Corn dropped to 3-week lows as the USDA’s Crop Progress good-to-excellent rating rose 1% to 72%, against expectations for a drop of 1%. President Trump also reassured investors by saying the China trade deal was still intact, after comments by his trade advisor Peter Navarro spooked the markets by suggesting the agreement was “over.” After Trump's remarks, Navarro back tracked and the market took off and never looked back. We expect to see more pressure on the grains markets for now, which is all weather related. In the overnight electronic session the July Corn is currently trading at 326 which is 2 ¼ cents lower. The trading range has been 327 ½ to 321 ¼.
In the ethanol market, a report from CoBanks Knowledge Exchange said the industry will have to diversify itself in the future. The report also said that excess production capacity and reduced demand will force the US ethanol industry to, “transform its business model to create more value and improve its operational efficiency.” CoBank predicts that consolidation within the companies will lead to longer and more financially stable companies with diversified ethanol co-product offerings by 2025.
“While ethanol remains an attractive business with long-term potential, the industry will need to evolve and diversify beyond fuel ethanol,” says Kenneth Zuckerberg, CoBank lead grain and farm supply economist.
He continues:
“That diversity will need to include higher-margin co-products like high protein distillers grains for animal feed, liquid carbon dioxcide for refrigeration, beverage grade alcohol and other industrial products. With the demand destruction we witnessed beginning in March, and now we are seeing people getting out and driving with some going back to work we are seeing a light at the end of the tunnel."
There were no trades posted in the overnight electronic session. The July contract settled at 1.260 and is currently showing 1 bid @ 1.192 and 2 offers @ 1.270 with Open Interest dropping to 46 contracts.
Crude oil is rolling along, as we get as close to "back to normal" as can be. We will see an impact of the summer driving season as well, with people moving and shaking and the improving economy rolling like a juggernaut. In the overnight electronic session the August Crude Oil is currently trading at 4124 which is 51 points higher. The trading range has been 4163 to 3976.
In natural gas, the Trump administration has finalized regulations to allow for the rail shipment of LNG. The move has been opposed by 15 states due to the potential hazards of transport by rail lines. Transportation Secretary Elaine Chao claims safeguards will prevent any dangerous accidents. The key operational safeguards will require tank cars to be outfitted with “an enhanced thicker carbon steel outer tank,” and improved braking. It is also requiring “remote monitoring of the pressure and location of LNG tank cars.” In the overnight electronic session the July Natural Gas is currently trading at 1.647 which is .017 lower. The trading range has been 1.663 to 1.635.