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 Unemployment and U.S. Trade Balance at 7:30 A.M., Fed Evans Speech at 8:00 A.M., Fed Bowman Speech, Factory Orders MoM (OCT), and Factory Orders ex Transportation (OCT) at 9:00 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M.
I also have a solution to those I power having an extremely hard time obeying their own COVID “rules,” which has locked-out or locked-up business owners and damaging the economy not to mention the dream of the small business entrepreneur. The option of the exercise if this were implemented, politicians that do not adhere to what they have told the voters to do when closing down their livelihood, is get sacked with the RICO Act and this would definitely have their attention as laws they impose, which some helping out other business’ that are frequent giving campaign finding. This would be a game-changer that the laws they impose will have to be honored by them in their so-called ethics which should felt by state and local government to the Beltway. We would see less squeezing of small honest business and the rise of criminal operations.
On the Corn Front the market traded higher as rains in Brazil’s forecast took a back seat to China buying more corn, sorghum and wheat. The Chinese also wrote a new law on management of grain reserves in regions and provinces seeking to bolster food security. Stating that reserves would only be used in cases of obvious food shortages, significant price moves and natural disasters or other emergencies. This does remind me back in the summer months when China was auctioning of all of their reserves and grain stocks at a whole. The Trade Deal definitely came into play as designed with an even playing field, not that the Peoples Republic of China are used to that way. Throw in a bumper crop and we have the best grain market since 1986. Expect to see a lot more Export Sales. In the overnight electronic session the march Corn is currently trading at 424 ¼ which is 2 ¼ cents lower. The trading range has been 426 ¾ to 423 ¾.
On the Ethanol Front the second half of November was the most successful weeks for fuel ethanol production since the pandemic hit, but demand was going in the wrong direction and left a large boost in inventory. Also, travel on Thanksgiving week, usually the biggest travel week for the year was lackluster at best. Now this industry, as well as every business hope Trump has another Ace up his sleeve and the vaccines get distributed and work in a timely fashion so we can escape this nightmare. There were no trades posted in the overnight electronic session. The January natural gas settled at 1.320 and the market is currently showing 3 bids @ 1.280 and 2 offers @ 1.370 with Open Interest at 32 contracts.
On the Crude Oil front the delayed OPEC+ meeting was worth the wait as they met and reached a compromise to increase production to 500,000 barrels per day in January. Starting next month, the OPEC+ arrangement consisting of 23 countries including Russia and allies will increase production. The result in reduced production of &.2 million barrels per day (mb/d), from the current levels of 7.7 (mb/d) This is expected to help India the world’s third largest oil importer. It looks that Saudi Arabia, United Arab Emirates, and India found a compromise that nobody was betting on early in the week. And everyone is tired of the roller-coaster rides and the market going negative this year. The market is trading higher in the overnight electronic session with January crude oil currently trading at 4590 which is 26 points higher. The trading range has been 4668 to 4561.
On the Natural Gas Front panic pre-report selling set the tone as bears are trying to tighten their grip as weather models shift to warmer weather. The EIA data really did not help matters much and the outlook until December 10th shows lows in the !0’s and 30’s in the Rockies and Plains this morning and lows in Northern Texas in the 20’s. Predictions have temperatures moderating in the next few days and into next week. In the overnight electronic session, the January natural gas is currently trading at 2.510 which is .003 higher. The trading range has been 2.524 to 2.462.
Have A Great Trading Day!