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 MBA 30-Year Mortgage Rte. MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.m., ADP Employment Change at 7:15 A.M., Trade Balance, Exports, Imports, Nonfarm Productivity QoQ Final, and Unit Labour Costs QoQ Final at 7:30 A.M., EIA Energy Stocks at 9:30 A.m., 17-Week Bill Auction at 10:30 A.m., and Dairy Products Sales at 2:00 P.M.
The Bureau of Lanor Statistics Monthly Job Openings and Labour Turnover Survey showed that the number of job openings in October fell by 617,000 jobs to 8.73 million, the lowest since March 2021 and far below the average trade estimate of 9.3 million. The figure was down 6.6% from September to mark the largest monthly decline in 5 months., and compared to a year ago, it was down 16.6%. Healthcare/social assistance job openings fell by 289,000, openings in the Midwest were down 193,000, job openings in the West fell by 83,000, and the Northeast was down 52,000.
Brazilian weather remains and is forecast drier North and wetter South. The EU model trended noticeably drier into Dec 12-13, and it remains any shift to needed regular rainfall in Central and Northern Brazil continues to be pushed back into the 7-14 day period. Extended range guidance does show potential for normal/above-normal rainfall in Central and Northern Brazil beyond Dec 13th , but must verify to prevent an acceleration in soybean yield loss. Too Much rain is forecast in Southern Brazil. There were widespread rumors on Tuesday that China had washed out 8-10 cargoes of Brazilian corn and switched the purchase to the US PNW. Confirmation of the switch awaited in the FSA/USDA daily sales reporting system. Traders and Fund Managers are also positioning for the December USDA Crop Report that will be released Friday. WASDE is expected to trim their Brazilian corn/soybean crop estimates due to past hot/dry weather. Tuesday’s preliminary CBOT open interest fell 4,028 contracts in soybeans and 1,607 contracts in wheat, while rising 776 contracts in corn. Soybean meal open interest was off 4,317 contracts with soybean oil of 1,883 contracts. Tuesday’s soybean break was largely due to long liquidation. Funds jockeying for position? Brazilian corn prices have been on a bullish tear amid China’s massive purchases that are estimated since May at over 19.0 MMT’s. The Chinese have simply bought out the Brazilian corn market with cash basis bids soaring to $1.50 over Chicago March corn futures. The Brazilian cash corn market will endure a nearby shortage of corn which will sustain %6.00/Bu cash prices into February. South Korea purchased optional origin corn which the origin can be selected by the seller, Ag Resources (ARC), expects that this sale will be sourced from the U.S. Midwest cash basis levels have been steady this week-despite the CBOT wheat/corn rally as farmers are content to sit on supplies. Merchandizers tell ARC that March corn futures nears $5.00/Bu that cash sales pace will dramatically increase. Farmers are targeting $5-$5.10 March to shed supply after the New Year for tax purposes. In the overnight electronic session the March corn is currently trading at 441 ¾ which is 1 ¼ of a cent higher. The trading range has been 492 ¾ to 489 ¼ .
On the Ethanol Front the Federal Trade Commission on the Dec1 issued its 2023 Report on Ethanol Market Concentration. As in prior years, the FTC’s analysis determined that there is sufficient competition among industry participants to avoid price-setting and other anticompetitive behavior, The report found that domestic ethanol production capacity increased slightly when compared to last year’s report. Actual production, however, was down slightly. More than 100 firms produced ethanol this year. The largest ethanol producer’s share of capacity is 17%, the same as last year. The FTC estimates total US ethanol production capacity at 18.4 billion gallons per year. That estimate includes capacity under construction. Actual production from July 2022 through June 2023 was at 15.3 billion gallons, down from 15.5 billion gallons during the prior 12 month period from July 2022 to June 2023, down from 1.4 billion gallons during the previous July-to-June period. There were no trades or open interest in ethanol futures.
