
|
581
|
+
for it. That is not a stable arrangement, and it is why the levy rate — not
|
|
582
|
+
the mandate headline — is the honest indicator of whether the programme is
|
|
583
|
+
affordable. Watch the rate.
|
|
584
|
+
|
|
585
|
+
The American version, and the trap in it
|
|
586
|
+
----------------------------------------
|
|
587
|
+
|
|
588
|
+
The United States sets its volumes through the Renewable Fuel Standard. The
|
|
589
|
+
final rule for 2026 put total renewable fuel at 26.81 bn gallons and
|
|
590
|
+
biomass-based diesel at 8.86 bn gallons, with an advanced biofuel line of
|
|
591
|
+
10.82 bn.
|
|
592
|
+
|
|
593
|
+
The temptation is to multiply a volume by a feedstock factor and call it
|
|
594
|
+
demand. Do not, without first checking the basis. Some RFS volumes are
|
|
595
|
+
stated in physical gallons and some in RIN gallons, and biodiesel generates
|
|
596
|
+
1.5 RINs per physical gallon. Read the wrong basis and the resulting
|
|
597
|
+
feedstock estimate is 50% too large. This mistake is made in public, by
|
|
598
|
+
people who should know better, and it is the fastest way to be confidently
|
|
599
|
+
wrong about a soybean oil balance sheet.
|
|
600
|
+
|
|
601
|
+
The safe method is to work in the increment, where the equivalence factors
|
|
602
|
+
cancel. Suppose a policy change adds one billion pounds of annual soybean
|
|
603
|
+
oil demand.
|
|
604
|
+
|
|
605
|
+
[chart] One billion of oil, four of meal — The mandate asks for the oil. The
|
|
606
|
+
bushel delivers four times as much meal alongside it — about two
|
|
607
|
+
million short tons that no fuel policy requested and no fuel
|
|
608
|
+
industry can use. — Worked example, episode 9, using the 11 lb oil
|
|
609
|
+
and 44 lb meal yields per bushel from episode 8. —
|
|
610
|
+
https://storage.googleapis.com/podcast-audio-2647223968/commodity-
|
|
611
|
+
desk-daily/ep09_chart3.png
|
|
612
|
+
|
|
613
|
+
A bushel of soybeans yields 11 lb of oil and 44 lb of meal, in fixed
|
|
614
|
+
proportion. One billion pounds of oil therefore requires about 91 million
|
|
615
|
+
bushels of additional crush — and that crush produces about 4.0 billion
|
|
616
|
+
pounds of meal, or 2.0 million short tons.
|
|
617
|
+
|
|
618
|
+
That meal was not requested by anyone. It has to be fed to an animal,
|
|
619
|
+
somewhere, at some price, and the price is what adjusts. So the chain runs:
|
|
620
|
+
a fuel rule bids up oil, crushers raise run rates, meal supply floods, and
|
|
621
|
+
the meal price falls. Ep 8's board crush formula makes the consequence
|
|
622
|
+
arithmetic rather than opinion — meal × 0.022, plus oil × 0.11, minus the
|
|
623
|
+
bean. An oil-driven demand shock lifts the second term, depresses the first,
|
|
624
|
+
and raises the third as crushers compete for beans. The crush captures far
|
|
625
|
+
less of the move than the oil chart suggests.
|
|
626
|
+
|
|
627
|
+
The general principle is worth stating cleanly: any demand shock arriving
|
|
628
|
+
through one joint product must be released through the other. Fixed
|
|
629
|
+
proportions make the by-product the shock absorber, and the by-product
|
|
630
|
+
market is where the price damage lands. A fuel policy is always, whether it
|
|
631
|
+
intends to be or not, a protein policy.
|
|
632
|
+
|
|
633
|
+
Why balance sheets now have an energy term
|
|
634
|
+
------------------------------------------
|
|
635
|
+
|
|
636
|
+
Palm and soybean oil each sit on two bids.
|
|
637
|
+
|
|
638
|
+
The first is the mandate: contracted, price-insensitive, known in advance.
|
|
639
|
+
The second is discretionary blending — a refiner buying vegetable oil purely
|
|
640
|
+
because it is cheaper than gasoil, with no subsidy and no legal obligation.
|
|
641
|
+
Through the middle of this year that bid was live, because gasoil rallied
|
|
642
|
+
roughly 30% in a fortnight and inverted above both palm and soybean oil,
|
|
643
|
+
making the blend profitable on its own economics.
|
|
644
|
+
|
|
645
|
+
That second bid is the energy term, and it has three properties that make it
|
|
646
|
+
dangerous for a crop analyst.
|
|
647
|
+
|
|
648
|
+
It is large. When it is on, it competes directly with food demand for the
|
|
649
|
+
same tonnes.
|
|
650
|
+
|
|
651
|
+
It is fast. Discretionary blending is a per-cargo decision, not a programme.
|
|
652
|
+
It switches on and off with the gasoil–vegoil relationship, which means it
|
|
653
|
+
can disappear within a week of a crude sell-off.
|
|
654
|
+
|
|
655
|
+
It is unforecastable from agricultural data. Nothing in a crop model, a
|
|
656
|
+
stocks report or a weather forecast tells you where gasoil will trade. An
|
|
657
|
+
analyst who adds an energy demand line is importing a variable from a market
|
|
658
|
+
with its own supply, its own politics and its own volatility.
|
|
659
|
+
|
|
660
|
+
The failure mode is symmetrical and worth naming. Build a balance sheet with
|
|
661
|
+
no energy line during a high-gasoil regime and you will systematically
|
|
662
|
+
understate demand, and book the missing tonnes to residual. Add the line at
|
|
663
|
+
the top of the cycle, then carry it forward through a 30% crude decline, and
|
|
664
|
+
you will overstate demand by exactly the amount you were previously missing.
|
|
665
|
+
Both errors feel like diligence at the time.
|
|
666
|
+
|
|
667
|
+
The discipline is to treat the energy term as a regime, not a level: state
|
|
668
|
+
the gasoil condition under which the line is live, size it, and set it to
|
|
669
|
+
zero the moment the condition fails. That is a harder forecast than a crop,
|
|
670
|
+
and it is now unavoidable, because a soybean is no longer only a food.
|
|
671
|
+
|
|
672
|
+
|
|
673
|
+
----------------------------------------------------------------------------
|
|
674
|
+
Soft Commodity Trading — a daily briefing on physical commodity trading.
|
|
675
|
+
|
|
676
|
+
GLOSSARY
|
|
677
|
+
Every unit and expression the show has introduced lives on the episode page:
|
|
678
|
+
https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/ep09.html#glossary
|
|
679
|
+
|
|
680
|
+
All episodes: https://storage.googleapis.com/podcast-audio-2647223968/index.html
|
|
681
|
+
RSS: https://storage.googleapis.com/podcast-audio-2647223968/commodity-desk-daily/feed.xml
|