Thursday December 31st, 2009

Good evening everyone. Due to the holiday schedule the Energy Thursday reports have been thin. Therefore I will give a little catch up starting with today, crude oil touched the $80 mark, but closed relatively flat at $79.36. Last time I was typing we were in the low $70's holding out for the low $65 mark, but things have ramped up as inventories have shrunk and trade has been thin. It was draws across the board in this weeks DOE report, 1.5 million on crude oil, 300,000 on gas, and 2 million on diesel. U.S. crude stocks fell last week as refiners increased runs, overcoming the increased crude imports. Gas and diesel had draw downs amidst the cold weather and holiday travel. Nothing shocking as expectation were met, but one thing to consider is refinery runs remain 7% percent blow normal for this time of year, while inventories are still considered high, stocks keep chipping away towards average. Oil rose 14% in the past two weeks. As Les Klukas of Country Hedging will explain in the attached video this is some what expected in the short term as the year closes; but wait to lock in your spring gallons until the market provides its next dip. The dip is predicted in the coming month or so. Time will tell what happens in energy, but for now inventories still remain high, demand is still down from last year on diesel(which wasn't exactly a banner year), and the economy is still looking for direction. A new year is upon us and expectations of some early buying opportunities are anticipated.
Thanks for reading over the past few months, hopefully I have been able to convey some useful energy information. Comments or questions are welcome, thanks again.
Happy new year to all and to all ....
Zach

Wednesday, December 30, 2009

Corn and beans closed moderately weaker today in a thin pre-holiday trade. There was some excitement today as shortly after the open corn futures plunged to as much as $.17 lower after 1,000+ contract sell order hit the market and pushed right through buy orders. The market was able to rally impressively and even traded higher for a time before selling came back into the market near the close. News is pretty scarce these days, the Argentine grain exchange did increase their estimate for the Argentine corn crop to 15.8 million ton vs. USDA at 14.0 and 12.6 last year. Producer end of the year selling remains active as concerns about storability continue to pressure nearby corn basis levels as well as the need for end of year income needs. The next major fundamental event for corn looks to be the January 12 USDA report, in the meantime I am sure we will have plenty of first of the year fund type discussion to move prices one way or the other.

A choppy soybean session today with influence from the volatile corn market but prices ended $.02 lower. There was hope for higher trade today as USDA announced a 348,000 ton soybeans sale to China but this kind of news is apparently old hat, apparently keeping this from helping the market much today. Either way we would still expect that USDA will have to increase the export estimate for the year possibly pushing carryout near 200 mbu.

Phil

Tuesday December 29th, 2009

The last blog of the decade for myself, I hope all of you had a wonderful Christmas celebration. This week is usually a week known for very little or extreme price action as the volume of trades is always light and prices can move a lot with a big order or not move at all with no orders. For the week I would put this week in the extreme price category with soybeans up 39 cents and corn up 8 cents in the first 2 days. Fundamentally, traders are talking about a superb South American corn and soybean crop shaping up but concerns over the final production numbers of our crop. Traders are trying to estimate how many actual bushels of corn will be lost due to what's out there and how bad the latest snow storm was. Numbers I have seen thrown out are between 200-250 million bushels lost. If so, and keeping everything else equal, our carryout for this next year would drop from 1.6 billion to 1.3-1.4 billion. Funds are estimated long 222,000 contracts of corn, 97,000 contracts of beans and short 22,000 contracts of Chicago Wheat.

Basis levels on corn reflect the poor demand nearby and the urgency to move this below average quality crop sooner rather than later. Please make sure to check bins as we have heard of centers getting warm even in this cold weather. Soybean basis has bounced back nicely to reflect the huge nearby export demand, which has forced processors to also keep pushing for stocks.

Happy New Year!!

Scott Meyer

Monday December 28th, 2009

Harsh winter weather, outside market support and technical strength pushed Chicago Board of Trade corn futures higher Monday. The market was higher all day, trading within a tight five-cent range, and was led by wheat and soybeans, which both surged. Strength in wheat and soybeans was attributed to short-covering and technical buying, which were factors in corn as well. The nearby March corn contract has climbed above key major moving averages, and a couple of analysts said the market appeared to be on the verge of a breakout to the upside. The market also had support Monday from the heavy snow that hit the U.S. Midwest over the weekend, which slowed grain movement, strengthened basis and heightened concern about the more than 500 million bushels of corn still in the field. The unharvested corn represents at least one-third of the projected 2009-10 U.S. carryout, analysts said.

Soybean futures finished sharply higher Monday after rallying in late dealings amid technical buying. There were ideas the market was due for a bounce after recent losses. As of Thursday's close, January soybeans had lost 61 cents for the month. Soybeans finished firmer with neighboring corn and wheat. Weakness in the dollar and gains in crude oil were supportive to agricultural markets, a trader said. Weekly U.S. soybean export inspections of 51.9 million bushels also were considered strong. Demand remains supportive for the market. Traders are waiting for the U.S.D.A. to issue its next crop report Jan. 12. They may put some risk premium back into the market amid uncertainty about the size of the U.S. crop after a late harvest.

~Chris Spurlock