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 Consumer Inflation Expectations (JAN) and Export Inspections at 10:00 A.M., 3-Month and 6-Month Bill Auction at 10:30 A.M., I hope your team one last night and if not, there are no other Monday morning reports.
On the Corn Front we ended up a penny lower in Friday’s action. Funds remain heavily long, and the question is whether they may lighten up today and/or tomorrows 11:00 A.M. USDA data. The market failed to attract new buyers last week as it was still digesting the huge sales posted from the week before. Nonetheless the market remains fundamentally bullish with crop news from South America with lower yields with estimates continuing to spiral lower after every new survey and report, and re-plantings that are feeling the rainy side of La Nina are triggering a void in any recovery of the crop. Traders do anticipate China to step back into the arena with more purchases and unless there is a surprise pre-report purchase, expectations of a bullish report may force their hand. And we are starting to see the annual tug and pull of U.S. corn and soybean acreage. In the overnight electronic session, the March corn is currently trading at 550 which is 1 ½ of a cent higher. The trading range has been 551 ¾ to 548 ¾.
On the Ethanol Front John Perkins with Brownfield Ag News of America reported Friday that ethanol exports for 2020 were down 9%. Canada was the biggest buyer, and their sales were down 1.5% with Brazil coming in as the second biggest buyer with their sales down a whopping 40% with uncertainty of import and export tariffs established by both Brazil and the U.S. The Renewable Fuels Association (RFA) said imports were higher year to year (YoY)for India, E.U., Mexico, and Nigeria. Producers and traders are watching for China to step into this market and asking at what commitment and volumes they seek. Traders will also be looking at tomorrows USDA report with corn for ethanol use. There were no trades posted in the overnight electronic session. The April ethanol settled at 1.749 and is currently showing 1 bid @ 1.551 and 2 offers @ 1.749 with Open Interest at 41 contracts.
On the Crude Oil Front Robert Rapier with OILPRICE.com wrote a nice piece on why Big Oil Isn’t worried about Biden’s Executive Orders. The orders deemed hostile to the oil and gas industries is an unrealistic promise. The cancellation of the Keystone XL permit had no mention of fracking and Biden said he is not going to ban fracking. A complete ban on fracking cannot be done by executive order because most fracking takes place on private land. A complete ban would have to be passed by Congress, and that looks like a longshot. Stacy Morris Director of Research for midstream index and data provider Aderian, said the executive orders are not as bad as they seemed: “These executive orders were pretty well-telegraphed. They were even softened from what from what he was campaigning. The language on the Biden website discussed banning permitting on federal land. The executive order is a pause on new leases. They are not looking at a full fracking ban.” She added the states impacted longer-term are New Mexico, Wyoming, North Dakota, and Colorado. She also said that the ban on drilling on federal land could lead to more imports from other countries produced with heavier carbon emissions than if they were produced in the U.S. which defeats the purpose of the climate change people. Way to go Joe! Give up jobs for what? Morris continued that the bark is worse than the bite: “The headline looks scary, but we don’t see any immediate impact from these executive orders.” In the overnight electronic session, the March crude oil is currently trading at 5746 which is 61 points higher. The trading range has been 5768 to 5700.
On the Natural Gas Front Amazon is upgrading its truck fleet to add hundreds of vehicles that run on natural gas as it explores new ways to reduce carbon emissions. The tech company ordered over 700 compressed natural gas trucks that would run from the warehouse to distribution centers. Amazon is pushing to be carbon neutral by 2040. Panic buying by the pandemic increased trucking volumes to about 30% in a June 2020 report by McKinsey & company. Weather throughout 2021 should as well show the pivotal uses and demand satisfaction this commodity does and will do in the future. In the overnight electronic session, the March natural gas is currently trading at 2.924 which is .061 higher. The trading range has been 2.985 to 2.886.
Have A Great Trading Day!