Good Morning!
As Matthew marches on residents in Florida, Georgia and the Carolinas are on alert and are warned not to try and weather this storm. Following Matthews onslaught, Tropical Storm Nicole is churning in the Atlantic moving northwest at 8 knots and another Disturbance moving westward in the Caribbean Sea does not look to be a major threat at the moment but is on investors radar screen. With evacuations on the eastern seaboard investors weigh demand destruction versus oil tankers not able to reach port to deliver imports as the ships try to avoid the storm’s path. This morning we have weekly Export Sales with Initial Jobless Claims ahead of tomorrow’s monthly Unemployment number. We also have the weekly EIA Gas Storage data at 9:30 A.M. which the Reuters poll of 19 analysts estimate injection numbers from 62 to 77 Billion Cubic Feet (BCF) These numbers compare to the 1-year injection of 97 bcf and the five year average of 92 bcf. In the overnight electronic session the November Natural Gas is currently trading at 3.026 which is 1 and ½ of a cent lower. The trading range has been 3.051 to 3.015. I would be buying this market with both hands on any pullback.
On the crude oil front the November contract is flirting to punch through $50 a barrel. The rally looks fleeting as the threat of Matthew entering the Gulf of Mexico is finite and has the market priced in cargo ships destined for New York Harbor have been redeployed to stay out of the storms path. As I write the November contract just achieved the $50 a barrel currently trading at 5008 which is 25 points higher. The trading range has been 5017 to 4933.
On the ethanol front there were no trades posted in the overnight electronic session. The November contract settled at 1.520 and is currently showing 5 bids @ 1.495 and 5 offers @ 1.525.
And for all the climate-change buffs, the Environmental Protection Agency (EPA) is considering using willow trees as another Renewable Fuel Standard (RFS) and they want to brush off the table is that burning 3 gallons of Corn Ethanol is the equivalent of burning 1 gallon of gas burnt from crude oil. Do the math. It does not sound to environmental friendly burning more gases to reach a government mandate.
On the corn front the market is not responding to the weather fronts that will be clashing this weekend as we are experiencing warmer seasonal temperatures we are experiencing at the moment. However two major fronts will collide like runaway freight trains with the Jet Stream moving south and the Tropical Storm weather moving north leaving cooler temperatures and rain, which will impact harvesting. In the overnight electronic session the December Corn is currently trading at 346 ¾ which is 1 cent lower. The trading range has been 347 ¾ to 345 ½. The market is trading on all weather and headlines for now.
Have a Great Trading Day!