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 Housing Starts & Permits at 7:30 A.M., Michigan Consumer Expectations, Michigan Current Conditions, Michigan Inflation Expectations, Michigan 5-Year Inflation Expectations and Michigan Consumer Expectations at 9:00 A.M. followed with the Baker Hughes Oil and Total Rig Count at 12:00 P.M.
On the Corn front South Korea’s feed sector both government and privately held companies bought 275,000 tons of U.S. corn. While the market has showed it is not overwhelmed with China making a record purchase of U.S. corn to shore up what obligation they signed on paper back in January. The market is trading on export news and weather and even with the friendly market news of Chinese purchases to fulfill the Phase One of the trade deal, the market is just not BUYING into it at this time. We also have to focus when commercials and funds decide to start their engines and where will the market be as we move closer to harvest. Will we have harvest pressure or will that seasonal throw a curve ball or a splitter at us too. After yesterdays Export Sales data with China the lead buyer in both old crop and new crop, at this perspective, we do not want to have all of our eggs in one basket. In the overnight electronic session the December corn is currently trading at 340 which is 2 ½ cents higher. The trading range has been 341 ¼ to 337 ½.
On the Ethanol front production hit sixteenth week high but with industry losses estimated at $9 billion dollars with pandemic-related damages, and even with the epiphany the industry learned that hand sanitizers and disinfectants boosted this market and kept it afloat, these revenue numbers are not easily cleansed. There were no trades posted in the overnight electronic session. The August ethanol settled at 1.205 and is currently showing 1 bid @ 1.175 and 1 offer @ 1.279 with Open Interest at 64 contracts.
On the Crude Oil front $41 a barrel continues to top and level off this market at this moment. Russian Energy Minister Alexander Novak believes demand will increase significantly as the two biggest consumers China and the U.S. will be opening the door from lock downs, and be on the fast track to get their economies moving again. Although, we are not out of the woods yet, one would think we are moving forward and OPEC and OPEC+ agrees, as they relaxed the August 1st production cuts in anticipation that demand will improve and they are not about to shock this market in these delicate times as they saw what Saudi Arabia did to put the futures prices into the negative. In the overnight electronic session the August crude oil is currently trading at 4047 which is 28 points lower. The trading range has been 4086 to 4029.
On the Natural Gas front this is another part of the energy complex that is in boom or bust mode. These demand driven markets have been slowed by the coronavirus and… you guessed it…. Government regulations and a variety of legal fees in certain jurisdictions that do not promote and expand the infrastructure to meet the requirements to next generation of energy. If we had the capabilities to build pipelines to get product easier for the consumer the benefits outweigh the downside. In the overnight electronic session the August natural gas is currently trading at 1.695 which is .028 lower. The trading range has been 1.729 to 1.690.
Have a Great Trading Day!