The Whole Turning Point Could Be Today
In today’s trading session we have a lot to decipher with EIA Energy Stocks at 9:30 A.M., Crop Production USDA Supply Demand at 11:00 P.M., and Dairy Product Sales at 2:00 P.M., Beige Book, Janet Yellen testifying before Congress today and of course weather will play a role even after the release of the Grain statistics.
In the overnight electronic session the rains gave way to traders thinking rains make grain. However, more substantial inches fell much quicker and the 5 inches forecasted happened rather quickly and started flash flooding in certain growing areas which could have investors thinking more damage control especially most investors are convinced the Crop Progress will show less favorable conditions to the good to excellent rating. The September corn is currently trading at 395 ¾ which is 6 cents lower. The trading range has been 400 ¾ to 395 ½ so far and is looking heavy in the early going.
On the Ethanol front the August contract is currently trading at 1.563 which is .002 of a cent higher. The trading range has been 1.568 to 1.563. The market is currently showing 4 bids at 1.551 and 1 offer at 1.562 with Estimated Volume of 12 contracts traded and Open Interest at 1,084 contracts. This market is still reeling on the news of the EPA 2018 proposal on volume of biofuels, Corn, Crude Oil, and gasoline prices in the future.
On the crude oil front we had another massive draw on the weekly API Energy Stocks of 8.1 million barrels and Cushing, Oklahoma with another large draw of 2 million barrels. Yes U.S. production is up but so is are Exports and if we do not see prices rise there will be more deficits in Shale production and those wells will be capped. Even with Barclays (LON:BARC) and Goldman Sachs (NYSE:GS) prediction of no $50 a barrel of oil before summers end I would have to say expect lower rig counts and Shale production with the capping of many wells that once re capped will not produce like they were before the shutdown.
Also the rise in rig counts were up in the northern regions and not in the Permian Basin. The International Energy Agency (IEA) expects global Energy investment to drop 12% which means the market is still out of balance and banks will not let producers write checks they cannot cash. In the overnight electronic session the August Crude Oil is currently trading at 4573 which is 69 points higher. The trading range has been 4602 to 4565.
On the Natural Gas front the market is giving a little bit back from yesterday’s rally. With the heat dome moving east and causing heat advisories I believe we will see this shallow selloff short lived. In the overnight electronic session the August contract is currently trading at 3.022 which is 2 ½ cents lower. The trading range has been 3.043 to 3.009.