U.S. grains: Corn, soyoil climb on biofuels news

The Andersons’ ethanol plant at Denison, Iowa. (AndersonsEthanol.com)

Chicago | Reuters –– U.S. corn futures rose on Tuesday and soyoil futures climbed about four per cent on prospects for changes to the U.S. renewable fuels policy that could boost demand for corn-based ethanol and soy biodiesel, traders said.

Both markets pared gains following a White House statement that no executive order was in the works on ethanol.

Wheat and soybean futures also closed higher. Investment by commodity funds at the end of the month and ahead of the U.S. planting season lent support, analysts said.

Chicago Board of Trade May corn settled up 5-1/2 cents at $3.73-3/4 per bushel after reaching $3.86-1/4, its highest level since Feb. 16 (all figures US$).

CBOT May soybeans ended up 13-3/4 cents at $10.35-3/4 a bushel while May soyoil rose 1.3 cents to 33.93 cents/lb. after reaching 34.74 cents, its highest price since Feb. 13.

CBOT May wheat finished up five cents at $4.43-3/4 a bushel.

Corn surged after the head of the Renewable Fuels Association said that U.S. President Donald Trump’s administration would shift the onus on combining biofuels with gasoline away from refiners, who had long requested this change to the nation’s biofuel program.

Changes to the program could include a waiver to allow greater volumes of ethanol to be blended into gasoline in the summer, and support for a congressional tax credit for domestic producers of soy-based biodiesel, a source said.

“If that is the case, then obviously demand for ethanol would increase,” said Dan O’Bryan, analyst with Top Third Ag Marketing.

Others said the strength across the grains complex had to do with commodity funds banking on weather uncertainty as the start of the U.S. growing season approaches.

“It just looks today as if we are seeing an inflow of fund capital,” said Rich Feltes, vice-president for research with R.J. O’Brien. “The funds, given the time of year, are still predisposed to own this thing ahead of the growing season, rather than bet on a great crop.”

Some said the corn market was primed for a bounce after open interest fell as prices sagged in the last week, an indication of investors liquidating long positions.

“You blew out the weak longs, and you get a bit of bullish news, and there is not a lot of selling in the way of that rally,” O’Bryan said.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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