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 start off the day with MBA Mortgage Applications (11/SEP) and MBA 30-Year Mortgage Rate (11/SEP) at 6:00 A.M., Business Inventories, and Retail Sales at 7:30 A.M., Business Inventories MoM (JUL), NAHB Housing Market Index at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., FED Interest Rate Decision and FED Economic Projections at at 1:00 P.M., FED Press Conference at 1:30 P.M., Dairy Product Sales at 2:00 P.M., Overall Net Capital Flows (JUL), Foreign Bond Investment (JUL), and Net Long-Term Tic Flows (JUL) at 3:00 P.M.
On the Hurricane Front the National Hurricane Center last update at 1:30 this morning expects Hurricane Conditions with Hurricane Warnings along the Mississippi and Alabama coastlines into the afternoon. Do not be confused, Hurricane Sally is a dangerous Category 2 and gaining strength before she hits landfall. There will be record storm surge and we will get an education on how bad that will be later in the day. Disturbance 1 has a 20% chance to form a hurricane as it meanders in the southern Gulf of Mexico and could be a 50% threat if it does not make landfall in the next five days. Hurricane Paulette is moving east-northeast at 25 knots and at the moment poses no threat to the North American coastline. However, Hurricane Teddy is moving northwest at 10 knots and the cone presently tracks him to reach Bermuda by Monday if there is no change in course. Tropical Storm Vicky is moving west-northwest at 8 knots and the cone has her dissipating into a Depression and moving southwest. This storm must still be watched. Disturbance 2 has a 50% chance of Cyclone Formation in the next 48 hours and the system is moving generally westward at 10-15 mph and still could pose a threat to the Gulf region next week, which is still a few hundred miles south-southeast of the Cabo Verde Islands. Tropical Disturbance 3 located in the far northeastern Atlantic a few hundred miles northeast of the Azores, may acquire some sub-tropical characteristics as it moves southeastward moving at 10 mph.
On the corn Front we may be seeing harvest pressure or are we. With rising Open Interest in the rally and a slow cash market, while Funds remain net long. Traders will be looking at exports as the Trade Deal with China has that country obliged to purchase more product and Mexico has been a steady purchaser in this market. After a tumultuous August that saw losses in crop and yields this could be a different autumn in the U.S. market. In the overnight electronic session, the December corn is currently trading at 364 ¾ which is 1 ¼ of a cent lower. The trading range has been 365 ¾ to 361 ¾.
On the ethanol Front refreshing headlines have had a positive spin and the hope is the good news will continue as ethanol producers scratch and crawl to get back to last years production levels. I believe this pandemic made producers more resourceful and utilize what other opportunities exist to this market other than our gas tanks. There were no trades posted in the overnight electronic session. The October ethanol settled at 1.306. The market is currently showing 1 bid @ 1.290 and 2 offers @ 1.340 with Open Interest at 42 contracts.
On the Crude Oil Front changing stories from the International Energy Agency (IEA) on supply and demand issues and a surprise API number which showed crude stocks down 9.517 million barrels, that was expected to show a build of 1.271M, Cushing dropped to -0.798M versus a build of 2.608 last week. These numbers show me demand is back and supplies are low after suffering through Hurricane Laura, and now we will monitor the disruptions Hurricane sally will cause. In the overnight electronic session, the October crude oil is currently trading at 3914 which is 86 points higher. The trading range has been 3942 to 3835. After today’s EIA Energy Stocks number, if bullish…. Do we punch through $40 a barrel?
On the Natural Gas Front Hurricane Sally has the market on edge. Waiting to see how bad the disruptions in Louisiana that what it can bare or will this slow-moving storm cause more demand destruction knocking out electricity in several states and counties along her path. One thing is for sure this storm will keep traders on their toes or on their heels today and tomorrow. In the overnight electronic session, the October natural gas is currently trading at 2.375 which is .013 higher. The trading range has been 2.389 to 2.352.
Have A Great Trading Day!