We start off the day with Challenger Job Cuts (DEC) at 6:00 A.M., Initial Jobless Claims (o2/JAN), Jobless Claims 4-Week Average (02/JAN), Continuing Jobless Claims (26?DEC), Export Sales and Trade Balance at 7:30 A.M. Fed Harker Speech at 8:00 A.M., ISM Non-Manufacturing Business Activity (DEC), ISM Non-Manufacturing New Orders (DEC), ISM Non-Manufacturing Employment (DEC), ISM Non-Manufacturing Prices (DEC) and ISM Non-Manufacturing PMI (DEC) at 9:00 A.M., EIA Gas Storage at 9:30 A.M., 4-week & 8-Week Bill Auction at 10:30 A.M., Fed Bullard Speech at 11:00 A.M. and Fed Evans Speech at 12:00 P.M.
On the Corn Front both corn and soybean prices traded higher with funds adding to their record long positions as China’s 2020 crop is expected to be lower than the USDA had anticipated. The USDA announced 102.6 metric tons of corn sales to destinations unknown have traders believing that destination unknown is China. This is a sign of more buying by China and other countries that should further bolster prices, while talk on the street is a dry 2021 summer with whispers of a larger drought in the US. Which could start more panic demand as we move through South America’s smaller than usual crop and carryover. In the overnight electronic session, the March corn is currently trading at 494 ½ which is a ½ of a cent lower. The trading range has been 485 ¾ to 493 ¾.
On the Ethanol Front the EIA report showed a modest gain of 1,000 barrels of ethanol production while stocks decreased 220,000 on the week but an increase of last year 822,000 barrels. These numbers are a little hard to crunch and figure out but so was 2020. The next estimate on corn for ethanol use will be on the USDA January 12th crop production report. With more possible lockdowns and global fuel demand on shaky ground leaves ethanol producers in a tangled web of how and what to capitalize on next. There were no trades posted in the overnight electronic session. The April contract settled at 1.566 and is currently showing 1 bid @ 1.310 with 0 offers posted and Open Interest at 45 contracts.
On the Crude Oil Front the EIA had a turnaround that the rainy day the API stocks gave traders. The U.S. did not import Saudi oil for the first time in 35 years. This outlook coming from a different time a while ago that the Saudi’s threatened that they could flood our market with product and put most of our energy sector out of business. Just ask the shale industry. With the pandemic fears and Saudi Arabia realizing it is better suited to negotiate with honey and not vinegar, in what we saw in the OPEC+ meetings. With the unknown about the future demand picture with the pandemic, short term this is great news. Goldman Sach’s is on board with my thinking which could be the kiss of death. In the overnight electronic session, the February crude oil is currently trading at 5093 which is 30 points higher. The trading range has been 5104 to 5039.
On the Natural Gas Front the market is playing the weather card of cold weather to some areas in the U.S. to milder winter temperatures for the next 5-10 days in other spots. We have the EIA Gas Storage this morning and the Thomson Reuters weekly poll with 17 analysts participating have estimates of withdrawals ranging from 158bcf to 118bcf with the median decrease of 135bcf. If analyst is correct the industry is definitely looking at the tea leaves of the next administration if they will be more friendly to fossil fuels than advertised. Tracking weather modules and everything else starting the year has some traders in doubt. And talk of a hot dry summer some weather modules are pointing to, this could be a wild ride in 2021. In the overnight electronic session, the February natural gas is currently trading at 2.712 which is .004 lower, the trading range has been 2.723 to 2.690.
Have A Great Trading Day!