Fed Kept Rates In Check - The Corn & Ethanol Report

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We kickoff the day with Current Account, Export Sales, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, Philly Fed Business conditions, Philly Fed CAPEX Index, Philly Fed Employment, Philly Fed New Orders, Philly Fed Prices Paid, Jobless Claims 4-Week average, and Continuing Jobless Claims at 7;30 A.M., Existing Home sales, Existing Home Sales MoM, and CB Leading Index MoM at 9:00 A.M., EIA Natural Gas Storage at 9:30 A.m., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:oo A.M., and 10-year TIPS Auction at 12:00 P.M.

On the Corn Front after showers today the US weather model backed off Eastern Midwest rain but both models agree that there will be soaking rains confined to areas west of the Mississippi River. Harvest will be swift across the Midsouth and Eastern Midwest, and major disruptions unlikely into mid-autumn. Wednesday’s estimated open interest added 18,967 contracts. Brazilian FOB corn basis has been rising in recent days and now equals the US Gulf into early 2024 at 41.06 over. China has been a massive buyer of Brazilian corn with purchases and shipments estimated at over 11MMT which has cleaned up the Brazilian surplus. Vessel counts show that China will import a record 4.75 MMT of Brazilian corn during October. The rally in the Brazilian corn FOB basis has placed the US into a competitive export position in the world corn market into mid-2024. Brazilian farmers are unwilling to sell new crop corn or soybeans on low interior price offers which prevents Brazilian FOB corn offers beyond January. In the overnight electronic session the December corn is currently trading at 478 ½ which is 3 ¾ cents lower. The trading range has been 482 ½ to 478.

On the Ethanol Front the National Corn Growers Association (NCGA) expressed criticism of a draft report from APA’s Science Advisory Board (SAB), which questions whether increasing ethanol fuels can significantly reduce greenhouse gas (GHG) emissions  versus gasoline or diesel. The draft report, slated for discussions at the SAB’s upcoming meeting, calls on the EPA to carefully examine the scientific evidence surrounding claims that corn ethanol offers lower lifecycle GHG emissions than petroleum-based fuels. The gloves are off again as we are switching to winter blends in gasoline and diesel. There were no trades or open interest in ethanol futures.

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