ECB Speaks Stimulus While FED Hawks Rates
While the European Central Bank (ECB) is preparing stimulus to combat the Brexit slowdown, I anticipate no big decision today but fresh stimulus is imminent in the coming months. The Euro-Zone known as PIIGS may have the two I’s (Ireland and Italy) joining Great Britain in leaving this taxation siphon. And we won’t be able to call them PIIGS anymore.
While the FED is following an opposite path all eyes and ears will be focused on Mario Draghi. The FED and Bank of Japan (BOJ) meet on the same days this month September 20th and 21st. The BOJ and FED seem to have conflicting directions as well on Interest Rates.
On the corn front yield prognosticators are all over the map versus August USDA numbers. They are either well above or well below and my bet would be on the lower side of the USDA’s information.
We still have weather fears and 3 diseases that could damage yields which are Northern Corn Leaf Blight, (which has already been reported in Iowa) Anthracnose Leaf Blight and Common Rust has investors and farmers alike attention.
In the overnight electronic session the December corn is currently trading at 334 ¾ which is 1 ½ of a cent higher. The trading range has been 335 to 333 ¼. The market could gather legs if the five day weather forecast is correct.
On the ethanol front there were no trades posted in the overnight electronic session. The October contract settled at 1.429 and is currently showing 1 bid @ 1.431 and 1 offer @ 1.459. As the Environmental Protection Agency (EPA) is pushing for more Ethanol usage in our gas tanks hyping more percentages of the Renewable Fuel Standard (RFS) which corn carryover is still a question mark.
The EPA’s claim that ethanol is so environment friendly is coming under further scrutiny with hard cold facts. The EPA is in a quagmire resolving lawsuits from 3 different states for dumping millions of toxic pollutants in the Animas River in Colorado and effecting tourism and food supply in those states. Some of the lawsuits contend this was of nefarious nature versus a mistake. Let’s see how this plays out in an election year.
On the crude oil front we have the weekly EIA Energy Stocks delayed until this morning at 10:00 A.M. due to the Labor Day holiday. The API data showed draws of 12 million barrels which brought the bulls back to town.
The API showed a huge draw but not a major shocker with the inclement weather in the South-eastern states and the Gulf of Mexico recently. In the overnight electronic session the October crude oil is currently trading at 4620 which is 70 points higher. The trading range has been 4649 to 4605. Another bullish draw on the EIA data and Draghi’s comments could spark a really large rally.
On the natural gas front the prices got torpedoed in yesterday’s trading session. This morning at 9:30 A.M we have the weekly EIA Gas Storage data. The Reuters poll of 19 analyst predict the injection number to be anywhere from 33 to 51 bcf. This compares to the 1 year of 74 bcf and the five year average of 69 bcf. In the overnight electronic session the October contract is currently trading at 2.721 which is 4 ½ cents higher. The trading range has been 2.723 to 2.679 so far.
Buckle Up Your Chinstrap!