Soyaoil jumps; grains sag

Chicago Board of Trade soyaoil futures surged more than 6 percent on Wednesday after the US government released final requirements for biofuel use for next year, analysts said. Soyabeans firmed on the jump in soyaoil, but trade was choppy. CBOT corn and wheat were lower, pressured by a stronger US dollar and profit-taking ahead of Thursday's Thanksgiving holiday.
As of 12:13 pm CST (1813 GMT), most-active CBOT January soyaoil futures were up 2.22 cents at 36.99 cents per lb after rising the daily 2.5-cent limit to 37.27 cents, a contract high.
January soyabeans were up 1-1/2 cents at $10.31-1/2 per bushel. December corn was down 1-1/4 cents at $3.49-3/4 a bushel and December wheat was down 5 cents at $4.02-1/4.
Soyaoil soared after the US Environmental Protection Agency (EPA) set the target for total renewable fuel use for 2017 at 19.28 billion gallons, up from this year's 18.11 billion gallons.
The total includes 15 billion gallons for conventional biofuel, mainly corn-based ethanol, and 4.28 billion gallons for the advanced biofuels mandate, which includes soya-based biodiesel.
The primary feedstock for US biodiesel fuel is soyaoil, so the EPA's targets should tighten domestic soyaoil stocks. The US Department of Agriculture currently projects US soyaoil stocks at the end of the 2016/17 marketing year at 1.658 billion lbs.
As CBOT soyaoil futures climbed, soyameal futures fell on oil/meal spreading. Soyabeans are processed into soyameal, used in animal feed, and soyaoil, used in foods and biodiesel fuel. Brokers often trade on the spread, or price difference, between soyameal and soyaoil.
Soyabeans were choppy as support from the strength in soyaoil met pressure from profit-taking, after the January soyabean contract notched a four-month high at $10.35-3/4 a bushel.
CBOT corn futures had little reaction to the EPA's biofuels targets and sagged on position-squaring ahead of the Thanksgiving holiday and strength in the dollar, which tends to make US grains less attractive on the world market.
Also, forecasts called for generally favourable weather in South America, where corn and soyabean crops are developing.