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 Consumer Inflation Expectations and Export Inspections at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 A.M., 3-Year Note Auction at 12:00 P.M. and Crop Progress at 3:00 P.M.
On the Corn front we traded higher near resistance in Friday’s action with investors and traders expect farmers to sell into strength. Increased competition with South American Corn and the ethanol market just reviving itself still puts the farmer at odds of when and where to sell. Although funds lightened up they still have a large net short position and if we see a continuation of price spike you can bet they will be ready to pounce once again. Tropical Depression Cristobal made landfall and there is still a life-threatening surge outside the Hurricane and Storm Damage Risk Reduction System from the mouth of the Mississippi River to Ocean Springs, Mississippi. Heavy rain associated with Cristobal will continue to push inland across the central Gulf coast and into the lower Mississippi Valley today. Flash flooding and renewed significant river flooding is possible where the heavier rainfall occurs. In the overnight electronic session we are still in somewhat of a tight trading range with the July corn currently trading at 333 ½ which is 2 ¼ cents higher. The trading range has been 334 ½ to 331 ¼.
On the Ethanol front the American Corn Growers Foundation is telling farmers to focus on ethanol. Gale Lush a farmer and Chairman of the foundation spelled it out frankly for counting on exports, “ has always been a questionable strategy.” With “problematic U.S. Trade policy, aimed at China, is attempting to protect intellectual property rights of big corporations but has boomeranged against farmers, due to Chinese retaliation, that has led to their investment in competitor exporting countries.” Lush continued that corn exports are, “extremely unpredictable and getting worse.” Fluctuating currency values where the dollar has gotten stronger leads to U.S. farm and manufactured goods exports to be more expensive in the world market. There were no trades posted in the overnight electronic session. The July contract settled at 1.232 and is currently showing 1 bid @ 1.133 and 1 offer @ 1.260 with Open Interest declining to 107 contracts.
On the Crude Oil front OPEC and OPEC+ finalized a deal to extend oil cuts into July before meeting again. Iraq and Nigeria agreed to slightly deeper cuts to compensate their failure to adhere to production cuts made earlier. Meanwhile, Libya’s largest oilfield reopens and this could be a test of how iron clad of an agreement this will be. In the overnight electronic session the July Crude Oil is currently trading at 3909 which is 46 points lower. The trading range has been 4044 to 3881.
On the Natural Gas front Tropical Depression Cristobal had little impact on the bears or the bulls as investors looked and followed the track as if it would have a direct hit on Henry Hub. With no damage premium added to the market traders are looking to where this market is headed. With continued increases on inventories and now the spread between Europe LNG and U.S. LNG with inventories expected to rise above a trillion cubic feet by November has not got the bulls chomping at the bit. There are some analysts that predict that Natural Gas may be the next commodity to trade $0 or negative. Not a healthy prospect for producers. In the overnight electronic session the July Natural Gas is currently trading at 1.762 which is 2 cents lower. The trading range has been 1.816 to 1.750.
Have a Great Trading Day!