Tale Of 2 Fronts: The Dividing Line Between Cold And Heatwave Fronts
Good Morning!
We kickoff the day with Export Sales and Jobless Claims at 7:30 A.M., Factory Orders and ISM Non-Manufacturing Index at 9:00 A.M. followed by EIA Gas Storage at 9:30 A.M. On the Corn front, after yesterday’s selloff with saturating rain I thought the market would bottom out. Unfortunately, that was not the case with a higher U.S. dollar, bad manufacturing data, drier weather forecasted and the U.S.-China trade talks have created the harvest pressure mode. The market seems to be way undervalued at the moment. Technically we need a close above 398 or ideally over 400. The cold hard truth is carryover is way down and so is acreage and expectations of yields the crop will produce. In the overnight electronic session the December Corn is currently trading at 387 ¼, which is a ½ of a cent lower. The trading range has been 388 ¼ to 386 ½.
On the Ethanol front, the Environmental Protection Agency (EPA) may use partial refinery exemptions under the administration’s biofuels deal to help farmers and boost Ethanol consumption, said two sources familiar with the matter on Wednesday. The aim would be to reduce the impact of the waivers, which frees refineries from their obligations under the Renewable Fuel Standard (RFS) – a law requiring Ethanol and other Biofuels to be blended into the nations gasoline. In August, the Trump administration granted 31 waivers, angering farmers and Ethanol producers, which the waivers cut demand and hurt them financially. The waivers only seemed to help the majors like Exxon Mobil (NYSE:XOM), and Chevron (NYSE:CVX). The Department of Energy has recommended only partial relief for those facilities. This reported by Stephanie Kelly with Thomson Reuters. In the overnight electronic session their were no trades posted in the overnight electronic session. The October contract expires today. The November contract settled at 1.420 and is currently showing 1 bid @ 1.397 and 1 offer @ 1.436 and Open Interest hanging around 423 contracts.
On the Crude Oil front, we are in refinery maintenance season and an accident with an injured worker at the BP (LON:BP) refinery in Whiting, Indiana has slowed the process. More bullish news is that the EIA failed to count U.S. exports in yesterday’s Energy Stocks and should show up in next weeks count. Saudi Arabia is exporting storage as they may be producing but their processing plant will not be up for a while and they will be forced to restock the Oil they are releasing in reserves. Geo-political risk in the Middle-East continues with the proxy war between Iran and Saudi Arabia, and now bloodshed in Iraq seems to hint to further shortages and higher prices. In the overnight electronic session the November Crude Oil is currently trading at 5250, which is 14 points lower. The trading range has been 5291 to 5225.
On the Natural Gas front, we have the EIA Gas Storage data this morning and we are looking for an injection build 101 to 102 bcf. The November contract is trading higher while the back months lower and looking heavy. In the overnight electronic session the November Natural Gas is currently trading at 2.257, which is 1 cent higher. The trading range has been 2.288 to 2.254.
Have a Great Trading Day!