Bullish API Sets the Tone. The Corn & Ethanol Report 06/26/19

We kickoff the day with Advanced Durable Goods at 7:30 A.M., EIA Energy Stocks at 9:30 A.M. and Dairy Product Sales at 2:00 P.M. Last night’s APUI showed draws in Crude Oil of 7.55 Mln barrels while Cushing had draws of 1.26 Mln barrels, while Gasoline had a large draw of 3.17 Mln barrels just before the 4th of July and Distillates had builds of 0.16 Mln barrels. Coupled with the risk Factor in the Middle-East and Putin wanting to bring back the Cold War of the 1950’s and 1960’s we could see a little more premium in the markets. Vladimir the music was great but not the iron fist. So we eagerly await the EIA Energy Stocks to see if their numbers are close. In the overnight electronic session the August Crude Oil is currently trading at 5894 which is 111 points higher. The trading range has been 5913 to 5865.

On the Corn front shortfall in U.S. production is putting Wheat back in the feed business in feedlots in the southern Plains. The dynamics, “are a changin”, fast. The G20 Summit this week has some people in the administration say we are 90% done to clear a new trade deal. The other 10% must all be Intellectual Property (IP) and that could be a deal killer and either side will not budge. Another key to this trade deal is that China had to destroy at least 30% of their pig crop months ago, which is a huge and the offspring will not exist and they will need to import. Not to mention toss out what they had in cold storage and clean the refrigerators before restocking them. China’s biggest fear is they will have to without question import from the U.S. and if they are forced to pay a tariff it would be ugly. Getting back to Corn which could be exported to China as well, there are also three things investors are watching from here on out and that is acreage, weather and yields. In the overnight electronic session the July Corn is currently trading at 443 ¼ which is 4 ¼ cents lower. The trading range has been 447 ¼ to 443.

On the Ethanol front the impending trade talks will impact this market and U.S. Corn farmers for exports to China. The Open Interest in the August contract well surpassed the July so we will rollover. There were no trades in the overnight electronic session. The August contract settled at 1.602 and the market is currently showing 3 bids @ 1.576 and 2 offers @ 1.600 with Open Interest at 607 positions.

On the Natural Gas front the July contract expires today. This is another market the U.S. could have a stranglehold on exports with LNG in the future for clean energy and the U.S. has it in abundance and at very attractive prices for importers at the moment. In the overnight electronic session the August contract is currently trading at 2.278 which is .008 lower. The trading range has been 2.285 to 2.263.

Have a Great Trading Day!
Dan Flynn