Dan Flynn is the writer of The Corn & Ethanol Report, a daily market letter covering grains, energies, and various global issues that are the driving force and backbone of the commodity markets. Contact Mr. Flynn at (312) 264-4374
Buckle Up your chinstrap and lets kickoff this Super Flower Moon Day with U.S. Challenger Job Cuts (APR) at 6:30 A.M., Export Sales and Jobless Claims at 7:30 A.M., EIA Gas Storage at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Consumer Credit at 2:00 P.M. and Fed Harker Speech at 3:00 P.M.
On the Corn front we look at the same old song with demand fears based on livestock feed and the ethanol industry getting blistered to stay afloat. Funds remain short corn and most likely will hold and remain short during the 2020 season as expectations have farmers selling any premium before the bottom falls out. When on paper it looked like a start of a good year overall for exports and all of a sudden we have a changing of the guard where demand is down and farmers are rethinking planting intentions. With frost and freezes forecasted in the next week and a half we could see some damage to the crop and see a retooling of what is planted if anything. Some analysts have said it is too early to have any damage in the crop. But if you are a farmer behind the eight ball you are thinking I survived and conquered what Mother Nature threw at me last year with profit revenue questionable at best. When do you say I give up? The answer is simple and some people say not so simple but the answer is never! We may also see new countries buy are product and will watch the Export Sales and see who is interested in participating in our market. In the overnight electronic session the July Corn is currently trading at 317 which is 2 ¾ cents higher. The trading range has been 317 ¾ to 314.
On the Ethanol front as parts of the United States reopen we have seen the first increase of production, week to week in two months. The EIA reported yesterday that production averaged 598,00 barrels a day, up 61,000 barrels on the week, but 42.3% or 535,964 barrels below a year ago because of slow blending demand caused by lower gasoline and crude oil use due to the COVID-19 related stay at home and social distancing restrictions. The levels of gasoline supplied to the markets and net inputs for refiners and blenders were also up on the week, but down on the year. Ethanol stocks declined 725,000 barrels from the previous week down to 25.612 million barrels, which is still 3.144 million barrels ahead of last year. The numbers were provided by John Perkins with Brownfield AG News For America. Meanwhile Alex Snodgrass with U.S. Green Plains expects fuel ethanol to lag behind gasoline demand in the recovery from shut downs across the U.S. “Recovery in gas demand could outpace recovery in Ethanol demand,” U.S. Green Plains said. There were no trades posted in the overnight electronic session. Today is Last Trading Day in the May Ethanol contract and there are 53 Open Positions. Beware of the squeeze play baseball fans. The June contract settled at 1.055 and is currently showing 1 bid @ 1.027 and 1 offer @ 1.089 with light Open Interest with 153 contracts.
On the Crude Oil front in this boom or bust industry, Egyptian billionaire Naguib Sawiris, Chairman of Egypt’s largest companies, Orascom telecom Media and Technology Holding S.A.E., predicted oil could hit $100 a barrel in the next 18 months, begging to differ from Warren Buffet’s contention with Berkshire Hathaway dumping airline holdings which the selloff hit airlines hard. Sawiris continued to say what all people in the oil patch already know that Saudi Arabia and Russia were attempting to kill the U.S. Shale industry. This may have backfired on them long-term. Sawiris also said he supported President Trump’s plan to reopen the American economy. He continued to say, “They may not find the cure, they may not find the vaccine, so how long are we going to be in prison in our homes?” And the energy complex took note with the complex trading in the green. In the overnight electronic session the July Crude Oil is currently trading at 2757 which is 195 points. The trading range has been 2770 to 2495.
On the Natural Gas front the market was living the life of Reilly following the crude and products but a selloff put the market back in the red. We have the EIA Gas storage and the Thomson Reuters weekly poll with 17 analysts participating estimate injection increases ranging from 95 bcf to 112 bcf with the median injection of 106 bcf. This compares to last years injection of 100 bcf and the five-year average build of 85 bcf. The June contract is currently trading at 1.929 which is 1 ½ of a cent lower. The trading range has been 1.965 to 1.914.