We start off the first trading day in August with a Full Moon and we will have a Harvest Moon on Halloween. There is plenty of work to be done between now and then so lats get started wit Market Manufacturing PMI Final (Jul) at 8:45 A.M., ISM Manufacturing Index and Construction Spending at 9:00 A.M., Export Inspections at 10:00 A.M., 3-Month and 6-Month Bill Auction at 10:30 A.M., Cotton System, Fats & Oils, Grain Crushings at 2:00 P.M. Crop Progress at 3:00 P.M. and Total Vehicle Sales at 7:00 P.M.

On the Corn Front China is experiencing food price inflation due to the pandemic which has caused corn prices to surge. Corn futures traded in Dalian have risen about 20% since Covid-19 started spreading in February at the same time U.S. corn futures have fallen 12%. That equals a healthy arbitrage market. Traders in China said corn prices have been boosted by a 90% plunge in government stockpiles in recent years. China’s food inflation is hitting double-digits and the country is the second largest corn consumer and leaves Beijing in a pickle. Starting with tensions with Washington and other countries around the globe for their handling of their handling of the pandemic, there is little else they can do other than buying crops from abroad. Some analyst believe at the current rate government reserves will run out as soon as the end of August. It should make for an interesting export market and we will be have Crop Progress later today. The question is…. Will the U.S. corn market sell off further or will the China wildcard support prices and keep aggressive bears on the sidelines. In the overnight electronic session the December corn is currently trading at 326 ¾ which is a ¼ of a cent lower. The trading range has been 328 to 326.

On the Ethanol front there were no trades posted in the overnight electronic session with the September contract settling at 1.110. The market continues to struggle but on a steady course as innovation and free market ingenuity are at work designing other means to adapt and refine what this commodity can be used for, other than gas at the pump. The byproducts can be used in numerous settings such as,  high protein, high-fiber product used for feed, hand sanitizers and booze any many other valuable purposes we the consumer use in everyday life which will create more jobs in rural communities, raise commodity prices as we realize it is a safe bet that demand in the corn market and prices will follow suit.

On the Crude Oil front the market is exhaling after taking a deep breath with Tropical Storm Isaias which is now moving up the East Coast at 60 knots. Now traders are gazing at Disturbance 1 which isolated a few hundred miles north of the norther Leeward Islands. It is expected to stall in the middle or latter part of the week, but is still on traders radar screen, as they ponder demand destruction with more lock downs and how solid OPEC+ can stay unified with production cuts as Iraq continues to cheat on those cuts. In the overnight electronic session the September crude oil is currently trading at 4016 which is 11 points lower. The trading range has been 4043 to 3938.

On the Natural Gas front the market continues to face hurdle after hurdle for exporting LNG. An export terminal to be built in Jordan Cove, Oregon is facing stiff opposition from local lawmakers and investments by companies to move forward on such a project with all the legal headaches that come with it. Senator Jeff Merkley (D-Ore) was quoted, “It’s not going to be built”, he went on to say, “I’ve talked to a number of folks – several people who have been deeply involved in international finance of energy projects- and they don’t believe that the company can lock-down the sales needed to justify the $6 billion investment. The company behind the Jordan Cove project, Canada based Pembina Pipeline Corporation, declined comment until Friday when it provides its investors of second-quarter earnings. The project is also facing competition from Canada and Mexico where they have newly operating terminals on the west coast to seize the Energy-hungry Asian markets. In the overnight electronic session the September natural gas is currently trading at 1.893 which is .095 higher. The trading range has been 1.922 to 1.852.

Have a Great Trading Day!
Dan Flynn