Grassley Goes After Pruitt. The Corn & Ethanol Report 05/16/18

We kickoff the day with Housing Starts & Permits at 7;30 A.M., Capacity Utilization and Industrial Production at 8:15 A.M., EIA Energy Stocks at 9:30 A.M. and Dairy Product Sales at 2:00 P.M. We also have earnings coming out with Macy’s leading the way. Republican Iowa senator Chuck Grassley said yesterday that Environmental Protection Agency (EIA) chief Scott Pruitt must scale back the use of biofuel waivers for small refineries, or else he will join Democratic lawmakers calling for his resignation. Republican senator John Barrasso from Wyoming whose home state represents several small refineries, was quoted the “EPA ignored this obligation (waivers) under the Obama administration and the courts rebuked the agency for it”. He further went on to say, “EPA is now following the law and must continue to do so.” This is going to be a fight with the Corn lobby and states with small refineries freeing them from the obligation to blend biofuels into the nation’s fuel. The Corn lobby supports expanding sales of E-15 in the Renewable Fuel Standard (RFS) and reducing the waiver program, but opposes counting exports toward volume quotas and I expect large volumes of exports to China. What a dilemma.

On the Corn front the rains and cooler than normal temperatures has once again slowed plantings. I do believe when the weather breaks and the fields dry the farmers will be near complete in plantings depending on where your land is on the map. In the overnight electronic session the July Corn is currently trading at 403 which is ¾ of a cent higher. The trading range has been 403 ¾ to 401.

On the Ethanol front the June contract is currently trading at 1.492 which is .001 higher. The trading range has been 1.492 to 1.482. 3 contracts traded and Open Interest at 629 is taking a back seat to the July 726 contracts. The June is currently showing 1 bid @ 1.487 and 2 offers @ 1.493.

On the Crude Oil front last night’s API showed builds over 4 million barrels with whispers that the build came from a release from the Strategic Petroleum Reserve (SPR) Products showed bullish numbers and supported the complex from any type of break. The International Energy Agency(IEA) is chirping once again about demand destruction. We have heard Chicken Little chirp before. And what was the outcome? I still remain bullish overall. In the overnight electronic session the June Crude Oil is currently trading at 7101 which is 30 tics lower. The trading range has been 7134 to 7085.

On the Natural Gas front here we go again. The June contract is currently at 2.837 which is .001 of a cent higher. The trading range has been 2.844 to 2.813. Maybe tomorrows weekly Gas Storage data could shed light on the glut of Gas and bring reality back to the futures market and get closer to meeting the cash market.

Have a Great Trading Day!
Dan Flynn