Fund Movement + Friday WASDE Surprise. The Corn & Ethanol Report 12/06/2023
We kickoff the day with MBA 30-Year Mortgage Rte. MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.m., ADP Employment Change at 7:15 A.M., Trade Balance, Exports, Imports, Nonfarm Productivity QoQ Final, and Unit Labour Costs QoQ Final at 7:30 A.M., EIA Energy Stocks at 9:30 A.m., 17-Week Bill Auction at 10:30 A.m., and Dairy Products Sales at 2:00 P.M.
The Bureau of Lanor Statistics Monthly Job Openings and Labour Turnover Survey showed that the number of job openings in October fell by 617,000 jobs to 8.73 million, the lowest since March 2021 and far below the average trade estimate of 9.3 million. The figure was down 6.6% from September to mark the largest monthly decline in 5 months., and compared to a year ago, it was down 16.6%. Healthcare/social assistance job openings fell by 289,000, openings in the Midwest were down 193,000, job openings in the West fell by 83,000, and the Northeast was down 52,000.
Brazilian weather remains and is forecast drier North and wetter South. The EU model trended noticeably drier into Dec 12-13, and it remains any shift to needed regular rainfall in Central and Northern Brazil continues to be pushed back into the 7-14 day period. Extended range guidance does show potential for normal/above-normal rainfall in Central and Northern Brazil beyond Dec 13th , but must verify to prevent an acceleration in soybean yield loss. Too Much rain is forecast in Southern Brazil. There were widespread rumors on Tuesday that China had washed out 8-10 cargoes of Brazilian corn and switched the purchase to the US PNW. Confirmation of the switch awaited in the FSA/USDA daily sales reporting system. Traders and Fund Managers are also positioning for the December USDA Crop Report that will be released Friday. WASDE is expected to trim their Brazilian corn/soybean crop estimates due to past hot/dry weather. Tuesday’s preliminary CBOT open interest fell 4,028 contracts in soybeans and 1,607 contracts in wheat, while rising 776 contracts in corn. Soybean meal open interest was off 4,317 contracts with soybean oil of 1,883 contracts. Tuesday’s soybean break was largely due to long liquidation. Funds jockeying for position? Brazilian corn prices have been on a bullish tear amid China’s massive purchases that are estimated since May at over 19.0 MMT’s. The Chinese have simply bought out the Brazilian corn market with cash basis bids soaring to $1.50 over Chicago March corn futures. The Brazilian cash corn market will endure a nearby shortage of corn which will sustain %6.00/Bu cash prices into February. South Korea purchased optional origin corn which the origin can be selected by the seller, Ag Resources (ARC), expects that this sale will be sourced from the U.S. Midwest cash basis levels have been steady this week-despite the CBOT wheat/corn rally as farmers are content to sit on supplies. Merchandizers tell ARC that March corn futures nears $5.00/Bu that cash sales pace will dramatically increase. Farmers are targeting $5-$5.10 March to shed supply after the New Year for tax purposes. In the overnight electronic session the March corn is currently trading at 441 ¾ which is 1 ¼ of a cent higher. The trading range has been 492 ¾ to 489 ¼ .
On the Ethanol Front the Federal Trade Commission on the Dec1 issued its 2023 Report on Ethanol Market Concentration. As in prior years, the FTC’s analysis determined that there is sufficient competition among industry participants to avoid price-setting and other anticompetitive behavior, The report found that domestic ethanol production capacity increased slightly when compared to last year’s report. Actual production, however, was down slightly. More than 100 firms produced ethanol this year. The largest ethanol producer’s share of capacity is 17%, the same as last year. The FTC estimates total US ethanol production capacity at 18.4 billion gallons per year. That estimate includes capacity under construction. Actual production from July 2022 through June 2023 was at 15.3 billion gallons, down from 15.5 billion gallons during the prior 12 month period from July 2022 to June 2023, down from 1.4 billion gallons during the previous July-to-June period. There were no trades or open interest in ethanol futures.
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Questions? Ask Dan Flynn today at 312-264-4374Daniel Flynn