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 jump start this Friday with what we dreamed about in February, and that is warm summer temperatures. Bring on summer and lets not forget the many wisdoms our Fathers taught us with us in life or spirit. Let’s get back to the ballgame starting with reports today, U.S. Current Account (Q1) at 7:30 A.M., Fed Rosengren Speech at 9:15 A.M., Fed Quarles Speech at 11:00 A.M., Fed Chair Powell Speech, Fed Mester Speech, Baker Hughes Oil and total Rig Count at 12:00 P.M. and Cattle on Feed at 2:00 P.M.
On the Corn front the big picture is going to be weather until further notice. We may have already (too early?) priced in weak exports and another bumper crop. With summer beginning tomorrow we still have a season to go through before we have autumn and harvest pressure. And the market would love to see more premium before sellers are in and dated. There are still components that could change this market other than weather that traders will be looking over their shoulder. Funds that are heavily short could start to cover or changed bias on their positions with exports and the value of the U.S. dollar squarely on their mind. One thing is for sure that keeps farmers and investors guessing, what is fair value for the price of crops. In the overnight electronic session the July corn is currently trading at 332 ½ which is 1 ½ of a cent higher. The trading range has been 333 to 327 ½.
On the ethanol front we are seeing improved production and improved demand, with product being moved with an up-tic on demand and a down-tic still on production. Minnesota based POET plant manager Chris Hanson said, “We shut down half of our production. This affected peoples livelihoods and pay,” both in industry and in agriculture, he said. If you look at a plant like mine, maybe we didn’t buy a million bushels that we would have, so those farmers don’t have somewhere to bring that million bushels of corn. There aren’t new consumers looking for that grain.” Brian Kletscher CEO with Hightower Ethanol, said his plant was able to keep running this spring, but at a reduced capacity. He continued, “On March 19th we cut production by approximately 22% to 25% and we remained at that reduced rate until the middle of May,” Kletscher said. “We didn’t make money at all, but we were able to run through April with trying to minimize our loss.” He also said Hightower’s production is back up to 90% now. He continued, “We still are watching the ethanol market and fuel usage through the United States.” In the overnight electronic session the July contract posted a trade at 1.230 which is unchanged with 1 contract traded. The market is currently showing 1 bid @ 1.180 and 3 offers @ 1.240 with Open Interest dropping to 64 contracts and the August contract slowly picking up the slack with 32 Open Positions.
On the Crude Oil front the July and August contracts punched through $40 a barrel and with Father’s Day Weekend we expect to see more cars on the road which equals more driving as we head into this first weekend of summer as well. In the overnight electronic session the August crude oil is currently trading at 4000 which is 95 points higher. The trading range has been 4044 to 3893. You still want to steer clear frm the July contract with Last Trading Day today in the ICE contract and on Monday with the CME Group.
On the natural Gas front the EIA Gas Storage was right on the money hitting the median of analysts predictions. Alex Kimani with OILPRICE.com reported that the U.S. is a surprising winner in China’s LNG market. With Beijing shifting it’s focus to overhaul its natural gas supply chains, traditionally from Central Asia to the West. The Asia-Pacific region accounts for two-thirds of global demand. With China the world’s second-largest importer of LNG, continues to ramp up it’s LNG imports despite tensions with the U.S. The countries affected that were the top exporters to China are Turkmenistan, Uzbekistan and Kazakhstan. In the overnight electronic session the July natural gas is currently trading at 1.654 which is .016 higher. The trading range has been 1.658 to 1.630.
Have A Great Trading Day!