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 Advanced Durable Goods, Export Sales, GDP (Q4’20) and Jobless Claims at 7:30 A.M., Pending Home Sales MoM & YoY (JAN), at 9:00 A.M., EIA Gas Storage at 9:30 A.M., Kansas Fed Manufacturing Index (FEB) at 10:00 A.M., Fed Quarles Speech at 10:10 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Fed Bostic Speech at 11:00 A.M., 7-Year Note Auction at 12:00 P.M., and Fed Williams Speech at 2:00 P.M.
On the Corn Front we have export sales early and hopefully have a good response in the marketplace. The USDA just seems to continue playing devil’s advocate in which they keep low-balling the cash price of 2021 and what guesses do they have that South America exports will pick up this year or anytime soon. The big news maybe losing exports to Mexico a steady importer. Announced by executive order on the final day of 2020 that their aiming to replace 16 million tons of yellow corn imports-most of which comes from the United States and almost all is genetically modified (GM) with local corn. The plan is to reach this goal by 2024 and boost Mexican domestic production. But is this lofty goal attainable? Ending corn imports from the United States, whose farmers have come to depend on shipments to Mexico for their livelihood, this could be a big blow in the coming years. In the overnight electronic session, the March corn is currently trading at 557 ½ which is 1 ¾ of a cent lower. The trading range has been 560 ½ to 555.
On the Ethanol Front the EIA had production at 658,000 a drop of 253,000 bpd on the week and lowest since May 2020. Supplies were down 1.512 million barrels on the week and 1.933 on the year. The next USDA corn for ethanol use will be on the March 9th report. There were no trades posted in the overnight electronic session. The April contract settled at 1.729 and is showing no market in the early going as Open Interest stands at 43 contracts.
On the Crude Oil Front Exxon Mobil Corp. erased almost every drop of oil-sands crude from its books in a sweeping revision of worldwide reserves to depths never seen in the company’s modern history. Exxon counted the equivalent of 15.2 billion barrels as reserves as of December 31st down from 22.44 million a year earlier. The company’s reserves of the dense, heavy crude extracted from Western Canada’s sandy bogs dropped 98%. In practical terms, the revision clipped Exxon’s future growth prospects until oil prices rise, costs slide, or technological advances to drill in those fields. Exxon has enough reserves to sustain current production levels for 11 years down from 15.5 years a year ago. Next Wednesday and Thursday OPEC+ meeting may see easing on production cuts. In the overnight electronic session, the April crude oil is currently trading at 6341 which is 19 points higher. The trading range has been 6379 to 6306.
On the natural Gas Front expect big draws with extremely cold weather boosting heating demand as wells and pipelines froze. Natural Gas producers are swamped all over trying to fix this problem. Utilities withdrew 237bcfof gas storage the prior week ended Feb 12th. Thomson Reuters polled 18 analysts, whose estimates ranged withdrawals from 352bcf to 287bcf. These huge withdrawals compare to 119bcf decline on the one-year and the five-year average decline of 81bcf. In the overnight electronic session, the April natural gas is currently trading at 2.836 which is .041 higher. The trading range has been 2.855 to 2.791.
Have A Great Trading Day!