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Expecting Another Wild Ride Today. The Corn & Ethanol Report 07/31/2020


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We start off the day with Employment Cost Index, Personal Income, Personal Spending, PCE Price Index MoM & YoY (Jun), Core Price Index YoY 7 MoM (Jun) at 7:30 A.M., Chicago PMI at 8:45 A.M., Michigan Inflation Expectations Final (Jul), Michigan Consumer Expectations Final (Jul), Michigan 5-Year Inflation Expectations Final (Jul), Michigan Current Conditions Final (Jul) and Michigan Current Conditions Final (Jul) and Michigan Consumer Sentiment Final (Jul) at 9:00 A.M., and Baker Hughes Oil and Total rig Count at 12;00 P.M.

On the Corn front China took another step toward meeting their agricultural commitments in the phase one trade agreement with its biggest-ever purchase of U.S. corn, according to Elizabeth Rembert and Michael Hirtzer with Bloomberg. The USDA reports exporters sold 1.937 million metric tons of corn, the largest deal to any destination. The purchase tops the previous record sale to China earlier in the month, when 1.762 million tons were booked. China still has commitments for $36.5 billion in U.S. agriculture goods as part of the deal. Although the accelerated purchases are closing the gap, they still might be short of reaching the agreed figure. The futures markets response to the purchases was, “what have you done for me lately,” with favorable crop conditions and expectations of a large surplus. The December corn futures settled at 326 ¾ which was up a ½ of a cent but with a week close and tight trading range in yesterdays action. In the overnight electronic session the December corn is currently trading at 327 ½ which is ¾ of a cent higher. The trading range has been 328 ¼ to 326 ½.

On the ethanol front there are winners and losers in this unique time with the pandemic as producers are forced to adjust and utilize what this commodity’ range for usage other than a gasoline blend. Vandana Singh, SA News Editor showed stock market gainers with Pacific Ethanol +33%, Apache + 16%, Altus Midstream +11%, Aemetis +11% and Dawson Geophysical +10%. While those losing shares were Kraton -24%, Trinseo- 21%, QEP Resources -16%, AngloGold Ashanti -10% and Tronox -10%. There were no trades posted in the overnight electronic session. The September settled at 1.110 and is currently showing 3 bids @ 1.030 and 1 offer @ 1.180 with Open Interest at 69 contracts.

On the Crude Oil front the August products gasoline and heating oil, today is Last Trading Day. Hurricane Isaias latest forecast cone has the boy kissing the state of Florida and driving up the Atlantic Coast. More Disturbances follow in this active hurricane season with Disturbance #2 has 0% of forming into a hurricane in the next 48 hours and Disturbance 1 about 200 miles east-southeast of the Cabo Verde Islands has become less organized since yesterday and the system is moving northward toward less environmental conditions, decreasing its chance to become a tropical depression. Although it still has a 20% chance of Cyclone formation in the next 48 hours. With these risk still coming into play and the National Hurricane Center will have an update later in the day, I would expect traders to lighten up on their short positions or not want to be short at all going into the weekend. In the overnight electronic session the September crude oil is currently trading at 4026 which is 34 points higher. The trading range has been 4055 to 3996.

On the Natural Gas front the market has been in a chop with milder temperatures some anticipate we could see another drop in the market. While dominion Energy is pushing and setting a goal of “net zero” of carbon dioxide and methane from power plants and infrastructure from 2050 Solar and wind power rely on sunny days and strong breezes to operate. Maintaining reliable electric service requires availability at any time, such as gas or nuclear generators. Batteries storage is emerging as another option to back up renewables, but remains in its infancy on the grid, according to Thomas Farrell, Dominion’s Chair and Chief Executive. Also President Trump signed four permits for LNG export terms for pipeline and rail transport for fossil fuel extending to 2050. In the overnight electronic session the September natural gas is currently trading at 1.854 which is .025 higher. The trading range has been 1.861 to 1.822.

Have a Great Trading Day!
Dan Flynn



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About the author


Mr. Daniel Flynn is a trader and analyst with a strong background in the fundamental and technical analysis of Grain and Energy markets.

He started his career in the summer of 1981 as a runner on the Chicago Mercantile Exchange floor, shortly after graduating from Leo High School in Chicago. He learned the futures and options business from the ground up and has proved his commitment and ability to the industry ever since.

Dan's daily newsletter, The Corn & Ethanol Report, gives a unique insight and perspective into these market sectors, covering various global issues that are the driving force and backbone of the commodity markets. Dan is regularly interviewed by global media outlets on his insights and forecasts.

Dan provides his customers with not only a thorough understanding of the markets and the issues surrounding them, but also how to approach daily risk management in the markets they trade.

Contact Daniel Flynn: (800) 769-7021 or at dflynn@pricegroup.com

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