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 (08/Jan) and MBA 30-Year Mortgage Rate (08/Jan) at 6;00 A.M., CPI and Real Earnings at 7:30 A.M., Fed Bullard Speech at 8:30 A.M., EIA Energy Stocks at 9:30 A.M., 105-Day and 154-Day Bill Auction at 10:30 A.M., 30-Year Bond Auction and Fed Brainard Speech at 12:00 P.M., Fed Harker Speech, Monthly Budget Statement (DEC), and Fed Beige Book at 1:00 P.M. and finally Fed Clarida Speech at 2:00 P.M.
On the Corn Front the market rallied to highs not seen since 2015-2016. This market along with soybeans are ready to roll with the bull market evident in our first of the year 2021 USDA/WASDE data. Look Out Sports fans this may just be a terrific ride. U.S. ending Stocks (Jan 20/21) down, Brazil Production (Jan 20/21) down, and Argentina Production (Jan 20/21) down. We will continue talking exports, but we will be listening and watching weather here in the U.S. as well as watch La Nina unfold in South America while looking at the best carryover market that countries would be most interested in importing from. In the overnight electronic session, the March corn is currently trading at 536 ¾ which is 19 ½ cents higher. The trading range has been 539 to 522 ¼.
On the Ethanol Front the USDA lowered its prediction for 2020-21 corn use for ethanol. I do not see this as a problem with gathering and getting all these forecast and actuals into play, and weather will play a role as well in this game of agricultural and gasoline and oil products. The crop in South America, with two major Asian purchasers, China, and India not to mention EU countries, we could see a switch of demand to the U.S. market if the weather picture painted is close to correct in 2021. There were no trades posted in the overnight electronic session. The April contract settled at 1.591 and is currently showing 1 bid @ 1.328 and 1 offer @ 1.880 with Open Interest at 45 contracts.
On the Crude Oil Front Oil prices rallied on the API huge crude draw in yesterday’s action. The API had a surprise draw of 5.821 mb and that got the bears moving quicker than the Chicago Bears to score some points. This rally really started with a short-term look and looks pretty bold at the moment, we will see how the EIA Energy Stocks come out. Traders will also be trying to see if people may be ready to get back to work or drive as we try to get back to normal as soon as possible. It would help if we can see a more limited lockdowns but that will be fruitless until we can get a hold of this coronavirus and put it to and end like gig-government. As I mentioned earlier the EIA Stocks will be huge today. A reminder of the API data, crude oil draws of-5.821M, draws on Cushing –232M, while we had builds on distillates at +4.433 M and Gasoline +1.876 M. In the overnight electronic session, the February crude oil is currently trading at 5543 which is 22 points lower. The trading range has been 5393 to 5321.
On the Natural Gas Front 2021 has been a positive start for LNG spot prices with several factors contributing to its upward trajectory. Demand for the commodity has risen particularly in Asia and Europe due to cooler than expected weather conditions. Coupled with the EIA Storage report which shows a marked reduction on LNG stocks since December.
Tomorrows data should give an insight into increased demand on current stocks. The increased demand has added and put pressure on supply as well as logistical capabilities. A shortage of LNG Tankers has resulted in exorbitant transportation costs which naturally translates in the final price of the commodity. The interruption in the supply chain does not stop at the tanker’s shortages but congestion present at the Panama Canal has forced alternative routes to Asia. These routes are longer which increases travel time and does not meet demand needs. In the overnight electronic session, the February natural gas is currently trading at 2.770 which is .017 higher. The trading range has been 2.786 to 2.719.
Have A Great Trading Day!