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 of the day with MBA Mortgage Applications and MBA 30-Year Mortgage Rate at 6:00 A.M., House Price Index (MoM) at 8:00 A.M., Existing Home Sales (MoM) and Existing Home Sales (June) at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 20-Year Bond Auction at 12:00 P.M., followed with Cold Storage and Dairy Product Sales at 2:00 P.M.
On the Corn front ratings by the USDA are at historically high levels and this could lead to average to above-average yields, although the assessments can change from now until harvest but current two-week weather forecast calls for hot temperatures and rain which is ideal at this time to move the crop to maturity. Funds activity picking up and they are getting back short, and before you know it, barring a headline, they will be at record shorts again. And I want to remind traders that weather is in the drivers seat at the moment, while other fundamental factors are in, “wait and see mode.” I do anticipate good trading in the Grain Complex at this time with trade deals and strength of the U.S. dollar hurts are exports versus Argentina, Brazil and the Ukraine currencies. This is what the market will absorb before the August 12 Crop Production USDA Supply/Demand data. In the overnight electronic session the December corn is currently trading at 332 which is 1 and ¼ of a cent higher. The trading range has been 333 to 330 ¼.
On the ethanol front the short and long-term pictures of the ethanol industry paint a different picture. We have seen a slow increase of production after reaching record lows in April, which saw revenue in the market with people losing 30 to 40 cents a gallon of every gallon produced. And that’s when we saw plants cutting production, and/or closing if not idling. As we move forward losses are expected to carry into 2021 while this market producers are focused on demand. There were no trades posted in the overnight electronic session. The August contract settled at 1.107 and is currently showing 2 bids @ 1.010 and 1 offer @ 1.107 with dropping Open Interest at 50 contracts.
On the Crude Oil front the API showed builds in crude oil at 7,5440M which took the wind out of the sails of a market that was destined to punch through $41 a barrel, hold and close. But after breaking out of a narrow trading range to the upside, another headline stalled the break out. This mornings EIA Energy Stocks could shed some light if the API number was exaggerated or right on the money with the flows in the Houston Shipping Channel disrupted by Tropical Storm Fay. And traders are watching the state to state lawmakers ruling on future if they choose to reinstate lock downs which would not help demand and what fate that it will have on business and commerce. In the overnight electronic session the September crude oil is currently trading at 4132 which is 60 points lower. The trading range has been 4193 to 4115.
On the Natural Gas front the markets premium may have been priced in with weather predictions heading into shoulder season and the market will need a new headline or several headlines to jumpstart the bulls and put fear into the bears hearts. Tomorrow we have the EIA Gas Storage data which I will have the estimates from analysts shortly. In the overnight electronic session the August natural gas is currently trading at 1.634 which is .041 lower. The trading range has been 1.680 to 1.632.
Have A Great Trading Day!