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 hump day with MBA Mortgage Applications 0/3 July and MBA 30-Year Mortgage Rate at 6:00 A.M., EIA Energy Stocks at 9:30 A.M., Fed Bostic Speech at 11:15 A.M., 10-Year Note Auction at 12:00 P.M., Consumer Credit and Dairy Product Sales at 2:00 P.M. and wrapping up with Total Vehicle Sales (June) at 8:00 P.M.
On the Corn front weather worries kept the market higher mostly during yesterdays trading session but the market sold off late with new forecasts of precipitation. With more talk of scattered showers with the heat will produce humidity and at night time temperatures in the mid to lower 70’s this is ideal growing conditions for corn for this time of year. And the started the profit taking which had the market ending up lower on the day. Cash corn bids remained mostly steady in the Corn Belt but were a tad higher at a Decatur, Illinois processing facility. With Mondays Crop Progress farmers will be concerned with booking new sales. Although, the farmers had optimism after last weeks acreage report to see if corn could test $4, They were hoping by the 4th of July, we will just have to monitor how long this heat dome will last and also the drought index. In the overnight electronic session the December corn is currently trading at 351 ¼ which is 1 ¼ of a cent lower. The trading range has been 351 ¾ to 347 ½.
On the Ethanol front Robert Suhr reporter for CBS affiliate in Bismark, North Dakota reports lower emission standards are hurting the ethanol industry. The Safer Affordable Fuel-Efficient Rule eases restrictions through 2026, that initially were put in place by the Obama administration. But groups across the country say the EPA ignored the benefits that cleaner fuel brings to cars, including mid-level ethanol. Mark Watne is president of the North Dakota Farmers Union and was quoted, “What it does it takes the need for increased octane and more improved emission type fuel out of the equation. So it’s a really bad thing in the sense because from a customer prospective obviously you want the environment better and you want your vehicle to get better mileage so it was a bad move from our prospective.” Suhr went on to say several automakers including Ford and Volkswagen, say they’d prefer not to have the emission standards lessened from the 5% requirement originally set. And the news not only impacts those who grow the corn, but those who process it later down the line, they are also disappointed. There were no trades posted in the overnight electronic session. The August contract settled at 1.345 with the market currently showing 1 bid @ 1.271 and 1 offer @ 1.420 with Open Interest at 74 contracts.
On the Crude Oil front last nights API showed builds in crude oil at 2 (mb) while distillates showed draws of .085 (mb) and gasoline shrank 1.8 (mb). Several traders are expecting a much different reading from the EIA data today with wide guesstimates both up and down. European refinery margins are close to nil and could effect prices too. So traders will keep a keen eye on the data that will be released at 9:30 A.M. In the overnight electronic session the August crude oil is currently trading at 4073 which is 11 points higher. The trading range has been 4075 to 4030.
On the Natural Gas front traders point out that the recent rally was not just due to the hot weather but Warren Buffet acquiring natural gas assets from Dominion Energy in one of the biggest deal in years with assets in the $10 billion deal. In the overnight electronic session the natural gas is not fairing that well with the August contract currently trading at 1.821 which is 5 ½ cents lower. The trading range has been 1.886 to 1.808.
Have a Great Trading Day!