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

Where A Landslide Brought Grain Prices Down. The Corn & Ethanol Report 02/12/2021

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We start off the day with the 5 Michigan economic indicators with Michigan Current Conditions Prel (FEB), Michigan Inflation Expectations Prel (FEB), Michigan Consumer Sentiment Prel (FEB), Michigan 5-Year Inflation Expectations Prel (FEB), Michigan Consumer Expectations Prel (FEB0,, and Fed Williams Speech at 9:00 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., and U.S. Budget Plan FY 2022 at 1:00 P.M.

On the Corn Front the selloff or more accurately correction had traders’ hearts pounding is this overdone, is the bull market gone? The truth of the matter was the market was due a needed correction from the frenzy of buying and the fast and swift breaks did get traders attention that the USDA and WASDE numbers did not warrant such a move, even with so-called better weather prospects in South America. We must look at there was a feeling in the market that the buyer did not have to beware… And that usually is when the cloud of liquidation hits. I do believe when we start getting more positive export data a fresh line of buying will proceed. It still seems there is a commitment to buy U.S. product for obvious fundamental reasons which one is the price and stocks we have on hand to sell. Yesterday’s export sales showed a cancellation in old crop sales to destination unknown, while the Chinese came in and bought a large varying number of new crops which helped settle the psychological balance in the market. I am curious to know where those destinations unknown were, but in the grand scheme of things it does not really matter as U.S. exports remain hot. The grain complex seems to trade with the factor of a further correction has priced itself in and cooler heads will be watching new import orders to come in. While not confirming a bottom, which we may see some South American product come out of the woodwork, it is still safe to say the U.S. crop is not cringing on supply and the U.S. market is the safe haven for future importers at the moment. In the overnight electronic session, the March corn is currently trading at 543 ½ which is 2 ½ cents higher. The trading range has been 545 to 540 ¼.

On the Ethanol Front with weekly production that grew fractionally from a week ago and stocks dipping the market is looking ahead for more vaccine news and driving demand so producers can get some ethanol plants back online with growing profit margins and get the market moving as we edge closer to the summertime driving season. China still seems to be kicking tires on U.S. ethanol, but the current price is right, and the market would love to see some new purchase activity. There were no trades posted in the overnight electronic session. The April contract settled at 1.729 and currently not showing any market for bids or offers with Open Interest at 43 contracts.

On the Crude Oil Front, we have seemed to have stalled and the market may have gotten parabolic with profit taking emerging. I expect continued bullish news and we will see fresh buying come in again. There is massive support at $55 level and OPEC is advertising lower demand ahead in the global markets, which I believe is signaling to member nations to continue biting the bullet on production as the new U.S. administration may pave the way for Iran and Venezuela back in the fold which could shake up the market share in the coming months. The Saudi’s are leading the way with doing everything possible to lead by example in capping production, they do not want a repeat of the errors of their ways so fresh in their minds that produced a big oil glut which took months to get the market into rebalance and their pretty lucky how resilient the comeback was in hindsight. In the overnight electronic session, the March crude oil is currently trading at 5756 which is 68 points lower. The trading range has been 5797 to 5741.

On the Natural Gas Front the EIA Gas Storage showed withdrawals of 171-bcf with the streets wide-range of expectations of 175-bcf to 181-bcf which pressured the market. Without a new headline from the new administration and/or news from producers next move and Chesapeake coming back in the production market, traders will be focusing on cold-snaps, ice, and snow in the lower 48 as weather forecast predict this weather is not about to move out anytime soon while pipelines may have to yield to the rails again in certain delivery points. In the overnight electronic session, the March natural gas is currently trading at 2.858 which is 1 cent lower. The trading range has been 2.885 to 2.834.

Have A Great Trading Day!
Dan Flynn

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

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