Overview of futures markets:
Higher across the board for grains and oilseeds.
Markets rallied on reports that the Trump administration was making alternations to the renewable fuels standard, which would involve a shift of the blending credits to from the refiner to the wholesaler.
In addition to this, legislation for tax credits from biofuel was going to be changed so that only US produced biofuel was valid to receive the tax credit which would reduce imports and increase domestic crushing. These reports were denied by the White House and President Trump is expected to address the press at approximately 1 pm AEST.
- CBOT Wheat was up 6c to 424.75c,
- Kansas wheat up 7.25c to 451.25c,
- corn up 6.5c to 366.75c,
- soybeans up 14c to 1025c,
- Winnipeg canola up 6.60$C to 518.6$C,
- Matif canola up 7€ to 416.75€.
- The Dow Jones down -25.19 to 20812.24 ,
- Crude Oil down -0.049c to 54c,
- AUD down to 0.765c,
- CAD down to 1.329c, (AUDCAD 1.017)
- EUR down to 1.057c (AUDEUR 0.723).
Soybeans rallied on the news but closed off their highs, if the policy change is confirmed it will increase domestic usage of soy oil and will reduce future exports. South American imports of biodiesel will slow which will see domestic vegoil demand increase, which will lead to imports of canola oil as soyoil demand increases.
Canola followed strength in the oilseeds complex rallying sharply and closing off its highs, the Canadian dollar was weaker which also supported pricing.
Corn like beans rallied sharply on the rumours, pushing close to recent highs before retreating once the White House denied the rumours. The fundamental implications of such a measure would increase corn ethanol production and drastically reduce carryout. This encouraged fund buying which was noted in large volumes.
Wheat followed strength in other markets which was the catalyst for more short covering. Warmer temps in the winter wheat areas is seeing some crops out of dormancy early, which cause some production issues. Egypt purchased wheat from the Black Sea and France, making their total purchases for the last two weeks 1.25Mt.
In Australia the latest ENSO wrap be the BOM is calling for a 50pc change of El Nino in 2017. Some mild rainfall is forecast for Queensland and NSW in the next 8 days which would be very welcome. The AUD is now trading under .765 and looks weak from a technical perspective.
Source: Lachstock Consulting