Corn & Ethanol Report, Market Commentaries, The Corn & Ethanol Report, Trading-Futures

Fed Dovish Decision and Stimulus Hopes For Christmas. The Corn & Ethanol Report 12/17/2020

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We start off the day with Building Permits MoM (NOV), Building Permits (NOV), Export Sales, Housing Starts MoM (NOV), Housing Starts (NOV), Initial Jobless Claims (12/DEC), Jobless Claims 4-Week Average (12/DEC), Philadelphia Fed Manufacturing Index (DEC) and Continuing Jobless Claims (05/DEC) at 7:30 A.M., EIA Gas Storage at 9:30 A.M., Kansas City Fed Manufacturing Index (DEC) at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., and Milk Production at 2:00 P.M.

On the Corn Front we will be looking at weekly Export Sales this morning, while yesterday’s Crush data sparked a rally in soybeans and firmed up corn and wheat prices. The market is already gauging what will be more profitable to plant in 2021, corn or soybeans. Most traders believe many farmers will be watching weather related issues in Brazil and obligations next year when deciding on acreage.  Talk on the street has the South American crop could be 10 (mmt) below the USDA estimate. Corn futures on the Dalian Exchange traded higher and could drop the 2020/21 carryout to 1,300 million bushels. Funds remain heavily long and commercials are heavily short. The weekly estimates for corn sales around 800 to 1,600 (mt) versus 1,362 last week. The technical are showing a possible head and shoulders formation which could have a negative impact on the market or a sideway market ready to break out again pushing prices to the 450-460 level. In the overnight electronic the March corn is currently is currently trading at 424 ½ which 2 ¾ cents lower. The trading range has been 429 to 424 ¼.

On the Ethanol Front yesterday’s EIA data showed ethanol production was down from a week ago and a year ago while stocks were up on the week and the year, and margins remaining in the negative with the vaccines starting to be distributed there are hopes for an increase for consumer demand for gas and ethanol. There were no trades posted in the overnight in the overnight electronic session. The January contract settled at 1.310 and the market is currently showing 1 bid @ 1.250 and 2 offers @ 1.400 with Open Interest at 32 contracts.

On the Crude Oil Front prices hit a nine-month high after the EIA data showed draws in crude stocks. Traders are anticipating a slow but steady grind to higher prices, but traders want to see the crude achieve a psychological and significant bullish move above $50 a barrel.  We could also see pullbacks to 44350 which could trigger additional buying. This is a better outlook than what traders were thinking earlier in the week.  They will also be watching the U.S. dollar as it is tied to crude oil. In the overnight electronic session, the January crude oil is currently trading at 4807 which is 25 points higher. The trading range has been 4859 to 4781.

On the Natural Gas the market has been in a chop zone with weather forecast changing frequenting and the winter storm in the east seems to be supportive in the early going.  Today’s EIA number could alter or push bullish overtones.  The Thomson Reuters weekly poll with 18 analysts participating with withdrawal estimates ranging from 138bcf to 85bcf with the median 120bcf.  This compares to the one-year withdrawal of 146bcf and the five-year average decrease of 151bcf. In the overnight electronic session, the January natural gas is currently trading at 2.691 which is .014 higher. The trading range has been 2.724 to 2.665.

Have A Great Trading Day!
Dan Flynn

Questions? Ask Dan Flynn today at 312-264-4374  
 
 
 

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