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 start off the day with Export Sales, Personal Income, Personal Spending, Goods Trade Balance Adv (Apr), PCE Price Index MoM & YoY (Apr), Core PCE Price Index MoM & YoY (Apr) at 7:30 A.M., Chicago PMI at 8:45 A.M., Michigan Consumer Expectations, Michigan 5 Year Inflation Expectations, Michigan Current Conditions, Michigan Inflation Expectations and Michigan Sentiment Final at 9:00 A.M., Fed Chair Powell Speech at 10:00 A.M., Baker Hughes Rig Count at 12:00 P.M.
On the Corn front we had quite the run in yesterday’s trading action with wider than 2 to 3 cents trading ranges. The December contract settled at 340 ¼ which was 5 ¾ cents higher. Traders called the move a liquidation of long soybeans and short corn spreads. No word if the funds really got into the act but word down on the farm is they no funds are record short and not willing to give up so easily with knowledge of corn used for ethanol is extremely high in stockpile. Another fear to the bulls trade deal with China is in doubt and talk about a record crop this early is not about to spook the funds and shake them out of their market bias. Weather forecast going into next week are favorable but not completely ideal and the funds are still banking on too much product and lack of an export market this year. Early in the overnight electronic session the July and December Corn still kept moving higher at about 1 ¼ of a cent higher and still holding close to those prices as of early this morning.
On the ethanol front John Perkins with Brownfield Ag News For America reports ethanol production is up as supplies are shrinking. As the industry rebounds from the catastrophic events, we now see production is up 61 thousand barrels a week, But it does have to go somewhere and fear of demand tightening will weigh heavily on producers. With social distancing relaxing we should see a continued movement forward on production. Producers are still behind the 8-ball and recovery will count on common sense on restrictions. With the recovery advancing it is not fast enough for corn farmers with their corn is based solely for ethanol use and not for human consumption or feed. There is a lot of other benefits that we never thought about before COVID-19, like sanitizer, alcohol that benefits many other products we take for granted when shopping. I will keep you posted on the Iowa vs. FDA ethanol producer fight on sanitizers as we try to rebound and reopen to get back at full-speed. In the overnight electronic session there were no trades posted. The July contract settled at 1.116 and is currently showing 1 bid @ 1.086 and 1 offer @ 1.150 with Open Interest at 123 contracts.
On the Crude Oil front prices have fallen but not peaked as traders expected more demand than we are seeing this early back in the recovery. As we are rebounding fears of a second wave of coronavirus cases in South Korea is just another case of worsening U.S.-China relations. The market is still on track for a hefty gain but expectations of how quickly momentum of demand would carry this market are starting to see roadblocks. China seems to be taking advantage of the East Asian markets that are also plagued by the coronavirus-induced recession and loading up on Nigerian crude at bargain basement prices. Also news that Gulf Keystone Petroleum LTD Gave away Crude seller of crude from their Shaiken crude produced in Northern Iraq more than $21 under Brent according to Julianne Geiger with Oilprice.com. In the overnight electronic session the July Crude Oil is currently trading at 3255 which is 116 points lower. The trading range has been 3377 to 3236.
On the Natural Gas front changing weather in the North East U.S. to colder weather in shoulder season and Turkey replacing Iran and Russian imports with U.S. imports have been the supportive sign in this day to day market that can’t catch a break. Iran’s pipeline used to carry 10 billion cubic meters of their LNG to Turkey but the pipeline has been frequently attacked since it’s inception in the early 2000’s and disruptions have a way of losing customers. Yesterday’s EIA Gas Storage showed injection builds of 109 bcf when the average guess on the street was 106 bcf. This offset any bull run but the July contract is currently trading at 1.847 which is 2 cents higher. The trading range has been 1.865 to 1.804.
Have A Great Trading Day!