The Corn & Ethanol Report: Eyeing the Drought Monitor
2023.06.02 16:47
On the front, summer storms with high-volume rains in some areas have the grain complex still riding the short side of the market. Where rain is needed, it is nil, so my advice going into the weekend is do not be stunned by Monday’s crop progress report.
Regardless of the rains in some areas, I anticipate a sharp deterioration in corn ratings. Abnormally dry conditions have also emerged in the eastern corn belt. The Drought Monitor also showed bigger drought conditions in Missouri and Central Illinois. Brazil is expected to have a huge 2nd crop which has also pressured the market.
As I mentioned before, and it may be redundant, “It is not what you plant but what you grow.” And I still stand with farmers’ prediction over a year ago, we may see food shortages, especially if we see mid-June rains dry up in the atmosphere, failing to materialize. Bulls in this market continue to laugh in the face of danger. We should get an education on how stressed the crops are in the early going, with the chop continuing until there is no doubt in reality.
On the front, production rebounded to 1,004 tbd last week, above 983 tbd from the week before, however, it is still below the pace needed to reach the USDA usage forecast of 5.250 billion bushels. There were 101 million bushels of corn used in the production process or 14.37 million bushels per day. In the month-to-year to date, there have been 3.774 billion used, or 14.1 mbd, an annualized pace of 5.140 billion. Yesterday’s monthly data showed there were 416 million bushels of corn used on April 23 for ethanol production bringing year-to-date consumption to 3.40 billion bushels down 4.5% from a year ago.
As we focus on drought forecasts we are waiting for corn used for ethanol in next Friday’s WASDE report. There were no trades or open interest in ethanol futures.
