We start off the day with MBA Mortgage Applications (16/OCT) and MBA 30-Year Mortgage Rate (16/OCT) at 6:00 A.M., Fed Brainard Speech at 7:50 A.M., Fed Mester Speech at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 20-Year Bond Auction at 12:00 P.M., Fed Beige Book at 1:00 P.M., and Dairy Product Sales at 2:00 P.M.

On the Hurricane Front the National Hurricane Center lowered Disturbance 1 a trough of low pressure extends from the northwestern Caribbean Sea near the northeastern portion of the Yucatan peninsula and upper winds are expected to remain unfavorable for significant change as the system drifts westward with 0% of hurricane formation in the next 48 hours. While Tropical Storm Epsilon is still expected to be at or near hurricane strength when it makes its closest approach to Bermuda late Thursday or early Friday while it is too early to determine the exact track or intensity near the island. Tropical Storm conditions with dangerous surf conditions are likely. The current cone has the storm boomeranging back out to the north Atlantic and currently missing the North American Coastline.

On the Corn Front the grain complex is on a present pace not normally seen this late in October and or harvest season. Speaking of harvest, which is above schedule, crop ratings have remained unchanged, as well funds still have a net-long position, and expectations of China to resume U.S. agriculture purchases while Mexico is expected to continue to be a steady buyer. We will be looking at Export Sales tomorrow and keeping our ear to the ground trying to hear any whispers of any Chinese movement or other Asian countries for further U.S. purchases, as we look to be the best fit for importing countries at the moment. In the overnight electronic session, the December corn is currently trading at 411 ¾ which is 3 cents higher. The trading range has been 412 ½ to 497 ¾.

On the Ethanol Front Iowa’s economic development arm and shuttered ethanol plant in Emmetsburg that promised to produce millions of gallons from crop waste have reached a settlement that lets the company off the hook for millions of dollars In tax incentives. Poet, the nation’s largest ethanol producer, idled the plant in July and laid off 52 workers this year. The company blamed the closure on federal actions that decreased ethanol demand and an overall drop in fuel use during the coronavirus pandemic. The federal government provided $100 million for the plant and the state of Iowa kicked in about %20 million through grants, forgivable loans, sales tax refunds and tax credits. To receive the full amount, Poet needs to retain 35 employees at the Emmetsburg plant through 2024. As part of the settlement will not get $2.5 million in tax credits it had not yet earned, but the Economic Development Authority will not seek to be repaid the benefits Poet already earned. There were no trades posted in the overnight electronic session. The November contract settled at 1.469 and is currently showing 1 bid @ 1.100 with 0 offers and Open Interest at 61 contracts.

On the Crude Oil Front a surprise crude oil build on the API’s and more COVID-19 talks from city and states are pressuring the market early. I still believe we will go back and forth with demand chatter and numbers. China looks like they are geared for another buying spree of oil which should include the U.S. market. But they do not care who they buy from and if Iran gives them a discount that they can’t refuse you bet that they will take it. While a Venezuelan tanker the Nabarima is seen tilted in the Gulf of Paria, millions of gallons of oil could spill into the sea and cause an environmental disaster the latest location of the tanker is between Venezuela, Trinidad, and Tobago. This could have Venezuela looking into the abyss and final extinction of their energy sector after years of corrupt, mismanagement socialist dictators. In the overnight electronic session, the December crude oil is currently trading at 4097 which is 73 points lower. The trading range has been 4159 to 4085.

On the Natural Gas Front, the market is moving higher on the cold weather outlook which will boost demand and LNG exports.  In the overnight electronic session, the November natural gas is currently trading at 2.893

Which is 7 cents higher. The trading range has been 3.004 to 2.890.

Watch the EIA Energy Stocks!

Have A Great Trading Day!
Dan Flynn