Corn crop ratings by the USDA are at historically high levels and this could lead to average to above-average yields, although the assessments can change from now until harvest. But current two-week weather forecast calls for hot temperatures and rain, which is ideal at this time to move the crop to maturity. Funds activity is picking up and they are back to going short, and before you know it, barring a headline, they will be holding record shorts again.
And I want to remind traders that the weather is in the driver's seat at the moment, while other fundamental factors are in “wait and see mode.” I do anticipate good trading in the Grain Complex at this time. However, the strength of the dollar is hurting US exports versus Argentina, Brazil and Ukraine. This is what the market will absorb before the Aug. 12 Crop Production USDA Supply/Demand data. December corn is currently trading at 332 which is 1 and ¼ of a cent higher. The trading range has been 333 to 330 ¼.
In ethanol, the short and long-term pictures of the industry paint a different picture. We have seen a slow increase of production after reaching record lows in April, which saw people losing 30 to 40 cents a gallon on every gallon produced. And that’s when we saw plants cutting production, and/or closing if not idling. As we move forward, losses are expected to carry into 2021. In this market producers are focused on demand. There were no trades posted in the overnight electronic session. The August contract settled at 1.107 and is currently showing 2 bids @ 1.010 and 1 offer @ 1.107 with dropping Open Interest at 50 contracts.
On the crude oil market, API showed builds in crude oil at 7,5440M barrels. This took the wind out of the sails of a market that was destined to punch through $41 a barrel, hold and close. But after breaking out of a narrow trading range to the upside, another headline stalled the break out. This mornings EIA Energy Stocks data could confirm if the API number was exaggerated, or right on the money, with flows in the Houston Shipping Channel disrupted by Tropical Storm Fay. And traders are watching state lawmakers ruling on whether or not they might choose to reinstate lockdowns, which would not help demand. September crude oil is currently trading at 4132 which is 60 points lower. The trading range has been 4193 to 4115.
On the natural gas front, the market's premium may have been priced in, with weather predictions heading into shoulder-season. Traders will need a new headline, or several headlines, to jumpstart the bulls and put fear into the bears' hearts. Tomorrow, we have the EIA Gas Storage data. August natural gas is currently trading at 1.634 which is 0.041 lower. The trading range has been 1.680 to 1.632.