Grains chopped around today to finish out the week. Wheat rallied 10-11 cents in Chicago and 4 to 6 in KC today, while soybeans closed up 5 cents on old crop and a penny higher on new crop. Corn closed a penny lower on most contracts. For the week, corn lost 7 ¾ cents on old crop and a nickel on new crop, soybeans dropped 6 to 9 cents on old crop, and 1 ½ lower on new crop, and wheat rallied 6 to 9 cents in Chicago and dropped 3 cents in KC. Chinese corn futures rallied 15 cents on corn and 27 cents on soybeans this week.
The outside markets were mostly higher as the Dow Jones index rallied 307 points and crude oil gained 12 cents. The dollar index was up 0.189 points. Gold sailed $34 higher to close at a new record high near $2,322. Silver also rallied 26 cents per ounce to $27.51, the highest levels since June 2021. We haven’t talked about silver much, but here is the monthly price history since 2003. Over the past 21 years, silver has had a range of $4.47 to $49.52. There has been some talk in the precious metal sector of silver looking to test the $30 level. If silver gets above that level, then those levels from prior to 2013 become the next target. We’ll keep an eye on both the gold and silver markets in the coming weeks, but it appears new buying is taking place in both, which needs to be monitored. Geopolitical and interest rate/debt risks have some traders fleeing to hard assets like gold and silver.
Grains had a choppy week after what looked like a promising USDA report last week. Some blame the price action on the weather forecasts, while others point to lack of export demand and multiple areas that have received 2 to 3 inches of rain in the past week. Subsoil moisture is recharging in areas, but there are still large portions of the Midwest who would love to receive 3 to 4 inches of rain prior to planting. The recent rains have shrunk the severe drought areas, and as the map below show, areas in Nebraska, Kansas, Oklahoma, and Texas are in MUCH better shape than a year ago. Areas drier than last year include portions of Iowa, Minnesota, and Wisconsin. Illinois and areas east are sitting in good shape with recent rains.
Wheat found some support today on news that Russia is having issues with their export program due to continued attacks on their oil refineries. There was also talk of a dispute between Russia and Egypt on wheat shipments due to new disputes with a large grain trader. There is also growing tension in the Middle East with Iran and Israel, with the risks for attacks on oil producing and exporting infrastructure. It sure would be nice if everyone could just get along!
Next week the USDA will give us updated supply and demand numbers on April 11th. We should have the trade estimates on Monday, but traders are thinking of lower corn stocks and slightly higher soybean and wheat stocks. Production in Brazil should come in a tad lower for corn and beans, while Argentina production should increase on soybeans and drop on corn.
We did see some new information come out this afternoon from Reuters on SAF details. Here is the news article. Sounds like a somewhat disappointing update, with more details to come by May 15th.
WASHINGTON, April 5 (Reuters) – The Biden administration will release a preliminary climate model for its sustainable aviation fuel (SAF) subsidy program in the coming weeks that is more restrictive than the corn-based ethanol producers had hoped, two sources familiar with the matter told Reuters.
Under the preliminary model, which could be released by May 15, ethanol is not expected to automatically qualify as a feedstock in the SAF subsidy program unless the corn involved is sourced from farmers using one of just three sustainable agriculture techniques, the sources said.
Those techniques include efficient tilling, use of cover crops, and efficient fertilizer application, the sources said.
The ethanol industry had expected a broader range of agriculture techniques to be included in the model to help the fuel qualify.
The sources said the model could be expanded to include a broader range of options when the administration issues its final rule later in the year.
The Biden administration wants SAF to play a key role in decarbonizing the transportation sector, and included a $1.25 per gallon tax credit for its production in the 2022 Inflation Reduction Act.
But to secure that subsidy, SAF producers must demonstrate their fuel is 50% lower in emissions than jet fuel.
Ethanol producers see the nascent SAF industry and its subsidies as the corn-based fuel’s top chance for market growth, amid stagnant demand for gasoline.
That’s all for today. See you here Monday!
AgriSource SAF Ethanol comments 3-27-24
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