Headlines:
- EU Seeks to Soothe U.S. by Clearing Soybeans for Biofuel
The European Commission said on Tuesday it had concluded that U.S. soybeans can be used in biofuels in the European Union, part of the bloc’s push to improve strained trade relations with the United States. However, industry sources said it was unlikely to lead to a flood of additional U.S. soybean imports into Europe. U.S. President Donald Trump agreed in July not to impose tariffs on EU car imports while the two sides explored ways to boost trade including a possible deal to remove tariffs on nonauto industrial goods and to boost EU imports of U.S. soybeans and liquefied natural gas. The Commission said in a statement the recognition of U.S. soybeans for use in biofuels was valid until July 1, 2021, but could extend beyond that date as long as they met sustainability criteria set in new EU rules in the 2021-2030 period. “Today’s decision is new proof that the European Union is delivering on our commitments,” a Commission spokesperson said.
- Polar Vortex Strikes U.S. Farm Belt
Farmers from North Dakota to Iowa buckled down for some of the coldest weather in a generation on Wednesday, throwing extra rations to pigs or building igloos for chickens before hunkering down for a day of sub-zero temperatures and bone-chilling winds. Some, like Kurt Line in Indiana, joked about the forecast. Line said he looked forward to working on his tax returns, something he usually puts off, rather than braving the cold to load corn for a local processing plant. But temperatures expected to plunge in some areas as low as -40°F., the point at which Fahrenheit and Celsius converge, are no laughing matter for an industry dependent on the elements. The brutal chill was caused by the polar vortex, a mass of freezing air that normally spins around the North Pole but has made its way south to the United States.
Summary:
The weekly export sales report is due for release tomorrow morning. Meanwhile, the energy markets have found some legs and appear to be poised to make an upside run in light of the polar vortex that is hitting the US and the Midwest in particular. US equity markets finished higher on the day are trading higher and both the USD and Gold finished close to flat on the day. The corn market was finished slightly higher on the day while remaining in a rangebound formation that started in the middle of December. The March contract is effectively trading close to its 50-day moving average of 378.50. Relief from the polar vortex is not expected until the weekend. Brazil’s corn harvest has begun in their southern region with early reports of lower than expected yields which could in turn cause support for US corn. We anticipate corn can trade higher on crop concerns in Brazil. The soybean market traded higher overnight getting strength from crop concerns in Brazil and hopes for a resolution to the trade war and increased demand for US soybeans. However, it was only able to finish the day at about 50% of the day’s trading range, surrendering a big part of its intraday gains. As Brazil’s soybean harvest progresses, more reports of disappointing yields from dry weather continue to surface. We anticipate that soybean can trade higher while it waits for signs of improving demand and on the heels of crop worries in Brazil. The wheat market bounced overnight, after disappointment over Egypt’s tender but trader with weakness for the balance of the regular trading session. Cold weather across the Southern Plains has raised concerns about possible damage in areas where there is little or no snow cover.
