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 this Thursday with Export Sales, Jobless Claims and PPI at 7:30 A.M., EIA Gas Storage at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Crop Production USDA Supply/Demand and WASDE data at 11:00 A.M. and 30-Year Bond Auction at high-noon, Let the trades begin-start your engines.
On the Corn front heading into today’s reports seasonal highs have a tendency to hit highs this time of year, but this year contract lows are being recorded. This is not the year to be a cycle trader because of the many fundamental bumps in the road we have witnessed so far. In today’s report traders will be looking at the old-crop balance sheet. Britt O’Connell, cash adviser for Commodity Risk Management Group was quoted, “most specifically, what adjustments will the USDA make to corn demand. Starting with export demand, in the month of May USDA raised export expectations to 1.775 billion. Corn exports of late have been strong and there is a chance that the USDA may make another revision higher.” She added, “we could expect ethanol demand to be revised lower. While we have seen an uptick in fuel consumption, we have still not achieved pre-coronavirus levels.” Even after today’s agriculture data investors and traders will be setting their sights on the June 30th Grain Stocks and Planted Acreage and the only thing in the way is Mother Nature casting heat spells that will factor into those numbers. In the overnight electronic session we have tight trading ranges with the July corn currently trading at 325 ¾ which is a ½ of a cent lower. The trading range has been 327 to 325 ¼.
On the Ethanol front we are starting to see rollover activity in the July and august contract as the June contract is set to expire today. Ethanol stocks reached its lowest point in 2020 the EIA reported yesterday. Stocks were down 700,000 barrels to 21.802 million barrels. This marks the seventh consecutive weekly draw after stocks reached a record-high of 27.689 million barrels on April 17th and now we are at our lowest point in 2020. One could say demand is picking up, as it slowly has, but production declines explain why we are at these levels. In the overnight electronic session the July ethanol posted a trade at 1.240 which is unchanged with 2 contracts passing hands. The market is showing another wide-spread with 2 contracts bid @ 1.215 and 1 contract offered @ 1.255 with Open Interest down to 86 contracts.
On the Crude Oil front there are a few things that have been priced into the market that slowed the rally, a disingenuous OPEC and OPEC+ meeting, weekly inventories and headlines of a 2nd wave of coronavirus infections took the wind out of this markets sails. The negativity factor could spill over into other commodity sectors as well. In the overnight electronic session the July Crude Oil is currently trading at 3660 which is 300 points lower. The trading range has been 3909 to 3644.
On the Natural Gas front we have the EIA Gas Storage data at 9:30 and I am looking for an injection build of 90bcf. The market is bouncing off the recent lows with weather forecasts predicting scorching temperatures in the southeast to the Ohio Valley in the near future. This could get a lot of air conditioners cranking up. In the overnight electronic session the July natural gas is currently trading at 1.820 which is 4 cents higher. The trading range has been 1.828 to 1.766. I think the biggest question on traders minds with the global glut in this commodity is when will the rally fail?
Have a Great Trading Day!