We start off the day with Unemployment and U.S Trade Balance at 7:30 A.M., Baker Hughes Oil & Total Rig Counts at 12:00 P.M. and Consumer Credit at 2:00 P.M.
On the Corn Front the March corn ended up 2 cents lower settling at 550 in yesterday’s action after hitting 7 ½ year highs. The export sales numbers were good but already the market priced in the numbers with sales to China that have been announced on the daily export notices. Continued concerns with Argentina’s and Brazil’s weather have harvest behind and now Brazil is getting too much rain which is delaying plantings of a second crop. Next Tuesday we will have the Crop Production USDA Supply/Demand which could bring more demand interest growing even further to the U.S. market. In the overnight electronic session, the March corn is currently trading at 549 ¾ which is a ¼ of a cent lower. The trading range has been 550 ¼ to 547 ¼.
On the Ethanol Front U.S. ethanol stocks have climbed to their highest level since May 2020. The EIA said domestic supply of 24.316 million barrels was up 714,000 on the week and 842,000 on the year, as slow blending demand caused by reduced travel boosted supplies, even as production remains well below last year. Higher corn prices and tighter profit margins are also limiting production. The next USDA estimate for corn used for ethanol will be on Tuesday’s report. There were no trades posted in the overnight electronic session. The April contract settled at 1.749 and is currently showing 2 bids @ 1.530 and 2 offers @ 1.749 with Open Interest at 41 contracts.
On the Crude Oil Front the market is rolling along with prices above $55 a barrel. And American oil producers and investors expect that shale firms will keep their promise and stay disciplined on spending. But as we know with one stroke of the pen, even that option to save the industry may be off the table. The industry wants to show it learned its lesson and OPEC+ is moving in the same direction as certain countries are chomping at the bit to inherent U.S. market share if the Keystone Pipeline goes down without a fight to this debacle. Disillusioned investors punished oil stocks and Shell’s oil profits fell 87% in 2020. Large firms such as Occidental, Pioneer Natural Resources, and Devon Energy promised no reckless races to record production. Last year operators in the Permian Basin did not outspend their upstream cash from operations, with plenty of hurdles to go in 2021 and beyond. In the overnight electronic session, the March crude oil is currently trading at 5685 which is 62 points higher. The trading range has been 5709 to 5643.
On the Natural Gas Front, we will need plenty of natural gas to keep the heat on and producing electricity. Speaking with a customer yesterday he was so eloquent and sounded like a prophet when he spoke about the new administration’s policies and regulations being brought to bear. His slant was solar power will not cut it this winter, days are not long enough, wind power is Ok on a windy day. But between the two of those sources, they will not provide enough electrons to serve the power grid when there is a surge in demand uses with weather factors and other acts of God that come into play when energy is most needed. At this point coal and natural gas is the only viable answer and those who do not believe and push through these regulations will only be opening Pandora’s Box. Look what happened in California last summer. And they still have not learned their lessons to this day. Heat wave in L.A. with air-conditioning units on full only the power grid could not fulfill the surge, so you had brownouts and rolling blackouts. The fires in Northern California could not keep the pressure to flow water to fight those fires. The answer is a simple one, the technologies of solar and wind are not even close to being reliable. In the overnight electronic session, the March natural gas is currently trading at 3.022 which is .087 higher. The trading range has been 3.057 to 2.953.
Have A Great Trading Day!