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 (05/FEB) and MBA 30-Year Mortgage Rate (05/FEB) at 6:00 A.M., CPI, Real Earnings and Wholesale Trade at 7:30 A.M.,EIA Energy Stocks at 9:30 A.M., 105-Day and 154-Day Bill Auction at 10:30 A.M., U.S. Budget Plan FY 2021 at 11:30 A.M., 10-Year Note Auction at 12:00 P.M., U.S. Monthly Budget Statement (JAN) and Fed Chair Powell Speech at 1:00 P.M., and Dairy Product Sales at 2:00 P.M.
On the Corn Front the USDA Supply/Demand report was as I said earlier, a mirage and spooked the bull’s bulletproof mentality with ending stocks coming in at 1.502 billion bushels with estimates pegged at 1.392 but below Januarys 1.552 billion bushels. World ending stocks were lower than forecasted coming in at 286.53 MMT below the estimate of 297.79 but above January’s 283.83 MMT. Brazil’s production came in 109 MMT with estimates at 108.4 MMT matching January’s number while Argentina came in slightly higher than estimates of 47.03 and reported 47.5 also matching January’s number. The report left traders wondering and the expected correction ensued. I have not been able to pick up fund activity as of yet. If they decided to pitch some of their record longs, I believe we will see them back if not today, Thursday with export sales or they could reload on Friday as we head into the long President’s Day weekend holiday. The WASDE report showed a rise in exports of 50 million bushels. In the overnight electronic session, the march corn is currently trading at 550 which is 6 ½ cents lower. The trading range has been 556 ¼ to 547 ¾.
On the Ethanol Front the EIA showed stocks the highest since May 2020. The surprise corn data did not help to boost prices in ethanol as crude and products were higher with a lower U.S. dollar and higher stock market. Dr. Michael Swanson with Wells Fargo says ethanol consumption is still running 10% lower than a year-ago but expects it to bounce back. He said, as we see a re-opening of the economy and were seeing a good rollout of vaccines. That will be a positive for ethanol utilization and were also going to see them spin up production which is good for corn demand. Dr. Swanson continued the Chinese are looking at ethanol prices as it has good value. There were no trades posted in the overnight electronic session. The April contract settled at 1. 749 and is currently showing 1 bid @ 1.550 and zero offers posted with Open Interest at 43 contracts.
On the Crude Oil Front the API numbers seemed friendly and the market looks poised to make a mad dash above $60 a barrel before weeks end following in Brent crudes footsteps. If the EIA has friendly or friendlier numbers, it would be wise to lock-in prices in this post energy independent era. Companies, farmers seeing history repeating itself before their eyes with higher prices yet to come. And after 2020 the new Secretary of Energy will not have the luxury of pleading to OPEC and now in this decade OPEC+ for a break in prices as Bill Richardson did under the Clinton administration. In the overnight electronic session, the March crude oil is currently trading at 5873 which is 37 points higher. The trading range has been 5876 to 5810.
On the Natural Gas front Chesapeake Energy Corp. on Tuesday exited Chapter 11 bankruptcy with business plans that nods to its founder’s emphasis on natural gas. Reports Jennifer Hiller with Yahoo Finance. Once the second-largest natural gas producer that lost its way overspending on deals. The company plans to focus 85% of this year’s spending on gas fields in the U.S. northeast and Louisiana. This is good news for the gas industry. In the overnight electronic session, the March natural gas is currently trading at 2.823 which is .012 lower. The trading range has been 2.836 to 2.741.
Have A Great Trading Day!