Thursday December 17th, 2009

Good evening blog readers. The energy market closed relatively unchanged today, but has seen a bit of change since yesterdays DOE report; 2.5% up from Tuesdays close. The story has been the dollar and with its recent streght it has put a hold on what was a very bullish energy market. The bulls came out on Wednesday after the DOE reported draws of 3.7 million bpd on crude. Diesel had draws of 2.9 million bpd and was the main reason for a single day jump of .06 cents. Four week demand is still down about 6.5% on diesel and up about a 1% on gas. Refinery utilization is up about a 1% to hit right at 80% total. We are at an interesting intersection now, does crude still follow the dollar or will we get seperation? After todays trade it appears the dollar is still king, but time will tell. Experts still call for down side in crude with a key nubmer being $67.50, today it closed at $72.65. Look for some profit taking tomorrow as the week closes.
Thanks for reading.
Zach

Monday December 14th, 2009

USDA released their weekly crop progress tonight, pegging US corn harvest at 92% complete vs. last week harvest of 88%. Traders were expecting the harvest to be between 90 to 94% complete. Current estimates show northern Illinois at 87% completed, with western Illinois being furthest behind at 78% complete. Grain prices rose on the Chicago Board of Trade after a bullish research note from Deutsche Bank said agriculture futures are poised to rise sharply in the coming months.

Investors waded back into most other commodities as the dollar weakened, making them less expensive for foreign buyers. A nine-month rally in commodities came to a halt this month as investors book some profits and question how long the dollar will remain weak. The Federal Reserve has kept interest rates near zero this year, weakening the dollar and making assets like stocks and commodities more attractive to investors. As the economy shows signs of strength, investors are worried that the Federal Reserve may raise interest rates sooner than expected and potentially upend the rally in commodities.

The Fed meets this week for its final policy meeting of the year. The central bank is widely expected to leave rates unchanged, but investors are anxious for any more insight on the timing of a future rate hike.

~Chris Spurlock

Thursday, December 10th, 2009

Its has been a week since we last discussed Energy and it hasn't been pretty for those looking to make a buck on crude. Today recorded the 7th straight day of losses. While today's losses where mild at only .13 cents, the past week has cost the crude market about six dollars. This weeks DOE report showed large draws on crude at 3.8 million bpd, but sizable builds in gas of 2.2 million and 1.6 million on heating oil, which held the bulls at bay. The market has taken a dip and when that happens it tends to create a crossroads of such. The 100 day moving average on crude is about to cross the seven day moving average, which doesn't mean a hill of beans to end users like us, but to the technical investment folks it could mean one of two things:
1. Buy and create an end of year run back up to the $80 mark or 2. Sell, take profits and hold out for $60 to get back in. Time will tell which direction we head, but watch for the dollar to be the catalyst which sparks the move. It was relatively unchanged today, but a bounce could make option 2 look very tempting. As I mentioned last week it appears the market is going to make a move over the next month, so far it is still in its $10 range of 70-80 but it has given away all it cushion.
Product
Diesel
Over all demand is still down about 8% from this time last year and nothing seems to be changing anytime soon. The nationwide cold snap will draw on gallons, but over the road hauling and manufacturing are still down.
Gasoline
Over all demand is up 1.2% from last year over a four week average. This weeks DOE report showed builds of 2.2 million bpd on gas, helping confirm the past weeks dip in price. Refinery runs are up about 1.4%, so they are making more product as the year comes to a close, something about drawdowns on crude for tax purposes. It is safe to say this weeks losses of a dime provide a good buying opportunity, not say there still isn't downside potential.

Stay warm
Zach Winter

Wednesday December 9th, 2009

Both corn and soybeans finished lower today. Corn saw position squaring ahead of the USDA report due out tomorrow. While this report will not have any updates to production numbers, which is due out in the January report, traders are expecting an increase in ending stocks. Lower crude oil and a higher US Dollar also put pressure on the corn market as well. Weather continues to impact the final leg of harvest of throughout several key states, which is providing modest support to the corn market. With 12% of the US corn acreage remaining to be harvested, along with 1.5 billion bushels in temporary storage throughout the US, one has to wonder if Ag fundamentals will start to play a roll in the direction of the corn market.

Chris Spurlock

Tuesday December 8th

Corn up 1.25 cents, Soybeans dn 9.0, and wheat dn 8.25 today amid lower outside markets. The ugly weather was mentioned as support for the corn market today as analysts try to figure out what is left and what will be harvested. One company I read estimated:

Illinois 309 million bu
Iowa 146
Kansas 33
Minnesota 158
Missouri 35
Wisconsin 97
South Dakota 186
Total snow covered bu of 964 million after today/tonight

Usda supply/demand report out 7:30 Thursday morning with many looking for slightly lower demand on corn but nothing changed yet on corn or soybean production.

Bundle up tomorrow as the 2009 winter makes it's first impression on all of us.

Scott Meyer