Winter Storm 2021. The Corn & Ethanol Report 02/19/2021

We start off the day with Fed Barkin Speech at 7:00 A.M., Export Sales at 7:30 A.M., Market Composite PMI Flash (FEB), Market Manufacturing PMI Flash (FEB), and Market Services OMI Flash at 8:45 A.M., Existing Home Sales (JAN)at 9:00 A.M., Fed Rosengren Speech at 10:00 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., and Cattle on Feed at 2 :00 P.M.

On the Corn Front we were flat yesterday with freeze may firm ahead of the USDA Supply/Demand outlook. There are still concerns about freeing and tightening of global supply. Texas is taking round 2 of this winter monsters and there is talk of forecasts for warmer weather early next weekend that should help for food, water, electricity, driving and getting the streets cleaned. We could use a good number on the export sales to put a positive spin in the market and rekindle bullish buyers. In the overnight session the March 551 ¼ which is 1 cent. The trading range has been 551 ¾ to 545 ¾.

On the Ethanol Front the February contract expires and the big story is Corn Growers E15 testing in California. More tests are underway said Tom Gillis who is on the Wisconsin Corn Promotion Board and the National Corn Growers Ethanol Action Group. What remains unclear is if testing will lead California to long-term use of U.S. corn-based or Brazilian Sugarcane-based ethanol as the sugarcane generates more carbon credits than corn-based ethanol under California’s Low Carbon Fuel Standard that Governor Gavin Newsome issued an executive order that all new vehicles sold in California by 2035 have to be carbon zero. That’s quite a lofty goal and you look at this track record history of dictating policy in California is not an attractive picture, so why don’t you take this slow and easy. There were no trades posted in the overnight electronic session. The April ethanol settled at 1.729 and is showing no activity thus far with Open Interest at 43 contracts.

On the Crude Oil Front, we should see volatility in this market as well with Iran and the U.S. playing possum as to what U.S. sanctions must be lifter before Iran comes to the table to negotiate. I have a nice round number in my head, and it could be used for making snow-man pitchers. I really want to concentrate on the south because old man winter just gave Texas a one-two punch. Hopefully, the weather forecast is correct, and warming will come in and soften the blow and get the food, water, and heat you have been seeking. On the crude oil volatility, the market is trading demand destruction as the south is more than definitely staying off the road in these conditions. Monday is Last Trading Day for March crude so we will switch in the overnight electronic session the April crude oil 5955 which is 98 points lower. The trading range has been 6019 to 5860.

On the Natural Gas Front this market is stuck in the volatility mode and freezing infrastructure with many asking why.  The answer is a shortage of infrastructure available to power plants. Texas relies on natural gas for power and just wasn’t ready for the extreme cold. Hopefully, this can be a learning lesson to all the dangers manifest when government leads to pipelines not being able to do an easy hook-up and in this pandemic energy companies are careful with their spending habits as they should. In the overnight electronic session, the March natural gas is currently trading at 3.089 which is .007 higher. The trading range has been 3.114 to 2.991.

Have A Great Trading Day!
Dan Flynn

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