Core Viewpoint - The U.S. Environmental Protection Agency (EPA) has proposed a plan to redistribute the small refinery exemption (SRE) obligations for biofuel blending to larger refineries, offering options of 50% and 100% redistribution, while also seeking public input on other potential ratios [1][2] Group 1: Proposal Details - The EPA's proposal includes a public comment period of 45 days, which is considered crucial by industry officials [1] - The biofuel industry advocates for a full 100% redistribution to maintain demand for products like corn ethanol, while refiners oppose this, citing increased costs [1] - The proposal is seen as a "stalling tactic" by some industry officials, indicating a lack of substantial progress [1] Group 2: Background Information - According to the Renewable Fuel Standard (RFS), refineries are required to blend billions of gallons of biofuels annually or purchase renewable identification numbers (RINs) from compliant entities [1] - Small refineries can apply for SRE exemptions if they demonstrate that blending requirements would cause financial hardship [1] - The EPA cleared over 170 SRE exemption applications from 2016, necessitating a compensation plan for the obligations [2] - The total amount of exemptions from 2023 to 2025 is equivalent to 2.18 billion RINs [2]

Report Information - Report Date: August 25, 2025 [1][4][12][15][19][23][30][32][33][37] - Report Source: Guotai Junan Futures Research [5][12][16][19][23][30][33][37] Overall Core Views - Palm oil: With the negative impact of US soybean oil SRE exhausted, international oils are rising [2][4] - Soybean oil: The trading of soybean shortage in the fourth quarter has paused, and it is consolidating at a high level [2][4] - Soybean meal: After the overnight slight increase in US soybeans, Dalian soybean meal may rebound and fluctuate [2][12] - Soybean No.1: Rebound and fluctuate [2][12] - Corn: Oscillate [2][15] - Sugar: Fluctuate in a narrow range [2][19] - Cotton: Futures prices are oscillating strongly [2][23] - Eggs: Near - term, focus on the rhythm of old hen culling; long - term sentiment remains weak [2][30] - Live pigs: The positive impact of reserve purchases has materialized, awaiting spot market confirmation [2][33] - Peanuts: Pay attention to the listing of new peanuts [2][37] Industry - Specific Summaries Palm Oil and Soybean Oil - **Fundamental Data** - Futures: Palm oil主力 closed at 9,510 yuan/ton during the day session with a 0.78% increase and 9,570 yuan/ton at night with a 0.63% increase; soybean oil主力 closed at 8,492 yuan/ton during the day with a 0.83% increase and 8,428 yuan/ton at night with a - 0.75% decrease [5] - Spot: Palm oil (24 - degree) in Guangdong was 9,540 yuan/ton, down 80 yuan; first - grade soybean oil in Guangdong was 8,670 yuan/ton, up 30 yuan [5] - Basis: Palm oil (Guangdong) basis was 30 yuan/ton; soybean oil (Guangdong) basis was 178 yuan/ton [5] - **Macro and Industry News** - Malaysia's palm oil production from August 1 - 20 was estimated to increase by 3.03% compared to the same period last month [6] - The US EPA announced the results of small refinery biofuel exemption applications, and will return 1.39 billion gallons of RIN credit for 2023 and 2024 [9] - Pro Farmer predicted record - high average yields for US corn and soybeans in 2025 [10] - Argentina's 2024/25 soybean planting area was estimated at 18 million hectares, up 8.4% from the previous year, and production was estimated at 50.9 million tons, up 5.6% [10] - In the 34th week, oil mills' actual soybean crushing volume was 227 million tons, with an operating rate of 63.81%, 134,300 tons lower than expected [10] - **Trend Intensity** - Palm oil trend intensity: 1; soybean oil trend intensity: 0 [11] Soybean Meal and Soybean No.1 - **Fundamental Data** - Futures: DCE soybean No.1 2511 closed at 3985 yuan/ton during the day with a - 0.28% decrease and 3996 yuan/ton at night with a 0.18% increase; DCE soybean meal 2601 closed at 3088 yuan/ton during the day with a - 1.28% decrease and 3108 yuan/ton at night with a 0.45% increase [12] - Spot: The price of 43% soybean meal was 3060 - 3110 yuan/ton, down 20 yuan to unchanged from the previous day [12] - Industry Data: The trading volume of soybean meal was 13.1 million tons, and the previous week's inventory was 97.4 million tons [12] - **Macro and Industry News** - On August 22, CBOT soybeans hit a two - month high, supported by Chinese demand expectations and strong soybean oil [12][14] - **Trend Intensity** - Soybean meal trend intensity: 0; soybean No.1 trend intensity: 0 [14] Corn - **Fundamental Data** - Futures: C2509 closed at 2214 yuan/ton during the day with a - 0.27% decrease and 2219 yuan/ton at night with a 0.23% increase; C2511 