Cannot Put Lipstick On This Economy & Mismanagement. The Corn & Ethanol Report 05/16/2023

We kickoff the day with Fed Mester Speech at 7:15 A.M., Retail Sales MoM & YoY, Retail Sales Ex Autos MoM, and Retail Sales Ex Gas/Autos MoM at 7:30 A.M., Fed Bostic Speech and Redbook YoY at 7:55 A.M., Industrial Production MoM & YoY, Manufacturing Production MoM & YoY, and Capacity Utilization at 8:15 A.M., Business Inventories MoM, Fed Barr Testimony, NAHB Housing Market Index and Retail Inventories Ex Autos MoM at 9:00 A.M., 52-Week Bill Auction at 10:30 A.M., Fed Williams Speech at 11:15 A.M., Fed Logan speech 2:15 P.M., API Energy Stocks at 3:30 P.M., and Fed Bostic Speech at 6:00 P.M.

AgResource reports the New York Fed’s monthly Manufacturing Index sank to -31.8 in May, far below expectations of -3.75 and well below the April reading of 10.8%. This was the largest year-over-year decline in 4 months, and excluding the COVID year, it was the largest month-over-month decline since the Fed survey began. The indexes for new orders plunged to -28 vs. +25 in April, while shipments fell to –16.4 vs. 23.9. The indexes for delivery times, inventories, and employment were all at negative levels, while the index for prices received ticked lower. The index for future business conditions remained positive at 9.8 but was well below the 2021 high of 52. The CBOT ag markets have turned around in thin volume following Monday’s rally, with modest drops in corn and wheat open interest hinting at speculative short covering. The Black Sea export corridor remains effectively shuttered as vessel movement halts. Russia said, there are still issues to work out, but no plans seemed to be in the future and it appears the Ukraine is preparing for the end of maritime shipments. Russia is not exempt for hot and dry weather which is causing problems for crops in the Northern Hemisphere which could cost them yields in spring wheat. It is all about what we grow and the yields produced by acre. Farmers earlier prediction months ago, of possible food shortages is looking closer to become reality. Corn plantings are moving well and we are seeing corn emergence, warm/dry weather will be what farmers and traders will be concerned about from here.  In the overnight electronic session the July corn is currently trading at 586 ¾ which is 5 ¾ cents lower. The trading range has been 593 to 586 ¾.

On the Ethanol Front the World’s biggest plant for ethanol jet fuel is expected to open in 2025. Airlines remain under pressure to decrease their emissions unless they are a Hollywood type taking a private jet and not sharing rides to school us on carbon emissions. Not that is applies to them. Honeywell will provide the technology for the US plant and Summit Agricultural Group plans to build the aviation fuel plant in the US Gulf Coast, which will add 250 million gallons/year of capacity to the region reported yesterday by the agriculture service company. 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