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 MBA Mortgage Applications (21/MAY) and MBA 30-Year Mortgage Rate at 6:00 A.M., Fed Quarles Speech at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 2-Year FRN Auction at 10:30 A.M., 5-Year Note Auction at 12:00 P.M., Dairy Product Sales and Fed Quarles Speech at 2:00 P.M.
On the Corn Front analysts are sparring as to the reason we had a one-month low in such a short period of time. Some say the top is in and I say no way. This selloff was due to plantings ahead of schedule and much needed rain when the Drought Index bells and whistles were going off, warning what was to come next with no rain. We will be seeing significant moisture in the coming days after seeing near to none. After a busy week overall China stopped buying on Friday and so far, this week. They most surely want to see a further drop in prices as their purchases are far from over. Analysts must remember it is not what you plant but what you grow. You can have all the acreage you want but who gives a hoot in hell if it will not produce yields. With South America’s crop not looking so strong and a weakened carryover market, margins are thin and not a lot of margins for error to fall back on this growing season. And it is way too early in the growing season to call for a top. In the overnight electronic session, the July corn is currently trading at 623 ¼ which is 3 cents higher. The trading range has been 626 ¾ to 617 ¼.
On the Ethanol Front a study by the U.S. Department of Energy (DOE) and Argonne National Laboratory revealed that corn for ethanol is reducing the carbon footprint and greenhouse gases. The study recently published in Biofuels, bioproducts and Biorefining, analyzes corn for ethanol production in the United states from 2005 to 2019, when production more than quadrupled. Scientist assessed corn for ethanol greenhouse gas (GHG) emission intensity or carbon intensity (CI) found a 23% reduction in CI’s. There were no trades posted in the overnight electronic session. The June ethanol settled at 2.350 and is currently showing no market with Open Interest at 21 contracts.
On the Crude Oil front the APIs came out with a bullish number with crude and products lower. The crude -0.439M, Cushing -1.154M, gasoline -1.986M and distillates -5.737M. If the EIA number comes close to a match and we have three more trading sessions before the actual Memorial Day Weekend starts, $70 a barrel is not out of the question. And heading into the long weekend with Iran’s recent behavior risk premium is in play. Those oil tankers insurance premiums must have rose through the roof the last four months. In the overnight electronic session, the July crude oil is currently trading at 6535 which is 28 points higher. The trading range has been 6638 to 6581.
On the natural Gas Front, it is Last Trading Day in the June contract. This market is due for another spike, and we should get when hot temperatures come back after a short dip in the 50’s and 60’s. In the overnight electronic session, the July natural gas is currently trading at 3.004 which is .030 cents higher. The trading range has been 3.006 to 2.983.
Have A Great Trading Day!
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