February 28 Grains Commentary: Virginia McGathey

[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.