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 kickoff the day with MBA 30-Year Mortgage Rate, MBA Mortgage Market Index, MBA Mortgage Refinance Index, MBA Purchase Index, and MBA Mortgage Applications at 6:00 A.M., Redbook YoY at 7;55 A.M., Fed Chair Powell Testimony, Fed Cook Testimony and Fed Jefferson Testimony at 9:00 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Goolsbee Speech at 11;25 A.M., 20-Year Bond Auction at 12:00 P.M., Milk Production at 2:00 P.M., Fed Mester Speech at 3:00 P.M., and API Energy Stocks at 3:30 P.M.
Crop Progress showed a 6% decline for yields, the worst rating for this time of year since the bad drought of 1988. Soil moisture was nil and the farmland looked more like concrete. So the crop ratings go down again and the Drought Monitor has the Midwest in a moderate to severe drought with Extreme Drought in parts of Texas, Oklahoma, Kansas, Nebraska, and Missouri. The drought epicenter is the dead center of the Midwest, and the US corn crop is now losing yield with everyday that passes without meaningful rainfall. The question is no longer if the corn crop is in decline, but it is a matter of how much? Abd based on the ratings falls, the yield drop could be dramatic if rain fails to materialize into July. And there is no indication meaningful rainfall will be allowed to flow into the Eastern Plains and Midwest into July. In the overnight electronic session the July corn is currently trading at 657 ½ which is 13 ¾ cents higher. The trading range has been 660 ¾ to 647 ¼.
On the Ethanol Front eyebrows are rising as drought fears and ethanol plant margins will be a concern as the farmers in the field try and outpace and contend with Mother Nature. The odds are with Mother nature but do not count the US farmers out. Energy markets continue to play OPEC and OPEC+ games. Far cry from when we energy independent. Back in the BB days = Before Biden. Reuters reports the US will boost biofuels mandates over the next 3-years but not for ethanol. The Biden Administration plans to increase the amount of biofuels that oil refiners must blend into the nations fuel mix over the next 3-years but lower mandates on corn-based ethanol. Two sources familiar with the matter told Reuters. Pandora’s Box is open Joe, you closed the Keystone Pipeline XL and your declaration of war on the energy industry. Farmers were in need of cheaper diesel and fertilizer which fell on deaf ears, and now we facing a formidable foe Mother Nature. If we were only energy independent we could at least soften the blow. What will you do for an encore? The ethanol cash market is all abuzz while the futures market remain dormant with no trades or open interest.
Have A Great Trading Day!
Dan FlynnQuestions? Ask Dan Flynn today at 312-264-4374