We start Pearl Harbor Day with mostly light reports this Monday. Starting with Export Inspections at 10:00 A.M., 3-Month and 6-Month Bill Auction at 10:30 A.M. and Consumer Credit Change (OCT) at 2:00 P.M. Crop Progress is done for the year as the harvest season has officially closed, even as farmers window dress and harvest the remaining small portions of their crops.
On the Corn Front the corn drifted 1% lower Friday, on rounds of technical selling and improving production in South America. Drought has a stranglehold on the western U.S. and is creeping in key production regions of the Plains and Midwest, according to data from the U.S. Drought Monitor. Nationwide, 66.9% of the country is afflicted by some level of the drought – the largest footprint since February 2018. In the Midwest, 36.2 % of the region is affected by drought, with 96.8% of the Plains in duress. NOAA’s three-month outlook for January to March shows the potential for some seasonally wet weather in parts of the eastern Corn Belt, upper Midwest, and Northern Plains. U.S. corn and soybean ending stocks have rapidly gotten tighter since the first estimates were released back in May. Allendale Chief Strategist, Rich Nelson was quoted, “These are wildly different than expected at the start of the year and certainly quite different than we expected as recently as June, and no we don’t have a good amount of historical precedence for this. There are still a lot of questions still in front of us here.” The carryover decline is expected to have corn and soybeans cut 50% or more. I do have one non-weather-related point to say exports drove prices higher and that was working because we were playing on an even playing field with China and of course the weather that caused crop damage and crops to be lost. Expect fireworks on Thursday’s USDA and WASDE reports. In the overnight electronic session the march corn is currently trading at 416 which is 4 ½ cents lower. The trading range has been 419 ½ to 415 ¼.
On the Ethanol Front UNICA, the Brazilian sugarcane industry association announced the production of hydrous ethanol was down during the first half of November. Ethanol and production for corn ethanol remained higher. This is a good sign to expect a competitive market in 2021, and god-willing we can call it the post-pandemic year. There were no trades posted in the overnight electronic session. The January ethanol settled at 1.320 and is currently showing 4 bids @ 1.098 and 2 offers @ 1.400 with Open Interest at 32 contracts.
On the Crude Oil Front gasoline prices jumped across the country as crude oil rallied to its highest levels since the pandemic began. Nationally, gasoline averaged $2.16 a gallon, up 4 cents from a week ago and 6 cents from a month ago. The national average is 43 cents lower than a year ago. Rig Counts also rose with crude oil prices on Friday. The energy complex is starting with a weak tone this morning. In the overnight electronic session, the January crude oil is currently trading at 4592 which is 34 points lower. The trading range has been 4625 to 4536.
On the Natural gas Front the market continues to sink lower with unseasonably warm temperatures expected to hit most of the country and that has the bulls in another furious scramble to dodge, window-dress or liquidate and reverse positions all together. In the overnight electronic session, the January natural gas is currently trading at 2.395 which is 18 cents lower. The trading range has been 2.483 to 2.389.
Have A Great Trading Day!
Dan Flynn