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 Purchase Index and MBA Mortgage Applications at 6:00 A.M., Building Permits Prel, Building Permits MoM Prel, Housing Starts, and Housing Starts MoM at 7:30 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., 20-Year Bond Auction at 12:00 P.M., and Dairy Products Sales at 2:00 P.M.
On the Corn Front Brazilian corn maintains a slight discount in Asia when accounting for all costs, and there’s little doubt they Brazil will dominate global corn trade through the summer and into autumn. However, the price of trade execution has risen as demand’s been found in Brazil. Brazilian FOB basis for August-September delivery last night was quoted 60 to 63 cents/Bushel over CBOT Sept Corn. Spot basis in Brazil was negative just 30 days ago. And autumn futures (Nov in Brazil & Dec in Chicago) are at even money. International market performance suggests US corn is not overvalued. And we can’t forget the Black Sea risks following Russia’s additional attacks on Southern Ukraine last night. Whether US exports of 2.0 Bil/Bu will happen is if Mother Nature will cooperate in the next 40 to 50 days. Speaking of weather the last run of the weather modules has the EU model having cooler, but still hot in the Central Plains vs. the GFS model, across Kansas, Nebraska, Missouri and Iowa. Extreme heat into July 28th is expected to remain in Texas, Oklahoma and parts of the Dakotas and Minnesota. In the overnight electronic session the December corn is currently trading at 558 ½ which is 24 cents higher. The trading range has been 562 to 531 ½.
On the Ethanol Front Erin Voegele with Ethanol Producer Magazine reports the US ethanol industry had strong second quarter results with steady production and above average profitability, according to CoBank in its latest quarterly research report, released July 13th. CoBank said the pretax operating margins for the three-month period averaged 45 cents per gallon through late June, well above the average profit margins of 32 cents per gallon year-to-date and 28 cents per gallon long-term. Production during the second quarter averaged 15.4 billion gallons annualized vs.15.2 billion gallons sequentially, which modestly exceeded the five-year average levels according to the report that will include their corn crop expectations. There were no trades or open interest in ethanol futures.
Have An Excellent Trading Day!