3 Big Things Today, February 28
1. Soybeans Hit One-Year High on Argentina Weather, Wheat Gains
Soybeans were again higher overnight amid spreading concerns about the drought in Argentina.
Argentina Treasury Ministers Chief Advisor Guido Sandleris said on a local radio station this week that if no rain comes soon, the crop will shrink, according to a Reuters report. Many analysts have said the dry weather has damaged the crop.
JP Morgan said in a note Monday that the crop’s value is $3.1 billion from year-ago levels. The most-active contract hit the highest price in a year in overnight trading.
It’s more of the same in the Southern Plains, where little or no rain has fallen in the past four to six months. That’s giving wheat prices a boost.
Soybean futures for May delivery added 7½¢ to $10.57 a bushel overnight on the Chicago Board of Trade. Soymeal gained $8.40 to $397.60 a short ton, and soy oil rose 0.09¢ to 32.49¢ a pound.
Corn futures for May delivery rose ¾¢ to $3.80 a bushel overnight.
Wheat added 7½¢ to $4.84½ a bushel, while Kansas City futures gained 9¼¢ to $5.14 a bushel overnight.
2. Grassley Says No Progress Made on RFS Reform After Meeting With President
Iowa Senator Charles Grassley said in a statement after he and fellow Iowa Senator Joni Ernst met with President Donald Trump and others about reforming the Renewable Fuel Standard that no deal was made, but he reminded the president of his commitment to corn producers.
“I reminded President Trump of his commitment to maintaining 15 billion gallons a year of ethanol under the RFS and his commitment to biofuels, agriculture, and rural America,” Grassley said in a joint statement with Ernst. “No deal on RFS reform was reached at the White House meeting. And no assurances or commitments were made to change the RFS ahead of the meeting.”
The president is concerned jobs will be lost, Grassley said, after Philadelphia Energy Solutions in January filed for bankruptcy, blaming the Renewable Fuel Standard. Grassley said he understands the concern as more than 1,000 people would be out of work if PES were to shut completely, but noted the problem seems to be isolated to one company.
“It’s important, though, that we are honest with ourselves when examining these issues,” he said. “If we don’t look at the facts before reaching conclusions, it becomes harder to fix problems. Every independent study indicates that other factors, not RIN prices, led to the bankruptcy of PES. Notably, merchant refiners in Texas and elsewhere are recording record profits.”
While jobs could be lost on the East Coast, 50,000 Iowans depend on the biofuels industry for their livelihoods, Grassley said in the statement. Ethanol is also important in 14 other states and to national security, he said.
Bob Dinneen, the head of the Renewable Fuels Association, said in an editorial written for The Hill that it wasn’t the RFS that was to blame, it Philadelphia Energy Solutions’ “hopelessly antiquated technology” that led to its demise. The company is among the country’s oldest refineries.
Grassley said he and Ernst suggested policy changes that would be a win-win for biofuels and oil, but he made it clear that a cap or waiver credit for RINs would undercut demand for ethanol.
“Farm jobs and blue-collar energy production jobs would be lost as a result,” he said. “I appreciate that President Trump wants to look out for domestic energy production workers. That does not need to be at the expense of ethanol production. The RFS shouldn’t be gutted for interests seeking market advantage in disguise.”
3. Flood Warnings Continue From Arkansas to Kentucky, Indiana to Ohio
Flood warnings remain in effect for a wide swatch of land stretching from Arkansas to Kentucky this morning, as several rivers and streams overflow.
A combination of rain last week followed by more storms this week is causing several waterways to overflow their banks, the National Weather Service said in an alert.
Only about 2 inches of rain are expected in the affected areas, but given wet conditions from last week’s precipitation, river and creek levels were already high in many areas, resulting in this week’s floods, the NWS said in a statement this morning.
Flood warnings have been issued in several parts of northern Indiana, southern Michigan, and northwestern Ohio, as well.
Record flooding along the St. Joseph River basin has occurred in the past 10 days, the agency said. Additional rainfall is expected to extend the duration of the flooding.