Corn, Beans Rise on Altered Biofuel Blending Requirements Rumor

Corn: U.S. President Donald Trump was rumored to be interested in the revamp of the national biofuel program to ease regulations on oil refiners, providing new incentives for ethanol and biodiesel production. Rumors also swirled that Trump would vie for a higher blender RVP waiver for E15 as 15% ethanol blends are currently restricted from use in some areas. However, the White House denied having discussed such matters, resulting in a corrective move to the downside.

The USDA reported weekly export sales of 692,400 MT of old-crop U.S. corn and 20,700 MT of new-crop corn, both below trade expectations (which were 850,000-1,250,000 old/new) as the U.S. continued to experience shipping delays. Japan, the world’s top corn importer, has tapped at least 330,000 MT of corn from emergency stockpiles after inventories fell to critically low levels due to a delay in shipments from the United States. Argy corn to be delivered to Japan in recent months has been at a slight discount to US PNW/Gulf corn.

Brazil exported just 487,000 MT of corn in February versus 5.37 million MT the year prior. Informa In a monthly report, the firm also raised its estimate of Brazil’s 2016/17 all-corn production to 91.0 million tonnes, from 89.0 million last month – well above the USDA’s current estimate of 86.5 million MT and Conab’s Feb estimate of 87.4. Argentina’s corn crop is also expected to keep rising, pending any weather surprises.

‘The American investors of the Summit Agricultural Group and its Brazilian counterparts are counting down to the crowning of a major investment project in Brazil.’ The construction of an ethanol plant is in its final phase in Brazil, which is set to come online in July. FS Bioenergia, the company that is building the facility, is also scouting out new locations for a second facility in the city of Sinop in northern Mato Grosso. This has created buzz within the industry that Brazilian ethanol may find its way into the U.S. and hamper U.S. export volumes (With an investment of US $ 115 million, the unit will have the capacity to produce 200 million liters of corn ethanol per year).

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Soybeans: Aside from the biofuel blending confusion that lifted the soy complex, especially bean oil, the other big story this week was transportation delays in Brazil. At least 11 ships are facing delays in loading soybeans at Brazil’s northern ports after rains washed out roads and disrupted the progress of about 3,000 trucks carrying beans from the center-west region, Brazilian officials said on Thursday. Agriculture Minister Blairo Maggi said some commodities traders could have problems fulfilling soy export contracts due to the transportation problems.

Soybean prices continue to be strong, UP 18% from prior year on a weekly basis, even as the market anticipates a big increase in acreage, the SA crop keeps rising and global feed wheat remains ample. Informa Economics on Thursday raised its estimate of Brazil’s 2016/17 soybean crop to 108 million MT, from their prior estimate of 106.5 million. Though Feb bean exports from Brazil only reached 3.5 million MT (+72% YoY) versus expectations near 6 million MT.

South American Crop Consultant Dr. Michael Cordonnier made no changes to his Brazilian crop estimate, leaving the soybean crop at 105 million MT. He also mentions that his estimate could move several million metric tons higher if soybeans in Rio Grande do Sul and northeast Brazil are as good as they look. Some market analysts believe the crop could rise as high as 110 million MT. Should that be the case, ‘reduced acreage in the U.S.’ may become a trivial fundamental.

WRITTEN BY Alyssa Badger

Alyssa started her career in 2008 at the Board of Trade managing a firm that had a primary focus in grains. The nucleus of her position centered around order entry and research development; from there, Alyssa's enthusiasm for commodities continued to grow and expand. This enthusiasm lead her to move to West Texas and assist in hedging for the largest originator of U.S. cotton to textile mills worldwide. Alyssa has now settled back in Chicago as a Trading Consultant for Highground Trading, Inc. Contact Alyssa