HAPPY VETERANS DAY!
Good Morning!
The USDA brought estimates up on total production and per-acre yields from October’s estimates. This sunk the corn futures in yesterday’s action where the December contract settled at 359, which was 7 ¾ cents lower. In the overnight electronic session we did have a little bit of a bounce in corn, soybeans and wheat. The December corn is currently trading at 361, which is 2 cents higher at this writing. The trading range has been 362 to 359 ½ so far. Exports, which are heavily pegged to the U.S. dollar and looks dismal, prompting the FED to hike Interest rates in December. Another issue is with supplies on Ethanol at a staggering high levels, one must wonder what our friends at the Environmental Protection Agency (EPA) will tolerate in how much Ethanol will be forced in our fuel supply with the yearly fight of the Renewable Fuel Standard (RFS). It makes absolutely no sense to force more Ethanol when we have abundant supplies of fuel and Ethanol-based fuel as well. We will see how much is mandated as lobbyist and politicians lock horns.
On the Ethanol front there were no trades posted in the overnight electronic session. The December contract settled at 1.490 and is currently showing 2 bids @ 1.493 and 1 offer @ 1.524.
On the crude oil front the API showed builds abound with a whopping 6.3 million barrels in Crude and Cushing, Oklahoma up 2.5 million barrels. These numbers do not add up. And with the Veteran ‘s Day holiday there will not be the follow-up EIA data until tomorrow that should bring the market back to reality. The numbers really seem overblown and traders seem to be thinking we will have low prices for decades in which I counter the cure for high prices is high prices and the cure for low prices is low prices. Also with the global geo-political risk where a war could start in a heartbeat and all the currency wars abound we could see prices rise to epic proportions. More bullish tidbits are the story Anadarko Petroleum (N:APC) approached Apache (N:APA) about a combination that would be the largest for an independent oil and gas producer earlier this year. Apache rejected the initial offer from its rival and is cutting a deal with the devil being advised by Goldman Sachs (N:GS) to advice on its options. Contributing to this story Matthew Monks, Ed Hammond and Dinesh Nair Bloomberg Business. In the overnight electronic session the December crude oil is currently trading at 4348, which is 73 points lower. The trading range has been 4391 to 4345 and is sinking fast as I write. The market could tank on this bank holiday forcing margin calls and could create a beautiful buying opportunity.
On the natural gas front the market is poised to receive the biggest delivery of winter this year, which should pack its punch tonight from the Plains, Texas to the Great Lakes. In the overnight electronic session the December contract is currently trading at 2.319 which is .001 of a cent lower. The trading range has been 2.346 to 2.285 so far. Could this snap in weather spike a needed rally in this commodity?
God Bless All Our Men & Woman Serving or have Served OUR Country!
Have a Great Trading Day!