Bio-Fuels Stung By Energy Prices
We kickoff the day with Housing Starts and Permits at 7:30 A.M. This is followed with the Fed meeting and API Energy Stocks at 3:30 P.M. Moving into the Fed meeting today and tomorrow, the Fed is expected to raise interest rates and traders are scratching their heads, asking if they priced this in or have thrown out the basic fundamentals and traded on fear alone.
China is buying copper and is talking about stimulating their economy, which should be robustly bullish to commodities, but that has not shown yet. Investors will look to corporate profits as there are fears about economic growth, higher bond yields and faster rate hikes. However, if there are promising earnings, that should show investors signs that ship is not sinking. Ethanol producers are concerned as the energy sector seems to be in freefall, which is not good news for the bio-fuels which are heavily invested to reap gains from a huge demand driven market.
On the corn front, the March contract is currently trading at 384 ¼ which is ¼ of a cent higher. The trading range has been 384 ½ to 383 ¼. The grain complex is moving on U.S.- Sino trade talks.
On the ethanol front, the market is reeling on the crash and burn in the energy sector In the overnight electronic session the January ethanol posted a trade at 1.257, which is .002 lower. 5 contracts traded and open interest is at 1,346 contracts. The market is currently showing 2 bids at 1.255 and 2 offers at 1.260.
On the crude oil front, the January contract expires tomorrow and we are looking for a dead cat bounce after tumbling on news that fundamentals definitely do not back up. We hope o see a turn around Tuesday that can move prices to more fair value. In the overnight electronic session the February Crude Oil is currently trading at 4900 which is 120 points lower. The trading range has been 4990 to 4813.
On the natural gas front, scientist are calling for a Polar Vortex to be unleashed on the East Coast after a lot of states already accumulated snow in what they receive in a year normally. This is not what the doctor ordered. In the overnight electronic session the January Natural Gas is currently trading at 3.713 which is 18 ½ cents higher. The trading range has been 3.736 to 3.566.