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 Redbook YoY & MoM (31/OCT) at 7:55 A.M., ISM New York Index (OCT) at 8:45 A.M., IBD/TIPP Economic Optimism (NOV), Factory Orders at 9:00 A.M., 119-Day & 42-Day Bill Auction at 10:30 A.M., 52-Week Bill Auction at 12:00 P.M., API Energy Stocks at 3:30 P.M., Total Vehicle Sales and Incoming Election Results at 7:00 P.M.
On the Hurricane Front, hurricane Eta’s eye wall moves onshore along the coast of Nicaragua and residents should have completed preparations a came back and had a strong close in yesterday’s action. Tropical Storm Warning is also in effect for the northeastern coast of Honduras. This hurricane has the potential to boomerang and could come into play again and we should track this storm and watch events unfold in the Caribbean.
On the Corn Front we saw the market come back and have a good close after the pall of the risen COVID-19 cases. I believe the following will drive prices even higher. 70-degree weather is back this week which will help harvesting, the COVID-19 initial shock that shook, but it seems traders expect demand not to fall from the map, China is not done buying U.S. Ag products and we have an election to hopefully keep these trade deals in place. We did see the funds were lightening their net-long positions, a very logical move. The headlines the next couple of days could also bring back a host of speculators buying with both hands wide-open. In the overnight electronic session, the December corn is currently trading at 400 ½ which is 3 cents lower. The trading range has been 402 ¾ to 395 ¼.
On the Ethanol Front the Chinese are starting to buy U.S. ethanol in a move that was open to them for some time. The industry is hopeful they will ramp up more orders and purchases. This could be a boost to the ethanol industry and corn after dealing with the COVID-19 and Russian- Saudi oil price war in 2020. This also comes at a time when corn use for fuel alcohol was down the from the previous two months and fears of another lockdown surge will disrupt demand again. There were no trades posted in the overnight electronic the December ethanol settled at 1.390 and is currently showing 0 bids and 1 offer @ 1.500 and Open Interest at 44 contracts.
On the Crude Oil Front the market has come back from a lot of complexities from European lockdowns to reinstated lockdowns here in the U.S. Libya adding more oil in the market and OPEC and Non-OPEC will be facing serious negotiations this quarter for sure. Irina Slav with oilprice.com gave us a taste of what will happen in the oil patch after the election. A Biden win may drive a rush for companies to implement decarbonization strategies, spurring investment in green/renewable energy. With economic activity globally beginning to see a resurgence and continued low commodity prices, it has allowed companies to run through a process and determine if executing a deal now would lead to greater value down the road. This particularly is true in U.S. shale where operators can be more nimble and adjust product to meet demand. A year from now expect a lot fewer players in the U.S. oil field. This is because of bankruptcies will likely continue, poor trade deals and higher taxes. Not a game winning formula. In the overnight electronic session, the December crude oil is currently trading at 3823 which is 142 points higher. The trading range has been 3830 to 3657.
On the Natural Gas Fronts warmer weather that could move to the 70 degree mark this week probably cooled off the bulls. Beginning early next week we will be back in the November wind chills and we should see another shake and bake in prices. And in the Gulf Coast States weather permitting, repairs could come at another rapid pace after Eta. If you look at this hurricane season the workers were not able to stay long enough to do really solid repairs because another hurricane was bearing down on them. This has just been a crazy year in every commodity sector. In the overnight electronic session the December natural gas is currently trading at 3.172 which is .072 lower. The trading range has been 3.241 to 3.152.
Have A Great Trading Day!