By: Dan Hueber –
We have witnessed a renewed spark of bullish enthusiasm in the grain and soy markets over the past couple days, stimulated by a combination punch of transportation issues in Brazil and a report that a deal to make changes in the Renewable Fuels Standard that really knocked the bears back on their heels. At this point in time we have not pushed any of these markets outside of recent ranges and I am not terribly confident that the stories really have the staying power to do so but it does come as a stark reminder that you never know exactly when that next black swan can take flight.
Of the two stories, the one concerning the RFS is the more intriguing. It has been rumored for some time than Carl Icahn, who is a special advisor to President Trump, has been pushing to rewrite rules and push the use of RINS away from refiners and onto blenders. Up until this point, the Renewable Fuels Association has been opposed to such a change and in fact within the last month had filed comments with the EPA opposing such but evidently have changed their tune after a pledge was included to allow the year-round sale of E-15 across the U.S. The RIN market did not take the news very well and now sits at less than half of where it was at the beginning of the year. Of course in business and in politics, everyone is trying to negotiate deals that are in the best interest of their holdings and this is no exception but it would seem that the intentions of Icahn are coming under special scrutiny. He is the major stockholder in refiner CVR Energy, Inc., and the story sent the prices of his holdings up to the tune of $126 million that day. Note that the value of CVR Energy has more than doubled since he stepped into the role as special advisor. I do have to imagine this has helped ease some of the recent pain he suffered after selling the failed Trump Taj Mahal casino in Atlantic City for a loss of around $300 million. As it stands today, there has been nothing official as to if the Trump Administration is planning to do anything with the proposal and a White House spokesperson stated there were no executive orders in the works that deal with ethanol. Regardless, you can be confident this will not be the last time we hear of such, which should keep both bears and bulls in the corn market on their toes.
Not a very inspiring week for export sales. For corn, we sold 692,400 MT or 27.26 million bushels. This was 7% below last week and 24% below the 4-week average. Top sales went to Mexico with 260.2k MT, followed by Japan with 132.9k and finally South Korea at 119.6k. Soybeans sales did improve over the previous week with a total of 427,700 MT or 15.72 million bushels. This was up 27% for the week but was still 23% below the 4-week average. China on top once again with 207.1k MT, followed by Indonesia with 49k and Peru purchasing 33.6k. Wheat fared no better with total sales down 22% from last week and 28% below the 4-week average coming through at 353,200 MT or 12.98 million bushels. Top sales went to Mexico with 64.5k MT, then the Philippines at 58.1k and in the third spot Japan at 56k.