It would appear that we are receiving a foretaste of what a weather market may look like this year as grain and soy prices have extended higher again to begin this new week. Corn is pressing up again the March highs, and with nearby futures approaching the 4.00 level once again, nearby beans are north of 10.50, and spot wheat has gapped higher and is north of 5.00 for just the 4th time in the last 41 weeks. Note that on the combination corn/bean/wheat, if we can hold, we will have pushed into new highs for the calendar year. The driving force this morning, as well as late last week, appears to be growing concern about wheat conditions/progress as well as the overall late start for corn/bean planting. We better be careful as people, i.e., investors could begin to get excited about commodities and direct money our way.
Interestingly enough, at least when measured by fund activity, they appear to be headed in the opposite direction. Index funds showed little change, but what is technically regarded as managed money, we find they net sold around 15,000 contracts of corn, 23,000 beans, 5,000 wheat, 4,000 meal and added 12,000 contracts to an already short position.
This afternoon will bring us the planting/condition updates and could determine if we can keep this move alive or not. The trade is expecting corn planted to come in between 15 and 20% complete. Nothing out of the ordinary lining up for export demand at this point but Argentina continues to be a purchaser of US beans. This morning the USDA reported a sale of 120,000 MT for the 2018/19 marketing year.
Now, before you read this next item, you may want to grab a box of tissues as it is quite heart wrenching. It was reported this morning that bio-fuel blending mandates are so onerous that there is an Oklahoma facility that is going to receive a waiver from the EPA, exempting it from the federal standards due to “hardship.” The company in question is CVR Refining of Wynnewood, Oklahoma. It is my understanding the provision being used here was enacted to help small refineries that are struggling with RFS standards. You may have heard of CVR previously as the major stockholder is Carl Icahn, the number 73 on the list of global billionaires with an estimated net worth of around $17.8 billion. Now, I am sure that there are many different billionaires who own or invest in the energy business, but it is a well-known fact that Mr. Icahn, who was until last August was an (unpaid) special regulatory and economic advisor to the president, has lobbied hard against the renewable fuels industry. Add in the fact that the EPA administrator Scott Pruitt is from Oklahoma and no friend of the biofuel industry either and one might be led to suspect that something fishy, or in this case, slick and oily is going on. I do understand that corn lobby has already raised objections to this deal, and it should be noted that Mr. Icahn is already under investigation by the Justice Department concerning his role in trying to influence biofuel policy while he was functioning as an “advisor” to the White House but if either is being heard would appear to be in question. I wonder if anyone has thought of the idea of starting a go-fund-me page to help Mr. Icahn and CVR work through this “hardship.”