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 started off the day with MBA Mortgage Applications for 10th of July coming in at 51% versus the previous 2.2% and the MBA 30-Year Mortgage Rate for 10th of July coming in at 3.19% versus the previous 3.26%, Export & Import Prices YoY & MoM and NY Empire State Manufacturing Index at 7:30 A.M., Capacity Utilization, Industrial & Manufacturing Production at 8:15 A.M. EIA Energy Stocks at 9:30 A.M., NOPA Crush and Fed Harker Speech at 11:00 A.M., Fed Beige Book at 1:00 P.M. and Dairy Product Sales at 2:00 P.M.
On the Corn front the market is playing the weather market, which for the moment, is pressuring a bullish USDA Crop Progress number. And when we thought the deal was dead with China they came in and made their largest purchase of U.S. corn on record. The USDA Foreign Ag Services said Beijing bought 1.762,000 tons of U.S. corn for delivery during the 2020/21 marketing year, following up on last weeks sale of 1,365,000 tons as China tries to meet Phase One of trade deal purchase obligations and hit the World Trade Organization’s low-tariff quota of 72 million tons of corn imports from any country. The previous largest China purchase of U.S. corn was 1,450,000 tons in 1994. The next Crop Production USDA Supply/Demand estimates will be on Wednesday August 12th. John Perkins with Brownfield Ag News For America supplied the data. The market still seems rather ho-hum on the China news, although trade is quick and fast the market is not putting on any major gains with the December contract currently trading at 373 ¾ which is unchanged. The trading range has been 336 ¼ to 332 ½. Some traders seethe rising tensions between Beijing and Washington as a way that China could cancel their purchases. It has been done before, and we will look at tomorrows Export Sales overall data.
On the Ethanol front the plunging in corn futures pushed ethanol crush margins higher and with all of trade news whirling around in the energy and grain sector, ethanol investors and traders will be looking for revenue profits that are much needed in this industry after surviving a big game changer that really started before March. There were no trades posted in the overnight electronic session. The August ethanol settled at 1.233 and is currently showing 1 bid @ 1.140 and 1 offer @ 1.196 with Open Interest at 66 contracts.
On the Crude Oil front we rallied with a very large draw-down on crude stocks in the API of 8.322 (MB), Cushing had builds of 0.548 (MB), while gasoline had draws of 3.611 (MB) and distillates had builds of 1.303 (MB). All eyes will be on today’s EIA Energy Stocks at 9:30 A.M. CST and the OPEC+ Meeting at 12:00 GMT and whispers are they will continue to pressure Angola, Iraq and Nigeria to over-comply to make up for their high output in May and June.. In the overnight electronic session the August Crude Oil is currently trading at 4090 which is 61 points higher. The trading range has been 4100 to 4037.
On the Natural Gas front the market showed signs of exhaustion in yesterdays trade. A week after Berkshire Hathaway Inc. purchased Dominion Energy Inc.’s gas transmission and storage assets. A group of 10 Democratic West Virginian lawmakers sent a letter to Warren Buffett urging him to invest in more projects like the Atlantic Coast Pipeline that Duke Energy Corp. and Dominion Energy announced the cancellation of the project due to legal uncertainties. The 600-mile pipeline would have hone from Harrison County, West Virginia into Virginia and North Carolina. The lawmakers also pressed the issue this energy is the wave of the future. This will be a hot story in the coming weeks. In the overnight electronic session the August Natural Gas is currently trading at 1.740 which is .006 lower. The trading range has been 1.777 to 1.737.
Have A Great Trading Day!