Corn And Ethanol: Concerns COVID Could Cause Shutdowns

On the front the market ended up trading higher after early trade was lower based on needed rains in Brazil, lack of more U.S. corn sales to China, and concerns over an increase of U.S. and World Covid cases which could force additional shutdowns which would continue slowdowns in food and fuel demand. Better than expected soybean sales to China offered support, and managed funds stepped in to buy 12,000 contracts of corn, according to Steve Freed with ADM Investor Services. The Chinese know they need to feed their population as their cupboards are slim at best heading into the winter months. They will also need feed which will add many more billions of bushels to the table and will need to last for at least two or three growing seasons, according to Dan Basse, president of AgResource Company. Now there is talk of $5 corn could be in the realm of possibility in these changing times. In the overnight electronic session, the March corn is currently trading at 421 ¾ which is 2 ¼ cents lower. The trading range has been 424 ½ to 420 ½.

On the front according to the USDA Foreign Agricultural Services the U.S. exported 126.52 million gallons of ethanol and 951,500 tons of distillers’ grains in October. Exports on both products were up from October 2019. The U.S. exported ethanol to more than 40 countries in October. Canada was the top destination at 35.56 million gallons, followed by the Netherlands 24.24 (mg) and South Korea 14.96 (mg). The value of U.S. ethanol exports reached $254 million in October. Up from $130.46 million in September and $163.93 million in October of 2019. There were no trades posted in the overnight electronic session. The January ethanol settled at 1.320 and is currently showing 1 bid at 1.290 and 1 offer at 1.390 with Open Interest at 32 contracts.

On the front David Messler with reports the oil markets are finally ready to recover, that saw the market stage a dramatic rally since early November, with WTI breaking out of a range between the high 30’s and low 40’s for the first time since early in the year. We still have the pandemic fears lurking in the unknown. Fundamentals have been gradually improving over the last 6-months. The massive 550 mm supply overhang from early January has been gradually whittled down to just above 475 mm bbls. It may sound like a lot but going through 18 mm barrels per day, and with a consumption rate at 475 mm bbls accounts for just 26 days of supply. So, the difference between feast or famine is not always as big as one might think. If there is a worry that some of your needs might go unmet, famine mentality sets in. One of the outcomes of an inventory drawdown and perception of tightening in the futures market for oil leading later contracts in backwardation. In the overnight electronic session, the January crude oil is currently trading at 4547 which is 29 points lower. The trading range has been 4593 to 4514.

On the front the futures started off where they left off last week with sellers dominating trade as long-term weather forecasts released over the weekend pointed to milder temperatures throughout December in most of the lower 48 states. Natural Gas intelligence (NGI) said so far December is on track to come within the Top 10 warmest on record. Spot prices retreated as traders found no urgency to load up ahead of the mostly comfortable temperatures throughout most of the U.S. Long-Term, I still remain bullish on natural gas prospects. In the overnight electronic session, the January natural gas is currently trading at 2.430 which is up .024 cents. The trading range has been 2.480 to 2.411.

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