Dan Flynn is the writer of The Corn & Ethanol Report, a daily market letter covering grains, energies, and various global issues that are the driving force and backbone of the commodity markets. Contact Mr. Flynn at (312) 264-4374
Janet Yellen’s swan song or last hurrah as Fed Chief raised Interest Rates ¼ which was anticipated and the verbiage ahead of the new Fed Chair Jerome Powell told a story that the Fed will raise rates only 4 times in 2018. I think that is a stretch, barring any black swan event I will take the over. With tax reform in the works and a long-awaited Christmas present to the hard-working middle-class this should be a further boon to our economy that has been in a quagmire the last 10 years. This morning we kickoff the day with Business Inventories, Export Sales, Initial Jobless Claims and Retail Sales at 7:30 A.M. followed by EIA Gas Storage at 9:30 A.M. Remember today is the last chance to get out or rollover December Grain positions.
On the Corn front light volume and uncertainty of a larger crop, slow exports and the Ethanol issue with Renewable Fuel Standard (RFS) has bottom feeders scratching their head instead of pulling the plug and buy value. In the overnight electronic session the March Corn is currently trading at 349 ½ which is a ½ of a cent higher. The trading range has been 349 ¾ to 348 ½. Keep in mind with the rise in Interest Rates the cause and effect will put a rise in the U.S. dollar making exports a little harder to move with which will add to the carryover. But if we get tax reform it will be an end to the Death Tax that is putting generations of U.S. Farmers out of business.
On the Ethanol front the January contract is currently trading at 1.293 which is .002 of a cent lower. The trading range has been 1.295 to 1.293. The Estimated Volume showed 48 contracts with Open Interest at 1,289 contracts with the market currently showing 3 bids @ 1.291 and 1 offer @ 1.296.
On the Crude Oil front the market is easing off bullish inventory data and my only inkling is to say a higher U.S. dollar and with the shutdown of the Forties North Sea pipeline has Brent Crude skyrocketing and as a hedge traders may be selling West Texas Intermediate (WTI) In the overnight electronic session the January Crude Oil is currently trading at 5620 which is 40 points lower. The trading range has been 5693 to 5614. As we approach Christmas next week it is possible we will see some heavy shorts lift some of their positions creating a short covering rally.
On the Natural Gas front the market continues to thumb its nose at weather reports like last year. The current weather cycle is hard to gather with wildfires in California and freezing temperatures here in the Mid-West. Is it Global Warming or Climate Change? The bottom line we are not moving product and storage is a key ingredient with not much more storage capacity and this glut is destroying producers. This glut will become a boon when the high storage diminishes but at the moment there is no end in sight. The EIA Gas Storage is due out at 9:30 A.M. and the Thomson Reuters weekly poll with 23 analysts participating expect draws from 49 bcf to 95 bcf with the medium of 60 bcf. This compares to the 1-year draw of 132 bcf and the five-year average of 78 bcf.
Have a Great Trading Day!
Questions? Ask Dan Flynn today at 312-264-4374
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