CBOT Weaker on Large Grain Deliveries; EPA Bio Fuel Mandates Positive Soyoil

Nov 30, 6:58 am | Mid-day Commentary | Share this:

** 6:30 AM CST CBOT Prices: January soybeans are down 1.50 cents at $9.91, March corn is down 1.00 cent at $3.525, and March Chi wheat is down 3.00 cents $4.3175.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! Slightly lower has been the feature at the CBOT overnight with corn, soybeans, and wheat futures sagging in modest volume. Only CBOT soyoil futures are higher on the EPA announcement of US 2018 and 2019 Biofuel Mandates. The CBOT has not been able to sustain Wednesday’s grain bounce on larger than expected December corn and wheat deliveries.   

  CBOT open interest data for Wednesday showed a 51,648 contract decline in corn, a 10,183 contract increase in soybeans, and a 9,025 decline in wheat. The big drops in corn and wheat open interest was all tied to additional liquidation of December futures positions before 1st notice day. 

  There were 2,000 contracts of December Chi wheat, 1,204 contracts of December corn, and 55 contracts of KC December wheat tendered for delivery.  The corn and Chi wheat deliveries were much larger than expected. Soyoil deliveries were just 179 contracts with 60 contracts of soymeal tendered.   Interestingly, the Chi wheat deliveries were the largest that we can find since the VSR was initiated, while the soyoil deliveries were the lowest in years. Chicago vs KC wheat spreads are expected to be pressured this AM.  

  The EPA is saying that it will maintain the US conventional biofuel mandate at 15 Bil gallons – mostly ethanol – the same as the current year, and keep the biodiesel mandate at 2.1 Bil gallons for 2018 and 2019. Biodiesel groups have been heavily lobbing Washington to raise the 2019 mandate to 2.4-2.6 Bil gallons based on additional capacity, but such an increase was not approved.

  EPA is said to require 4.29 Bil gallons of advanced biofuels in a 2018, a slight uptick from the current 4.28 Bil, and above the 4.24 gallons proposed on July 5th. And 288 Mil gallons of the Advanced Biofuel mandate would have to be made from cellulosic – non edible plant materials. EPA head Scott Pruitt will be heading to Nevada, IA to meet with farmers/legislators this AM.   

  The leaked mandates are positive for US vegoil prices with the US Dept of Commerce moving ahead to finalize hefty duties against Argentine/Malaysian  biodiesel importers. Accordingly, the availability of soyoil is tightening.

  Rainfall of .8-1.50” fell in Cordoba, Argentina yesterday with other areas seeing .1-.7”. A few showers are possible on the weekend with any good rains to be across the far west with a below normal rain pattern noted thereafter. Temps are starting to seasonally warm with 80’s to lower 90’s commonplace.

The below normal Argy rain trend extend into the S Brazil into mid December as a strong pool of cool Pacific waters is noted to the west of S America.   Big CBOT grain deliveries will pressure the CBOT to start, but we doubt that any lasting decline can be sustained amid arid Argy/S Brazil forecasts. Active soyoil/meal spreading is expected on the biofuel mandate news.

** Limited Moisture for Plains Wheat for next 10-14 days: 

South American percent of normal