Market Commentary

Dec corn up ½ at $3.495
Nov beans up 3 ½ at $9.90
The DOW is up
USD is up
Crude oil down $.39 at $50.90

Good morning,

We labelled early strength in corn the “Trump Bump”, as news agencies penned stories suggesting the President himself directly intervened to dissuade the EPA from “messing with the RFS”. Rumors had been circulating for the past month that the EPA was looking to ease the compliance burden of refiners in one way or another – either by allowing exported ethanol gallons to count, or by outright reducing biodiesel (and advanced biofuel) mandated volumes. This prompted a political backlash by Midwest Senators, who have been aggressively lobbying against such changes. Though there was no official statement from the White House or the EPA, the stories were enough to rally corn and bean oil, as well as biofuel RIN credits, which suddenly got a whole lot more clear. Ethanol did not respond; in fact, that market actually closed the day 1-2 cents lower. The futures crush fell to a new recent low, likely sending more plants to a “breakeven at best” posture. Cattle on Feed report out today will give livestock traders something to chew on. Dairy futures fell to a one month low. Weekly Broiler Hatchery report found egg sets up 4% yr/yr, and broilers placed up 2% (also yr/yr).

Technically, CZ reversed higher but was unable to hold trade back above $3.50 however nothing changes with the chart remaining in its sideways range. Support lies at the $3.42 ½ low which now acts as key near term support however, if the chart can extend to new lows we run into an open count to $3.35 which suggests limited downside potential from here. The same is true to the topside though where resistance remains in the upper end of our recent range from $3.55 to the $3.60 area. It takes a trade above the $3.62 July high to shift the chart posture.

SX bounced off its initial test of support with our previous range roughly defined from $9.80 to $9.60. Resistance will remain at $10 while a close into new highs would project a run to the open count in the $10.23 area next. The trend remains higher for now, it takes a close below the $9.59 report day low to shift the formation back to the downside.

Senate Agriculture Committee ranking member Debbie Stabenow is trying to defend the farm bill from any trimming that could happen as a result of the budget reconciliation process that kicked off in the upper chamber this week. The Michigan Democrat announced late Wednesday that she filed an amendment intended to spare all farm bill programs from any reduction in spending from 2019 to 2028. The move comes as the Senate gears up to consider the GOP budget resolution, which would pave the way for a deal on tax reform. The Senate's budget resolution already spares the ag committee from having to deliver any cuts, but the House budget resolution calls for $10 billion in reductions over a decade, and the two measures will need to be reconciled. As many in the agriculture community have argued, Stabenow contends farm programs shouldn't be mined for savings because the ag committees have already focused on making cuts. More than $100 billion is expected to be saved under the 2014 farm bill, though the vast majority of that comes from reductions in people receiving SNAP benefits. (Source: Politico)

President Donald Trump intervened personally with the Environmental Protection Agency amid pressure from Republicans in the politically important state of Iowa who worried the agency was poised to weaken biofuel quotas, three people familiar with the discussions said. Trump directed EPA Administrator Scott Pruitt to back off any changes that would dilute a federal mandate for biofuel use, the people said. A top EPA official said Trump’s urging was unnecessary because Pruitt wasn’t planning on weakening the mandate. Nevertheless, the agency was told by the White House to drop two changes that were under consideration: a possible reduction in biodiesel requirements and a proposal to allow exported renewable fuel to count toward domestic quotas, said the people, who asked not to be identified because they were not authorized to speak publicly about the move. While campaigning in Iowa last year, Trump pledged to protect ethanol and the biofuel mandate. Trump called Iowa Governor Kim Reynolds Wednesday to reassure her of his commitment to the program. (Source: Bloomberg)

It took 107 pages for a Kentucky court to explain a ruling that bans any farm-machinery maker except Deere & Co. from using green in combination with yellow for their equipment. The court found in favor of Deere in a suit aimed at protecting the company’s trademark coloring and brand. The decision bans Fimco Inc., a South Dakota company that makes agricultural sprayers under the Ag Spray Equipment brand name, from painting them green and yellow. Deere argued that Fimco’s use of the same hues confused the public about where its products came from and diluted the value of the Deere brand. Fimco now has 60 days to file a plan with the court, outlining how it will comply with the ban. (Source: MarketWatch)

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