February 28 Grains Commentary: Virginia McGathey
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[Virginia McGathey] I'm Virginia McGathey here on the floor at the CME Group
reporting to you on the grain market.
A wild day in commodities today.
All grains soared on the news that
the ethanol mandate from the renewable fuels association,
the standard was going to be increased by 50 percent.
So it was going to raise it from ten percent to 15 percent,
which was a bit of a surprise,
and that said in corn rallying up 18 cents.
Then the dominoes started to fall,
so what that means is that
many of the farmers decided the idea was
the farmers would decide to take
their acres back from what they originally said
on Friday from forum
and take it back from soy beans.
So the idea that the farmers would take back
and plant corn instead of soy beans
made soy beans rally like 32 cents.
Wheat then was up 15 cents and it was basically along for the ride,
but there was some bullish news for wheat because
there is some concerns of the weather.
It's very cold, there really isn't a lot of snow
cover and so very difficult to tell
how this is going to work out with the winter wheat.
Now, that actually helped a little bit on that one.
Now, after all that, the White House response was
they denied that there was any report at all
or that this was actually going to happen.
But the renewable fuel association president
Bob Dinneen said again that it
was definitely part of that.
So the White House response was
in conflict with what the president said.
Nevertheless, when that news came out,
the selling started to come back.
So originally when the market rallied,
it certainly started to tap out.
There was some selling coming back, but the market still stayed higher.
After the news that the White House denial came out,
sellings came in again.
The market still ended up higher
with volatility for all the grains with huge ranges.
And it was a little bit kind of
extraordinary because today is the last day of February.
So there was a lot of positioning and an awful lot of
gyrations in the market today.
Corn finished up still five and a half.
So that was May corn, May what finished
up five and the May soy beans finished up 13 and three quarters.
We expect a continuation of the wild ride tomorrow
as we get this settled down as to what's actually going to happen
with that renewable fuel standard.
So it's a little bit up in the air
as to exactly what's going to happen, so we're going to have a lot to look at tomorrow.
That's all from the floor at the CME Group, I'm Virginia McGathey.