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 (25/DEC) and MBA 30-Year Mortgage Rate (25/DEC) at 6:00 A.M., Goods Trade Balance Adv (NOV)< Wholesale Inventories MoM Adv (NOV) at 7:30 A.M., Chicago PMI (DEC) at 7:45 A.M., Pending Home Sales MoM & YoY (NOV) at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 105-Day & 154-Day Bill Auction at 10:30 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., and Dairy product Sales at 2:00 P.M.
On the Corn Front, what can you not say? Lower U.S. dollar and exports continuing to rise, and the carryover continues to diminish forcing and hoping for a good growing season. And the weather in Argentina and Brazil has raised eyebrows not to mention U.S. exports not seen in some time. The March corn punched through 460 and Steve Freed, V.P. ADMIS Grain Research points out the next major resistance is 519, which is close to the 2014 highs. This market seems poised for another good run in 2021, even with surrounding questions with the trade deal with China and other countries. As Vince Lombardi wrote, Winning is a habit, but unfortunately so is losing. After the soybeans flirted with the teens in yesterday’s trading session the market is giving back roughly a dime in the early overnight session. The market made progress coming back from the lows an attempting to proceed higher at this writing. In the overnight electronic session, the March corn is currently trading at 64 ¼ which is 1 ¾ of a cent lower. The trading range has been 466 to 462.
On the Ethanol Front India has redrafted vehicle rules to achieve higher blending ratios. The changes require manufacturers to determine and visibly display compatibility to E20, E85 and E100 gasoline blends in new vehicles. Surplus in corn and rice in April and September were added to the feedstocks for ethanol blending, in addition to sugarcane-based feedstocks of B heavy molasses, C heavy molasses and sugarcane juice, as well kept included damaged food grains. Domestic food security concerns will temper volumes of staple foodstuffs used in ethanol production, limiting potential for expanding production beyond sugarcane-producing states. There were no trades posted in the overnight electronic session. The January ethanol settled at 1.420 and is currently showing no bids or offers with Open Interest at 30 contracts. February and March ethanol does not stack up to the interest of the April contract which is very close to the start of the summertime driving season. April settled at 1.510 and is showing 1 bid @ 1.510 and 1 offer @ 1.551 with Open Interest at 42 contracts.
On the Crude Oil Front prices continue to rise and the API had a larger inventory draw to the tune of 1.650 M barrels to what the street was anticipating. The market is gaining Rock Star status after the undoing to the market back in April and May. There are still long-term doubts of the sustainability crude prices will have in 2021 and beyond for revenue for companies and the economy. If we have another bullish number on the EIA Energy Stocks, we could see $50 oil heading into the New Year. In the overnight electronic the February crude oil is currently trading at 4842 which is 42 points higher. The trading range has been 4849 to 4803.
On the Natural Gas Front the FBI has joined in the investigation of vandals damaging natural gas pipelines and leaving thousands of Aspens, Colorado residents without heat. Black Hill Energy is “hopeful,” to begin relights for residential customers by Monday evening. These clowns do not miss a beat, they must of ran out of statues to knock down and once again show their immature shortsighted agenda to cause destruction to get their point across, even with a pandemic going on. However, I wish they could come close to complete science, (is that what they are taking in school?) and at least have some preponderance of the truth. Hopefully, the FBI will haul them all in and charged them with domestic terrorism, they sure don’t care about the people without heat. In the overnight electronic session, the February natural gas is currently trading at 2.469 which is .025 higher. The trading range has been 2.473 to 2.394.
Have A Great Trading Day!