Full Moon and Snow Storm On Energy Turnaround Tuesday. The Corn & Ethanol Report 12/29/2020

We start off the day with Redbook YoY and MoM (26/DEC) at 7:55 A.M., S&P/Case-Shiller Home Price MoM and YoY (OCT) at 8:00 A.M., Consumer Confidence at 9:00 A.M., 52-Week Bill Auction and 7-Year Note Auction at 12:00 P.M., and the API Energy Stocks at 3:30 P.M.

On the Corn Front it was a great day for corn and soybeans with the USDA said as of Christmas Eve, soybean and corn export inspections continue to run ahead of the pace needed to meet projections for the current marketing year. Corn was reported at 993.710 tons, up 223,588 from the previous week, and 584,764 higher than last year at this time. The top destinations were China and Japan. Just over a quarter into the marketing year, corn inspections are 13,734,004 tons compared to last year’s 8,052,178 tons. With the COVID-19 environment and vaccines and add ethanol to reinvent the industry are finding more and more ways it can be used for, especially helping us with products in heavy use because of the pandemic, other than gasoline and ethanol. The corn market is seeing these reasonings and settled towards the highs in yesterday’s action. 460 was a benchmark, but we may see demand winds blow right through that number. In the overnight electronic session, the March corn is currently trading at 454 ½ which is 2 cents lower. The trading range has been 454 ½ to 453 ½.

On the Ethanol Front Pacific Ethanol Inc. (PEIX) soared 2.33% in yesterday’s action. What a change this company made and secured its survival just in time to have the exchange relist the Stock because the price fell below what a listed company could trade. Again, the company’s story is like a better comeback than Lazarus. It owns and operates several ethanol production facilities distributed across the Western and Midwestern U.S.  The company operates across two segments: production and marketing. Its production segment includes, the production and sale of ethanol and co-products, such as corn oil, distillers’ grains, and corn gluten meal. It’s marketing segment includes the marketing, distribution, and trading of ethanol. The majority of companywide revenue comes from the sale of ethanol, with co-products accounting for a smaller portion. Pacific Ethanol’s customers are mainly integrated oil companies and gasoline marketers that blend ethanol into their gasoline. The pandemic forced this company to adjust ways in using and distributing their product and it has paid off handsomely. There were no trades posted in the overnight electronic session. The January contract settled at 1.400 and is currently showing 1 bid @ 1.285 with 0 offers posted and Open Interest at 30 contracts. I am also seeing activity picking up in the April contract which is just before the summer driving season. Traders may be looking ahead to the vaccines working and will get people back on the road again and end this horrendous lockdown situation.

On the Crude Oil Front, we have the API’s today and the market swing back to the ground it was at yesterday. The market faded in yesterday’s trade because of OPEC+ plans and the skimpy U.S. stimulus. This is a no brainer. Do the politicians give the American People the check that they deserve or do we roll out the pork bellies and give the funds to people who had NO SKIN IN THE GAME! The House passed the $2,000 check versus the first one at $600, (Tanks for Nuthin.), and now we will see if the Senate follows suit. Today is a different day and crude oil is higher on spot demand and we are flirting with $50 a barrel heading into New Years, after trading negative in the spring. In the overnight electronic session, the February crude oil is currently trading at 4813 which is 51 points. The trading range has been 4835 to 4782.

On the Natural Gas Front today is the Last Trading Day on the January contract. The market is recovering and has got a little bounce after a change in the weather reports led to a gap open down under and keep a full-court press on the bulls during the trading session. Today’s winter storms may bring support to prices and we will have another weather report soon. In the overnight electronic session, the February natural gas is currently trading at 2.379 which is .053 higher. The trading range has been 2.390 to 2.305.

Have A Great Trading Day!
Dan Flynn

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