About The Author

Daniel Flynn

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 Redbook YoY at 7:55 A.M., Fed Chair Powell Speech at 8:30 A.M., JOLT’s Jobs Openings and JOLT’s Job Quits at 9:00 A.M., RCM/TIPP Economic Optimism Index at 9:10 A.M., EIA Energy Stocks and LMI Logistics Managers Index at 3:30 P.M.

Ag Resource (ARC) reports, The Institute for Supply Management’s monthly Manufacturing Purchasing Managers Index declined to 48.5 in June from 48.7 in May, defying trade expectations for a monthly increase. This marked the 6th consecutive month of declines. Compared to a year ago, the index was 5% higher to mark the 6t consecutive month of year-over-year gains. However, the index has now been below 50 in 19 of the last 20 months. An index reading below 50 is not necessarily been an indication of a US financial recession. However, the current cycle has set a record for the number of months below 50 without an official declaration of a recession. This is do to the tightness of the US Labor market and rising incomes. A slowing of the US must occur before recessionary fears become realistic: Central Weather Discussion; We could see backlash from Beryl the quickest storm to become a Category 4 in the Atlantic since we have recorded. The warm waters of the Atlantic have now churned to a Category 5, another record. Scares About Rending Drier Weather beyond the Next 5 Days; Extreme Heat Absent into July 10th: Heavy rainfall – some excessive – is forecast across the N Plains and Midwest into late week, with accumulations of 2-4.00” to favor MO, IA, MN, and WI. Such rain is unwanted in N IA/MN, but a majority of the Corn Belt will be well watered by July 6th . An abrupt southward shift in precipitation occurs thereafter into mid-month. Fortunately, sustained extreme heat is not indicated. Highs across the C Plains & Midwest will exist mostly in the 70’s & 80’s. The nearby outlook is favorable, with meaningful crop threats confined to late June flooded areas amid a lack of GDD accumulations across NW Corn Belt. ARC notes the models are at odds over the exact positioning of high Pressure Ridging July 10th onward, and the duration of the Central US dryness will be monitored – and whether July climate outlooks that has long called for heat/dryness outside the Southeastern US proves correct. As South American crop is being monitored into Jul/Aug, the Black Sea drought is forecasted to extend and worsen. Overshadowed last week by the USDA reports were the EIA’s June release of key biofuel reports. The Monthly Biofuels Capacity and Feedstocks Update  showed that after falling in February, US biodiesel capacity increased by 7 Mil Gal/Year in April to 1,991 MG/Yr. But compared to a year ago, capacity was 96 MG/Yr. or 5% smaller. Renewable diesel production capacity rose for the first time in 7 months, increasing by 269 MG/Yr. (7%) to a record large 4,126 MG/Yr. Compared to a year ago, capacity was 848 MG/Yr. (26%) larger. Combined biofuel capacity increased to a record larger 6,117 MG/Yr. On the feedstock use side of the report, biofuel producers used 1,070 Mil Lbs. of soybean oil in April, the most since January and a 1443 Mil Lbs. (15%) increase over a year ago. Canola oil use was 40% larger than a year ago at 361 Mil Lbs., and corn oil use was 15%larger at 339 Mil Lbs. Beef tallow use increased 132% to 486 Mil Lbs. and yellow grease use was 18% was 18% larger at 700 Mil Lbs. Total fats & oils use was up 32% at 3,071 ML Lbs. US corn use for ethanol production in may totaled 454 Mil Bu, vs. 423 in April, and vs. 439 a year ago. EIA also published ethanol production in the month of April at 1.23 Bil Gal, which places ethanol yield in April at 2.92, a bit lower than normal. Marketing year to date corn use for ethanol production sits at 4.06 Bil Bu, up 6% year-over-year. And which implies USDA forecast is 20-30 Mil Bu too low. It’s a minor difference and not market sensitive, but the recent ballooning of ethanol margins and seasonally strong gasoline use will keep the rate of domestic corn disappearance elevated using EIA weekly data through June 20th , analyst ARC estimates corn used for ethanol production in June at 448 Mil Bu, up 6 million the previous year. The market’s goal is to find demand growth, and this is occurring. ARC notes Us corn remains highly competitive in the export market through December. NASS crop conditions on corn dropped 2% and held steady in soybeans. (Good to Excellent)

Have A Great Trading Day!

Thanks,Daniel Flynn

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