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
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Beautiful Hunter’s Moon. The Corn & Ethanol Report 10/18/2024
We kickoff the day with Building Permits Prel, Building Permits MoM Prel. Hosing Starts, and Housing Starts MoM at 7:30 A.M., Fed Bostic Speech at 8:30 A.M., Fed Kashkari Speech at 9:00 A.M., Fed Waller Speech at 11:10 A.M., Fed Bostic Speech at 11:30 A.M., Baker Hughes Oil & Total Rig Count and Monthly Budget Statement at 12:00 P.M.
The Biden Administration has been quietly restocking the nation’s Strategic Petroleum Reserves Stocks in the last year. Last week, the SPR increased by 952,000 BBL’s and was 322 Mil BBL’s larger than a year ago. Stocks have now increased for 44 consecutive weeks bt an average of 727,000 BBL’s/week. However, this pales in comparison to the liquidation that got underway in 2021and lasted into mid-2023, in which stocks were liquidated at an average rate of 2.5 Mil BBL’s/week. Current stocks are 11% above July 2023 and 40% from early 2021 and holding at early 1980,s levels.
South American Weather Nearly Ideal into Oct 26th; Updated Climate Forecast Features Low Probability of Drought:
The South American forecast remains favorable. A nice mix of rain & sun is projected over the next 10 days in Brazil, with heavy accumulation of 1.5-4.0” to further replenish subsoil moisture in Mato Grosso, Goias , Minas Gerais. The Buenos Aires Exchange on Thursday issued an alert over Polar air’s negative impact on Argentine rainfall longer term, but very precipitation worth 2-4” will blanket Argentina’s Ag Belt into Oct 26th . Threats are absent today. IRI’s updated three-month precipitation anomaly forecast probability of sustained dryness in Nov-Jan period across the N Mato Grosso and lesser soybean producing states in the Northeast Brazil. Normal climate conditions across the core of Brazil’s Ag Belt which along with added acres will produce record large corn/soybean crops.
Corn Ends Firm on Needed Bounce to Correct Oversold Chart Condition:
World corn markets ended steady higher, with S American fob premiums firming and US origin highly competitive against Ukrainian. US exporters this week have made new 24/25 sales worth 66 Mil Bu- and sagging ethanol cash prices & production margins. Spot cash ethanol sitsa at $1.56/Gal, vs. $2.34 a year ago in mid-October. Both the bulls and bears will lack leverage until South American weather becomes crop-critical in December. ARC’s strategy remains to use seasonal strength/nearby demand to advance 2024 and 2025 cash sales. A shift of 2 Mil acres from soybean to corn in 2025 keeps US end stocks stuck at 2.0 Bil Bu, which in turn keeps fair value confined to $3.60-$4.40 without outright dire drought in Argentina/southern Brazil. A lack of adverse South American weather will pull December corn futures down to $3.70-$3.90 by delivery. The US corn supply stays abundant.
Thursday’s CBOT open interest data showed corn up 14,675 contracts with soybeans down 4,992 contracts and wheat down 742 contracts. Open interest has grown substantially this week amid reports of investment funds placing bearish CBOT bets due to the November 5th presidential election.
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Have Great Trading Day!
Thanks,
Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn