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 Monday with Export Inspections at 10:00 A.M., 3-Month and 6-Month Bill Auction at 10:30 A.M. and Crop Progress at 3;00 P.M.
On the corn front China buying to meet their quotas did not seem to faze the market. We are having a hot July with plenty of moisture which is good for corn. There are talks that China may increase their quotas, but at the moment it is all talk and the market is not getting excited about it. One farmer said we have been talking about this for two years if they want to talk the talk then walk the walk. We will see weekly Export Inspections and Crop Progress reports today. If yesterdays storm created any unknown damage with the high winds, hail and saturating rains, I really do not see much of an upside in trade prices. The Soybeans could be supportive with that situation has the commodity at much tighter supplies than the corn side. We still have warm weather and rain forecasted mid-week which could pressure corn even further. In the overnight electronic session the December corn s currently trading at 335 ¾ which is 4 cents lower. The trading range has been 340 to 335 ¾. Soybean trade was higher in the overnight which may somewhat support corn as I said earlier, but with the weather fundamentals I would be watching fund activity.
On the Ethanol front Chuck Abbott with Successful Farming reported that ethanol revenue was cut by more than $3.4 billion, according to the Renewable Fuels Association on Wednesday, in the spring with stay-at-home orders and the economic slowdown. Ethanol consumption from March through June was 1.3 billion gallons lower than the average consumption in the same period for the past 3 years, RFA economist Scott Richman said. The amount of corn used for ethanol production was 467 million bushels below average for the period. “The low point came in April, when ethanol production and consumption fell more than 40% compared with the same period over the last few years,” said the RFA analyst. “To date, industry revenues have been reduced by over 43.4 billion. The negative effects are expected through the remainder of 2020 and 2021, even if the pandemic does not intensify and government restrictions such as those saw in spring are not reimposed.” The House passed a coronavirus relief bill in May that offered $2.5 billion in assistance to ethanol producers. Payment would 45 cents a gallon for production from January 1, 2020 to May 1, 2020 for plants that stayed open and 22.5 cents for plants that idled their production based on their production in the same period in 2019. Other remedies have been proposed in freestanding bills. There were no trades posted in the overnight electronic session. The August contract settled at 1.170 and is currently showing 1 bid @ o.981 and 1 offer @ 1.126 with Open Interest at 64 contracts.
On the Crude Oil front, OILPRICE.com reports that China’s hunger for oil is waning as China’s importers engaged in a massive buying spree which is now evaporating. In May, China’s crude imports soared to an all-time high, with imports at 47.97 million tons, or 11.34 million barrels a day, according to Bloomberg. Tomorrow is Last Trading Day in August Crude Oil so we will roll to the September contract which is currently trading at 4045 which is 30 points lower. The trading range has been 4083 to 4020. The market has knocked on the door several times at $41 a barrel and ending up retreating. With resurfacing pandemic fears and potential lock-downs we could see OPEC+ decide to harden their recent production cuts at their last meeting. Demand destruction fears may be the story this week unless we grab another headline.
On the Natural Gas front producers are expecting this market to hit a wall again with production numbers high and demand slight and moving closer to shoulder season. Also I had questions some producers of their thoughts on West Virginian lawmakers requesting to Berkshire Hathaway’s, Warren Buffett to make further investments in the Atlantic Coast Pipeline as he bought Dominion Energy’s natural gas assets, and the answer was 100% in agreement and the answer was, he can always say NO! So we will see how this train rolls this week as well. In the overnight electronic session the August natural gas is currently trading at 1.688 which is 3 cents lower. The trading range has been 1.707 to 1.680.
Have A Great Trading Day!