We start off the day with Personal Income MoM & YoY (JAN), Wholesale Inventories MoM Adv (JAN), Goods Trade Balance Adv (JAN), PCE Price Index MoM & YoY (JAN), Core PCE Price Index YoY & MoM (JAN) at 7:30 A.M., Chicago PMI (FEB) at 8:45 A.M., Michigan Consumer Sentiment Final (FEB), Michigan Consumer Expectations Final (FEB), Michigan Current Conditions Final (FEB), and Michigan Inflation Expectations Final (FEB) at 9:00 A.M., followed with Baker Hughes Oil & Total Rig Count at 12:00 P.M.
Just after Fed Chair Jerome Powell’s testimony on Tuesday & Wednesday, the brutal sell-off in the stock and the bond market was ignited by fears that the economy could overheat later this year and generate a high level of inflation that would force the Fed to hike rates earlier than expected. We should hear plenty from the Fed Board of Governors in the coming weeks and months.
On the Corn Front weak export sales with sales of corn coming in at 599,200 million metric tons (mmt) vs. trade expectations of 500,000 – 1.3 (mmt) and soybeans 238,700 (mmt) vs. the street expectations of 200,000
To 800,000 (mmt). This started a round of profit taking as in many different commodity sectors was caught off guard as well, with the stocks and bonds coming off so quick after Fed Chair Powell’s testimony. In the overnight electronic session. The March corn is currently trading at 550 ½ which is 4 ¼ cents lower. The trading range has been 554 ½ to 548 ½.
On the Ethanol Front no new headlines. The EPA must account for lost gallons of ethanol as production plummeted 27.8% in one week. Plenty of energy companies taxed at the moment as they work on getting the lights back on, so unless a resounding headline the energy companies are playing catch up. There were no trades posted in the overnight electronic session. The April contract settled at 1.729 and there are no bids or offers making a market with Open Interest holding at 43 contracts.
On the Crude Oil Front everyone is talking about higher and higher prices. I have heard and read that $100 a barrel is a given. With our all-time high roughly $147 a barrel we could overshoot this if they can get the vaccines properly distributed and open the economies further. Texas is getting back online, and the big winner is in this cluster**** is Saudi Arabia exports to the U.S. There is also a $7 Trillion cost of upgrading the U.S. Power Grid and with the number of negative policy changes in a matter of weeks has the oil industry ready to fight President Biden in court. We also have the OPEC+ meeting on production expected to loosen somewhat but not unilaterally, as we hope in a sound agreement to keep the market in re-balance. The meetings are scheduled for March 3rd and 4th. Another piece to the pie is the largest banks in the U.S. continue to be backers of the oil and gas industry. In the overnight electronic session, the April crude oil is currently trading at 6271 which is 82 points lower. The trading range has been 6357 to 6254.
On the Natural Gas Front the EIA Gas Storage had a huge draw of 338bcf but did not surpass the record withdrawal of 359bcf in January 2018. The number was a yawner to participants in the market as the damage was done. The market did little to NOTHING to recover as with the Texas situation saw natural gas plummet 45%. It is going to be a while right this ship’s wrong navigational steering with unending regulations that lead to nowhere fast. And then we go nowhere slow. In the overnight electronic session, the April natural gas is currently trading at 2.737 which is 4 cents lower. The trading range has been 2.770 to 2.716.
Have A Great Trading Day!