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Corn And Ethanol: China Purchases Fall Short Of Trade Deal Target

By Dan FlynnCommoditiesJul 09, 2020 10:33AM ET
www.investing.com/analysis/corn-and-ethanol-china-purchases-fall-short-of-trade-deal-target-200530226
Corn And Ethanol: China Purchases Fall Short Of Trade Deal Target
By Dan Flynn   |  Jul 09, 2020 10:33AM ET
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China bought more corn and other agricultural products, but even with the boost in sales, they are setting the tone to buy about $27 billion in grains, which is far short of the pledge made in January to buy $36.5 billion. The weather remains a factor in the Corn Belt, with scattered precipitation and in some areas receiving up to two inches of rain inside the heat dome, which shows what a difference a few miles makes. We will be tuned in on weather in the coming weeks and also looking ahead to tomorrow's Crop Progress USDA Supply/Demand and WASDE data. And after that release, we will be looking at the USDA Crop Progress ratings and corn silkings on Monday. December Corn is currently trading at 359 ¼ which is 5 cents higher. The trading range has been 359 ¾ to 353 ¼.

According to the EIA, ethanol production averaged 914,000 barrels a day, which is up 14,000 barrels last week, but still below a year ago, as blending is still a factor. Ethanol stocks were up for the first time in eleven weeks, but supplies remain very tight. Tomorrow's USDA report posting corn for ethanol use will be looked at as well. There were no trades posted in the overnight electronic session with the August contract settling at 1.360 and currently showing 1 bid @ 1.360 and 1 offer @ 1.388 with Open Interest at 74 contracts.

On the oil market, the EIA showed a larger build in crude stocks than the API, showing a 5.6 (MB) versus the API’s 2 (MB) builds. China is also falling short in its purchases of US energy products to meet its targets under the phase-one trade deal signed with in January. And it is no secret they have been stacking their stockpiles in recent months with prices at these levels. Many analysts concur that China will fall short of the agreed target. The market is still trying to scratch its way and close above $41 a barrel. August crude oil is currently trading at 4082 which is down 8 points. The trading range has been 4099 to 4061.

The news of Warren Buffett buying the natural gas assets of Dominion Energy (NYSE:D) and the weather has galvanized this market from the abyss. We also have the EIA Gas Storage data this morning and the Thomson Reuters (NYSE:TRI) poll of 16 analysts estimates a range from increases of 51 bcf to 65 bcf, with the median 57 bcf. This compares to the one-year injection of 67 bcf and the five-year average build of 63 bcf.  August natural gas is currently trading at 1.877 which is .053 cents higher and the trading range has been 1.891 to 1.812.

Corn And Ethanol: China Purchases Fall Short Of Trade Deal Target
 

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Corn And Ethanol: China Purchases Fall Short Of Trade Deal Target

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