Headlines:

  • President Trump to address Congress/House of Representatives this evening. Markets waiting to see if he will talk about tax reforms
  • First Notice Day for March grain and oilseed contracts is today, February 28
  • US biofuel rumors send grains prices on a dizzy ride
    Corn and soybean futures went on a roller coaster ride, spiking nearly 6% at one point, on ideas that the White House might allow an increase in the blending of ethanol into gasoline, which would support demand for the corn-based biofuel.  The Renewable Fuel Association (RFA) offered a suggested resolution to the long-standing question of who should hold responsibility for ensuring the inclusion of ethanol in gasoline, and vegetable-oil based biodiesel into diesel. The responsibility currently falls on refiners, although they can outsource this obligation by buying Renewable Identification Numbers (Rins) from blenders who include biofuels. The RFA said on Thursday that it would accept these measures if the White House also increased the amount of ethanol that could be blended into gasoline, with the cap raised from 10% to 15% in summer months. The news sent corn prices soaring, with media sources carrying reports from unnamed sources supposedly close to the issue that a presidential memorandum was on its way. But White House spokeswoman Kelly Love later denied these reports, saying “there is no ethanol executive order in the works”.

 

Summary:

Rumors spread that the President will sign Executive Orders allowing E-15 Fuel Partial Waivers (partial waiver allows fuel and fuel additive manufacturers to introduce, into commerce, gasoline that contains greater than 10 volume percent (Vol%) ethanol (E10) and no more than 15 volume percent ethanol (E15) for use in model year (MY) 2001 through 2006 light-duty motor vehicles, which includes passenger cars, light-duty trucks and sport utility vehicles (SUV)). Additionally, the Order is said to include moving blending credits to the producer level. Moving blender credits to the producer level would improve margins. The E-15 Waiver would still leave ethanol plants near capacity but would also provide better surety for expanding capacity. The rumors were well received on the market place sending grain and oilseed products significantly higher intraday on marginal volume. Prices pulled back well off of intraday highs but still finished the day well into positive territory after White House spokesperson, Kelly Love, denied that the reports were true.