closed at 2175 yuan/ton during the day with a 0.32% increase and 2174 yuan/ton at night with a - 0.05% decrease [16] - Spot: Jinzhou's closing price was 2260 yuan/ton, down 20 yuan; Guangdong Shekou's price was 2360 yuan/ton, down 20 yuan [16] - Basis: The main 11 - contract basis was 85 yuan/ton; the 09 - 11 inter - period spread was 39 yuan/ton [16] - **Macro and Industry News** - Northern corn port prices were 2210 - 2230 yuan/ton, and Guangdong Shekou's prices were stable [17] - **Trend Intensity** - Corn trend intensity: 0 [18] Sugar - **Fundamental Data** - Futures: The main futures price was 5670 yuan/ton, down 18 yuan - Spot: The mainstream spot price was 5980 yuan/ton, down 10 yuan - Basis: The mainstream spot basis was 310 yuan/ton, up 8 yuan [19] - **Macro and Industry News** - Brazil's sugar production needs to be re - estimated, and India's monsoon precipitation has weakened [19] - China imported 740,000 tons of sugar in July, an increase of 320,000 tons [19] - CAOC estimated domestic sugar production, consumption, and imports for 24/25 and 25/26 seasons [20] - ISO estimated a global sugar supply shortage of 5.47 million tons in the 24/25 season [21] - **Trend Intensity** - Sugar trend intensity: 0 [21] Cotton - **Fundamental Data** - Futures: CF2601 closed at 14030 yuan/ton during the day with no change and 14155 yuan/ton at night with a 0.89% increase [23] - Spot: The price of Beijiang 3128 machine - picked cotton was 15272 yuan/ton, unchanged [23] - Spread: The CF9 - 1 spread was - 270 yuan/ton, down 10 yuan [23] - **Macro and Industry News** - Domestic cotton spot trading was partially good, and cotton yarn market trading was okay, while the cotton fabric market was weak [24] - ICE cotton futures rose slightly on Friday, driven by US interest - rate cut expectations [25] - **Trend Intensity** - Cotton trend intensity: 0 [26] Eggs - **Fundamental Data** - Futures: Egg 2509 closed at 2920 yuan/500 kg with a - 0.21% decrease; Egg 2601 closed at 3434 yuan/500 kg with a - 0.67% decrease [30] - Spot: The price of Liaoning eggs was 3.20 yuan/jin, down 0.10 yuan [30] - **Trend Intensity** - Egg trend intensity: 0 [30] Live Pigs - **Fundamental Data** - Futures: Live pig 2509 closed at 13760 yuan/ton, up 35 yuan; Live pig 2511 closed at 13840 yuan/ton, up 75 yuan; Live pig 2601 closed at 14145 yuan/ton, up 40 yuan [33] - Spot: The price of Henan live pigs was 13780 yuan/ton, unchanged [33] - Spread: The live pig 2509 basis was 20 yuan/ton, down 35 yuan; the 9 - 11 spread was - 80 yuan/ton, down 40 yuan [33] - **Market Logic** - In August, the planned出栏 volume of large farms increased, demand growth was limited, and the spot market underperformed expectations. The reserve purchase policy has been implemented, but supply pressure needs multiple rounds of reserve purchases to ease [35] - **Trend Intensity** - Live pig trend intensity: 0 [34] Peanuts - **Fundamental Data** - Futures: PK510 closed at 8008 yuan/ton with a 0.40% increase; PK511 closed at 7802 yuan/ton with a 0.64% increase [37] - Spot: The price of Liaoning 308 common peanuts was 8200 yuan/ton, unchanged [37] - Spread: The Liaoning 308 common peanut basis was 192 yuan/ton; the 10 - 11 inter - period spread was 206 yuan/ton [37] - **Spot Market Focus** - In Henan, the volume of new peanuts on the market was small, demand was weak, and prices were mostly weak [38] - **Trend Intensity** - Peanut trend intensity: 0 [41]

Report Summary 1. Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - The bearish impact of the US soybean oil SRE is over, leading to an increase in international oil prices [1]. - The trading of soybean shortages in the fourth quarter has paused, and soybean oil prices are consolidating at a high level [1]. 3. Summary by Directory 3.1 Fundamental Tracking - **Futures Prices**: The closing prices and daily price changes of palm oil, soybean oil, rapeseed oil, Malaysian palm oil, and CBOT soybean oil futures are presented. For example, the palm oil futures price closed at 9,510 yuan/ton during the day session with a 0.78% increase, and 9,570 yuan/ton during the night session with a 0.63% increase [2]. - **Trading Volume and Open Interest**: The trading volume and open interest of palm oil, soybean oil, and rapeseed oil futures, along with their changes, are provided. For instance, the trading volume of palm oil futures decreased by 9,332 lots to 48,758 lots, and the open interest decreased by 16,867 lots to 55,391 lots [2]. - **Spot Prices**: The spot prices and price changes of palm oil, soybean oil, and rapeseed oil are listed. For example, the spot price of 24 - degree palm oil in Guangdong is 9,540 yuan/ton, with a decrease of 80 yuan/ton [2]. - **Basis**: The basis of palm oil, soybean oil, and rapeseed oil in Guangdong and Guangxi regions is shown. For example, the basis of palm oil in Guangdong is 30 yuan/ton [2]. - **Price Spreads**: The spreads between different futures contracts, such as the spread between rapeseed oil and palm oil futures, soybean oil and palm oil futures, and the 9 - 1 spreads of palm oil, soybean oil, and rapeseed oil futures, are presented [2]. 