Corn Spikes Ahead of Export Sales & WASDE Data. The Corn & Ethanol Report 05/11/2023

We kickoff the day with Export Sales, PPI MoM & YoY, Core PPI MoM & YoY, Initial Jobless Claims, Jobless Claims 4-Week Average, and Continuing Jobless Claims at 7:30 A.M., Fed Waller Speech at 9:15 A.M., EIA Natural Gas Storage at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., and 30_year Bond Auction at 12:00 P.M.

On the Corn Front choppy trade with topsy-turvy results ass the bulls and the bears locked in on each other with both bullish and bearish news the market is trying to digest all the news and breaking news headlines. China’s cancellation of 272 MT of corn, Ukraine export deal looks sunk in the Black Sea, Weather in South America. Overall we are ahead in plantings , but remember, “it is not what you plant but what you grow.” I believe the rally was short-covering as traders lightened up on their short positions and liquidated for profit ahead of today and tomorrow’s reports. Not expecting a bullish surprise in exports, especially with China’s 3^rd cancellation in 2 weeks. Brazil could have record corn production, breaking last years 116 MMT’s, and even assuming safrinha corn yield loss 7-8% relative to trend, output will be higher year-over-year. Corn futures have fallen since mid-April on favorable Midwest planting weather and the fear of a bearish USDA May crop report. A long growing season is ahead and a record US corn yield is far from achieved. Remember, “it is not what you plant but what you grow.” With good yields part of the plan. We could have an oversold market. Tomorrow is Last Trading Day in May grains. In the overnight session the July corn is currently trading at 591 ¼ which is 2 ¾ cents lower. The trading range has been 592 ¾ to 590 ¼.

On the Ethanol Front US ethanol margins over variable cost reached there best levels since February 2018. The recent weakness in corn coupled with strong cash ethanol demand is likely to cause an expansion in US corn grind once seasonable maintenance is completed. US cash corn demand into ethanol plants is strongly bid into until late-July. Ethanol production slipped to 964 bpd last week, down from 976 bpd a week ago. Corn usage at 97 million bushels was below expectations and below the pace to reach the USDA Forecast for the 10^thconsecutive week. Oddly enough implied gasoline demand rebounded sharply last week, up7% from a week ago and 8% from YA. Ethanol stocks slipped to 23.3 million barrels, the lowest level since Nov 22.Margins should continue to rise while there are whispers the USDA may lower their corn use for ethanol forecast. There were no trades or open interest in ethanol futures.

Have A Great Trading day!

Dan Flynn

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