Dicey Markets This Week- Look Ahead to Weather Patterns. The Corn & Ethanol Report 09/30/2020

We start off the day with MBA Mortgage Applications (25/SEP) and MBA 30-Year Mortgage Rate (25/SEP) at 6:00 A.M., GDP at 7:30 A.M., Chicago PMI (SEP) at 8:45 A.M., Pending Home Sales YoY & MoM at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., Fed Kashkari Speech at 10:00 A.M. Grain Stocks and Small Grains Summary at 11:00 A.M., Dairy Product Sales at 2:00 P.M., and Fed Kaplan Speech at 5:00 P.M.

As mention earlier the forecast that have this dicey market not looking through the telescope with a Canadian jet stream cooling off portions of the Great Plains, Mid-West, and the North and South Eastern Seaboard, which will bring cooling temperatures and rains that will impact harvest. Another fear that the market has discounted was the National Hurricane Center has shown another Tropical Wave forming over the central Caribbean Sea could bring another 2020 slap in the face or double whammy to what we have endured this summer already.

On the Corn Front the weather changes and slow movement in the cash market due to the Chinese holidays and weather changes, this market does not seem to be pricing in the risk, which when reality hits the markets may tend to over-react. Also, investors are locking in profits as we proceed into the harvest season. Funds are still carrying a net long position, but not as heavy as last week’s Monday with panic selling due to the Banking news. We still may have more selling pressure to overcome but expect the market will understand there is still demand from China, which will be a buyer and Brazil already sold their crop. With the weather and all tangibles on the table this should be and not so normal harvesting season. And yet again, what has been normal in 2020? In the overnight electronic session, the December corn is currently trading 362 ¾ which is 2 cents lower. The trading range has been 364 ¾ to 362.

On the Ethanol Front Pacific Ethanol stock continues to rise, just after being de-listed as a bona-fide stock on the NASDQ Exchange. Once the criteria were met the company’s profits had it re-listed and continue to rise in profit margins. This is good old American ingenuity to capitalize on other profit centers your product can produce. Whatever the adjustments were made they were timely, and this industry has felt the fate of 2020 like so many other industries have endured. Their stock rose another 14%, pretty nice recovery, after their shares were considered worthless months ago. But this company learned a lesson and their business plan will be copied or followed. There were no trades posted in the overnight electronic session. The November contract settled at 1.290 and the market is currently showing 1 bid @ 1.2000 and 2 offers @ 1.350 with Open Interest at 65 contracts.

On the Crude Oil Front, the API data showed crude stocks down -0.831 M, Cushing had builds of +1.623 M, Distillates were down -3.424M, and Gasoline showed builds of +1.623 M. These numbers really created no incentive for traders to buy value. The weather is changing, and energy demand will follow the new demands. We have the EIA Energy Stocks this morning and continue to watch possible disruptions in the flow of energy as the seasons change. In the overnight electronic session, the November crude oil is currently trading at 3912 which is 17 points lower. The trading range has been 3925 to 3868.

On the Natural Gas Front, the market continues not to believe that demand will pick up and countries in Europe that import U.S. LNG have had an early winter. Domestically we will realize a change that could put demand higher, and we still must understand this hurricane season is not over to the infrastructure to supply the needs of the consumer. We will be tracking the Tropical Wave brewing in the Caribbean. In the overnight electronic session, the November natural gas is currently trading at 2.473 which is .088 lower. The trading range has been 2.533 to 2.463.

Have A Great Trading Day!
Dan Flynn

Questions? Ask Dan Flynn today at 312-264-4374