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 Challenger Job cuts (Jul), Export Sales, Initial jobless Claims (01/Aug) Jobless Claims 4-Week Average (01/Aug) and Continuing Jobless Claims (25/Jul) at 7:30 A.M., Fed Kaplan Speech at 9:00 A.M., EIA Gas Storage at 9:30 A.M., followed with 4-Week and 8-Week Bill Auction at 10:30 A.M.
On the corn Front the market settled higher in yesterdays action. We even saw short covering and technical buying, although the gains were limited with expectations for a large crop if not a record crop. There are some areas in the Corn Belt that lacked moisture and all the scattered showers did not rain on their parade. And the fields where Mother Nature rained on, in the big picture, with yields and bushels per acre should keep prices from rallying large. This morning we will have export Sales that could boost the market with traders looking at purchases from the usual suspects or new orders to different destinations. HIS Market expects the U.S. crop to be at 15.036 billion bushels with an average yield of 179.0 bushels per acre, while In-forma sees the world crop at 1.159 million tons. Agro consult estimates corn production 2020-21 Brazil to be at a combined 110.3 million tons. If that is realized, that would be a record high. Traders will be checking export activity and all eyes will be on next Wednesdays Crop Production USDA Supply/Demand and WASDE Report. Keep in mind China’s stockpiles of corn could be nil by the end of August. In the overnight electronic session the December corn is currently trading at 322 ¼ which is 1 cent lower. The trading range has been 324 to 322. Farmers and traders would like to see these tight trading ranges break out either to the upside or to the down. We should be getting a further education after Wednesdays data and China has a meeting scheduled August 15th to further discuss Phase One of the trade deal even though they are delinquent of their purchase commitment agreed to in January.
On the ethanol front the EIA reported that ethanol production averaged 931,000 barrels a day, which is down 27,000 barrels on the week and 109,000 from a year ago because of tighter margins and concerns about blending demand caused by the pandemic. Stockpiles of 20.346 million barrels were up 74,000 from last week, but down from 2.771 million barrels from last year. The Renewable Fuels Association said ethanol exports during June were tabbed at 883,193 tons, an increase of 47% on the month. The market is rallying for a comeback but these numbers are showing what a slippery slope that we meet head on in recovery and get back to basics while producers export could and should be on the rise. There were no trades posted in the overnight electronic session. The September contract settled at 1.105 and is currently showing 1 bid @ 1.030 and 1 offer @ 1.170 with Open Interest steady at 69 contracts.
On the Crude Oil front inventories were down mainly because of hurricane activity in the Atlantic even with OPEC+ raising production just shy of 2 million barrels per day and pandemic fears that there just might be to much product for the consumer to consume. The API and EIA data showed otherwise and what a certain headline could move this market. Traders still have Disturbance 1 on their radar screen, as it appears to be losing definition but is still lurking about midway between Bermuda and the Bahamas drifting southwestward. There appears to be no other tropical disturbances at the moment in the Atlantic in this active hurricane season. In the overnight electronic session the September crude oil is currently trading at 4175 which is 44 points lower. The trading range has been 4245 to 4161.
On the Natural Gas front speculators, producers and traders are wondering if this is the breakout to the upside and is natural gas going to make Asia a big player in the market while European market has been and/or potential to be a large importer of U.S. LNG. Kevin Crowley and Joe Carroll with Bloomberg report that Exxon Mobil Corp is warning that if low energy prices continue and stagnate one fifth of its oil and natural gas will be wiped off the books. Yes this is a boom or bust-feast or famine industry. In the overnight electronic session the September natural gas is currently trading at 2.221 which 3 cents higher. The trading range has been 2.244 to 2.192.
Have a Great Trading Day!