Rains In The Plains? The Corn & Ethanol Report

We started off the day with MBA Mortgage Applications (14/MAY) and MBA 30-Year Mortgage Rate at 6:00 A.M., EIA Energy Stocks at 9:30 A.M., Fed Bostic Speech at 10;35 A.M., 20-Year Bond Auction at 12:00 P.M., FOMC Minutes at 1:00 P.M. and Dairy Product Sales at 2:00 P.M.

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On the Corn front, with farmers having planted 80% of their corn crop and the UADA pegs it is behind, we are getting much-needed rains in the Midwest that is forecasted the next couple of days. Traders will be watching for four things, are the rains going to be enough to lower the severity of the Drought Monitor, what tomorrow’s Export Sales look like, South American crops and/or weather change, and what type of fund activity will we see. In the overnight electronic session, the July corn is currently trading at 655 ½ which is 2 ¾ cents lower. The trading range has been 663 to 653. The deferred months are trading mostly around 5 cents lower.

On the Ethanol front, POET could expand ethanol production by 3 billion gallons through an acquisition. Reuters report that POET is in talks with Flint Hill Resources to buy all its ethanol assets. Flint Hills is currently the fifth-largest ethanol producer in the U.S. with a footprint mainly in Iowa. When you see Mergers and Acquisitions, it is historically a time when the market is close to or at a bottom. There were no trades posted in the overnight electronic session. The June ethanol settled at 2.340 and currently showing no market with Open Interest at 21 contracts.

On the Crude Oil front, tomorrow is the Last Trading Day in the June contract. This morning we have the EIA Energy Stocks while last night’s API showed builds in crude at 0.620 M, Cushing +0.053 M, gasoline down 2.837M and distillates down 2.518 M. News that Colonial Pipeline went down again yesterday and states that have gas stations out of gas will slow the economy even further, with truckers and other people who must drive for a living out of necessity. The prognosis wasn’t good to begin with how gas stations in the affected areas, that the pipeline would not be up to full speed until after the Memorial Day Weekend. The busiest driving weekend that starts the summer driving season. The administration seems to offer zero help but lip service. Risk on is going up every day in the Middle East as the powder keg of wars continuing to erupt and Iran allegedly supplying arms to proxy war states. In the overnight electronic session, the July crude oil is currently trading at 6441 which is 109 points lower. The trading range has been 6535 to 6418. Do not be surprised if we punch through $70 a barrel by Memorial Day.

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