Subject: Sunday Night. ANGER, MISS-leading comments, Weather, USDA
Sunday night calls are mixed to higher with a very strong biased to prices.. Personally think just higher. Any sell offs should find good support as weather this week will be crap deteriorating. Traders need to ask a simple question – is the crop getting bigger or smaller in the next few weeks? Offsetting the friendly weather is a lot of BEARISH DEMAND information is being put out that is a little misleading. USDA REPORTS will be a major uncertainty until 11;00 tomorrow, then we can go back to weather.
DEMAND:
The headline story that has been talked about since Friday evening is the EPA announcement to grant waivers to 31 refiners for 2018. This amount of waiver equates to 480 million bushel or approximately 5 bpa. So the statement you have been reading this weekend is CORRECT in relating what the waiver equate to in a tangible number….BUTT these are NOT additional waivers or reduction to demand. We spoke to JSA Corporate about this at length this weekend. JSA Handles a LOT of the US ethanol business. In our demand numbers, we have assumed at all along there would be waivers. The wavers in 2017 were for 34 refiners and 1.8 bil gal. This announcement for 2018 is 32 refiners and 1.43 bil gal. Fact is this is LESS waivers than last year. Obviously we were hoping for NO waivers…just follow the law. But reality is EPA granted many…but less waivers than last year. Total corn grind for ethanol in 2017 was 5.605 bil bu and in 2018 was expected to be 5.45 bil bu. Thus the number ALREADY assumed demand would be reduced and waiver granted. Total demand for 2017 = 14.793, 2018 = 14.255 and 2019 = 14.255. We see no real reason to reduce demand on this report based on these waivers. However, due to international trade policy and threatened export markets for DDG’s and ethanol, we could see estimated grind decline 50 mil bu on this report and long term to as little as 5.300. But that is a different argument, will likely be heavily influenced by the dollar in the next 5 months and not likely to happen right now.
USDA REPORT
This part of tomorrow will have many balls in the air , pieces to the puzzle, and plain chaos until all the numbers have been out long enough for traders to decipher. In the most recent interview granted by USDA, it appears all Department will be working together so that the numbers are incorporated into the WASDE report . We will see. Key numbers – it’s all gonna come down to harvested acres and yield. If corn production is below 13.3, then the report is not bearish and will find buyers on any break because based on weather, we could expect smaller numbers down the road. IF soybean production is below 3.8 then we are taking a minimum of 300 million bushels off carryover . That is not bearish. Based on weather and current size of beans as well as the fact that we’re running out of time, traders will be there to by the market.
AND just remember in another week pro farmer will be walking fields. They will be out there counting kernels in some fields where ears have not even been set east of the Mississippi River.
WEATHER
Estimates TOTAL Rain Today thru Friday:
The GFS is the wettest model and has less than .5 where it is needed
Rain chances improve from Aug 20 – 27 but still lighter than desired in Central IL,IN,OH
NOAA 6-10 day
8-14 day
