We started off the day with MBA Mortgage Applications (31/Jul) and MBA 30-Year Mortgage Rate (31?Jul) at 6:00 A.M., ADP Employment Change at 7:15 A.M., U.S. Trade Balance, U.S. Treasury Refunding Announcement, U.S. Exports, U.S. Imports at 7:30 A.M., Market Composite PMI Final (Jul) and Market Services PMI Final at 8:45 A.M., ISM Non-Manufacturing Index at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., Dairy Products Sales at 2:00 P.M., and Fed Mester Speech at 4:00 P.M.
On the corn front, prices tanked in yesterday's action with news of a bumper and near-record corn crop in Minnesota that was 97% silking versus the 75% five-year average according to the USDA. “I just drove 2 ½ hours this morning and saw the best crop I have ever seen in early August,” Dennis Inman, vice president of grains for CFS Cooperative said Tuesday. The co-op runs 18-grain elevators mostly in southeast Minnesota. Nationally, the USDA projects a corn harvest of 15 billion bushels, slightly of the record of 15.1 billion bushels set in 2016. This information was supplied by Adam Betz with the Star Tribune. Andy Eubank with Hoosier Ag Today wrote that corn and soybean growers are helped by a boost in exports. The USDA projected total U.S. red meat and poultry products exports at 18.4 billion pounds, about 7.5% more than last year. Indiana corn grower Mike Beard from Frankfort, said, we keep developing demand for U.S. meat products overseas and producing more corn and soybeans to meet that demand, “ its going to reduce the pile of corn and increase demand.” China is still another wild card in another grain purchase and pork exports could to 19% from last year. In the overnight electronic session the December corn is currently trading at 321 ¾ which is 1 ½ of a cent higher. The trading range has been 322 ½ to 320 ¾.
On the ethanol front, today is Last Trading Day in the August contract. Brazil is debating whether to extend or alter tariff-free ethanol import quota. Brazil imposed a 20pc tariff on ethanol imports in 2017 in the face of rising imports from the U.S. With pressure from Washington the tariff-free quota was raced to 750 million liters from 600 million liters. Sergio Araujo, president of the fuel importers association at Abicom, was quoted, “If the quota is renewed, everyone should have access.” The expiration of the tariff-free ethanol imports is August 31. Araujo also added that ethanol imports are needed no matter what happens to the tariff, “There is a structural production deficit,” he said, as Argus reported. There were no trades posted in the overnight electronic session. The September contract settled at 1.090 and is currently showing 1 bid @ 1.030 and 1 offer @ 1.160 with Open Interest at 69 contracts.
On the Crude Oil front, Isaias has moved up the Eastern Seaboard and has entered Canada while Disturbance 1 has a 10% chance of forming cyclone formation. The storm is producing several disorganized showers and after being stationary for several hours is now moving southwestward and the oil industry will be monitoring any threats of the storm entering the gulf of Mexico. Even with demand fears oil prices jumped on a significant draw on crude oil inventories in the API Energy Stocks that showed draws of 6.829 million barrels, more than double of what analysts predicted. Distillates were up 3.824 million barrels while gasoline has draws of 1.748 million barrels and Cushing inventories rose 1.63 million barrels. In the overnight electronic session the September crude oil is currently trading at 4342 which is 172 points higher. The trading range has been 4352 to 4147.
On the Natural Gas front, OILPRICE.com’s Charles Kennedy reports that U.S. natural gas assets are selling for pennies on the dollar. Range Resources agreed to sell its North Louisiana assets for one-tenth of what it paid for in 2016. Range Resources has been struggling with high debt in the shale patch and adding the Saudi’s design to bury the shale industry and low commodity prices overall with the production war between the Russians and Saudi’s and throw in the coronavirus for good measure. Range Resources sold their assets to Castleton Resources LLC, who’s President and CEO Craig Jarchow said, “We are very pleased to be able to purchase quality assets at a low-point in the commodity price cycle.” As warren Buffett’s Berkshire Hathaway bought Dominion Energy’s assets. With Buffett’s mantra to buy when there is blood on the streets. In the overnight electronic session, the September natural gas is currently trading at 2.234 which is .041 higher. The trading range has been 2.261 to 2.167.
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