We started off terrific Tuesday with Redbook MoM & YoY (01/Aug) at 7:55 A.M., ISM New York Index (Jul) at 8:45 A.M., IBD/TIPP Economic Optimism (Aug), Factory Orders MoM (Jun) and Factory Orders ex Transportation (Jun) at 9:00 A.M., 119-Day and 42-Day Bill Auction at 10:30 A.M., Dairy Products at 2:00 P.M. and API Energy Stocks at 3:00 P.M.
On the Corn front, the Crop Progress rating stayed unchanged with the good to excellent rating at 72% while 92% of the nations corn is silking versus the 87% five-year average. We are also keeping an eye on weather for potential crop stress in portions of the Midwest and Plains that have not received the sporadic rains with coverage in pats of those areas had enough to soak the subsoil as well. Traders are also keeping an eye to see if China steps up and make another large agriculture purchase. In the overnight electronic session the December corn is currently trading at 326 ¼ which is 2 ¼ cents lower. The trading range has been 327 ¾ to 325 ½.
On the Ethanol front, Tom Doran with Agrinews reports the U.S. Court of Appeals for the Tenth Circuit’s ruling that struck down Small Refinery Exemptions improperly issued by the Environmental Protection Agency hasn’t deterred companies from filing more requests. There exemption requests dating back to 2011 to 2018, 52 requests all in all for that period, and another 28 request from 2019 to 2020 that have yet to be ruled on by the EPA. The ethanol industry is also waiting on the EPA to announceRenewable Volume Obligations under the RFS for 2021. The ruling for 2020 was made on July 5, 2019, and appears to be on indefinite hold by the EPA for next year. There were no trades posted in the overnight electronic session. The September ethanol settled at 1.110 and is currently showing 3 bids @ 1.030 and 1 offer @ 1.117 with Open Interest at 69 contracts.
On the Crude Oil front, OPEC+ is doing a delicate balancing act as production cuts of 9.7 million barrels per day expired on July 31st. The cuts will be around 7>7 million (bpd). Also, we have Iraq cheating on cuts and the cartel+ must be unified to stabilize the demand destruction caused by the coronavirus and the price war between Russia and Saudi Arabia. Another story reported by Simon Watkins with OILPRICE.com has several sources who have confirmed China has been hoarding Iranian oil directly or indirectly with several front companies registered in Myanmar, Malaysia, Singapore, and Pakistan. Could another round of sanctions be far off? The market is paring the gains made yesterday we have API Energy Stocks later today with predictions of builds or draws all over the board. Tropical Storm Isaias has been downgraded from hurricane status and is hitting the Carolina’s at the moment. We also have Disturbance 1in the Atlantic that has a 30% chance of forming into a cyclone but does not seem to be a threat of entering the Gulf of Mexico. In the overnight electronic session, the September crude oil is currently trading at 4034 which is 67 points lower. The trading range has been 4099 to 4019.
On the Natural Gas front, bullish fundamental news has some new bulls riding the wave that has got this boring market excitable again. There is talk that natural gas will replace coal and with some climatologist wanting to replace natural gas, the odds don’t look to be a reality anytime soon. Other bullish news that has been in the market for weeks is the cancellation of the Atlantic Coast natural gas pipeline, Warren Buffett’s buying Dominion Energy assets and we are seeing more bankruptcies that will bring down supply and is usually a good sign a market is forming a bottom. In yesterday’s action we sot through the 200-Day Moving Average and looks as though this market may have woke up. In the overnight electronic session the September natural gas is currently trading at 2.115 which is .014 higher. The trading range has been 2.169 to 2.095.
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