Good morning friends
- FOMC day. Any indication that interest rates may not stay at zero forever should send shocks through out risk assets. The phenomenon that is Gamestop is something the fed is likely to address, maybe not today but at some point. Its beginning to become clear to me the challenges the FOMC and Treasury face to stimulate the economy but do it in “the right way”. That will have ramifications.
ADM announced China bought 200 million gallons of ethanol for Q1 delivery. If this is the start of a trend, its a game changer. Until yesterday, the market was counting on ethanol margins tightening at these prices to ration demand. That may not be the case with the Chinese helping out.
Russian export taxes are having a mixed effect. Producers who hold supply in Russia are not lowering offers, buyers at the ports are simply paying the tax. This is bullish for replacement supply like the US. I expect the US supply to catch a bid somewhere in N. Africa sometime this year. I do not see any weather problem priced into the July contracts yet. I promise, you will know when the world is concerned with wheat supply. Its not happening at 6 dollars. We will get a new wheat crop conditions report for the KC region next week. Eyes will also be on the next GASC tender.
- Canola futures closed limit up for the second day in a row. The edible oil market remains on fire. I would look at upside calls in bean oil if you are a speculator. The market is fully inverted. The March delivery is going to be nuts, especially if the Brazilian and Argentinian transportation strikes would pop up.