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 30-Year Mortgage Rate (09/OCT), and MBA Mortgage Applications (09/OCT) at 6:00 A.M., PPI MoM (SEP), Core OOI MoM (SEP), Core PPI YoY) (SEP), and PPI YoY (SEP) at 7:30 A.M., Fed Klarida Speech at 8:00 A.M., Fed Quarles Speech at 2:00 P.M., API Energy Stocks at 3:30 P.M., Fed Kaplan Speech at 5:00 P.M., and the IMF/World Bank Virtual Annual Meeting.
On the Hurricane Front an update on Disturbance 1 which is now a 20% chance to form cyclone formation in 48 hours, with a broad area of low pressure associated with a tropical wave, now located 350 miles east of the Windward Islands. Although this Disturbance continues to produce large areas of disorganized showers and thunderstorms, mainly to the east of the center, strong upper-level winds are expected to inhibit development the next few days. The system is moving west northwestward through the end of the week and produce locally heavy rainfall and strong gusty winds across the Lesser Antilles today, the Virgin Islands and Puerto Rico tomorrow and Hispaniola on Friday. We will keep you posted on this storm.
On the Corn Front the market traded higher against Monday’s drop, with funds net-sellers of 27,500 contracts. There is optimism as yesterday morning was announced of large corn sales to Mexico and an overall healthy export inspection data. While China corn futures hit a new record high because of crop damage from typhoons and selling their once huge state reserves. The most actively traded corn futures on the Dalian Commodity Exchange for delivery in January hit 2.566 yuan or $380.70 per ton, the highest on record. China’s corn output is expected to fall this year after typhoons flattened crops in some parts of the countries northeastern Corn Belt.
Corn acreage also fell as farmers switched to soybeans, while output from Liaoning and Jilin provinces is expected to drop due to drought according to Meng Jinhuis, senior analyst with Shengda Futures. He also said,” The stockpiles have been sold out, the market strongly expects supply shortages., and the market has gone bullish (on futures).” I expect more China purchases in the U.S. market with South America tight on supplies. In the overnight electronic session, the December corn is currently trading at 390 which is 1 ¼ of a cent lower. The trading range has been 392 to 389 ½ .
On the ethanol Front the U.S. market sees big gains as Canada will soon be unveiling a proposal to drastically reduce greenhouse emissions and overhaul how it regulates biofuel production. The U.S. sells hundreds of millions of gallons to Canada every year, and that will increase because of Canada’s further efforts to cut emissions. There were no trades posted in the overnight electronic session. The November ethanol settled at 1.415 and is currently and is currently showing 1 bid @ 1.396 and o offers with Open Interest at 70 contracts.
On the Crude Oil Front, the market was weak in the overnight and has done an about face. U.S. Shale Production is expected to drop further next month. Concerns the crude oil is rangebound between #37 and $4349. Also, Goldman Sachs announced a Biden win would be bullish to the oil industry? I don’t know what their smoking…. In the overnight electronic session, the November crude oil is currently trading at 4050 which is 30 points higher. The trading range has been 4057 to 3982. Remember API Energy Stocks at 3:30 P.M.
On the Natural Gas Front prices hit a bump in the road as weakening has started with models showing some lost near-term demand. All in all, I believe this is another reason for profit taking mode as the Gulf of Mexico production continues to return. In the overnight electronic session, the November natural gas is currently trading at 2.640 which is 0.220 lower. The trading range has been 2.771 to 2.627.
Have A Great Trading Day!