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
We kickoff the day with CPI, Real Earnings and Wholesale Trade at 7:30 A.M. EIA Energy Stocks at 9:30 A.M. and Dairy Product Sales at 2:00 P.M. Floods, snow, avalanche and fire alerts were called on Sunday in Idaho and Colorado. The powerful storms with high winds driving wildfires across dry grasslands and trees which also on Sunday in southeastern Montana’s Norther Cheyenne Indian Reservation. The Plains and the Mid-West are the next target for this monster with predictions as high of two feet of new snow in certain farmland areas. The waterways are not going to be able to handle this new menace and barge traffic will have a tough time navigating through this one if at all. Already saturated farmland will push delays in plantings even further and the big question is when the funds will decide enough is enough to be at a record short position. Yesterday’s USDA report was deemed bearish but the Corn rebounded from a record low and the May contract settled unchanged and the Soybeans followed suit and erased losses. Another bearish sign was that Feed and Ethanol usage was on the decline as a direct result of weather conditions. In the overnight electronic session the May Corn is currently trading at 360 ¾ which is ¾ of a cent higher. The trading range has been 361 ½ to 360.
On the Ethanol front the market was again mostly quiet in the overnight electronic session. The May contract posted a trade at 1.315 which is .007 higher. Three contracts changed hands while Open Interest is at 857 contracts. The market is currently showing 1 bid @ 1.313 and 2 offers @ 1.318.
On the Crude Oil front we had a mixed bag of tricks in the API inventories with Crude showing builds of 4.1 million barrels, Cushing, Oklahoma had draws of 1.3 million barrels, Gasoline had a huge draw of 7.1 million barrels which further explains why prices keep going up at the pump. Distillates had draws of 2.4 million barrels and eventually we will feel the pinch in this market with heavy fuel needed for factories that some are working at half speed or at all and others ramping up to fill the void with the closures of others. Diesel and Jet Fuel will be affected but farmers cannot get in he fields with tractors and heavy-duty machinery in full swing once again due to the inclement weather. We are also seeing geo-political risk driving prices higher as well. In the overnight electronic session the May Crude Oil is currently trading at 6428 which is 30 points higher. The trading range has been 6454 to 6405.
On the Natural Gas front the bears may have had it. However, the complete evidence is not just in yet. Although this market could propel and boomerang into a bull market as I expect the Corn to do so once the funds decide to liquidate their shorts. The rift between the U.S. and E.U. and tariffs being talked has the E.U. talking of infrastructure and building LNG plants which would create a larger export market for the U.S. and the E.U. would rely less on Russian energy so if political difference will not give the Russians the edge to cut off their spigot. If history is known for repeating itself this would be a given. In the overnight electronic session the May Natural Gas is currently trading at 2.714 which is 1 ½ of a cent higher. The trading range has been 2.729 to 2.691.
Have a Great Trading Day!
Questions? Ask Dan Flynn today at 312-264-4374