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 Export Sales, Initial Jobless Claims (06/FEB), Jobless Claims 4-Week Average (06/FEB), and Continuing Jobless Claims (30/JAN) at 7:30 A.M., EIA Gas Storage at 9:30 A.M., Fed Monetary Policy Report at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 30-Year Bond Auction at 12:00 P.M., and U.S. Budget Plan FY 2022 at 1:00 P.M.
On the Corn Front Wow! The soybeans were even slammed hard in yesterday’s trading session. The correction seems well overdone; however, headlines continue to spook traders with South American weather getting better. But the old adage is, “it is not what you plant, but what you grow.” Argentina and Brazil would need a huge reversal of fortunes in weather in their La Nina year to spike expected yields, which is a longshot but not impossible. China buying is not going to simply dry up and they will participate in the U.S. market while the bulls are worried about market shares going down with the news out of South America. The funds remained long 345,000 contracts of corn selling 30,000 contracts in Tuesday’s action with whispers of more to come. I hope to get a more accurate and recent number soon and hope the export sales rock today. In the overnight electronic session, the March corn is currently trading at 531 which is 3 ½ cents lower. The trading range has been 532 ¾ to 524 ¾.
On the Ethanol Front as production improves, we are still behind last year and have many hurdles ahead this year. Hopefully, the countries who regularly purchase U.S. ethanol continue and China will jump at the chance to buy the value this commodity pricewise has to offer. The market is watching energy prices as China could add an influx of demand and we do not want corn and crude prices to get out of hand for profit margins to producers. There were no trades posted in the overnight electronic session. The April contract settled at 1.729 and is currently showing 1 bid @ 1.550 and 0 offers posted with Open Interest at 43 contracts.
On the Crude Oil Front David Hodan with the Wall Street Journal reports the International Energy Agency (IEA) said in its monthly report that a recovery in demand would outstrip production the second half of the year prompting, “a rapid stock draw,” while other news services report analyst predict we will see over $100 a barrel in 2022. And this comes at a time we gave away our energy independence and will import heavier carbon emission crude oil from countries like Russia who we just gave are market share to and cut production of U.S. lower carbon emission crude oil right here at home. Well, so much for saving jobs and the planet. In the overnight electronic session, the March crude oil is currently trading at 5828 which is 40 points lower. The trading range has been 5847 to 5811.
On the Natural Gas Front this cold weather will be around for a while and is expected to be bone-chilling cold this weekend and forecasters are calling for colder than normal temperatures will stay well into March. Well, that clears the decks of hoping for an early spring. This will buoy natural gas prices for sure. We have the EIA Natural Gas Storage at 9:30 A.M. and the Thomson Reuters poll with 20 analysts polled have estimates withdrawals ranging from 188-bcf to 150-bcf with the median decrease of 181-bcf. This compares to the one-year withdrawal of 141-bcf and the five-year average decline of 142-bcf. In the overnight electronic session, the March natural gas is currently trading at 2.973 which is .062 higher. The trading range has been 3.001 to 2.959.
Have A Great Trading Day!