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 started this morning with MBA Mortgage Applications –9.2% vs. the previous +1.5%, MBA 30-Year Mortgage matching the previous number at 3.97%. At 7:15 A.M. we have ADP Employment Change, Market Composite& Services at 8:45 A.M., ISM Non-Manufacturing PMI, Non-Manufacturing Business Activity, Non-Manufacturing Employment, Non-Manufacturing Prices and Fed Quarles Testimony at 9:00 A.M., EIA Energy Stocks at 9:30 A.M. and Dairy Product Sales at 2:00 P.M. What a difference a day makes. After President Trump let it be known he is in no hurry to sign away on a U.S.-China trade agreement. He also added tariffs on France, Argentina and Brazil for other nefarious trade disputes. The Chinese may have finally got the message, and hope to get Phase 1 of the deal sign before the December 15th tariffs added come into place with a slew of new levies set to take place. No word of a delay rollback or suspension in those new tariffs as a sign of good faith as the negotiations and counter-negotiations of he said, she said continue.
On the Corn front the market seems to be holding its own in the downward trend in futures with a slow-moving Cash market which may signal a reprieve to the futures market. We also have the Crop Production USDA Supply/Demand and WASDE number on Tuesday. With the Brazilian Real weak relative to the U.S. dollar Brazil is aggressively exporting Corn. They are also aggressively exporting beef and pork to China filling the U.S. void. China is running out of other sources to import and with Brazil move to export so much they are now running into tight supplies and if the tariffs are put in place on the 15th, China is going to have a problem importing their basic hand to mouth commodities. In the overnight electronic session the December Corn is currently trading at 372 ¾ which is ¾ of a cent higher. The trading range has been 372 ¾ to 370 ½.
On the Ethanol front today is the Last Trading Day for the December contract. Brazil continued to boost biofuels production in October amid an ongoing push by the government to reduced refined-product imports. Brazilian Sugar mills produced 4.68 billion liters of Ethanol production in October, an increase of 42.2% from a year ago. It seems the globe is moving to biofuels to mixed with Gasoline as Brazil’s Ethanol production is strong despite a slowing cane harvest. There were no trades posted in the overnight electronic session. The January contract settled at 1.385 with the market currently showing 1 bid @ 1.375 and 1 offer @ 1.417 and climbing Open Interest at 508 contracts.
On the Crude Oil front the API Energy Stocks showed draws in Crude Oil at 3.7 mln barrels, Cushing down 250 thousand barrels, builds in Gasoline at 2.93 mln barrels and Distillates showed a 794 thousand barrel build. Today’s EIA Energy Stocks may have Friday’s bears crying in their coffee as we have nothing but bullish fundamental news on the horizon. In the overnight electronic session the January Crude Oil is currently trading at 5748 which is 138 points higher. The trading range has been 5752 to 5628 so far and is making new highs as I write.
On the Natural Gas front , do we have another, “Change in the Weather”, forecast? The market is pulling back from yesterday’s gains. In the overnight electronic session the January contract is currently trading at 2.396 which is 4 ½ cents lower. The trading range has been 2.463 to 2.376.
Have a Great Trading Day!
Questions? Ask Dan Flynn today at 312-264-4374