Question Of The Day…Can Other Commodities Go Negative? The Corn & Ethanol Report

We kicked off the day with Dallas Fed Manufacturing Index at 9:30 A.M., Export Inspections at 10:00 A.M., 2- Year Note and 6-Month Bill Auction at 10:30 A.M., 3-Month Bill Auction and 5-Year Note Auction at 12:00 P.M. and Crop Progress at 3:00 P.M.

AG-Web covered a story if it is possible for Corn & Ethanol to go negative like the Crude Oil market did for the first time in trading history. CME CEO Terry Duffy countered and said this is not the first time a commodity went into negative territory. He said, “We have had Natural Gas go negative and other crude refined products go negative,” Duffy went on to say, “ It’s just wrong to say that”. Then the next question was could it happen to agriculture commodities as well? Darin Newsom of Darin Newsom Analytics said yes. It has been proven any storable commodity that continues to show increased supplies and demand being destroyed, an example would be corn. Seth Meyer, an economist with the University of Missouri, agrees it’s possible for anything to trade lower, but the difference between oil and corn is the ability to store it. “ In theory, I suspect it is possible for both grains and ethanol to go negative futures but it will be more difficult for grains given the wide delivery points and you can dump it on the ground, you cannot do that with oil storage,” Meyer said. “ For Ethanol, I think the risk is greater and those folks have been significantly cutting production as storage dries up. There is some play between oil/gas/ethanol storage. So, I think it is possible, but highly unlikely given the current market conditions. In Friday's action in the corn market we headed lower with managed funds net sellers of 6,000 corn. Whispers are funds are short 164,000. And estimates that 24% of plantings are done. In the overnight electronic session the May Corn is currently trading at 311 ¼ which is 4 ½ cents lower. The trading range has been 315 ¾ to 311 ¼.

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