3.2 Macro and Industry News - Malaysia's palm oil production from August 1 - 20 is estimated to have increased by 3.03% compared to the same period last month, with different growth rates in different regions [3]. - The US EPA announced the results of small refinery biofuel exemption applications, including the approval of 63 full - exemption and 77 partial - exemption applications, and the rejection of 28 applications. It also clarified the use of RIN credit and will return 1.39 billion gallons of RIN credit for 2023 and 2024 [6]. - The US EPA plans to release a supplementary proposal for the 2026 - 2027 Renewable Volume Obligations (RVO) [7]. - Pro Farmer predicts record - high average yields for US corn and soybeans in 2025, with corn yield at 182.7 bushels/acre and total production at 16.204 billion bushels, and soybean yield at 53.0 bushels/acre and total production at 4.246 billion bushels [7]. - Argentina's 2024/25 soybean planting area is estimated to be 18 million hectares, stable from last month's estimate and 8.4% higher than the previous year. The production is estimated to be 50.9 million tons, stable from last month's estimate and 5.6% higher than the previous year [7]. - In the 34th week (August 16 - 22), the actual soybean crushing volume of oil mills was 2.27 million tons, with an operating rate of 63.81%, 134,300 tons lower than the estimate [7]. 3.3 Trend Intensity - The trend intensity of palm oil is 1, and that of soybean oil is 0. The trend intensity ranges from - 2 to 2, indicating different levels of bullishness or bearishness [8].

Financial Data and Key Metrics Changes - The company reported a consolidated net loss of $90 million for the second quarter of 2025, with a loss per share of $1.14 and an EBITDA loss of $24 million [5][11] - Adjusted EBITDA for the quarter was $99 million, with an adjusted loss per share of $0.23 [11] - The negative mark to market impact on the RFS obligation was $89 million, and the unfavorable inventory valuation impact was $32 million [11] Business Line Data and Key Metrics Changes - In the Petroleum segment, total throughput was approximately 172,000 barrels per day, with a light product yield of 99% on crude oil processed [5] - Adjusted EBITDA for the Petroleum segment was $38 million, driven by increased Group 3 crack spreads, offset by higher RIN prices and lower throughput volumes [11] - The Fertilizer segment achieved an adjusted EBITDA of $67 million, supported by higher UAN and ammonia sales pricing and volumes [11] Market Data and Key Metrics Changes - Group 3 2-1-1 benchmark cracks averaged $24.02 per barrel for the second quarter, compared to $18.83 per barrel in the same period last year [6] - Average RIN prices for 2025 were approximately $1.11, an increase of over 70% from the prior year [6] - Nitrogen fertilizer prices for 2025 were higher for both UAN and ammonia compared to 2024 [10] Company Strategy and Development Direction - The company plans to focus on improving capture rates, reducing costs, and growing the business profitably [25] - The alkylation project at Wynnewood is expected to enhance the ability to produce premium gasoline, with completion anticipated in 2027 [19] - The company is cautiously optimistic about the refining sector's near and medium-term outlook, given low refined product inventories and steady demand [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the refining market, citing low inventories and steady demand for refined products [17][20] - The company is awaiting final regulations from the IRS regarding PTC benefits, which could positively impact the Renewables segment [9][21] - Management indicated that the energy transition is evolving, with a belief that gas and diesel will remain essential fuels for the foreseeable future [48] Other Important Information - The company ended the quarter with a consolidated cash balance of $596 million and total liquidity of approximately $759 million [15] - Significant cash uses included $189 million for capital and turnaround spending and a $70 million prepayment on the term loan [13] Q&A Session Summary Question: Impact of excess inventory on financials - Management acknowledged that excess inventory during turnaround seasons negatively impacted financial performance, estimating a 7% to 9% decline in capture rates due to timing of product sales [31][35] Question: 2026 CapEx and turnaround outlook - Management indicated that there are no major turnarounds planned for 2026, and guidance on capital spending will be provided later in the year [36] Question: Strategic focus for new leadership - Management emphasized the need for diversification and the potential for future acquisitions to mitigate reliance on a single market [40] Question: Dividend reinstatement considerations - Management expressed a desire to return to dividend payments as soon as possible, with ongoing discussions at the board level [48][51] Question: Small refinery exemptions outlook - Management discussed the ongoing challenges with small refinery exemptions and the potential for legal action if necessary, emphasizing the importance of these exemptions for rural refineries [54][56]

Report Industry Investment Rating No relevant content provided. Core View of the Report - The US EPA issued a proposed rule for the RFS from 2026 - 2027, which is unexpectedly bullish. The total demand for raw materials is expected to grow in the next two years [20]. - There is a price premium for North American domestic raw materials over overseas raw materials in producing renewable diesel. The premium is dynamic and may widen if the RIN price rises. The bottom of the US soybean oil price is relatively stable, but there is a risk of a 10% - 20% upward fluctuation in the long - term. The demand from small refineries is uncertain [20]. - Due to the increasing biomass diesel obligation and differential subsidies for domestic and foreign raw materials, North American soybean oil and rapeseed oil will be used for biomass diesel production, while overseas raw materials will be used in the food and oleochemical markets. The price of raw materials for biomass diesel is more elastic [21]. - The US is expected to increase domestic soybean crushing and reduce soybean exports without increasing the soybean planting area. This may affect China's soybean imports, and the CBOT soybean price will be supported [22]. Summary by Related Catalogs Policy Introduction - On June 13, 2025, the US EPA issued a proposed rule for the RFS from 2026 - 2027, which led to a sharp rise in US soybean oil prices. A virtual public hearing will be held on July 8, 2025, and an additional meeting may be held on July 9, 2025 [2]. - The policy aims to provide market certainty for producers, offer lower oil prices for consumers, support the US biofuel industry, and enhance energy security and employment [3]. - The main contents of the policy include setting strong growth targets for major renewable fuels, prioritizing the US by reducing the value of foreign renewable fuels and raw materials, and canceling electricity as a qualified renewable fuel to achieve the goal of canceling the EV mandate [3]. Policy Details - The EPA proposed to set the total RV0 for 2026 at 24.02 billion RINs, an almost 8% increase from 2025, and 24.46 billion RINs for 2027, a nearly 2% increase from the previous year [5]. - The obligated quantities of biomass diesel for 2026 and 2027 are set at 5.61 billion gallons and 5.86 billion gallons respectively, exceeding market expectations [6]. - The proposed policy will increase the production of US biomass diesel, raise the operating rate, and increase the demand for raw materials [6]. Impact on Raw Material Prices and Demand - North American domestic raw materials for renewable diesel have a premium of about 10 cents per pound (about $220 per ton) over overseas raw materials. The premium is dynamic and may widen if the RIN price rises. The US soybean oil price is more volatile, and there is a risk of a 10% - 20% upward fluctuation in the long - term. The demand from small refineries is uncertain [10]. - The increasing biomass diesel obligation and differential subsidies will lead to the use of North American soybean oil and rapeseed oil for biomass diesel production, while overseas raw materials will be used in the food and oleochemical markets. The price of raw materials for biomass diesel is higher than that in other industries [11]. - Compared with 2024, the total demand for biomass diesel in 2026 is flat, and it increases in 2027. The global demand for vegetable oil is expected to increase, with North America leading the growth [13][14]. - The US may increase domestic soybean crushing and reduce soybean exports without increasing the soybean planting area. The USDA expects the 2025/26 soybean crushing volume to be 2.49 billion bushels (67.76 million tons), a 2.8% increase year - on - year. The domestic soybean crushing capacity has increased, and there is a probability of further increase by 2030. This may affect China's soybean imports, and the CBOT soybean price will be supported [18][22].