Weather worries kept the corn market higher during yesterday's trading session, but the market sold off late with new forecasts of precipitation. With more talk of scattered showers with the heat will produce humidity and at night time temperatures in the mid to lower 70’s this is ideal growing conditions for corn for this time of year. And the started the profit-taking which had the market ending up lower on the day. Cash corn bids remained mostly steady in the Corn Belt but were a tad higher at a Decatur, Illinois processing facility. With Monday's Crop Progress, farmers will be concerned with booking new sales. Although, the farmers had optimism after last week's acreage report to see if corn could test $4, They were hoping by the 4th of July. We will just have to monitor how long this heat dome will last and also the drought index. December corn is currently trading at 351 ¼ which is 1 ¼ of a cent lower. The trading range has been 351 ¾ to 347 ½.
On the ethanol front, Robert Suhr, a reporter for a CBS affiliate in Bismark, North Dakota, reports lower emission standards are hurting the ethanol industry. The Safer Affordable Fuel-Efficient Rule eases restrictions through 2026, that initially were put in place by the Obama administration. But groups across the country say the EPA ignored the benefits that cleaner fuel brings to cars, including mid-level ethanol.
Mark Watne is president of the North Dakota Farmers Union and was quoted as saying:
“What it does is, it takes the need for increased octane and more improved emission-type fuel out of the equation. So it’s a really bad thing in that sense, because from a customer perspective, obviously you want the environment better and you want your vehicle to get better mileage, so it was a bad move.”
Suhr went on to say several automakers including Ford (NYSE:F) and Volkswagen (OTC:VWAPY), say they’d prefer not to have the emission standards reduced from the 5% requirement originally set. And the news not only impacts those who grow the corn, but those who process it later down the line, they are also disappointed. There were no trades posted in the overnight electronic session. The August contract settled at 1.345 with the market currently showing 1 bid @ 1.271 and 1 offer @ 1.420 with Open Interest at 74 contracts.
In crude oil, yesteday's API showed builds in crude oil at 2 (mb) while distillates showed draws of .085 (mb) and gasoline shrank 1.8 (mb). Several traders are expecting a much different reading from the EIA data today, with wide guesstimates both up and down. European refinery margins are close to nil and could affect prices too. August crude oil is currently trading at 4073 which is 11 points higher. The trading range has been 4075 to 4030.
On the natural gas front, traders point out that the recent rally was not just due to the hot weather, but Warren Buffet acquiring natural gas assets from Dominion Energy (NYSE:D), in one of the biggest deals in years, for $10 billion. Natural gas is not fairing that well, with the August contract currently trading at 1.821 which is 5 ½ cents lower. The trading range has been 1.886 to 1.808.