Hurricane Florence Packing a Punch. The Corn & Ethanol Report 09/14/18

We kickoff this morning with Business Inventories and Retail Sales at 7:30 A.M. followed by Capacity Utilization and Industrial Production at 8:15 A.M. Hurricane Florence is making her presence known and has not given her best punch yet. Word is the eye has made landfall near Wrightsville Beach North Carolina. Disturbance 1 is an area of low pressure located over the western Gulf of Mexico. It most likely will not develop into a tropical depression before it moves onshore of Texas later today. Tropical Storm Isaac is south of Puerto Rico and is moving west at 13 knots and does pose a threat to the Gulf region. Tropical storms Helene and Joyce’s cone looks to boomerang and head into the North Sea which could disrupt European Oil flow.

Today the September Grains expire. On the Corn front the market is still gun-shy of any type of rally with Wednesday’s USDA Supply/Demand report that shocked Farmers and Traders alike with the coming yield will be a record 181.3 bushels per acre versus the estimate of 177.6. These numbers expect a bumper crop but I cannot discount Mother Nature’s mood changes during harvest. In the overnight electronic session the December Corn is currently trading at 351 ½ which is 1 cent higher. The trading range has been 352 ½ to 350 ¼.

On the Ethanol front Reuters News reported yesterday that Archer Daniel Midland (ADM) an Illinois based commodity powerhouse, a major Ethanol producer, accounted for 61% of the 9.5 million barrels of Ethanol sold at the Chicago hub between November and August, according to data reviewed by Reuters reporters Jarrett Renshaw and Michael Hirtzer. Previously, ADM had been a regular buyer in September and October of last year. U.S. demand flat lined and export markets were cut off due to the effects of President Trump’s trade disputes. Small producers are extremely mad as they will be less equipped to manage through the tough times. In the overnight electronic session the October Ethanol is currently trading at 1.289 which is .015 higher. The trading range has been 1.289 to 1.284. 10 contracts traded and the market is currently showing 2 bids @ 1.281 and 1 offer @ 1.283 with Open Interest declining to 1,187 contacts.

On the Crude Oil front the market is trading risk on – risk off, Demand destruction or disruptions in the flow of Oil globally, especially with the North Sea at risk. This is almost a year to the day Hurricane Harvey hit and the same scenario played out and at the end of the drama the Crude Oil shot sharply higher. This could be a repeat or Déjà vu. In the overnight electronic session the October Crude Oil is currently trading at 6881 which is 22 points higher. The trading range has been 6914 to 6884.

On the Natural Gas front prices do not seem to be doing much with the market looking at further demand destruction with already very cheap prices. Florence may cause a further break to the downside later in the trading session. In the overnight electronic session the October Natural Gas is currently trading at 2.802 which is 1 ½ of a cent lower. The trading range has been 2.814 to 2.797.

Have a Great Trading Day!
Dan Flynn