Floor Talk May 29
BREAKING NEWS: New RFS Trims Ethanol
Trade Sees the news as negative corn, friendly soyoil. but, the impact has been muted, so far.
Scott Shellady, TJM Investments Senior VP, and CME Group floor trader, says the market reaction is soft, so far, Friday.
“It has given a boost to soyoil. Negative corn but so far impact has been muted,” Shellady says.
Right now, the corn market has already been beaten up, with July corn futures at the $3.50 level, The real Yet, another CME Group floor trader, requesting anonymity, says Friday’s RFS announcement is complicated to understand.
“The 2014 mandates were dissappointing for ethanol and a little flat for bio-diesel, allowing for some carry in RINS. …Now, the 2015 mandate is in-line with the USDA’s soyoil balance sheet and ethanol RINs are dropping precipitously for ethanol,” the floor trader says.
“So, ethanol production will get hurt in short run, adding to bearish corn price ideas… the cheap ethanol numbers..in short run shut out sugar ethanol imports.. so the increase in Advanced fuels can drive soy oil consumption higher than the D4 mandates... keeping soy oil tight,” the floor trader says.
Al Kluis, Kluis Commodities, agrees that the announcement is confusing. “the announcement is a little confusing, That said I view it as a little negative for corn and that is the way the corn market is trading it as well.
Overall I think a lot of the markets close to a low - I do not know what will cause the rally. Cotton really took off this week.”
Though the consensus of the trade is that the EPA announcement is setting the market back, Alan Brugler, President Brugler Marketing & Management LLC, says nothing suggests lower ethanol production or corn use in that sector.
First, the EPA’s 2014 mandate is immaterial to corn demand, Brugler says.
“About the only impact would be on RIN values, depending on whether those having to meet the mandate are holding too many or not enough to prove compliance,” Brugler says.
He adds, “We would have liked to see the 2015 mandate a little bit larger, given the burdensome supply of corn now available. However, the market has essentially been operating without the mandate all year, due to the lack of an announcement. We have been running at near record weekly production levels in 2015. Pricing and consumption should not change much.”
These mandates keep a solid floor under ethanol consumption, Brugler says. “Growth needs to come from the expansion of E15, blender pumps and E85 use, as well as exports. If all of the E10 pumps were E15, ethanol use would balloon to over 19 billion gallons and the industry could not meet the demand. Of course, we are several years away from such a thing, and with blend pumps would likely not get there. Initiatives by independents like Kum & Go to expand the offering of higher blend percentages, and to price the products at appropriate BTU values are very important to growing use without the push of the blend wall.”
At the close, the July corn futures settled 2 cents lower at $3.51 1/2 per bushel. The Dec corn futures finished 2 cents lower at $3.68 per bushel.
July soybean futures closed 8 cents higher at $9.34. Nov. soybean futures closed 3 3/4 cents higher at $9.05.
July wheat futures ended 11 3/4 cents lower at $4.77.
July soymeal futures finished $0.90 per short ton higher at $305.70. July soyoil futures closed $1.27 higher at $33.33.
In the outside markets, the Brent Crude oil market is $2.97 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 86 points lower.
At mid-session, the July corn futures are trading 1 1/2 cents lower at $3.52 per bushel. The Dec corn futures are 1 1/2 cents lower at $3.68 per bushel.
July soybean futures are trading 7 1/2 cents higher at $9.33. Nov. soybean futures are trading 4 cents higher at $9.06.
July wheat futures are trading 8 1/4 cents lower at $4.80 1/2.
July soymeal futures are trading $2.10 per short ton lower at $302.70. July soyoil futures are trading $1.30 higher at $33.36 .
In the outside markets, the Brent Crude oil market is $1.63 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 100 points lower.
At the open:
At the open, the July corn futures are trading 3 1/4 cents higher at $3.56 per bushel. The Dec corn futures are 3 cents higher at $3.73 per bushel.
July soybean futures are trading 2 1/4 cents higher at $9.28. Nov. soybean futures are trading 2 cents higher at $9.04.
July wheat futures are trading 1 1/4 cents lower at $4.87.
July soymeal futures are trading $1.30 per short ton lower at $303.50.
In the outside markets, the Brent Crude oil market is $0.32 higher per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 57 points lower.
Standby: We are awaiting EPA's required renewable volume obligation announcement Friday. The agency is set to make this announcement on or before June 1.
What do you think this announcement will do to the corn market, today?
USDA announces big soybean sale Friday:
Private exporters reported to the U.S. Department of Agriculture export sales of 202,000 metric tons of soybeans for delivery to unknown destinations during the 2015/2016 marketing year.
The marketing year for soybeans began Sept. 1.
USDA Weekly Export Sales Report Friday shows average sales vs. expectations.
Wheat= 296,100 metric tons vs. the trade's expectations of 175,000-500,000 metric tons.
Corn= 661,300 mt vs. the trade's expectations of between 650,000-1,150,000 mt.
Soybeans= 377,500 mt. vs. the trade's expectations of 350,000-650,000 mt.
Early calls: Corn 2-4 cents higher, soybeans 1-2 cents lower, and wheat 2-4 cents lower.
Overnight grain, soybean markets = Trading mostly lower.
Brent Crude Oil = $0.84 higher.
Wall Street = Seen lower, with 1st Quarter growth in focus.
World Markets = Europe stocks were lower, Asia/Pacific stocks were mostly higher.
More in a minute,
Re: Floor Talk May 29
Details of EPA announcement Friday, according to the fact sheet:
The proposed rule calls for the 2015 RVOs to include a cellulosic requirement of 106 million gallons, a biomass-based diesel requirement of 1.7 billion gallons, an advanced biofuel requirement of 2.9 billion gallons and a requirement for total renewable fuel of 16.3 billion gallons. The statutory requirement is 20.5 billion gallons of total renewable fuel, including 3 billion gallons of cellulosic biofuels and 5.5 billion gallons of total advanced biofuels.
The EPA’s proposal calls for the 2016 RVOs to include 206 million gallons of cellulosic biofuels, along with 1.8 billion gallons of biomass-based diesel, 3.4 billion gallons of advanced biofuel, and 17.40 billion gallons of total renewable fuel. The statutory requirement of 22.25 billion gallons of total renewable fuel, including 4.25 billion gallons of cellulosic biofuel and 7.25 billion gallons of total advanced biofuel.
In addition, the proposed rule aims to set the 2017 RVO for biomass-based diesel at 1.9 billion gallons.
Re: Floor Talk May 29
do know i sure wish the whole grain deal would turn around and get positive for a change.
dam thing is soooooo far below cop it's just a negative planet.