U.S. – China Trade Talks Moving. The Corn & Ethanol Report 01/18/19

It all hangs in the balance, is it possible that Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer can lift some or all of the tariffs imposed on China imports. The discussions will continue on January 30th. This brought optimism to the Grain Complex as weather problems in South America continue to mount and smaller yields will come into play. This comes at a time we have not seen in decades with China talking that they may digest their huge carryover by years end. In the overnight electronic session the March Corn is currently trading at 381 which is 1 cent higher. The trading range has been 382 to 378 ¼.

On the Ethanol front the big decline in Ethanol output has declined due to profit margins linked to the trade war with China and is raising cost to American Farmers who feed Cattle, Chickens and Hogs with a by-product of the Corn-based bio-fuel. But with cuts in production and tightening supplies are raising prices paid by livestock farmers. Many are turning to other feeds including Soybean Meal with the easing of the price of Soybeans when China halted imports of American Soybeans. In the overnight electronic session the February contract is currently trading at 1.270 which is .001 higher. The trading range has been 1.277 to 1.263 with 3 contracts traded and Open Interest at 1,682 contracts. The market is currently showing 1 bid @ 1.270 and 2 offers @ 1.274.

On the Crude Oil front the market is moving to fair value on news we may see movement in trade talks and optimism the that the trade talks are moving forward and we will feel the pinch of OPEC production cuts while moving closer to the changeover to summertime blends of Gasoline in March or April for the driving season. In the overnight electronic session the March Crude Oil is currently trading at 5309 which is 73 points higher. The trading range has been 5320 to 5237.

On the Natural Gas front the market is currently selling off the weather premium it has gained. In the overnight electronic session the February contract is currently trading at 3.233 which is 18 cents lower. The trading range has been 3.439 to 3.201.

Have a Great Trading Day!
Dan Flynn