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 kickoff the day with U.S. Trade Balance at 7:30 A.M., Redbook YoY (01/May) at 7:55 A.M., IBD/TIPP Economic Optimism (May), Factory Orders MoM (Mar) and Factory Orders ex Transportation at 9:00 A.M., API Energy Stocks at 3:30 P.M. and Total Vehicle Sales at 6:00 P.M.
On the Corn Front with half the corn in the ground as of yesterday’s USDA Crop Progress report showed. We still have weather hurdles again that could slow down plantings as Iowa and Illinois race forward. We also had multiple brief tornados touchdown in Central Illinois last night. Corn planting progress state by state is well above the five-year average and last year, showing we are 29% ahead of schedule. At these prices’ farmers see the urgency to get the crop in the ground. We also have to consider growing in drought conditions with 14 states having no topsoil moisture in surplus conditions. In the overnight electronic session, the July corn is currently trading at 688 ¼ which is 8 ¾ cents higher. The trading range has been 692 ½ to 676.
On the Ethanol Front John Perkins with Brownfield AG News for America reports that March corn for ethanol use is upon the month and year. The USDA said 420.045 million bushels of corn were used for ethanol production in March. That was a 26% increase from February, which was impacted by late month cold and snow limiting movement causing some plants to idle. We were up 2% from a year ago during the early stages of the COVID-19 pandemic. Production of distillers dried grains and soluble was 1,803,494 million tons, a jump of 28% on the month and 9% on the year. The USDA currently expects 4.95 billion bushels to be used for ethanol production this marketing year, with the next estimate out Mat 12th. There were no trades posted in the overnight electronic session, the May contract is set to expire tomorrow while the June contract settled at 2.340 and is currently showing no market with Open Interest at 20 contracts.
On the Crude Oil Front oil investment lags the jump in crude oil prices. The world continues the battle with COVID-19 and the energy industry is increasingly moving towards diversification outside its core business, and it is doubtful how soon-if ever-investments in new upstream projects will recover to pre-pandemic levels. Also, newsworthy Iraq could buy ExxonMobil’s 32.7% stake in one of the largest oil fields in OPEC’s second-largest producer, West Qurna 1. Bloomberg reported that last year that Chines state giants China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC) were interested in buying ExxonMobil’s entire operating stake in West Qurna 1. The stake was said at the time worth a sale of $500 million according to reports. In the overnight electronic session, the June crude oil is currently trading at 6564 which is 115 points higher. The trading range has been 6573 to 6479.
On the Natural Gas Front, we continue to trade just below Major resistance. If we have a continuation of the chop, traders will expect the market to punch through that resistance as drought and hot weather is forecasted this summer. The weather will not be the lone factor that will propel prices, the export market should be huge with the EU not planning to have Russia their single natural gas provider and the export market will be a key player in advancing prices should the rally hit as forecasters and traders have planned. The Biden administration realized what a profit center the U.S. natural gas export market is and could be greater than we are seeing at the moment. So, they toned down their negative chatter as they see the benefits of the profits. I smell another tax burden is being planned as we speak. In the overnight electronic session, the June natural gas is currently trading at 2.943 which is .024 lower. The trading range has been 2.996 to 2.939.
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