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., ADP Employment Change at 7:15 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Dairy Products Sales at 2:00 P.M., Treasury Refunding Announcement and Total Vehicle Sales at unspecified times.
On the Corn Front with corn prices below 520, Crude draws of 15 million barrels on yesterday’s API, harvest pressure is not as likely to be a big show in this years crop. The spillover of low crude supplies will also drive gasoline ,diesel, and grocery prices higher. Inflation is getting worse no matter what dream world the pundits are living in. The Purchasing Managers Index for July came in at 46.4 up from a 3-year low of 46 set in June. Any number above 50 shows job growth, but below 50 indicates contraction. July marked the 9th consecutive month below 50 which has not happened since 2008/09. The index below 50 does not necessarily indicate a recession, but recession has occurred every time the index fell below 45. Job Openings report showed openings fell 34,000 jobs in June the lowest since April 2021, during COVID. The Unemployment data will be released Friday. Weather models are agreeing that an active pattern of rainfall and noticeable boost in soil moisture lie ahead for the Western Plains, pockets of the Northern Plains, and Southern Midwest. Strong high Pressure Ridging is regulated to the Southern Plains and Delta beyond the next 48 hours. Moisture will be reaching into the Central US during the first half of October. Showers begin across Iowa, Missouri, and Southern Illinois today. However, like all summer, benefits will be regional. The Great Lakes and East Midwest will be hot and dry. Temps east of the Mississippi River will periodically reach into the mid/upper 80’s. The Central US has lacked largescale, organized precipitation events, with crop health to stay uneven into the final throws of the growing season. Worse case yield scenarios will be avoided following heavy Plains/Midwest rainfall in early July and recent extreme heat will proved to be short-lived. It has been an odd growing season and it’s critical crop ratings across the Upper and Eastern Midwest increase measurably to keep the USDA’s 177.5 (BPA) national yield forecast. There has been very limited improvement in state-wide ratings in Illinois, Michigan, and Missouri. Good-to Excellent in Missouri was pegged at 25% vs. 52% a year ago. And Michigan Good-to-Excellent was just 44% vs. 64% last year. I do not believe this is a good spot to add shorts, and we should keep our eyes on fund activity. In the overnight electronic session the December corn is currently trading at 498 which is 1 cent higher. The trading range has been 512 ¼ to 497 ¼.
On the Ethanol Front PRO FARMER Editors report corn-use-ethanol use totaled 445.5 million bu. in June, according to USDA, 2.7 million bu. less than expected. Corn ethanol use increased 2.5 million bu. (0.6%) from May but was 2.7 million bu. (0.6%) than a year ago. Through the first 10 months of 2022-2023, corn-for-ethanol use totaled 4.277 billion bu., 172 million bu. (3.9) behind the same period last year. To reach USDA’s forecast of 5.225 billion bu., ethanol use must top year-ago by 8.1% over the final two months of the marketing year. Our 2022-23 corn-for-ethanol use forecast is 5,200 billion bushel. And crop tours are beginning as we wait for the PROFARMER Crop TOUR. There were no trades or open interest in ethanol futures.
Have An Excellent Trading Day!