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
We kickoff the day with NFIB Business Optimism Index at 5:00 A.M., CPI & Real Earnings at 7:30 A.M., Redbook MoM & YoY at 7:55 A.M., Fed Kashkari Speech and Fed Bullard Speech at 8:00 a.m., Fed Quarles Testimony at 9:00 A.M., 119-Day and 42-Day Bill Auction at 10;30 A.M., Fed Harker Speech, Crop Production USDA Supply/Demand and WASDE Reports at 11:00 A.M. 10-Year Note auction at 12:00 P.M., Monthly Budget Statement at 1:00 P.m., API Energy Stocks at 3:30 P.M. and Fed Mester Speech at 4:00 P.M.
On the Corn front we did not see any follow through after starting higher in yesterdays action. We sold off on profit taking from longs and technical selling as we prepare for today’s Crop Production USDA Supply/Demand and WASDE data. Crop Progress showed that 67% of corn planted is at 67% versus the average 56%, and 24% has emerged, compared to 22% on average. More rains are expected this week in many areas in the Corn Belt. We do have rivers already at flood stage in some of those areas. While export inspections topped what is needed to meet expectations for the 2019/20 marketing year. Investors are also monitoring livestock feed demand and forecasts for rains in Brazil. In the overnight electronic session the July Corn is currently trading at 318 which is a ½ of a cent lower. The trading range has been 318 ½ to 317 ¼. Tight trading range so far before the 11:00 A.M. grain data.
On the Ethanol front WGEM interviewed a farmer Dan Cole out of Plainville, Illinois, said miles driven and gas consumed is about 55% of what it was before the COVID-19. He said this dropped corn demand for ethanol by about 2.5 billion bushels. “I sold corn last year, this month, for 44.30 and the did at the same elevator is $301, so a $1.30 of corn,” Cole explained. “We have to open back up and I hope that the driving season starts early,” said Cole. “I hope that, you know, people drive more. Cole reiterated corn is also taking a hit from the livestock sector. Alex Kimani with OIL PRICE.COM, wrote with widespread layoffs and furloughs hitting post-World War II records and a global economy in the throes of a recession, the economic devastation wrought by the COVID-19 pandemic is only rivaled by the Great Depression. Yet, some businesses have been thriving during this upheaval, while others that are struggling others had to reinvent themselves thanks to dramatic shift in consumer behavior. Case in point, POET LLC, the worlds largest ethanol manufacturer producing about 2 billion gallons of product per year, has drastic business transition after retooling and pivoting to hand sanitizers. POET has re-engineered its systems to make pharmaceutical-grade hand sanitizers after ethanol prices cratered following weak gasoline demand. This ingenuity with the boom in hand sanitizers could save the ethanol industry or a needed hockey save for now. With no trades posted in the June ethanol and declining Open Interest we will roll over to the July contract which posted a trade at 1.111 which is unchanged. The market is currently showing a wide spread with 1 bid @ 1.073 and 1 offer @ 1.182 with 1 contract and Open Interest at 273 contracts.
On the Crude Oil front the market is rolling with more state openings and even in Chicago which the state of Illinois is totally non-committed to re-opening anytime soon, maybe, mid-June. I am seeing more foot traffic with people commuting to work and more cars on the road. We should see drastic production cuts and the reopening of economies will drain the glut. Saudi Arabia was able to gain a temporary advantage on key Asian export markets, shipments to China doubled to 2.2 million barrels a day (bpd) and those to India 1.1 million per day (bpd). Even with this very slight victory, though, has already has been jeopardized by an indication that the scale of trouble into which the House of Saud has placed on Saudi Arabia is truly monumental, which is putting the entire Kingdom of Saudi Arabia at risk. In the overnight electronic session the July Crude Oil is currently trading at 2636 which is 128 points higher. The trading range has been 2643 to 2515.
On the Natural Gas front warmer temperatures starting to get the mercury slowly climbing back should offer more resistance to this market and the bears may just be ready to pounce again. In the overnight electronic session the June Natural Gas is currently trading at 1.828 which is .002 higher. The trading range has been 1.849 to 1.812.
Have a Great Trading Day!
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