We started out Tuesday with NFIB Business Optimism Index at 5:00 A.M., Wholesale Trade at 7:30 A.M., Redbook MoM & YoY at 7:55 A.M., IBD/TIPP Economic Optimism (June), JOLTs Job Openings (Apr) and Wholesale Inventories at 9:00 A.M., 119-Day and 42-Day Bill Auction ay 12:00 P.M., API Energy Stocks at 3:30 P.M. and Day 1 of the FOMC Meeting.
On the corn front, Cristobal is driving right up into the Corn Belt. It does look like the track will miss central Illinois that could really use the moisture right now. And there are portions of Iowa that do not necessarily need any more moisture with the ground soak or flooded and they may get more than they bargained for this early in the season. Farmland is spotty where the rain is need or not needed the most. In yesterday's action the corn was traded higher by a couple of cents in light volume and tight trading range in the session. Funds remain short and farmers could come in and sell premium for cost-cutting maneuvers. In the overnight electronic session the July corn is currently trading at 331 ½ which is 2 ¼ cents lower. The trading range has been 334 to 331.
On the ethanol front, the CEO of an ethanol plant in southeast Minnesota is not convinced the rebound in ethanol is sustainable. Randal Doyal with Al-Corn Clean Fuel in Claremont says facilities across the country are coming back online as the coronavirus-related stay-at-home orders are lifted. “As soon as the indicators out there said you might be able to at least cover your cost, if not make a little money, everybody (got back) to producing again. U.S. ethanol production has increased five weeks straight. Doyal went on to say fuel demand appears to be 80 to 90% of pre-pandemic expectations. “So we are going to overproduce again pretty rapidly.” He is also concerned and nervous about a resurgence in COVID-19 cases later this year and how the country responds. “With people learning they can work from home, there might not be as much of demand for commuting fuel as there was before. So I’m not sure where we wind up out on this, but we haven’t seen the pain from our destruction of the economy yet. Doyal echoes others in the biofuels sector who say the industry needs direct government aid to withstand the damage caused by the pandemic, RFS waivers, and the oil price war between Russia and Saudi Arabia, according to Mark Dorenkamp with Brownfield AG News. The June Ethanol expires today and in the overnight electronic session, the July contract posted a trade at 1.245 which is unchanged. The market is currently showing 2 bids @ 1.170 and 1 offer @ 1.259 with 1 contract traded and Open Interest at 108 contracts.
On the Crude Oil front after the OPEC meeting, the market just does not seem excitable in any fashion. Investors and traders see a wide room for some countries to cheat on production cuts and the Saudi’s reminded them not to test the nation. Maybe tonight’s API Energy Stocks could get the bulls back on the dance floor. There is hope that if the OPEC and OPEC+ countries adhere to their pledges on production cuts we could see this market recover further. In the overnight electronic session the July Crude Oil is currently trading at 3799 which is 20 points lower. The trading range has been 3886 to 3707.
On the Natural Gas front, the European weather model is backing off predictions of a hot June. China will be ramping up on LNG and renewable fuels this decade which could open up an even broader market with the many opportunities in Europe alone. In the overnight electronic session the July natural gas is currently trading at 1.776 which is .013 lower. The trading range has been 1.829 to 1.771.
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