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 NY Fed Treasury Purchases TIPS 1 to 7.5 yrs. At 9:30 A.M., Consumer Inflation Expectations (Jun) and Export Inspections at 10:00 A.M., 3-Year Note Auction and 6-Month Bill Auction at 10:30 A.M., Crop Production, USDA Supply/Demand and WASDE reports at 11:00 A.M., 10-Year Note Auction and 6-Month Bill Auction at 12:00 P.M. and Crop Progress at 3:00 P.M.
On the Corn Front the weather front seems to be making the rich – richer and the poor–poorer. The Plains and West and North Midwest are suffering an excruciating drought while the Midwest and West Midwest is getting rains with the dividing point in Iowa. The cooler temperatures in the Midwest had been experiencing will give way to more hot and dry weather heading into August. Funds are still liquidating their record long positions heading into the 4th of July weekend. Brazil’s crop is experiencing trouble and a little more than previously thought. We have whispers on today’s report that yields per acre will be nothing to write home about. With little to none carryover and no margin for error this market should take off. And I do expect global exports to pick up very shortly.
On the Ethanol Front Brazil based ethanol, bioenergy and dried distillers grains (DDG) producer, FS, is implementing a system that it says will make the first biorefinery to be carbon negative. FS makes ethanol, animal nutrition and bioenergy products exclusively from corn, and is now incorporating a bioenergy with carbon capture and storage (BECCS) system The UK based company DRAX is also engineering that feat as well. By doing so it not only reduces its CO2 emissions but also removes CO2 from the environment. The system consists of capturing, compressing dehydrating and transporting the CO2 for a deep and safe underground injection and permanent storage. Will environmentalists sound an alarm that this will create earthquakes or other Acts of God? Today we also have corn for ethanol use in the report.
On the Crude Oil Front the void created by the rift between Saudi Arabia and United Arab Emirates makes room for speculation of an upcoming price war. You would think after 2020 and going negative oil producing countries would do all they could to keep prices in balance, after going negative only last year. Julian Lee with Bloomberg reports that Saudi Arabia and Russia, the alliance largest producers and de facto leaders, had devised a plan for the group to raise its production target by 400,000 barrels a day each month until the end of the year, and possibly longer. For good measure, they wanted to extend the output until the end of 2022, Instead of April. The UAE refused to do so if the alliance didn’t address what it sees as an unfairly low baseline production level from which its cuts are measured. The Saudi’s balked at fiddling with that at the starting point and, more importantly, it would not approve the output increases without the extension. It blamed the UAE for blocking an agreement to pump extra oil the market will need in the coming months. As news of this failure sank in oil prices soared, with West Texas Intermediate (WTI) hitting 2024 highs.
On the Natural Gas Front team Biden is running aground again on transportation of energy and other dangerous cargo moved by rail just does not make sense. It would be cheaper and would add public safety in transporting the fuel. If energy companies were able to add pipelines it would secure cheaper electricity bills and would not be so bottlenecked to force shutdowns as the pipes froze with slowing the flow and like last year the freeze that hammered Texas would not have been that disastrous, Thanks to Big Government. I hate to be redundant but is cheaper to operate a system and the more systems that flow will make it safer for the consumer and producers?
Have A Great Trading Day!
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