We start off the day with MBA Mortgage Applications and MBA 30-Year Mortgage Rate at 6:00 A.M., ADP Employment Change at 7:15 A.M., Markit Composite PMI Final and Markit Services PMI Final (May) at 8:45 A.M., Factory Orders and ISM Non-Manufacturing Index at 9:00 A.M., EIA Energy Stocks at 9:30 A.M. and Dairy Product Sales at 2:00 P.M.
On the corn front, we will be watching the path of Tropical Storm Cristobal which is forecast to move northward along the coast of Mexico and could impact this weekend the U.S. Gulf Coast from Texas to the Florida Panhandle with the risk of storm surge, rainfall and wind impacts. We will no doubt be following the storm's track as it makes landfall.
There has been plenty of rain in the Corn Belt and if the hot weather persists this week hopefully, it will soak up a lot of existing moisture if the track hits us head on and brings milder temperatures. Corn and soybeans planting progress is way ahead of last year's pace and, with the crops in great shape in the early going, you may see investors jump back into the long soybean-short corn spreads. But questions over exports might be critical in determining if this play works again. In the overnight electronic session, July corn is currently trading at 322 cents per bushel, or 2 ¼ cents lower. The trading range has been 322-324 ½ , and we are looking at a continued tight trading range.
In the ethanol market, growers are confident the industry is beginning a slow recovery. Nebraska Ethanol Board Chairman Jan ten Bessel, also a farmer in Cambridge, Nebraska, says he is confident the ethanol industry will recover from the demand destruction caused by the coronavirus pandemic. “What were seeing today is a little bit of what agriculture would be without ethanol,” ten Bessel says. “But I believe this will come back, maybe slowly at first, but will come back.” He says Nebraska ethanol plants that were shut down are starting back up. “As people start driving again and people getting out, those supply lines are moving again.” The June ethanol expires today and there were no trades in the complex overnight. The July contract settled at 1.148 and is currently showing 1 bid at 1.123 and 1 offer at 1.165 with open interest at 114 contracts.
Crude oil saw a surprise draw in inventories that boosted even further yesterday. OPEC and OPEC+ meet later this week and are considering extending their production cuts of 9.7 million barrels per day (bpd), or about 10% of global production, into July, August or September 1st, with a meeting before to decide the next steps. July WTI crude is currently trading $36.83 a barrel, roughly flat on the day. The trading range has been $38.18 -35.88. Don’t forget the EIA energy inventory data at 9:30 A.M.
In natural gas, the talk is the next major market for U.S. LNG is Turkey, which is cutting ties with Russia. We are already on the cusp of becoming the world's largest LNG exporter ahead of Qatar and Australia. Bloomberg reports that natural gas could be the next commodity to turn negative, given a glut in Europe that has caused hefty price-cutting. All of these factors weigh on prices and create a negative outlook for producers. Unlike the oil market, there has been no coordinated response to address the surplus and the fallout could be deeper and longer. However, the market has the wind in its sails this morning, most likely based on Tropical Storm Cristobal. In the overnight electronic session the July Natural Gas is currently trading around $1.825, around 3% higher. The trading range has been $1.771-1.822.