Insanity In The Marketplace. The Corn & Ethanol Report 04/27/2023

We kickoff the day with Export Sales, GDP Growth Rate QoQ Adv, Initial Jobless Claims, GDP Price Index QoQ Adv, Jobless Claims 4-Week Average, PCE Prices QoQ Adv, Real Consumer Spending QoQ Adv, GDP Sales QoQ Adv, Continuing Jobless Claims, and Core PCE Prices QoQ Adv at 7:30 A.M., Pending Home Sales MoM & YoY at 9:00 A.M., EIA Natural Gas Storage at 9:30 A.M., Kansas City Fed Composite Index & Kansas City Manufacturing Index at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., and 12-Year Note Auction at 12:00 P.M.

On the Corn Front the Central US forecast is consistent with additional rainfall across the Southern Plains over the next 36 hours and a welcome warmer weather is forecasted next Wednesday (Fed Decision Day) and Thursday. The EU model temp for May 4^th has highs in the 70’s and 80’s. Key in the long run is whether additional soaking rain is allowed to impact the southern/western Plains prior to summer. Nebraska and Iowa are in need pf a perfect El-Nino inspired summer US are in retreat. The Plains drought is unlikely to end quickly. The futures continuation of bearish price trends continue. The fall in wheat has dragged corn lower while soybean oil is holding mid-March lows. Funds are long soybeans and soybean meal which we could see them lightening up or liquidating in today’s action. The key is whether wheat/soybean oil are able to hold key chart support. Ukraine grain is said to be flowing through Istanbul check points today as vessels push to exit the Black Sea on fear of its closure. Russian foreign ministry spokeswoman Maria Zakharova indicated that only a full implementation of Russian demands of the Black Sea Pact can save it. She indicated the latest UN effort was not enough. With Brazil exports not being able to export efficiently until late summer, Argentina’s drought expanding and now the Ukraine off the export map, this should help the slow US export market as Brazilian FOB basis has bounced off this week’s lows. With the growing season ahead, it is way too early to be ultra bearish. The grain complex is near key support making today’s trading session important as tomorrow is First Notice Day on May grains with volume and open interest slows with ongoing sharp declines with corn open interest down 25,445 contracts, soybeans down 26,104 and Chicago wheat off 2,706 contracts. In the overnight electronic session the July corn is currently trading at 594 which is 7 cents lower. The trading range has been 602 ½ to 593 ½.

On the Ethanol Front production fell last week to 967 tbd, down from 1,024 the previous week. In the month-year (MY) to date corn for ethanol use has reached 3.292 billion bushels or 14.1 mbd, annualized pace of 5.156 billion, vs. USDA forecast of 5.2510 billion. Lower production and surging demand drew ethanol stocks down to 24.3 million barrels. Well below expectations and the lowest in 3 months.  Ethanol margins should surge on lower supplies, sharp demand, and lower cost for corn. There were no trades or open interest in ethanol futures.

Have An Excellent Trading Day!

Dan Flynn

Questions? Ask Dan Flynn today at 312-264-4374