Crude Oil Prices Hold $50 A Barrel And Flirting With $51 A Barrel. The Corn & Ethanol Report 01/08/2021

We start off the day with Non-Farm Payrolls (DEC), Unemployment Rate (DEC), Non-Farm Payrolls Private (DEC), Average Hourly Earnings YoY & MoM (DEC), Average Weekly Hours (DEC), Government Payrolls (DEC), Participation Rate (DEC), Manufacturing Payrolls (DEC), and Wholesale Trade at 7:30 A.M., Wholesale Inventories MoM at 9:00 A.M., Fed Clarida Speech at 10:00 A.M., Baker Hughes Oil and Total Rig Count at 12:00 P.M. and Consumer Credit Change (NOV) at 2:00 P.M.

On the Corn Front the market rebounded from early lows that saw some profit taking and the futures ended up to a fraction lower when all was said and done, while global food prices climb with dairy products and vegetable oils leading the charge. Funds remain long while the USDA announcement of 102.6 mt of corn was purchased to destinations unknown ahead of the Export Sales number did not result in any real new buying to reach the next plateau. With the new administration talking about agriculture carbons and South American weather news, which is all on traders’ radar, they were not backing off but kept their buyer hands in their pockets. In the overnight electronic session, the March corn is currently trading at 497 which is 3 cents higher. The trading range has been 499 ½ to 492 ½.

On the Ethanol Front the USDA is reopening the Higher Blends Infrastructure and Incentive Program (HBIIP) that has money left over to match fuel marketers who want to add higher blends of ethanol and distributors want to put biodiesel distribution ethanol. The deadline was mid-August of last year to apply. However, the USDA has $22 million left to spend that was awarded in which applicants decided not to accept for one reason or another. As a result, the USDA will reopen a 2^nd chance 30-day application window that ends January 19^th. 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 and 0 offers posted with Open Interest at 45 contracts.

On the Crude Oil Front in the later overnight the crude punched through $51 a barrel. Longer term forecast in the market have dismal prospects for the sector with doubts of demand which some have hypothesized that oil demand peaked in 2019. I do not believe these theories, but one could say they come with good measure with the pandemic and lockdowns continuing to change drivers’ habits. This will show that the industry will adjust, and shift marketing of oil and energy companies will get their bearings on the new habits of their customers. In the overnight electronic session, the February crude oil is currently trading at 5158 which is 75 points higher. The trading range has been 5166 to 5081.

On the Natural Gas Front were trading lower with milder temperatures in parts of the U.S. for this time of the year. The future of natural gas is far from certain with drillers cutting back on growth capital to reduce debt. The giant Supermajors are even struggling with their gas acreage to producing more value. The market needs more stabilizing higher prices to increase revenue and put in place more technological infrastructure for decades in the future. In the overnight electronic session, the February natural gas is currently trading at 2.642 which is .087 higher. The trading range has been 2.706 to 2.626.

Have A Great Trading Day!
Dan Flynn

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