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Corn And Ethanol: Short-Covering Boosts Corn

By Dan FlynnCommoditiesJun 18, 2020 10:55AM ET
www.investing.com/analysis/corn-and-ethanol-shortcovering-boosts-corn-200528137
Corn And Ethanol: Short-Covering Boosts Corn
By Dan Flynn   |  Jun 18, 2020 10:55AM ET
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Corn traders have been weighing favorable weather forecasts and better export numbers, with rumors that China came in and bought shipments of corn and soybeans. There was also growth in ethanol production, which started some short covering in yesterday's action.

The 72-hour cumulative precipitation map from the NOAA is calling for wetter-than-average weather for the Central Plains and Western Corn Belt. The NOAA 8-14 day outlook has also forecast wet weather from June 24th to June 30th, while dry weather will emerge in the Northern Plains. Even with continued fund selling in Tuesday's trading session, certain traders are hedging their bets by covering shorts and looking to sell more contracts at higher levels before next week's USDA Crop Progress report. July Corn is currently trading at 332 ¾ which is 2 ½ cents higher. The trading range has been 333 ¾ to 329 ¼.

On the ethanol front, we traded a tad higher yesterday, with production slightly higher and weekly ending stocks down 2%. It may look like baby steps, but the market is starting in the right direction. The week ending June 12th marks the seventh consecutive week of growth, following sharp declines that began in late March through April, due to the impact of the COVID-19 pandemic. Erin Voegele, with Ethanol Producer Magazine, contributed the data. There were no trades posted in the overnight electronic session. The July contract settled at 1.247 and the market is currently showing 1 bid @ 1.225 and 1 offer @ 1.260 with Open Interest dropping to 67 contracts.

For the crude oil market, the weekly inventory figures were, “A Tale Of Two Cities.”  After a break to the downside on Tuesday after the API data, the market recovered after a total different picture was painted by the EIA data yesterday. It seems like the market wants to make new highs and eventually punch through $40 a barrel to really get investors' attention. July crude is currently trading at $38.03 up $0.70. The trading range has been $37.11-$38.53.

In natural gas, we have EIA Gas Storage data and the Thomson Reuters (NYSE:TRI) poll with 18 analysts participating estimate builds ranging from 80 bcf to 90 bcff, with a median injection build of 85 bcf. This compares to the one-year build of 103 bcf and the five-year average injection of 73 bcf. Make no mistake, there is a bearish consensus in this market, but most likely we need to see a rally to attract more sellers to jump back into the fray. July natural gas is currently trading at 1.623 which is 1 ½ of a cent higher. The trading range has been 1.654 to 1.620.

Corn And Ethanol: Short-Covering Boosts Corn
 

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Corn And Ethanol: Short-Covering Boosts Corn

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