The Corn & Ethanol ReportDaniel Flynn
Investors Banking On La Nina Dryness in South America. The Corn & Ethanol Report 11/30/2020
We start off this Full Moon Monday with Chicago PMI (NOV) at 8:45 A.M., Pending Home Sales MoM & YoY (OCT) at 9:00 A.M., Dallas Fed Manufacturing Index (NOV) at 9:30 A.M., Export Inspections at 10:00 A.M., 3- Month and 6-Month Bill Auction at 10:30 A.M. and Crop Progress at 3:00 P.M.
On the Corn Front we have First Notice Day on all December Grains. What a difference a day or two makes. The rains called for dry areas in Argentina and Brazil were negated by La Nina. The weather is expected to be dry for the next 10 days and reports of a second round of showers will attempt to make it wet in those dry areas. The two South American countries are expecting drier than normal conditions, while Argentina is reporting a little increase in corn plantings and they have a lower crop estimate than the USDA. More bullish news is barge freight costs are moving higher and talk of higher soybean prices should help corn prices as potential importers are playing possum to see if the prices will fade in the cash market. It does not look good for he who hesitates, especially if you are purchasing domestic supply which will get you through this winter. Funds also turned buyers in Friday's action after unloading contracts on Wednesday and is not completely clear if it was more of a December liquidation, but there were sellers in Dec & March. The funds were estimated to buy 4,000 contracts and estimated to be net-long 271,000 contracts. With these realities with export and prices traders expect to see new highs. In the overnight electronic session, the March corn is currently trading at 433 which is 3/4 of a cent lower. The trading range has been 439 1/2 to 432 1/2.
On the Ethanol Front the industry is embracing demand increases expected in this industry for months and years to come. As the U.S. Congress is calling for and want to achieve "net-zero" CHG by 2050. Not only is the 2020 election is the talk of the town and so are traders wishes for demand to go through the roof in 2021. There were no trades posted in the overnight electronic session. The January ethanol settled at 1.350 and is currently showing 1 bid @ 1.300 and 2 offers @ 1.400 with Open Interest at 44 contracts.
On the Crude Oil Front the OPEC+ alliance is considering a delay to their output hike and whispers are that U.S. Shale is ready to get back into the picture again. And this is before we are not sure who will be calling the energy shots. Is he for fracking or against fracking? Or does he know what fracking is? A lot of t's need to be crossed and a lot of I's dotted. We can expect headlines to great shakes and move in this market in the coming weeks. In the overnight electronic session, the January crude oil is currently trading at 4550 which is 3 points lower. The trading range has been 4580 to 4442.
On the Natural Gas Front San Jose joined the ranks of San Francisco, yes, they are close together, in banning natural gas in new structures as U.S. Shale Firms amp up natural gas output as the future signals more gains. It looks like the politicians in the state of California have not learned dating back before their ENRON debacle. In the overnight electronic session, the January natural gas is currently trading at 2.989 which is 0.146 higher. The trading range has been 2.991 to 2.823.
Have A Great Trading Day!
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December 1st, 2020
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