We kickoff Chicago’s 183rd birthday with MBA Mortgage Applications and MBA 30-Year Mortgage Rate at 6:00 A.m., ADP Employment Change at 7:15 A.M., Markit Composite PMI Final and Markit Services PMI Final at 8:45 A.M., ISM Non-Manufacturing Index at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., Fed Beige Book at 1:00 P.M., Dairy Products and Dairy Product Sales at 2:00 P.M., Total Vehicle Sales at 3:00 P.M. and Fed Bullard Speech at 5:30 P.M. This mornings market activity and volatility reminds me of the 2002-2003 SARS outbreak, which caused crazy market volatility because the media sensationalized the epidemic. And we were all to believe their word is gospel. The SARS epidemic caused 8,098 cases, resulting in 774 deaths in 17 countries with a 9.6% fatality rate. The majority of those cases were mainland China and Hong Kong. No cases of SARS have been reported worldwide since 2004. More cases and more fatalities have been realized by influenza and did not receive the same coverage or sensationalism as we see in this vote harvesting time. Is this just another chapter of history repeating itself with just a little different spin, like the name? And at the end of the day it will come out the wash the same.
On the Corn front all things green must come to a halt at some time. The market should still be on the upswing and I remain bullish overall. There are plenty of fundamental factors weighing on my decision. And with news Argentina’s government may impose a further tax on shipments of raw Soybeans, cooking oil, and livestock feed at a rate of 33%. Corn and Wheat cargoes will be spared for now. But growing up in Chicago where taxation without representation is the closest thing we will see to the eternal light. This may damper South American exports as we expect the Fed to take further action if needed and that will help U.S. exports. In the overnight electronic session the May Corn is currently trading at 380 1/2 , which is 3/4 of a cent lower. The trading range has been 381 3/4 to 379.
On the ethanol front today is the Last Trading Day on the March contract. There were no trades posted in the overnight electronic session. The April contract settled at 1.291 and is currently showing 1 bid @ 1.280 and 1 offer @ 1.300 with Open Interest at 351 contracts.
On the Crude Oil front last night’s API number had a bullish spin with Crude Stocks +1.688 million barrels, Cushing -1.352mb, Gasoline -3.9mb and distillates -1.7mb. After this mornings EIA and OPEC+ confirming more production cuts $50+ a barrel will be a reality. In the overnight electronic session the April contract is currently trading at 4809, which is 91 points higher. The trading range has been 4822 to 4679.
On the natural gas front the rally may have stalled. I did anticipate this and the market is now in chop mode. The April contract is currently trading at 1.805 which is a 1/2 of a cent higher. The trading range has been 1.820 to 1.785.
Look Out for Further Rate Cuts!
Buckle Up Your Chinstrap!
Have a Great Trading Day!
The Corn And Ethanol Report: March 04, 2020
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