Grains Get Volatile. The Corn & Ethanol Report 04/28/2021

We kickoff the day with MBA Mortgage Applications (23 Apr) and MBA 30 Year Mortgage Rate (23/Apr) at 6:00 A.M., Goods Trade Balance Adv (Mar) and Wholesale Inventories MoM Adv (Mar) at 7:30 A.M., EIA Energy Stocks at 9:30 A.M., Fed Interest Rate Decision at 1:00 P.M., Fed Press Conference at 1:30 P.M. and Dairy Product Sales at 2:00 P.M.

On the Corn Front the volatility is back in the market while retreating after a good run. The dramatic climb was expected to stall sooner or later. A move like this only happens once in about 30 years, although we did see a move 10 years ago close to this emerging muscle market, but for different circumstances. China remains a key player into buying this commodity and Brazil has had dry conditions the last two months as they head into their usual dry season. There is little room for the market not to have a good growing season and the odds are not looking that good at the moment. Demand and growth will be the factor when all is said and done. Some traders point out that the acreage numbers are why we corrected from above $7 and slammed the soybeans. But in truth there will be more feverish buyers other than China, Mexico, and Japan. No carryover and a lower crop will entice more buying and movement. Again, the acreage numbers could be higher as expected but as Brazil is realizing, “it is not what you plant, but what you grow.”  We did see a lot of profit taking in this long liquidation, but it is still early folks, and we could see a new round of fresh buying after tomorrows Export Sales numbers. Then we may see the next plateau in buying as the season rolls on and get a handle of product for exports, domestic use such as ethanol and feed. In the overnight electronic session, the May corn is currently trading at 681 which is 14 ½ cents lower. The trading range has been 700 ¼ to 676 ¼.

On the Ethanol Front the shuffling of feet continues as the battle of the EPA having the authority to grant waivers to small refiners not to blend ethanol. Just a thought that the EPA is a regulatory body, and no one voted them in office. After 16 years of arguing you would think a compromise or resolution would have been reached by now beneficial to both sides.  But now it is off to the Supreme Court. There were no trades posted in the overnight electronic session. The market had a nice upward move in yesterday’s action with the May contract settling at 2.330. There is no market showing and Open Interest declined to 20 contracts.

On the Crude Oil Front the Iranians seem to be scraping for a fight and menacing the world oil flow and just may step up terrorist activity if they have not already done so. Iranian gun boats forced the U.S. Navy to fire warning shots Monday evening. Such actions did not happen in the last administration while the previous administration let them board our ships and hold U.S. sailors at gun point. They are getting very provocative in these current administrations first 100 days. The EIA data this morning should shed some light on where we go from here ahead of the OPEC+ meeting. In the overnight electronic session, the June crude oil is currently trading at 6314 which is 20 points higher. The trading range has been 6330 to 6313.

On the Natural Gas Front, it is the Last Trading Day for the May futures. Lower production continues to support this market as we will soon see a spike in demand for exports and a forecasted hot summer should propel prices. In the overnight electronic session, the June natural gas is currently trading at 2.955 which is .013 higher. The trading range has been 2.958 to 2.930.

Have A Great Trading Day!
Dan Flynn

If you have any questions, feel free to call me at 1-888-264-5665 or 312-264-4374 cell 312-213-7678 email