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 MoM & YoY (02/Jan) at 7:55 A.M., ISM New York Index (Dec) at 8:45 A.N., ISM Manufacturing New Orders (Dec). ISM Manufacturing Prices (Dec), ISM Manufacturing Employment (Dec) and ISM Manufacturing PMI (Dec) at 9:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Fed William Speech and Fed Evans Speech at 2:45 P.M., API Energy Stocks at 3:30 P.M. and Total Vehicle Sales at 6:00 P.M.
On the Corn Front the market was off to a solid start Sunday night with talk on the street of lower South American crops due to La Nina which would increase U.S. demand and lower U.S. carryout. The Export Inspections did not come out as bullish as expected and were lower than last week but still higher than last year. That started a selloff, and a combination of less bullish news gave the market a reason to correct after a nice bullish run. The market did recover from the lows with Chinese demand remaining strong and traders felt optimistic of future purchases. With bull spreads firming in corn and soybeans overall, traders set their sights on higher price targets. With the weather in South America not helping the crop, investors are thinking the potential yield potential will continue to drop. The Dalian corn futures made new highs with talk of a lower 2020 China crop while most of the rain in Brazil was in areas that were not so much growing areas and was less than expected and Argentina remains dry. That did set up the recovery on the close. In the overnight electronic session, the March corn is currently trading at 486 which is 2 ¼ cents higher. The trading range has been 486 ½ to 482.
On the Ethanol Front Pacific Ethanol Inc. (PEIX) the golden child of the ethanol rebound in the rough 2020 year started the New Year on a good note as shares jumped 4.97% in yesterday’s action to close at $5.70. Based out of Sacramento, California the producer and marketer operates facilities in the western and Midwestern states. The company’s revenue comes from their production and sale of ethanol. Its production includes sale of ethanol and co-products, such as corn oil, distillers’ grains, and corn gluten meal, which is a smaller portion of the companywide revenue while their customers are mainly integrated oil companies and marketers that blend ethanol into their gasoline. There were no trades posted in the overnight electronic session. The April contract settled at 1.566 and is currently showing 1 bid @ 1.310 with no offers posted and Open Interest at 45 contracts.
On the Crude Oil Front OPEC+ meets again today with no solid agreement on production. As history has proven they know all participating countries will have to be onboard to eliminate cheating and boosting production under the table. Bloomberg reported at 4:20 A.M. that the talks were suspended without a decision and the market rallied above $48 a barrel. Although the talks are happening on shaky short-term demand backdrop. England was ordered into a third lockdown until mid-February, Germany is set to expand its curbs and Japan is considering another state of emergency for the Tokyo area. Several Asian refiners won’t be getting into long-term contracts for fuel this year, a sign the regions energy consumption is far from certain. Iran has seized a South Korean-flagged oil tanker in the Strait of Hormuz, the latest in a series of shipping incidents in the Persian Gulf, just before announcing it would increase its nuclear activities. Anxiety in the region is rising as President Donald Trump’s administration enters its final weeks. In the overnight electronic session, the February crude oil is currently trading at 4852 which is 90 points higher. The trading range has been 4856 to 4724.
On the Natural Gas Front the market jumped higher on weather modules shifting “materially colder” for parts of the U.S. through mid-January. The northern hemisphere will also face a cold snap which will drive prices higher on heat demand. In the overnight electronic session, the February natural gas is currently trading at 2.685 which is .104 higher. The trading range has been 2.705 to 2.591.
Have A Great Trading Day!