Grains are mostly lower at midday:

Dec Corn – 4 ¼ cents/bu (5.33 ¼ )

Nov Soybeans – 8 ¾ cents/bu (12.41 ¾ )

Dec Chi Wheat + 4 ¼ cents/bu (7.49)

Cdn $ -0.00250 (79.245 cents)

WTI Crude Oil – 1.53/barrel (77.40)

Wednesday has been a very volatile day in all markets.  We started the day off strongly in grains, with support coming from outside markets, particularly crude oil that traded up to 7 year highs overnight.  Inflation concerns and tight energy and grain stocks will continue to provide underlying support to grains.  However, the inflation story also raises concerns over what the US government might do to combat it, as that might include interest rate increases and/or a tapering of the stimulus programs that America has become addicted to.  At any rate, either of those courses of action are feared to stifle economic growth, and has led to equity and commodity markets selling off today (energies are all down and Dow futures are currently off 300 points @ 33,883).

The soybean rally was fuelled by strength in soyoil, which was tied to crude oil strength and expectations for solid biodiesel demand.  With a fall in oil prices today, soyoil has fallen ¾ of a cent per pound, hence the drop in soybean prices.  Corn values are also impacted by energy prices, but analysts expect that biofuel mandates, if changed, will see bigger cuts to ethanol blending than to biodiesel blending.

Wheat is shaking off yesterday’s slide in prices due to the realization that milling wheat supplies worldwide remain tight, and the US market cannot afford to miss out on any winter wheat plantings this fall.  Hence, prices should remain supported until the planting window ends.

The Energy Information Administration weekly report on petroleum stocks was actually friendly for ethanol this morning.  It showed that weekly production of ethanol increased last week by 64,000 barrels per day to a daily average of 978,000 barrels per day.  That was also 55,000 barrels per day higher than the same week last year.  Overall ethanol stocks were 19.9 million barrels last week, down 300,000 barrels from the week before.