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 MBA Mortgage Applications and MBA 30-Year Mortgage Rate at 6:00 A.M., Challenger Job Cuts at 6:30 A.M., ADP Employment Change at 7:15 A.M., Market Manufacturing PMI at 8:45 A.M., Construction Spending, ISM Manufacturing Index and Fed Evans Speech at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., FOMC Minutes at 1:00 P.M., Cotton System, Fats & Oils, Grain Crushings, Dairy Products and Dairy Product Sales at 2:00 P.M. followed by Total Vehicle Sales at 7:00 P.M.
On the Corn front all you can say is, Wow! Yesterdays Grain Stocks for corn came in at 5.224 billion bushels with the average estimates of 4.99 (bb) and the 1-Year 5.202 (bb), while the Acreage numbers came in at 92.01 million of acres which average estimates tagged at 9.521 (moa) and versus last year at 89.7 (moa). The lower corn acreage must have had farmers doing the happy dance with funds reported buying 30,000 corn. Make no mistake weather is go to play a key factor from here on out and some feel that it is too late to replant acreage. The question is… Will we have another after the 4th of July weekend selloff? Unless we see drought conditions which I highly doubt, we will see some selling come back in, but at the moment traders are riding this pony. You have to admit we have seen a rally with large trading ranges we have not seen in some time. But we also have to remember hot and humid weather is ideal growing conditions in corn that should make the crop thrive. The market continued the momentum in the overnight electronic session with the December corn currently trading at 354 ½ which is 4 cents higher. The trading range has been 355 to 3491/2.
On the Ethanol front Brazil’s output for May achieved the highest level as sugarcane harvest and biodiesel rebounded from COVID-19, according to the country’s National Petroleum Agency (ANP). Sugar mills produced 8.46 billion liters of ethanol in May which more than doubled the 4.05 billion liters last year. This is clearly telling me that there are signs of life in this industry. There were no trades posted in the overnight electronic session. The August contract settled at 1.205 and is currently showing 1 bid @ 1.205 and 2 offers @ 1.250 with Open Interest moving higher to 80 contracts.
On the Crude Oil front it can’t be denied that domestic and global demand is increasing and on the rise. Last nights API data showed draws in crude at 8.156 (mb) while Cushing, Oklahoma had builds of 0.164 (mb), Gasoline had draws of 2.459 (mb) and Distillates rose 2.638 (mb). If these numbers bear fruit in the EIA energy Stocks this morning we should roll into the 4th of July weekend. In the overnight electronic session the August Crude Oil is currently trading at 3993 which is 66 points higher. The trading range has been 4058 to 3954.
On the Natural Gas front we saw some profit taking in the overnight electronic session as the market saw a solid up move not seen in quite some time which started with last week’s rally. Even with hot temperatures forecasted, short term investors gladly banked their profits. If this upswing can continue the U.S. market must continue to rule in the export market to countries like Turkey who do not want to rely on Russia running their pipeline for fuel. We also could use a long heatwave to support prices. In the overnight the august natural gas is currently trading at 1.664 which is .087 cents lower. The trading range has been 1.758 to 1.655.
Have a Great Trading Day.