U.S. Covered In A Heat Wave. The Corn & Ethanol Report

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We start the day with New Home Sales MoM (Jun) and New Home Sales (Jun) at 9:00 A.M., Dallas Fed Manufacturing Index at 9:30 A.M., Export Inspections at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 A.M., 2-Year Note Auction at 12:00 P.M. and Crop Progress at 3:00 P.M.

On the Corn front, the market traded lower Friday even as weather modules predict hot & dry weather. The U.S. model changed and calls for showers in Iowa and Central Illinois. Parts of Northern Illinois was hit by heavy rains Saturday which may be the reason the market is trading lower at the moment. However, the hot weather dried up the coverage rather quickly, and heading into the dog days of summer more heat and dry weather is expected to cover the U.S. This could attract funds to start free-swinging on long positions again. Yields are the name of the game as exports have been weak with China’s excessive buying spree slowed. With the prices where they are right now, farmers are reluctant to sell at the moment driving cash prices higher. Remember Carryover, yields and South America’s crop struggling could once again make the U.S. the only game in town for purchasers. I do expect exports to pick up as we move closer to the winter months. In the overnight electronic session, the December corn is currently trading at 543 ½ which is 3 ¾ cents lower. The trading range has been 547 to 533.

On the Ethanol front, the bipartisan effort in Congress to eliminate biofuels mandates has hit a crossroads. The White House is delaying policy changes for the Renewable Fuel Standards due to the two recent court rulings which has also weighed in on corn prices. One thing is for sure the fight is far from over concerning mandates. There were no trades posted in the overnight electronic session. The August contract settled at 2.320 and currently showing no market with Open Interest at 2 contracts.

On the Crude Oil Front, the market is being pressured by the coronavirus delta and slower China imports. Overall demand remains strong but the fears of the virus has traders on edge. They are hoping not to have a repeat performance of 2020 decline do to the coronavirus as OPEC+ is starting to put more barrels on the market. I still remain wildly bullish long-term. In the overnight electronic session, the September crude oil is currently trading at 7166 which is 41 points lower. The trading range has been 7243 to 7056.

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