Eyeing The Drought Monitor. The Corn & Ethanol Report

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The day was officially kicked off with Export Sales, Unemployment Rate, Nonfarm Payrolls, Participation Rate, Average Hourly Earnings month-over-month & year-over-year, Average Weekly Hours, Government Payrolls, Manufacturing Payrolls, and Nonfarm Payrolls Private at 7:30 A.M. Next, we saw the Baker Hughes Oil & Total Rig Count at 12:00 P.M., as well as Total Vehicle Sales.

On the corn front, summer storms with high volumes of rain have seen the grain complex riding the short side of the market recently. Rain appears to be nonexistent in the areas where it is needed, so I would advise to not be surprised with the results of Monday's crop progress report.

Regardless of the rains in some areas, I anticipate a sharp deterioration in corn ratings. Abnormally dry conditions have also emerged in the eastern corn belt. It should be noted that the Drought Monitor has also showed bigger drought conditions in Missouri and Central Illinois.

Brazil is expected to have a huge second crop, and this has also has placed pressure on the market. As I have mentioned before, “it is not what you plant, but what you grow.” We may see food shortages, especially if we see mid-June rains dry up.

Traders were not expecting much in the morning’s Export Sales. Bulls in this market continued to laugh in the face of danger. In the overnight electronic session, the July corn was seen trading at 584 ½, which is 8 cents lower. The trading range has been 592 ½ to 582.

On the ethanol front, production rebounded to 1,004 tbd last week, above the 983 tbd reading from the week before. However, this amount is still below the pace needed to reach the USDA usage forecast of 5.250 billion bushels. There were 101 million bushels of corn used in the production process, or 14.37 million bushels per day.

Yesterday’s monthly data showed there were 416 million bushels of corn used on April 23 for ethanol production, bringing the year-to-date consumption to 3.40 billion bushels, which is down 4.5% from a year ago. As we shift our focus to drought forecasts, we are awaiting next Friday’s WASDE report. There were no trades or open interest seen in ethanol futures.

More By This Author:

Technical Bounce? The Corn & Ethanol Report
3-Day Weekend Tuesday Surprise. The Corn & Ethanol Report
Grains Bouncing Back. The Corn & Ethanol Report

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