Corn futures fell to new 11-month lows, but new selling slowed as the GFS and EU models project a lengthy period of dryness in late August. US ethanol production last week was also much higher than expected. End user demand will emerge on any further break; yield checks suggest NASS is too high with its IL yield.
US ethanol production through the week ending August 11th totaled 311 Mil Gal, up a full Mil from the previous week and just 0.5 Mil shy of the all-time record posted in late January. Cumulative ethanol exports in 2017 remain record large. But the highlight in energy markets is still the ongoing decline in US crude inventories, which as of last Friday are down 4.9% from the previous year. Crude will have ample support at $45/barrel, and as such biofuel margins will stay profitable.
Argentine fob basis for Sep delivery has rallied every day this week, and this evening is quoted at $.30/Bu over. This is up some $.40/Bu in just a few weeks. Brazilian corn is now offered at a premium to US origin.
The market is probing for a lasting bottom, which ARC expects to be found at $3.55-3.65 basis Dec. No new sales are advised as the S American market has bottomed, and major exporter supplies will be down some 45 MMTs from last year. The US farmer will need to plant additional corn acres in 2018.
