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 kickoff the day with Challenger Job Cuts at 6:30 A.M., Export Sales, Initial Jobless Claims, Nonfarm Productivity QoQ Prel, Unit Labour Cost QoQ Prel, Continuing Jobless Claims, and Jobless Claims 4-Week Average at 7:30 A.M., Factory Orders MoM and Factory Orders ex Transportation at 9:00 A.M., EIA Natural Gas Storage and NY Fed Treasury Purchases TIPS 7.5 to 30 yrs. at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate, and Total Vehicle Sales at 11:00 A.m.
On the Grain Front the complex was trading supportive early in the night session, with concerns regarding Brazilian weather and comments from Fed Chairman Powell hinted that the US Central Bank may be finished with the most aggressive tightening cycle in 4-decades, a dovish pivot. Powell stated that the question we’re asking is : Should we hike more? “Slowing down gives us, I think, a better sense of how much more we need to do , if we need to do more.” Financial markets cheered Powell’s comment that the US economy is expanding, and the US Central Bank has largely won the war on inflation. However, with the US inflation rate still above their 2% target, they left the door open for another rate hike, potentially in January. The Dow has rallied over 320 points since the Fed rate policy announcement, with US interest rates ticking lower. The yield on the 10-year treasury fell to 4.70% with the US dollar in fast retreat. Crude oil has rallied $1.15 overnight to 8160 and gold is up $7.00 at 1994.60/oz. Risk on is the mentality of the world financial markets this morning. However, not everyone is buying that the Fed is done with JP Morgan’s Dimon suggesting that the Fed could hike rates an additional .75% next year. China’s Q4 corn/soybean imports will be record large due to massive imports from Brazil. A newswire is reporting that China will import a record 105 MMT’s of all origin soybeans in 2023 and a 2023 Q4 Chinese corn import’s near 12 MMT’s. Brazilian weather remains a concern with seasonal recovery underway. The key for soybeans is whether the January contract can rise above the 50-day moving average and signal a trend change? Tomorrow we will have the Unemployment data and next Thursday the WASDE. In the overnight electronic session the December corn is currently trading at 473 ½ which is 1 and a ½ of a cent lower. The trading range has been 477 to 473.
On the Ethanol Front US airlines back the ethanol industry position on aviation fuel credit. Major US airlines and aviation companies joined ethanol companies to send a letter to the Biden Administration on Wednesday backing a regulatory change that would make it easier for sustainable aviation fuel (SAF) made from corn-based ethanol to qualify for federal subsidies. The Inflation Reduction Act, Joe Bidens signature climate law, requires SAF products to use an emissions model developed by the International Civil Aviation Organization (ICAO), or a similar methodology,” to show their fuel cuts emissions over gasoline by 50% to secure the subsidies. According to Reuters, airlines including Delta, Jet Blue, and Southwest and companies like GE Aerospace and Boing, said in a letter to Treasury Secretary Janet Yellen that the administration should allow the use of the Department of Energy’s Greenhouse Gases Regulated Emissions and Energy use in Technologies (GREET) model in addition to the one developed by ICAO, echoing a request from the ethanol industry. This follow up letter was after democrat Senators sent a letter urging these companies be disqualified from tax credits. Here we go again. There were no trades or open interest in ethanol futures.
Dovish Fed – Risk On? & More Questions. The Corn & Ethanol Report 11/02/2023
We kickoff the day with Challenger Job Cuts at 6:30 A.M., Export Sales, Initial Jobless Claims, Nonfarm Productivity QoQ Prel, Unit Labour Cost QoQ Prel, Continuing Jobless Claims, and Jobless Claims 4-Week Average at 7:30 A.M., Factory Orders MoM and Factory Orders ex Transportation at 9:00 A.M., EIA Natural Gas Storage and NY Fed Treasury Purchases TIPS 7.5 to 30 yrs. at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate, and Total Vehicle Sales at 11:00 A.m.
On the Grain Front the complex was trading supportive early in the night session, with concerns regarding Brazilian weather and comments from Fed Chairman Powell hinted that the US Central Bank may be finished with the most aggressive tightening cycle in 4-decades, a dovish pivot. Powell stated that the question we’re asking is : Should we hike more? “Slowing down gives us, I think, a better sense of how much more we need to do , if we need to do more.” Financial markets cheered Powell’s comment that the US economy is expanding, and the US Central Bank has largely won the war on inflation. However, with the US inflation rate still above their 2% target, they left the door open for another rate hike, potentially in January. The Dow has rallied over 320 points since the Fed rate policy announcement, with US interest rates ticking lower. The yield on the 10-year treasury fell to 4.70% with the US dollar in fast retreat. Crude oil has rallied $1.15 overnight to 8160 and gold is up $7.00 at 1994.60/oz. Risk on is the mentality of the world financial markets this morning. However, not everyone is buying that the Fed is done with JP Morgan’s Dimon suggesting that the Fed could hike rates an additional .75% next year. China’s Q4 corn/soybean imports will be record large due to massive imports from Brazil. A newswire is reporting that China will import a record 105 MMT’s of all origin soybeans in 2023 and a 2023 Q4 Chinese corn import’s near 12 MMT’s. Brazilian weather remains a concern with seasonal recovery underway. The key for soybeans is whether the January contract can rise above the 50-day moving average and signal a trend change? Tomorrow we will have the Unemployment data and next Thursday the WASDE. In the overnight electronic session the December corn is currently trading at 473 ½ which is 1 and a ½ of a cent lower. The trading range has been 477 to 473.
On the Ethanol Front US airlines back the ethanol industry position on aviation fuel credit. Major US airlines and aviation companies joined ethanol companies to send a letter to the Biden Administration on Wednesday backing a regulatory change that would make it easier for sustainable aviation fuel (SAF) made from corn-based ethanol to qualify for federal subsidies. The Inflation Reduction Act, Joe Bidens signature climate law, requires SAF products to use an emissions model developed by the International Civil Aviation Organization (ICAO), or a similar methodology,” to show their fuel cuts emissions over gasoline by 50% to secure the subsidies. According to Reuters, airlines including Delta, Jet Blue, and Southwest and companies like GE Aerospace and Boing, said in a letter to Treasury Secretary Janet Yellen that the administration should allow the use of the Department of Energy’s Greenhouse Gases Regulated Emissions and Energy use in Technologies (GREET) model in addition to the one developed by ICAO, echoing a request from the ethanol industry. This follow up letter was after democrat Senators sent a letter urging these companies be disqualified from tax credits. Here we go again. There were no trades or open interest in ethanol futures.
Have A Great Trading Day!
Thanks,
Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn