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Natural Gas Breakdown Signals Lower Targets
By: Bruce Powers | July 2, 2024
• Natural gas broke below the 200-Day MA and prior swing low, signaling a bearish reversal with the next target zone between 2.37 and 2.34.
The 200-Day MA failed to hold as support on Tuesday as natural gas broke below it to reach a low of 2.415 for the day. It is on track to close below the 200-Day line as well. In addition, the prior swing low of 2.47 from May 28 was broken to the downside triggering a bearish reversal. This puts the next lower target zone of 2.37 to 2.34 in line as a downside target. The price zone is comprised of the 50% retracement of the full upswing and the completion of a descending ABCD pattern, respectively. As of today’s low, natural gas was down by 23.6% from the June peak.
200-Day Line Fails to Hold as Support
Both the long-term 200-Day MA and intermediate 50-Day MA failed to stop the descent in the price of natural gas. And it is on track to close clearly below the line today. This increases the short-term bearish outlook and the chance to reach lower targets before the retracement is complete. Below 2.34 begins a price zone from 2.235 to around 2.18.
Nonetheless, this does not mean that natural gas continues straight down as it has the past several days. A bounce is coming sometime. If it comes soon, the first sign of strength would be on a rally above today’s high of 2.48. Potential resistance around the 200-Day MA at 2.47 and the 50-Day line at 2.49 should also be considered, followed by this week’s high of 2.60.
Result of Failed Trendline Breakout
Natural gas is reacting to a failed trendline breakout that began in early-June. It was able to stay above the long-term downtrend line for only four days before it succumbed to selling pressure. Bearish implications were confirmed today with the drop below the 200-Day line. This means that the recovery could take some time.
Possible Time Symmetry
Let’s quickly analyze the timing of the current retracement. As indicated above, it takes the shape of a falling ABCD pattern. The AB decline of the pattern occurred in eight days while the current CD down leg is now in its fourth day. Will a retracement low be reached after an eight-day decline for the CD leg of the pattern? If it does, time symmetry will be represented. As with price, once swings match in time a potential pivot point has been identified.
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Grains Report: Wheat, Rice, Corn and Oats, Soybeans, Canola and Palm Oil
By: Jack Scoville | July 2, 2024
• WHEAT
General Comments: Wheat was higher in all three markets after trading lower early in the day. The rally came on news that Russia was considering expanding the war. USDA showed that the quarterly stocks were a little higher than expected but that planted area was a little below expectations. The US harvest is expanding through Kansas and adverse world growing conditions are still around. There were more reports of hot temperatures coming this week to Russian growing areas. It has also been very dry there. The weather is still a key, with extreme dryness reported in Russia and parts of the US and too wet conditions reported in Europe. However, US producers are reporting strong yields that exceed expectations so far and very good conditions as the harvest is now past the halfway point. Big world supplies and low world prices are still around.
Overnight News: The southern Great Plains should get mostly dry conditions. Temperatures should be above normal. Northern areas should see mostly dry conditions. Temperatures will average above normal. The Canadian Prairies should see mostly dry conditions. Temperatures should average above normal.
Chart Analysis: Trends in Chicago are mixed. Support is at 566, 557, and 550 September, with resistance at 605, 614, and 631 September. Trends in Kansas City are mixed. Support is at 576, 568, and 565 September, with resistance at 601, 614, and 636 September. Trends in Minneapolis are down with no objectives. Support is at 602, 596, and 590 September, and resistance is at 646, 649, and 669 September.46
• RICE
General Comments: Rice closed lower in new crop months as the market continued to digest the reports from Friday that showed increased planted area for Rice. The big US crops are now in doubt from reports of extreme rains in southern growing areas and especially near Houston, but the weather is now improved and big crops are expected once again. Supply tightness is expected to give way to increased production this year and greatly increased supplies this Fall. These ideas are reflected in the prices seen in the old crop and the new crop.
Overnight News:
Chart Analysis: Trends are down with objectives of 1502 and 1460 September. Support is at 1500, 1494, and 1484 September and resistance is at 1548, 1563, and 1571 September
• CORN AND OATS
General Comments: Corn and Oats closed a little higher yesterday, with weakness based on higher than expected planted area estimates released by USDA along with sharply higher than expected quarterly stocks data and strength coming from rallies in Soybeans and Wheat. The US weather remains hot and mostly dry except for northern areas such as southern Minnesota that have had way too much rain and flooding reported. The US Midwest is seeing uneven growing conditions and so are Southeast growing areas. However, USDA kept crop conditions high and the market sees no real problem at this time.
Overnight News: Colombia bought 100,000 tons of US Corn.
Chart Analysis: Trends in Corn are down with no objectives. Support is at 400, 394, and 388 September, and resistance is at 429, 432, and 443 September. Trends in Oats are mixed. Support is at 302, 296, and 290 September, and resistance is at 322, 327, and 338 September.
• SOYBEANS
General Comments: Soybeans and Soybean Oil closed higher yesterday, but Soybean Meal was a little lower. Deteriorating growing conditions in the US and on forecasts for less heat and more rain in areas in the Midwest this week were supportive. USDA found less than expected plamted area and slightly more stocks than had been expected by the trade. Precipitation chances are high in northern Midwest areas that have already been flooded. Reports indicate that China remains an active buyer of Soybeans in Brazil but has cut back and increased purchases from the US on demand due to the tax issues in Brazil and on Brazil logistical concerns. Domestic demand has been strong in the US but has suffered as crushers were crushing for oil. Oil demand has suffered as cheaper alternatives for feedstocks hit the biofuels market.
Overnight News:
Chart Analysis: Trends in Soybeans are mixed to down with objectives of 1117 and 1094 August. Support is at 1128, 1116, and 1104 August, and resistance is at 1155, 1162, and 1180 August. Trends in Soybean Meal are mixed. Support is at 344.00, 343.00, and 340.00 August, and resistance is at 353.00, 359.00, and 361.00 August. Trends in Soybean Oil are up with objectives of 4660 and 4890 August. Support is at 4510, 4440, and 4390 August, with resistance at 4620, 4680, and 4700 August.
• CANOLA AND PALM OIL
General Comments: Palm Oil was higher yesterday and trends are trying to turn up again. Export demand has been very strong in recent private reports. There is talk of increased supplies available to the market, but the trends are up on the daily and weekly charts. Canola was closed for a holiday. The daily charts show that Canola rejected a new leg down last week and closed near the top end of the recent trading range
Overnight News:
Chart Analysis: Trends in Canola are mixed. Support is at 618.00, 599.00, and 591.00 November, with resistance at 630.00, 634.00, and 640.00 November. Trends in Palm Oil are mixed to down with objectives of 3770 and 3630 September. Support is at 3780, 3760, and 3680 September, with resistance at 4020, 4080, and 4100 September.
Midwest Weather Forecast Scattered showers and storms. Temperatures should average below normal.
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Softs Report: Cotton, OJ, Coffee, Sugar, Cocoa
By: Jack Scoville | July 2, 2024
• COTTON
General Comments: Cotton was a little higher yesterday on the strength in Crude Oil futures. Big storms were reported in southern Texas in recent weeks that could damage crops. There are also some big problems with too much sun and no rain in the Delta and Southeast in recent weeks. Demand has been weaker so far this year but there are hopes for improved demand with the lower prices. Chinese consumer demand has held together well, and Chinese demand for Cotton has started to increase.
Overnight News: ICE said that 0 notices were posted for delivery against July futures and that total deliveries for the month are now 132 contracts.
Chart Trends: Trends in Cotton are mixed. Support is at 72.00, 71.20, and 70.00 December, with resistance of 75.80, 77.70 and 79.40 December.
This Week Last Qeek Last Year Average
Cotton Planted 97 94 98 99
Cotton Squaring 43 30 38 38
Cotton Setting Bolls 11 8 9 9
Very Poor Poor Fair Good Excellent
Cotton This Week 8 9 33 44 6
Cotton Last Week 5 9 30 51 5
Cotton Last Year 7 14 31 41 7
• FCOJ
General Comments: FCOJ closed higher yesterday and generally remained within the current trading range. The daily charts show that the market is trying to form a bottom. The market remains well supported in the longer term based on forecasts for tight supplies and very hot weather in Florida. The reduced production appears to be at the expense of the greening disease. There are no weather concerns to speak of for Florida or for Brazil right now. The weather has improved in Brazil with some moderation in temperatures and increased rainfall amid reports of short supplies in Florida and Brazil are around but will start to disappear as the weather improves and the new crop gets harvested.
Overnight News: ICE said that 0 notices were posted for delivery against July futures and that total deliveries for the month are now 0 contracts.
Chart Trends: Trends in FCOJ are mixed. Support is at 410.00, 403.00, and 384.00 September, with resistance at 433.00, 440.00, and 457.00 September.
• COFFEE
General Comments: New York closed a little lower yesterday and London closed higher as London as more reports of short supplies that could be made worse by ideas of reduced offers of Robusta are still in the market and forecasts for another couple of weeks of dry weather in Vietnam are still heard. Vietnam said it exported 902,000 tons of Coffee in the first six months of this year, down 10.6% from last year. A little rain has been reported in Vietnam recently to help crops there. There were also reports of poor Robusta yields in Brazil during the harvest but the main focus is on the terrible conditions in Vietnam. Ideas of less production in Vietnam are driving the rally. There were indications that Brazil and Vietnam producers were now offering Coffee, buts in small amounts.
Overnight News: The ICO daily average price is now 224.77 ct/lb. ICE NY said that 4 contracts were posted for delivery against July contracts and that total deliveries for the month are now 622 contracts.
Chart Trends: Trends in New York are mixed. Support is at 217.00, 212.00, and 203.00 September, and resistance is at 229.00, 236.00 and 238.00 September. Trends in London are mixed. Support is at 3960, 3820, and 3740 July, with resistance at 4300, 4390, and 4450 September.
• SUGAR
General Comments: New York closed mixed and London closed lower as harvest progress in Brazil was the important fundamental but as world supplies remain rather tight. Harvest yields of Sugarcane in Brazil have been disappointing so far. Trends are up on the daily and weekly charts. End users need Sugar but are not finding too much available in the cash market. There are still ideas that the Brazil harvest can be strong for the next few weeks amid dry harvest weather, but now the cry weather is causing concern about developing Sugarcane in center south areas. Harvest weather is called good in center-south Brazil. There are worries about the Thai and Indian production, but data shows better than expected production from both countries and above average rains are in the forecast for India.
Overnight News:
Chart Trends: Trends in New York are up with objectives of 2070 and 2170 October. Support is at 1970, 1920, and 1880 October and resistance is at 2060, 2090, and 2140 October. Trends in London are up with objectives of 575.00 and 600.00 October. Support is at 550.00, 550.00, and 528.00 October, with resistance at 581.00, 590.00, and 599.00 October.
• COCOA
General Comments: New York and London were lower again yesterday on continued speculative long liquidation and chart trends are down. Production concerns in West Africa as well as demand from nontraditional sources along with traditional buyers keep supporting futures, but this support is running its course and the market is searching for a new bullish fundamental. Production in West Africa could be reduced this year due to the extreme weather which included Harmattan conditions. The availability of Cocoa from West Africa remains very restricted and projections for another production deficit against demand for the coming year are increasing. Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast and Ghana continue.
Overnight News: ICE NY said that 9 notices were posted for delivery against July futures and that total deliveries for the month are now 919 contracts.
Chart Trends: Trends in New York are down with no objectives. Support is at 6960, 6420, and 6000 September, with resistance at 8000, 8130, and 8670 September. Trends in London are mixed. Support is at 5790, 5350, and 4920 September, with resistance at 6810, 7420, and 7940 September.
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The Corn & Ethanol Report
By: Daniel Flynn | July 2, 2024
We kickoff the day with Redbook YoY at 7:55 A.M., Fed Chair Powell Speech at 8:30 A.M., JOLT’s Jobs Openings and JOLT’s Job Quits at 9:00 A.M., RCM/TIPP Economic Optimism Index at 9:10 A.M., EIA Energy Stocks and LMI Logistics Managers Index at 3:30 P.M.
Ag Resource (ARC) reports, The Institute for Supply Management’s monthly Manufacturing Purchasing Managers Index declined to 48.5 in June from 48.7 in May, defying trade expectations for a monthly increase. This marked the 6th consecutive month of declines. Compared to a year ago, the index was 5% higher to mark the 6t consecutive month of year-over-year gains. However, the index has now been below 50 in 19 of the last 20 months. An index reading below 50 is not necessarily been an indication of a US financial recession. However, the current cycle has set a record for the number of months below 50 without an official declaration of a recession. This is do to the tightness of the US Labor market and rising incomes. A slowing of the US must occur before recessionary fears become realistic: Central Weather Discussion; We could see backlash from Beryl the quickest storm to become a Category 4 in the Atlantic since we have recorded. The warm waters of the Atlantic have now churned to a Category 5, another record. Scares About Rending Drier Weather beyond the Next 5 Days; Extreme Heat Absent into July 10th: Heavy rainfall – some excessive – is forecast across the N Plains and Midwest into late week, with accumulations of 2-4.00” to favor MO, IA, MN, and WI. Such rain is unwanted in N IA/MN, but a majority of the Corn Belt will be well watered by July 6th . An abrupt southward shift in precipitation occurs thereafter into mid-month. Fortunately, sustained extreme heat is not indicated. Highs across the C Plains & Midwest will exist mostly in the 70’s & 80’s. The nearby outlook is favorable, with meaningful crop threats confined to late June flooded areas amid a lack of GDD accumulations across NW Corn Belt. ARC notes the models are at odds over the exact positioning of high Pressure Ridging July 10th onward, and the duration of the Central US dryness will be monitored – and whether July climate outlooks that has long called for heat/dryness outside the Southeastern US proves correct. As South American crop is being monitored into Jul/Aug, the Black Sea drought is forecasted to extend and worsen. Overshadowed last week by the USDA reports were the EIA’s June release of key biofuel reports. The Monthly Biofuels Capacity and Feedstocks Update showed that after falling in February, US biodiesel capacity increased by 7 Mil Gal/Year in April to 1,991 MG/Yr. But compared to a year ago, capacity was 96 MG/Yr. or 5% smaller. Renewable diesel production capacity rose for the first time in 7 months, increasing by 269 MG/Yr. (7%) to a record large 4,126 MG/Yr. Compared to a year ago, capacity was 848 MG/Yr. (26%) larger. Combined biofuel capacity increased to a record larger 6,117 MG/Yr. On the feedstock use side of the report, biofuel producers used 1,070 Mil Lbs. of soybean oil in April, the most since January and a 1443 Mil Lbs. (15%) increase over a year ago. Canola oil use was 40% larger than a year ago at 361 Mil Lbs., and corn oil use was 15%larger at 339 Mil Lbs. Beef tallow use increased 132% to 486 Mil Lbs. and yellow grease use was 18% was 18% larger at 700 Mil Lbs. Total fats & oils use was up 32% at 3,071 ML Lbs. US corn use for ethanol production in may totaled 454 Mil Bu, vs. 423 in April, and vs. 439 a year ago. EIA also published ethanol production in the month of April at 1.23 Bil Gal, which places ethanol yield in April at 2.92, a bit lower than normal. Marketing year to date corn use for ethanol production sits at 4.06 Bil Bu, up 6% year-over-year. And which implies USDA forecast is 20-30 Mil Bu too low. It’s a minor difference and not market sensitive, but the recent ballooning of ethanol margins and seasonally strong gasoline use will keep the rate of domestic corn disappearance elevated using EIA weekly data through June 20th , analyst ARC estimates corn used for ethanol production in June at 448 Mil Bu, up 6 million the previous year. The market’s goal is to find demand growth, and this is occurring. ARC notes Us corn remains highly competitive in the export market through December. NASS crop conditions on corn dropped 2% and held steady in soybeans. (Good to Excellent)
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Falling Apart. The Energy Report
By: Phil Flynn | July 2, 2024
The Biden administration’s warped energy policy is continuing to fall apart as they lose in the courts and lose with scientific realties. This comes as hurricane risk and geopolitical risk factors are adding to the bullishness in the market. Fox Weather is reporting that Hurricane Beryl has been upgraded to a Category 5 hurricane in the Caribbean with sustained wind speeds at 160 mph. This storm is ‘extremely rare and extremely dangerous’ and the earliest category 5 on record.
Yet storm risk is taking a back seat to geopolitical risk factors and signals of the potential for record breaking holiday demand. Not only do we have US military bases on high alert for a credible threat of terror attack now we have the Iranian backed Houthi rebels daring the US to defend international waters tweeting that, “The next Aircraft Carrier that comes into the Red Sea will be our primary target”.
Even without the storm, the markets are starting to price in a global oil supply deficit as the spreads are suggesting that the markets are already starting to tighten significantly. In the big picture, the market is realizing that the lies that alternative fuels and electric cars would lead to a demand slowdown was greatly exaggerated. Demand is on track to hit a record high and massive Energy Information Administration (EIA) Adjustments could be swinging back which could lead to some big-time crude draws in the coming weeks. Fox News reports that, “AAA forecasts a record 71 million people traveling 50 miles or more through the weekend after the holiday, beating pre-pandemic numbers. Over 60 million people will hit the road. More than 57 million will take to the air, and almost 5 million will be cruising or taking buses and trains.
Tonight, we get the American Petroleum Institute (API) supply report and we expect crude to draw by 3 million barrels. I also think that Gasoline supply and Distillate supply should fall by about 3 million barrels as well.
At the same time world events along with the Biden administration ceding more power to the OPEC Plus Russia cartel are looking more dangerous. Biden seems to want to clamp down on US and oil and gas producers but continues to offer oil production opportunities to Iran and Venezuela. After the Biden administration reimposed sanctions on Venezuela after they failed to follow through with their promise to allow free and fair elections, they are now concerned about the possibility of sharply rising gasoline and diesel prices going into the election. So why not go back to their favorite neighborhood dictator?
Oil Price is reporting Venezuela’s president, Nicolas, Maduro, has accepted a U.S. proposal for a new round of talks on local policies and the future of U.S. oil sanctions on Caracas. “I have received the proposal during two continuous months from the United States government to reestablish talks and direct dialogue,” Maduro said on Venezuelan television, as quoted by the Associated Press. “After thinking about it for two months, I have accepted, and next Wednesday, talks will restart with the United States government to comply with the agreements signed in Qatar and to reestablish the terms of the urgent dialogue,” the Venezuelan president said.
And based on what we’re seeing in the crack spreads here in the United States, you can see why the Biden team might be getting nervous. While today’s national average at $350.1 a gallon is slightly lower than a year ago and the lowest since 2021. The signs are that prices could jump higher as the week continues. So, the upside risks that we’ve been warning about are starting to come to fruition. We need to hold on to our hat as we get closer to the holiday weekend and the end of the week.
The EIA natural gas report will be released a day early. We are looking at a 33 bcf injection. Weather will continue to be the major factor driving prices.
Reuters is reporting that Federal judge halts US government’s ban on LNG permits. “A federal judge on Monday blocked the U.S. government’s ban on approving applications to export liquefied natural gas (LNG), in response to a lawsuit by Republican-led states. U.S. District Judge James Cain Jr, in Louisiana, a Trump appointee, ruled that the LNG export ban “be stayed in its entirety, effective immediately.” A coalition of 16 Republican-led states, including Texas, Louisiana and Florida, had filed suit in March in Lake Charles, Louisiana, arguing that the administration of Democratic President Joe Biden lacked the authority to broadly deny the permits. They claimed the U.S. Department of Energy’s (DOE) pause on exports would harm the U.S. economy and undermine efforts to supply foreign allies in Europe with steady supplies of LNG as the region seeks to wean itself off piped gas from Russia.
The Biden administration said in January the pause would allow officials to review the process for analyzing economic and environmental impacts of projects seeking approval to export LNG to Europe and Asia where the fuel is in high demand. The January move was cheered by climate activists, an important part of Biden’s base, and could have delayed decisions on new plants until after the Nov. 5 presidential election, when Biden will face off against Republican former President Donald Trump.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | July 2, 2024
• Top Movers
Soybean Oil CBT Futures 4.48 %
NYMEX RBOB Gasoline Futures 3.07 %
NY Heating Oil Futures 3.02 %
Wheat CBT Futures 2.93 %
Palm Kernel Oil 2.93 %
• Bottom Movers
NSW Baseload Electricity Continuous 26.54 %
AU - Queensland Base-Load Electricity Futures 5.68 %
Cocoa (NYCSCE) Futures 5.67 %
NY Natural Gas Futures 4.73 %
Eggs 4.42 %
*Close from the last completed Daily
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The Corn & Ethanol Report
By: Daniel Flynn | July 1, 2024
We kickoff the day with S&P Global Manufacturing PMI Final at 8:45 A.M., ISM Manufacturing PMI, ISM Manufacturing Employment, Construction Spending MoM, ISM Manufacturing New Orders, and ISM Manufacturing Prices at 9:00 A.M., Export Inspections at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 A.M., Cotton System, Fats & Oils, and Grain Crushings at 2:00 P.M., and Crop Progress at 3:00 P.M.
The Commitment of Traders report affirmed another big week of selling in the ag markets. I also believe Friday’s report did not systemize the damage of recent weather, whether drought, flooding and heavy rain & high winds. I expect a reality check in the next upcoming reports. This report is not one to take for granted, For the week ending June 25, funds were net sellers in every ag market except live cattle, where they bought 4,100 contracts. Funds sols 86, contracts in corn, 24,000 in soybeans, and 36,000 contracts of wheat on all 3 wheat exchanges. Funds also sold 12,000 in soybean meal, and nearly 24,000 in soybean oil, close to 9,000 contracts in lean hogs, and 500 in feeder cattle. Across the 10 principle ag markets, funds sold 187,000 contracts during the week to take the net short position near 501,000 contracts. Ag Resources (ARC) estimates today’s funds short position is closed to 580-600,000 contracts. And if our crazy weather pattern continues into July both in the US and abroad, in this forecasted heavily active hurricane season. Weather may start short-covering, and by the time the horse left the barn it will be too late to say, “Katy Bar the Door!” The June Acreage and Quarterly Grain Stocks reports offered sharply mixed results. The big surprise was 1.4 Mil/Acre and increase in corn from the March Prospective Plantings report and a 410,000 acre decline in soybean acres. ( The street was thinking the opposite). There was a slight decline in additional minor feed grain acres and fewer minor oilseed acres. Corn and Soybean Stocks were both within the range of pre-report estimates. Ultimately, it was the average that directed price trends during the day. The soybean average figure was below expectations and supported soybean futures prices ate the end of the week, while larger-than-expected corn acreage number sent corn futures sharply lower. Amid the mixed report results, more drama was added as the USDA’s websites crashed at the reports release, delaying the Grain Stocks foe more than 10 minutes and the Acreage delay nearly 20 minutes. The CBOT futures are mixed as world traders were able to react to Friday’s NASS June Stocks/Seedings report. Initial selling pressure was evident and was felt on Sunday’s opening, but short covering and end user pricing allowed for an overbought bounce in soybeans and wheat. Corn futures are slightly lower on spreading.
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Storm Surge. The Energy Report
By: Phil Flynn | July 1, 2024
Energy up on rising storms of different natures. Weather Risks, geopolitical risk, the possibility of an oil supply deficit and predictions of record Fourth of July travel are being tempered with Data from the Energy Information Administration that touts oil and gas production and disappointing Canada Trans Mountain Pipeline loadings suggesting weak Chinese demand. Is that anyway to celebrate Canada Day?
We should start with some of the geopolitical risk factors that are mounting. Fox News Lucas Tomlinson tweeted that, “All U.S. military bases in Europe have been put on heightened alert status due to a potential terrorist attack. There is credible intel pointing to an attack against U.S. bases in Europe over the next week or so,” a U.S. defense official tells Fox News.
ESSA News reported that NATO representatives have expressed concern over Russia’s actions in the North Sea. The issue pertains to the potential mining of key Western infrastructure. Russian ships reportedly performed up to 1,000 suspicious maneuvers. According to the British newspaper “The Times,” the suspicions are based on data from companies servicing key oil and gas drilling platforms, pipelines, power, and telecommunications cables. No sabotage has been detected on Belgian or Dutch cables. But explosives have been found on a British cable at the beginning of the Ukraine crisis, according to “The Times.”
The AP reports that U.S., European and Arab mediators are pressing to keep stepped-up cross-border attacks between Israel and Lebanon’s Iran-backed Hezbollah militants from spiraling into a wider Middle East war that the world has feared for months. Iran and Israel traded threats Saturday on what Iran said would be an “obliterating” war over Hezbollah.
These increased risk factors will add a premium for the shipment of oil and gas it should be reflected in the futures market especially as we get into a holiday week where trading is a bit thinner, and people are more nervous.
Reuters is reporting that, “About 20 ships loaded crude oil on Canada’s West Coast in the first full month of operation on the newly expanded Trans Mountain pipeline, according to vessel-tracking data on Sunday, slightly below the operator’s forecast. Loadings from the pipeline expansion are closely watched because the Canadian government wants to sell the $24.84 billion (C$34 billion) line. Questions about oil quality, pipeline economics and loading challenges have swirled since its startup, spurring concerns over demand and exports of crude.
The 20 vessels loaded were less than the 22 ships that Trans Mountain had initially expected to load for the month. Total crude exports from Vancouver were around 350,000 barrels per day with the last two vessels for June-loading at the Westridge Marine terminal, as of Sunday. Still Reuters reported that, “U.S. energy production overshadowed consumption by 9 quadrillion British thermal units (quads) in 2023, according to an analysis released by the U.S. Energy Information Administration (EIA) on Wednesday that showed the widest margin in records dating back to 1949. Energy production rose 4% to hit a record of nearly 103 quads in 2023, the analysis found, while energy consumption eased 1%.
Even with the numbers that are being touted by the Energy Information Administration (EIA) there is still an expectation that we’ll see a supply deficit later this year. Obviously demand from China continues to be a concern but overall, we still expect that things will get tight especially with what’s happening on the weather front.
The Atlantic weather pictures is still a concern. Also a concern, Fox Weather is reporting that the situation in the Caribbean is becoming more dire, and residents are being warned to finish preparations as soon as possible ahead of Hurricane Beryl. The storm rapidly intensified and strengthened into a Category 4 hurricane and could unleash catastrophic destruction across populated island nations starting early Monday morning. “Extremely dangerous Category 4 Beryl (is) approaching the Windward Islands,” the National Hurricane Center (NHC) said Sunday evening. “Life-threatening winds and storm surge expected there early Monday morning.”
Hurricane Beryl is now the second named storm of the 2024 Atlantic hurricane season and quickly strengthened from a tropical depression into a tropical storm and then a hurricane – all within 24 hours. Not only is Hurricane Beryl intense, but it’s also made history. Hurricane Beryl intensified from a tropical depression into a major Category 3 hurricane in less than 48 hours, a feat never achieved earlier than September.
Triple A reported last week that, “the national average shook off nearly three weeks of stagnation, moving a nickel higher since last week to hit $3.50. The move came as the cost of oil crossed the $80 per barrel mark, putting upward pressure on pump prices. With oil costs accounting for about 54% of what you pay at the pump, more expensive oil usually leads to more expensive gas.
“Summer got off to a slow start last week with low gas demand,” said Andrew Gross, AAA spokesperson. “But with a record 60 million travelers forecast to hit the road for the July 4th holiday, that number could pop over the next ten days. But will oil stay above $80 a barrel, or will it sag again? Stay tuned.
Several states will adjust fuel taxes and fees starting Monday, July 1. Indiana is increasing the tax on gasoline/gasohol by a cent to 35cts/gal. Virginia increased the tax on gasoline, gasohol, and alternative fuels such as CNG and LNG by a penny to 30.8cts/gal. However, Michigan will keep the current gas tax rate at 18.8cts/gal while reducing the clear diesel fuel and kerosene tax from 21.3cts/gal to 20.4cts/gal.
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Natural Gas Bearish Trend Intensifies
By: Bruce Powers | June 28, 2024
• Natural gas dropped to a new retracement low at 2.59, breaking below key Fibonacci levels and potentially targeting further support near the 200-Day MA.
Natural gas dropped on Friday to a new retracement low of 2.59. Selling accelerated as the sellers took back control generating a decisive red candle. Trading continues near the lows for the day at the time of this writing, and natural gas could still dip lower before the weekend. Today’s decline broke below the 78.6% Fibonacci retracement at 2.63.
Decline Follows Failed Breakout Above the 20-Day MA
The decline today follows a successful test of resistance around the 20-Day MA and top trendline over several days earlier this week. Given that the June 24 swing low at 2.635 failed to hold as support today, it looks like the 200-Day MA around 2.47 will be tested as support before the retracement is complete.
Notice that the 50-Day MA has almost converged with the 200-Day line thereby confirming potential support around the 200-Day line. If the 200-Day line fails to act as support, lower potential targets are identified at the 50% retracement and 61.8% Fibonacci retracement at 2.37 and 2.18, respectively.
Drop to 200-Day MA More Likely
When measuring the full upswing beginning from the April 25 swing low, the 38.2% retracement shows at 2.55. But given the rejection of the price of natural gas as the 20-Day line and subsequent bearish reaction, it is at risk of being broken. Further, this week’s swing high of 2.86 established the BC leg of a descending ABCD pattern.
The pattern completes below the 200-Day MA and near the 50% retracement at 2.34. This would seem to increase the risk of a potential decline below the 200-Day line. The 200-Day line was successfully tested as support on May 28, shortly after natural gas rallied back above the line on May 16. If it falls back below the line and then stays below it, the correction is likely to continue with a deeper retracement or consolidation.
Lower Support Zone Starts Around 2.235
A lower potential support zone, below the 50% retracement, is identified from around 2.235 to 2.18. This week is on track to end, completing the second week down from the June 10 high. Moreover, selling continues to dominate into Friday afternoon. Therefore, next week natural gas is at risk of continuing the bearish decline.
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Taking The Wind Out Of The Sails. The Energy Report
By: Phil Flynn | June 27, 2024
British Petroleum or BP as it is also known, is having the wind taken out of its sails as investors say enough is enough when it comes to investing and losing money in aspirational virtue signaling projects.
Reuters reported that BP’s CEO Murray Auchincloss has imposed a hiring freeze and paused new offshore wind projects as he places a renewed emphasis on oil and gas amid investor discontent over its energy transition strategy, sources at the company said.
The moves, which have not previously been reported, are part of a decision by Auchincloss to slow down investments in big budget, low-carbon projects, particularly in offshore wind, that are not expected to generate cash for years, said several sources at BP who declined to be named according to Reuters. This means that investors are demanding that BP get back to investing, get back to oil and gas and start making profits. This is the latest evidence of the backlash from the energy transition debacle that has damaged the global economy, led to rampant inflation, hurt the poor, and has destabilized the globe. Finally we are starting to see a swing back towards common sense as people of reason start to stand up.
Despite global leaders falsely claiming that the biggest threat to the globe is climate change, people of reason see that the cure being touted by the green energy elite is much worse than the disease. For years politicians and global leaders have hyped doom and gloom climate predictions to push the big government green agenda. Doom and gloom predictions to get you to conform, give up your freedoms all in the good name of saving a planet. Whether it’s taking away your mode of transportation or putting farmers out of business trying to take away their water supply or get rid of gassy cows and take away your meat or taxing the heck out of you, it is more about government control. These policies will make it almost impossible to heat or cool your home; people are starting to get wise to this game. They are getting tired of these political windbags.
Decades of this scaremongering and billions of dollars spent on this transition yet the reality is that fossil fuel usage is at a record high. I am for all forms of energy yet it’s very clear the government desire is to force feed the global economy inefficient energy sources that are more expensive and take away our rights. Not only has it failed from a carbon emission standpoint but from a moral and ethical standpoint as well.
Back in the real oil world, prices seem to be shaking off some bearish data from the Energy Information Administration (EIA) and even reports China’s crude oil imports hitting a five year low because of increasing geo-political risk and signs that the trend of increasing global demand that will hit an all-time high, will see the oil market significantly tighten later over the coming months.
The EIA put supply at U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.6 million barrels from the previous week. At 460.7 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year. Total motor gasoline inventories increased by 2.7 million barrels from last week and the same as the five-year average for this time of year. Distillate fuel inventories decreased by 0.4 million barrels last week and are about 9% below the five-year average for this time of year.
The EIA petroleum demand over the four-week moving average came in at about 20.4 million barrels a day and that’s actually up 0.8% from the same period last year gasoline demand continues to lag falling last week and on a four-week moving average is at 9.1 million barrels a day down 2% from the same. A year ago, distillate demand came in at 3.6 million barrels a day over the past four weeks, that is down 1% from the same period a year ago.
Other fuels are driving the market higher, jet fuel, asphalt chemicals and demand is higher than a year ago overall.
Natural gas can’t seem to get a handle on which way the wind is blowing. While production is down and demand is up, some producers might start to ramp up production and temperatures could cool down, causing some uncertainty about advancing prices much higher. On top of that the hot weather that has driven demand in many parts of the country may ease and the other issue with natural gas is just what may happen as far as tropical activity develops in the Gulf of Mexico.
Fox Weather is reporting that, “Hurricane HQ: Invest 95L likely to become Tropical Storm Beryl in Atlantic Fox Weather warns that a pair of tropical disturbances are being tracked in the Atlantic Ocean.
‘Invest 94L is the one closest to land as it moves across the Caribbean Sea. Invest 95L is in the middle of the ocean and has a high chance of developing into a tropical depression or tropical storm this weekend. The next named storm in the Atlantic will receive the name Beryl.
For natural gas these storms, depending on how they develop, could have a major impact on prices, whether it be from the lack of production because of shutdowns in the Gulf of Mexico to the flip side of that power outages caused by this storm reducing demand. Download the Fox Weather app to keep up with the latest developments.
The other thing that natural gas traders are watching today is the weekly storage report. Scott Di Salvino at Reuters wrote that, “U.S. utilities likely added a smaller-than-usual 51 billion cubic feet (bcf) of natural gas into storage last week, after drillers cut output earlier this year due to low gas prices, a Reuters poll showed on Wednesday. That would be sharply down from an injection of 81 bcf during the same week a year ago and a five-year (2019-2023) average increase of 85 bcf for this time of year. In the prior week ended June 14, utilities added 71 bcf of gas into storage. The forecast for the week ended June 21 would increase stockpiles to 3.096 trillion cubic feet (tcf), about 11.2% above the same week a year ago and about 20.5% above the five-year average for the week. The U.S. Energy Information Administration (EIA) will release its weekly storage report at 10:30 a.m. EDT (1430 GMT) on Thursday. Financial firm LSEG said gas output in the Lower 48 U.S. states rose to an average of 98.5 billion cubic feet per day (bcfd) so far in June, up from a 25-month low of 98.1 bcfd in May. That was still well below the monthly record high of 105.5 bcfd from December 2023.
There were 94 total degree days (TDDs) last week compared with a 30-year normal of 75 for the period, according to data from financial firm LSEG. TDDs measure the number of degrees a day’s average temperature is above or below 65 degrees Fahrenheit (18 degrees Celsius) to estimate demand to cool or heat homes and businesses.
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Natural Gas Will the Uptrend Continue?
By: Bruce Powers | June 26, 2024
• Testing resistance at 2.86, natural gas remains uncertain; a close above 2.95 would improve the likelihood of an uptrend continuation.
Natural gas rallied to test resistance around the downtrend line with the day’s high of 2.86. That high is the extent of the bounce so far from the 2.635 swing low reached on Monday. Today’s high defines resistance up to the swing high and weekly high of 2.95.
A decisive advance through 2.95 confirms an upside breakout and the potential continuation of the uptrend that has developed since the April 25 swing low. Nevertheless, natural gas remains in a precarious position and uncertainty remains as to the next direction.
20-Day Line Tells a Story
The relationship to the price of natural gas and the 20-Day MA tells a story over the past few days. Notice that Monday ended above the 20-Day line and yesterday’s close was below the 20-Day line. At the time of this writing natural gas is on track to close weak, in the lower third of the day’s range and again below the 20-Day line. Since the line had shown support during the trend’s rise, successful tests of the 20-Day line as resistance continue to keep the possibility of a deeper retracement as a possibility.
Further Weakness Below 2.635
A break below Monday’s low of 2.635 is a sign of weakness, and it opens the door to a deeper retracement. However, a dip below Tuesday’s low of 2.70 will provide an earlier signal of pending weakness. On the downside, the initial target is the 200-Day MA, currently at 2.47. Also, the 50-Day MA is a little lower than the 200-Day line at 2.43.
Recovery from Shallow Retracement is Bullish
Notice that Monday’s low found support near the 78.6% Fibonacci retracement level of the internal upswing. However, the larger upswing has a minimum 38.2% Fibonacci retracement of the full trend 2.55. It provides a potential support area that is above the 200-Day line. The fact that the recent retracement found buyers before testing support of the 38.2% Fibonacci level is a sign of strength. That is, if it follows through with additional bullish signals. Once there is a daily close above 2.95, natural gas would have cleared an important price level to indicate that the trend is indeed improving.
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The Corn & Ethanol Report
By: Daniel Flynn | June 26, 2024
We kickoff the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchased Index at 6:00 A.M., New Home Sales and New Home Sales MoM at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction and 2-Year FRN Auction at 12:00 P.M., Dairy Products Sales at 2:00 P.M., Bank Stress Tests, Building Permits Final, and Building Permits MoM Final at 3:30 P.M.
Housing price data from the Federal Housing Finance Agency showed that the average price of single-family homes with mortgages backed by Fannie Mae and Freddie Mac rose by 0.2% in April and were 6.3% higher than a year ago. This marked the 8th consecutive month of 6% or more gains, and it put the FHFA House Price Index at a record high of 424.3. Across the 9 census divisions, year-over-year increase ranged from +3% in the West South-central region to +8.5% in the New England and Mid-Atlantic region. Flooding and excessive heat continue to drive fear in what the crops can produce with more rain here and more to come. This is rough and no end is in sight with Mother Nature globally, and a house next to the Rapidan Dam falls into the Ble Earth River. More damage is expected as we attempt to understand damage control in the immediate. Ad Resources Central US Forecast Mixed/Chaotic; Helpful Rain Impacts E Midwest; Drought Alert Offered to Southern Plains, Southeast, Southern Midwest: The Central US forecast features a wide range conditions into the first week of July. Helpful rain will linger across the eastern Midwest slowly across the Upper Midwest. Rapid drought development is forecast across the Southern Plains, Delta, and far Southern Midwest – while odds are high heat will be widespread in July. As I mentioned yesterday it’s a story of haves and have nots. And we will see if we can take advantage of global yields and fill the void. The major forecasting models, along with NOAA, agree that amplified high pressure Ridging will be anchored aloft the S Plains & Southeast. Temps in TX, OK, KS, LA, AR, TN, and KY in the 6-15 day period are projected in the upper 90’s/low 100’s. Ridge-riding storms are forecast elsewhere, and so it’s the exact positioning of this Ridge in early/mid-July that matters most. ARC fears the far southern and eastern Midwest will join the Southeast in facing heat & dryness in July. (A time that makes or breaks yields). Spot CBOT Corn Tests Spring Low; Ethanol Margins Best in Decade; US July Heats Up: Corn markets followed wheat lower as the speculative community embraces negative seasonal trends as needed rain falls across the Eastern Midwest. The market views US supply risk – acres, yield, and June 1 stocks – as limited to nonexistent, but at $4.25, spot futures, there’s just not much opportunity for the bears until late July/Aug weather is known. ARC relays that climate guidance agrees drought development across the S Plains, Delta, Midsouth, and Ohio Valley. Odds are high that heat blankets most of the Central US during July. A slowing of ethanol production in NW Corn Belt – due to flooding – has spiked ethanol cash prices and production margins. Gasoline stays strong into the end of summer. US weekly ethanol grind doesn’t peak seasonally until late July. It’ll be difficult for NASS June stocks & seedings data to lean bearish at depressed prices. Sales are not recommended amid a sharp drop in Brazilian corn production, confirmation of yield collapse in Argentina and as dryness re-emerges in Ukraine. Corn is too cheap! Cash basis bids for corn is also firming. Central Illinois corn is bid at 16 cents over and Cedar Rapids paying 24 cents over. The corn basis has some wondering if US June corn stocks will be less than 4,875 Mil Bu forecast. Stout Midwest cash basis bids, oversold technical indicators, erratic world weather and coming NASS reports has the bears wondering if its time to bank profits into the end of the month and quarter. The USDA June Stocks/Seedings Report is Friday and risk adjustment will be the theme into the historical unpredictable report. ARC looks for a modest fall in US corn and a rise in soybean acres. Once again, July weather makes or breaks US corn crops. Don’t forget the funds large net short positions.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 26, 2024
• Top Movers
AU - Victoria Base-Load Electricity Futures 5.05 %
AU - Queensland Base-Load Electricity Futures 4.59 %
Cotton 3.03 %
Cotton #2 (NYCE) Futures 2.29 %
Orange Juice (NYCE) Futures 2.12 %
• Bottom Movers
NY Palladium Futures 4.04 %
LME Aluminum Alloy 3.72 %
Coffee (NYCSCE) Futures 2.94 %
NY Natural Gas Futures 2.88 %
Soybean Oil CBT Futures 2.33 %
*Close from the last completed Daily
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Natural Gas Poised for Breakout After Key Reversal
By: Bruce Powers | June 25, 2024
• Natural gas peaked briefly above Monday’s high before finding resistance at 2.84, suggesting a rest day before potential higher moves following a bullish reversal.
An insignificant day today for the price of natural gas as it peaked above Monday’s high briefly before finding resistance at 2.84. Consider it a rest day before attempting to proceed higher as it follows Monday’s bullish key reversal day. That high was a successful test of resistance around the downtrend line. Natural gas is on track to complete a narrow range day today and it has formed near the highs of yesterday’s price range. This positioning reflects underlying strength.
Strength Confirmed Above 2.95
Today’s price behavior reiterates the importance of natural gas getting above the most recent swing high of 2.95, also a weekly high, before buyers start to get more aggressive. Until then, resistance could be seen that takes natural gas down to again test support at this week’s low of 2.635, and possibly lower. There remains a series of lower swing highs and lower lows until the 2.95 high is breached.
Retracement Likely Complete
Nonetheless, there are reasons to believe that the 2.635 low from Monday may be the end of the retracement. It completed a 78.6% Fibonacci retracement (2.62), and yesterday’s strong bullish reversal ended with a key reversal day (open below prior day, close above prior day). The key reversal day reflects a shift in sentiment in only one day, from the sellers being in charge to the buyers taking back control of price action. Yesterday’s swing low also set up a measured move. The measured move is reflected in a rising ABCD pattern shown on the chart.
Initial Upside Target of 3.32
The second move or CD leg of the pattern has the potential to at least match the price appreciation seen in the first move or AB leg up. Price symmetry is reflected when the two swings match. It completes an initial target at 3.32. Once symmetry is present between the swings, a potentially significant pivot level has been identified. Either price breaks out above the pivot zone, or it behaves as resistance and a pullback ensues. Also, a choppy relatively sideways pattern could develop as well around the pivot point.
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The Great Wheat Collapse continues with its 7th consecutive red day and 17th of the last 19
By: Barchart | June 25, 2024
• The Great Wheat Collapse continues with its 7th consecutive red day and 17th of the last 19.
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Arabica Coffee (the good stuff) soared today and is now approaching 2-year highs
By: Barchart | June 25, 2024
• Arabica Coffee (the good stuff) soared today and is now approaching 2-year highs.
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Cocoa posts 3rd largest decline in the last 40 years. Chocolate back on the menu
By: Barchart | June 25, 2024
• Cocoa posts 3rd largest decline in the last 40 years. Chocolate back on the menu.
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Natural Gas Price Forecast: Bullish Signs Point to Potential Upside
By: Bruce Powers | June 24, 2024
• Natural gas hit 2.83, signaling a bullish reversal and potential for higher prices if it closes above 2.77 today, Monday.
Natural gas found support at a new retracement low of 2.64 on Monday before it strengthened intraday. The subsequent advance took the price of natural gas above Friday’s high of 2.77 thereby triggering a daily bullish reversal. At the time of this writing the high for the day was 2.83 and trading continues near the highs of the day.
Natural gas is on track to complete a key bullish reversal day today. Monday’s session began with an open below Friday’s 2.67 low and it was followed by an eventual breakout above Friday’s high. A daily close today above Friday’s high increases the chance for further strengthening in the price of natural gas.
20-Day MA Near-term Support
Further, the price area around the 20-Day MA, now at 2.79, has been defining resistance today. If natural gas can end today above the 20-Day line, it will be sending a signal that the retracement is likely over, and higher price levels again come into play. Note that natural gas closed below the 20-Day line for only the past two days. It had marked potential support since April 26 when natural gas previously rose above the 20-Day MA after being below it. A quick two-day recovery of the 20-Day MA is a bullish sign.
Bullish Signal on Breakout Above 2.95
Last week’s high of 2.95 marks an important price level for natural gas as it is a weekly high and a daily interim swing high. A decisive breakout above that price level will signal a bullish weekly reversal. Also, a rise above last week’s high will have recovered the downtrend line. From there natural gas should look to recover the recent trend high of 3.16 and then test higher target areas.
Rising ABCD Pattern Points to 3.32, if Bulls Take Back Control
An initial higher target is identified around 3.32. That price would complete a simple rising ABCD pattern or measured move. Once price symmetry is exhibited the chance to encounter resistance to some degree increases. That target is a little below the next higher price target around the January swing high at 3.39. It is confirmed by a 200% extended retracement target of 3.37.
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Drought & Flooding – Not A Good Sign For Yields. The Corn & Ethanol Report
By: Daniel Flynn | June 24, 2024
We kickoff the day with Fed Waller Speech at 2:00 A.M., Dallas Fed Manufacturing Index at 9:30 A.M., 3-Month & 6-Month Bill Auction at 9:30 A.M., Export Inspections at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 A.M., Fed Daly Speech at 1:00 P.M., and Crop Progress at 3:00 P.M.
Ag Resources (ARC) is expecting US corn & soybean condition ratings to decline 3-5% today due to heat and dryness across the E Midwest and flooding across the Northwest Midwest. This is not a start to be desired. CBOT futures are mixed to start the week with wheat values weaker on continued chart selling while soybean futures bounce. Central US forecasts have improved from the last several rain chances for the E Midwest. Yet, the trade is likely not giving enough yield concern to the widespread flooding that is occurring across the Northwest Midwest. This is a case where rain is not making grain and this high yielding area will struggle with drowned out crops due to ponding and the leaching of nutrients and elevated disease pressures. It seems unlikely that the 2024 corn yield will surpass last year’s 177.3 BPA record.
This is a sign with global weather patterns affecting crops across the globe… Who can fill the void of exports?
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All while there is very little rain and soaring temperatures from coast to coast.
Stores of value including Cryptocurrencies and metals have been hammered the last few weeks.
Commodity price changes over last year...
By: Charlie Bilello | June 21, 2024
• Commodity price changes over last year...
Cocoa: +180%
Silver: +35%
Coffee: +34%
Gold: +22%
Zinc: +20%
Copper: +17%
Aluminum: +13%
WTI Crude: +12%
Brent Crude: +10%
Natural Gas: +6%
US CPI: +3.3%
Heating Oil: +2%
Gasoline: -2%
Cotton: -10%
Lumber: -13%
Soybeans: -19%
Wheat: -22%
Sugar: -26%
Corn: -30%
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Lumber just took out the Jan 2023 low
By: Barchart | June 21, 2024
• Lumber just took out the Jan 2023 low.
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The Great Wheat Collapse continues as it has now traded red in 15 of the last 17 days
By: Barchart | June 22, 2024
• The Great Wheat Collapse continues as it has now traded red in 15 of the last 17 days.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 22, 2024
• Top Movers
Palm Kernel Oil 3.54 %
AU - Victoria Base-Load Electricity Futures 2.79 %
Gold / Silver Ratio 2.42 %
Platinum / Gold Ratio 2.38 %
US - Dow / Gold Ratio 1.63 %
• Bottom Movers
Lumber (CME) Futures 4.42 %
Oats (CBOT) Futures 4.35 %
NY Silver COMEX Futures 3.92 %
NY Copper Futures 2.63 %
New York Spot Copper 2.63 %
*Close from the last completed Daily
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Lumber closed at its lowest price since January 2023
By: Barchart | June 21, 2024
• Lumber closed at its lowest price since January 2023.
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Natural Gas Natural Gas at Risk of Lower Pullback
By: Bruce Powers | June 20, 2024
• Natural gas declines below key support levels, threatening the bull pennant breakout and indicating potential for a deeper bearish trend.
Natural gas stalled its rise on Thursday and reversed to trigger a bearish continuation of the retracement. It is now back below the 20-Day MA, and it is on track to close below it today. Further, the 61.8% retracement level at 2.74 failed to stop the decline. Natural gas looks to be on its way to trigger a breakout failure for the bull pennant. It looks to be rapidly approaching the center of the pennant triangle formation at 2.70.
That center line defines the symmetry of the pennant and is being used to identify a potential support level. If it is broken that provides a bearish indication. While, if it leads to a bullish reversal, the potential for the bull trend to continue in the near-term improves. If the 2.70 price area fails to hold as support, then the pennant breakout is failing. If so, the trendline breakout has also failed. Lower down is the more significant 200-Day MA at 2.47.
Breakout Above 2.95 Needed for Bullish Sign
On the upside, a new bullish signal is indicated on a decisive rally above today’s high of 2.95. A daily close above that high will then be needed to confirm the breakout. Notice that Wednesday’s high closed technically above the line, but not by much. The result is seen in today’s weakness. Also, keep an eye on the interim swing high of 2.92. It was also exceeded today but subsequently failed to follow through. It should be watched in conjunction with the downtrend line.
Deeper Retracement More Likely
Natural gas recently completed a greater than 99% rally when starting from the April 25 swing low. Further consolidation and or retracement would not be surprising following such a move. Nevertheless, how the price of natural gas responds in the pullback is going to be more revealing. Both the prospect of a deeper retracement, or a bullish continuation remains a possibility.
Yesterday’s bullish reversal off the 20-Day line showed promise but given the bearish response today, uncertainty dominates. The weekly chart provides support for a possible deeper correction as a bearish shooting start candle triggered to the downside earlier this week. If this week’s low price is broken the weekly chart will take on greater meaning.
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Natural Gas Shows Continued Strength Following Retracement
By: Bruce Powers | June 19, 2024
• Natural gas traded within a narrow range today, reinforcing its uptrend and signaling potential for further gains if key resistance levels are breached.
Natural gas retained signs of strength on Wednesday as it traded in a relatively narrow range near the highs of Tuesday’s trading range. Tuesday’s close was above the downtrend line, and it looks like today may also close above the line. The high for the day was 2.93 and the low was 2.86, at the time of this writing. Another close above the line would provide an additional sign of strength. Also, of interest is the 2.92 interim swing high, which was Tuesday’s high. It was busted briefly today and a close above it would further confirm strength.
20-Day MA Retains Trend Support
This week’s bounce from the 2.76 swing low confirms the 20-Day MA as an applicable moving average to use for the current aggressive uptrend that began from the April 26 bullish reversal and breakout of a symmetrical triangle bottom. A daily bullish reversal yesterday set the stage for a continuation of the uptrend following an upside breakout of a bull pennant and break above the trendline last week.
The retracement exceeded 50% of the near-term swing and was a little shy of the 61.8% Fibonacci retracement at 2.74. It was a normal and healthy retracement following a 1.57 point or 99.2% advance in 31 days when measured from the April 25 swing low.
Bullish Weekly Candle Will Counter Last Week’s Bearish Sentiment
Last week ended with a bearish weekly shooting star candlestick pattern that triggered on Monday with a drop below 2.86. If this week’s low of 2.76 is retained as support and natural gas can end this week in the top third of the week’s range, it will have formed a weekly bullish pattern. Therefore, if it does so, heading into next week it will be positioned to trigger a weekly bullish reversal with an advance above this week’s high. This week’s bearish weekly reversal would then be negated.
Watching for Breakout Above 3.16
A rally above last week’s trend high of 3.16 will trigger a continuation of the rising trend. While natural gas may still encounter resistance up to approximately 3.20 (top of resistance zone from 3.18 to 3.20), the bullish momentum from a second and confirming breakout of the trendline should help propel it through that price range. The area around the swing high of 3.39 from early-January would then be the next higher target. That swing high is part of the downtrend price structure as it is a lower swing high.
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Grains Report: Wheat, Rice, Corn and Oats, Soybeans, Canola and Palm Oil
By: Jack Scoville | June 18, 2024
• WHEAT
General Comments: Wheat was lower in all three markets again yesterday on reports of cheaper prices offered from Russia and as the US harvest expands and even as adverse world growing conditions are still around. There are more reports of hot temperatures coming this week to Russian growing areas. It has also been very dry there. The weather is still a key, with extreme dryness reported in Russia and parts of the US and too wet conditions reported in Europe. However, US producers are reporting strong yields that exceed expectations so far and very good conditions. Big world supplies and low world prices are still around.
Overnight News: The southern Great Plains should get mostly dry conditions. Temperatures should be above normal. Northern areas should see mostly dry conditions. Temperatures will average above normal. The Canadian Prairies should see mostly dry conditions. Temperatures should average above normal.
Chart Analysis: Trends in Chicago are down with objectives of 583 and 558 July. Support is at 686, 575, and 569 July, with resistance at 613, 630, and 640 July. Trends in Kansas City are down with no objectives. Support is at 598, 592, and 580 July, with resistance at 660, 675, and 690 July. Trends in Minneapolis are down with no objectives. Support is at 620, 608, and 596 July, and resistance is at 641, 670, and 679 July.
• RICE
General Comments: Rice closed lower yesterday after seeing some wild price action as the July contract continues to liquidate longs and shorts in a violent way. The big US crops are now in doubt from reports of extreme rains in southern growing areas and especially near Houston. Supply tightness is expected to give way to increased production this year and greatly increased supplies this Fall. These ideas are reflected in the prices seen in the old crop and the new crop. Big storms have brought significant rains to crops in Texas, but the weather is better now.
Overnight News:
Chart Analysis: Trends are mixed. Support is at 1753, 1741, and 1725 July and resistance is at 1818, 1872, and 1900 July
• CORN AND OATS
General Comments: Corn closed lower yesterday on more news that Brazil has proposed new export taxes on Agricultural goods of 20% and on reports that Brazil farmer are now selling to beat the tax bill. Congress must approve the measure and has already rejected the move once. The US Midwest is still seeing good growing conditions although it has turned hot and dry now. The market anticipated that crop condition ratings would be very high in the USDA reports last week and will anticipate high crop ratings this week. Oats were lower on good growing conditions found in the northern US and into Canada. The weather in the Midwest has been very wet but it is drier and warm now. Demand has been a force behind the rally. Increased demand was noted in most domestic categories along with rising basis levels, and export demand has been strong.
Overnight News:
Chart Analysis: Trends in Corn are mixed to down with no objectives. Support is at 438, 436, and 434 July, and resistance is at 449, 456, and 460 July. Trends in Oats are down with no objectives. Support is at 310, 304, and 298 July, and resistance is at 330, 340, and 350 July.
• SOYBEANS
General Comments: Soybeans and the products closed mostly lower yesterday, on good growing conditions in the US and on reports of increased taxes for Brazil farmers that apparently are now causing farmers to sell. The government there has proposed a new tax on farm production and exports of up to 20%. Congress must approve the measure and has rejected it once already, but the government is trying again. There were wire reports that China prices are weakening amid veery strong imports from Brazil. Reports indicate that China remains an active buyer of Soybeans in Brazil but has cut back on demand if the domestic market does not improve and on ye tax issues in Brazil. Some of that demand has moved to the US. China said that it has increased exports of Soybean Meal due to the weaker internal demand. Domestic demand has been strong in the US but has suffered as crushers were crushing for oil. Oil demand has suffered as cheaper alternatives for feedstocks hit the biofuels market.
Overnight News:
Chart Analysis: Trends in Soybeans are down with objectives of 1155 and 1123 July . Support is at 1157, 1146, and 1141 July, and resistance is at 1180, 1193, and 1205 July. Trends in Soybean Meal are mixed to down with objectives of 350.00 and 324.00 July. Support is at 350.00, 345.00, and 342.00 July, and resistance is at 373.00, 376.00, and 381.00 July. Trends in Soybean Oil are mixed to down with objectives of 4330 and 4130 July. Support is at 4310, 4270, and 4250 July, with resistance at 4530, 4690, and 4780 July.
• CANOLA AND PALM OIL
General Comments: Palm Oil was a little higher last week on stronger demand ideas. Export demand has been very strong in recent private reports. There is talk of increased supplies available to the market, but the trends are up on the daily and weekly charts. Canola was lower on reports of generally good conditions in Canada and as the Canadian Dollar rallied. The Brazil news was bearish as well.
Overnight News:
Chart Analysis: Trends in Canola are down with objectives of 593.00 and 566.00 July. Support is at 597.00, 594.00, and 585.00 July, with resistance at 626.00, 642.00, and 645.00 July. Trends in Palm Oil are mixed. Support is at 3890, 3860, and 3780 September, with resistance at 3970, 4020, and 4080 July.
Midwest Weather Forecast Scattered showers and storms. Temperatures should average below normal.
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Softs Report: Cotton, OJ, Coffee, Sugar, Cocoa
By: Jack Scoville | June 18, 2024
• COTTON
General Comments: Cotton was lower yesterday as growing conditions are good and demand is not. Big storms were reported in Texas recently that could damage crops. There are also some big problems with too much rain in the Delta and Southeast in recent weeks. Demand has been weaker so far this year but there are hopes for improved demand with the lower prices. Chinese consumer demand has held together well, and Chinese demand for Cotton has started to increase.
Overnight News:
Chart Trends: Trends in Cotton are down with no objectives. Support is at 68.00, 66.80, and 6e 67.60 July, with resistance of 71.50, 73.70 and 76.00 July.
This Week Last Qeek Last Year Average
Cotton Planted 90 80 87 91
Cotton Squaring 22 14 17 18
Cotton Setting Bolls 6 2 3
Very Poor Poor Fair Good Excellent
Cotton This Week 2 11 33 47 7
Cotton Last Week 2 6 36 49 7
Cotton Last Year 7 13 33 41 6
• FCOJ
General Comments: FCOJ closed higher on follow through buying yesterdazy. The daily charts show that the market is trying to form a bottom but the work is not done yet. The market remains well supported in the longer term based on forecasts for tight supplies and very hot weather in Florida. The reduced production appears to be at the expense of the greening disease. There are no weather concerns to speak of for Florida or for Brazil right now. The weather has improved in Brazil with some moderation in temperatures and increased rainfall amid reports of short supplies in Florida and Brazil are around but will start to disappear as the weather improves and the new crop gets harvested.
Overnight News:
Chart Trends: Trends in FCOJ are down with objectives of 403.00 and 370.00 July. Support is at 417.00, 406.00, and 389.00 July, with resistance at 452.00, 473.00, and 477.00 July.
• COFFEE
General Comments: Both markets closed closed higher yesterday on short supplies that could be made worse by ideas of reduced offers of Robusta and on forecasts for another couple of weeks of dry weather in Vietnam. There were also reports of poor Robusta yields in Brazil during the harvest. Ideas of less production in Vietnam are driving the rally. There were indications that Brazil and Vietnam producers were now offering Coffee, buts in small amounts,
Overnight News: The ICO daily average price is now 226.32 ct/lb. Brazil will get mostly scattered showers with near normal temperatures. Central America will get mostly dry conditions. Vietnam will see scattered showers.
Chart Trends: Trends in New York are mixed. Support is at 218.00, 212.00, and 208.00 July, and resistance is at 229.00, 239.00 and 241.00 July. Trends in London are up with no objectives. Support is at 4090, 4060, and 3990 July, with resistance at 4200, 4\540, and 4660 July.
• SUGAR
General Comments: Both markets closed lower yesterday on harvest progress in Brazil and on new tax proposals that the government of Brazil is considering. The Brazil government wants to tax ag products at 29% and this has caused an uproar in some markets.. Trends are mixed on the daily charts. End users need Sugar but are not finding too much available in the cash market. There are still ideas that the Brazil harvest can be strong for the next few weeks amid dry harvest weather, but now the cry weather is causing concern about developing Sugarcane in center south areas. Harvest weather is called good in center-south Brazil. There are worries about the Thai and Indian production, but data shows better than expected production from both countries.
Overnight News: Brazil will get rains in the south and scattered showers in the north. Temperatures should average above normal. India will get mostly dry conditions and below normal temperatures.
Chart Trends: Trends in New York are mixed. Support is at 1890, 1860, and 1840 July and resistance is at 2000, 2050, and 2100 July. Trends in London are mixed. Support is at 536.00, 528.00, and 522.00 August, with resistance at 570.00, 578.00, and 586.00 August.
• COCOA
General Comments: Both markets were lower yesterday, and chart trends are mixed. Production concerns in West Africa as well as demand from nontraditional sources along with traditional buyers keep supporting futures. Production in West Africa could be reduced this year due to the extreme weather which included Harmattan conditions. The availability of Cocoa from West Africa remains very restricted and projections for another production deficit against demand for the coming year are increasing. Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast and Ghana continue.
Overnight News:
Chart Trends: Trends in New York are mixed Support is at 9410, 8930, and 7870 July, with resistance at 10310, 10520, and 11000 May. Trends in London are mixed. Support is at 9100, 7640, and 7250 July, with resistance at 9150, 9640, and 9980 July.
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The Corn & Ethanol Report
By: Daniel Flynn | June 18, 2024
We kickoff the day with Retail Sales MoM & YoY, Retail Sales Ex Autos MoM, and Retail Sales Ex gas/Autos MoM at 7:30 A.M., Redbook YoY at 7:55 A.M., Industrial Production MoM & YoY, Manufacturing Production MoM & YoY, and Capacity Utilization MoM & YoY at 8:15 A.M., Business Inventories MoM, Fed Barkin Speech, and Retail Inventories at 9:00 A.M., NY Fed Treasury Purchases 0 to 1 yrs. at 9:30 A.M., Fed Collins Speech at 10:40 A.M., Fes Kugler Speech, Fed Logan Speech, and 20-Year Bond Auction at 12:00 P.M., Fed Musalem Speech at 12:20 P.M., Fed Goolsbee Speech at 1:00 P.M., Net Long-term TIC Flows, Foreign Bond Investment, and Overall Net Capital Flows at 2:00 P.M., and API Energy Stocks at 3:30 P.M.
The US weather Stagnant until June 26, Rain soaks N Plains/Upper Midwest, Heat & Dryness forecasted in the East. The Central US forecast is consistent with previous runs. Details depend on Gulf storm activity, but the major forecasting models agree that a steady pattern of heavy rainfall continues throughout the next 10 days across NE, the Dakotas, MN, and WI. Heat, dryness and rapid soil moisture loss impacts the E Midwest and Delta Southeast. Corn & soybean growth rates will be deflated in the N Plains & Upper Midwest – where dryness and heat are now desired. Heat in much of the E Midwest is not an issue today, but it’s duration of this pattern needs watching. Unfortunately, Gulf/Atlantic warmth guarantees active tropics, which confidence is low in long range outlooks. The EU model maintains high temps in the low 90’s occur each day this week east of the Mississippi River. Highs in the upper 90’s are forecasted in MO, IL, IN, KY, and OH this week. Operational models later this week will begin to peak into the opening days of July. Watch temp forecasts closely. Soybeans Fall on Technical Selling, CBOT soybean futures were lower to start the week on the technical selling and unexpected weekend rains. The Crop Progress report showed the national soybean planting progress advanced to 93% complete, 2% ahead of the 5-Year Average. 82% of the crop has emerged against the average of 79%. National good-to-excellent crop conditions ratings slipped 2 points for the week to 70%, but well above last year’s 54%. The top-rated crop was in LA at 88%, followed by NE at 79% GD/EX. IL and NC tied with the lowest-rated crops at 61% GD/EX. A year ago, IL was only 33% GD/EX. Some parts of IL caught unexpected weekend rains, but the 10day forecast is hot and dry for the crop growing areas east and south of IA. Next support is at $11.50 July, with crop ratings expected to fall another 2-4 points in the week ahead. On the Corn Front, CBOT corn extends correction, Central US weather remains rather mixed, chart-based selling continued after July fell through the 50- and 100-day moving averages on Friday. There’s also a broad ‘rain makes grain’ mentality with respect to coming soaking precipitation across the N Plains/Upper Midwest. However, heat/dryness are what is desired in key parts of the Northern US, and Ag Resources (ARC) views N American climate in late June as Chaotic. More focus will be placed upon heat east of the Mississippi River if it continues beyond the next 10 days. The US crop on Sunday was rated at 72% GD/EX, vs. 74% the previous week and vs. the longer term average of 69% in mid-June. The crop in IL fell 9 points to 76 GD/EX. The IA crop is up 1 point at 74%. ARC expects the national GD/EX ratings to drop 3-4 points next Monday amid heat in the east. Central US weather drives hourly/daily price discovery into late July. ARC cautions against turning bearish on breaks as unlike a year ago, a record yield is needed to offset sizable losses in Brazil and disease in Argentina. Livestock operations are recommended to begin scaling into additional coverage below $460, Dec.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 18, 2024
• Top Movers
Oats (Minneapolis) 3.77 %
Platinum / Gold Ratio 2.44 %
NY Crude Oil Futures 2.14 %
London IPE Brent Crude Futures 1.97 %
London IPE Brent Crude Spot 1.97 %
• Bottom Movers
Cocoa (NYCSCE) Futures 5.67 %
Oats (CBOT) Futures 4.71 %
Wheat CBT Futures 3.46 %
NY Natural Gas Futures 3.23 %
Tokyo Rubber Futures 3.19 %
*Close from the last completed Daily
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Natural Gas Retraces Gains, Tests Key Support Levels
By: Bruce Powers | June 17, 2024
• While a further drop could risk failure of recent bullish activity, holding support around $2.74-$2.76 could set up natural gas for a bullish continuation.
Natural gas further retraced its prior advance on Monday as it fell below the long-term downtrend line to reach support at 2.76. That completed a successful test of support at the purple 20-Day MA. It is the first touch of the 20-Day line since natural gas rose above it on April 26.
Since the 20-Day line is showing support so far, there is a possibility that today’s low completes the retracement. The low price today also completes a successful test of support around the top of the bull pennant pattern.
Test of 20-Day Line Might Complete Retracement
Lower prices begin to put recent bullish activity at risk of failure. Although there could still be a brief drop lower in the short term, if a quick recovery follows it will put natural gas back in a position to progress its uptrend. The 61.8% Fibonacci retracement level is at 2.74. If the 20-Day line is busted, currently at 2.76, then natural gas will likely reach the 2.74 area.
If support is seen from there, followed by a recovery above the 20-Day line, the bullish price structure will be maintained. However, a drop below the 20-Day line where natural gas then stays below the line, will be short-term bearish. A failure of the bull pennant breakout is indicated on a drop below the center line at 2.70.
Rally Above Today’s High of 2.85 Shows Strength
If a bullish setup completes today, then a decisive breakout above today’s high of 2.85 will be a sign of strength. Today’s candlestick pattern may take the form of a bull hammer candlestick pattern. A daily close in the top third of the day’s range will be a stronger indication than a close lower than the top third of the range. A decisive advance above today’s high would then be a sign of strength that should continue to higher prices.
Bearish Weekly, but Quick Bullis Recovery Will Negate Implications
Today’s decline in natural gas also triggered a bearish reversal on a weekly time frame. The weekly pattern last week was of a bearish shooting start candle. It triggered today on a drop below 2.86 and it will confirm on a daily close below that price level.
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The Corn & Ethanol Report
By: Daniel Flynn | June 17, 2024
We kickoff the week with NY Empire State Manufacturing Index at 7:30 A.M., Export Inspections at 10:00 A.M., 2-Month & 6-Momth Bill Auction at 10:30 A.M., NOPA Crush Report at 11:00 A.M., Fed Harker Speech and 42-Day Bill Auction at 12:00 P.M., Crop Progress at 3:00 P.M., and Fed Cook Speech at 8:00 P.M.
Were coming in lower this morning as traders access the 10-day weather forecast and NOPA Crush, Export Inspections, and Crop progress will also weigh on this weeks trading. US export prices in May declined 0.6% from April, marking the first monthly decline since December, as lower prices for non-agricultural goods offset higher agriculture prices. Compared to a year ago, May export were up 0.61%, marking the first year-over-year increase since January 2023. Import prices declined 0.4% from April to mark the first decline since December. But compared to a year ago, prices were 1.07% higher to mark the 3rd consecutive month of year-over-ear gains. From a pandemic high, export prices have seen the largest correction, but both export and import prices are significantly above pre-pandemic levels. Eastern Midwest Forecast Stays Hot into June 23, Excessive Rain Impacts Central Plains and Northwest Corn Belt. The Central US forecast is consistent with prior runs. An expansive/intense high pressure Ridge will be anchored aloft the E Midwest/East Coast June 16-23, with the EU mode extended the duration of extreme heat into Friday/Saturday. Temps east of the Mississippi will consistently reach the mid/upper 90’s, with an outside chance highs in the low 100’s are recorded in IL,IN,KY, and OH today and again on Wednesday through Friday. Soil moisture loss will be rapid, and key is whether this pattern is extended into the opening part of July. Steady ridge-riding system will produce heavy rainfall of 2-8.00” in E-NE,SD.IA,MN, and northern WI. G Resources (ARC) notes that warm temps in July often, not always follow warm temps in June, and so the risk of sustained heat is elevated. Fortunately, elevated Gulf storm activity provides needed soaking rain to Mexico in late June. Chines monsoon sputters with dryness to deepen in next 10 days. Rainfall in China into June 23 will stay south of major crop areas, and the need for soaking rain becomes immediate July 1st onward. Shandong, which accounts for 10% of corn and 20% of Chinese winter wheat production. Dryness in center-east China is common during the spring, but seasonal heavy rains have so far failed to move northward as usual. Heat will accompany continued dryness in key areas wheat/corn belt. High temps in Shandong next week will exist in the 90’s/100’s. A year ago soaking rains in July eased crop issues in much of China. Watch late June/early July Chinese weather closely. Conditions outside the US remain far from ideal. The official end of El Nino suggest that dryness will continue. Argentine corn yields have fallen sharp[y as more of later planted crops are harvested. Remember funds are short up the yin-yang!
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At It Again. The Energy Report
By: Phil Flynn | June 17, 2024
Apparently the Biden Administration believes that the Strategic Petroleum Reserve (SPR) is their own little political slush fund. The Biden team is saying that they will potentially tap the reserve using taxpayer money to help influence the outcome of the election. I think I read somewhere that someone else was accused of something like that. Regardless, according to the FT, “The Biden administration is ready to release more oil from its strategic stockpile to halt any jump in petrol prices this summer, as the White House battles to contain inflation ahead of the November election.”’ So, I guess you can spend money, which increases inflation, and put on regulations that raise prices and kill pipelines that raise prices and put on drilling moratoriums that raise prices and then slander the oil and gas industry and mom and pop gas stations then use the SPR to make it all ok. All the while using the SPR for political cover while leaving the country vulnerable if there is a major oil disruption.
We are not just talking about hurricanes. In a year where they are predicting a record amount of hurricanes there is also the growing risk of global conflict that could impact supply and those risks have increased dramatically under this administration.
Russian Warships in the Caribbean, bringing back memories of the Cuban Missile crisis, as wars wage in the Ukraine, Gaza, and ongoing attacks on ships from the Iranian backed Houthi rebels which all are a risk to oil supply. Reports that Russian subs and the Russians carrying supersonic missiles are meant as a gentle threat about Biden’s escalation of the war in Ukraine.
Fox News reported that, “Russia is a longtime ally of Venezuela and Cuba, and its warships and aircraft have periodically made forays into the Caribbean. But this mission comes less than two weeks after President Joe Biden authorized Ukraine to use U.S.-provided weapons to strike inside Russia to protect Kharkiv, Ukraine’s second-largest city, prompting President Vladimir Putin to suggest his military could respond with “asymmetrical steps” elsewhere in the world.
The Washington Post reported that, “One Russian reporter described the visit as retaliation for Biden’s decision to allow Ukraine to strike inside Russia with American weapons. “Last week, President Vladimir Putin made it clear that it reserves the right for a mirror response – that is, supplying long-range weapons to countries that feel the pressure of the United States,” the Russia 24 reporter said.
This comes as the sanctions on Russian oil and gas are failing. The Financial Times reported that, “Europe’s gas imports from Russia overtook supplies for the United States for the first time in two years even though the region must mean itself off of Russia and fossil fuels. The strategic blunders that Europe has made was to go head first into green energy alternatives and becoming more dependent on Russia for supplies and now it seems they just can’t quit. Diesel supplies in Europe are very tight and now they are looking to the US to replenish those supplies but at the end of the day, Russia continues to supply more and more energy to Europe every day.
The FT Reported that, “Following Russia’s full-scale invasion of Ukraine in February 2022, Moscow slashed its pipeline gas supplies to Europe and the region stepped up imports of LNG, which is shipped on specialized vessels with the US as a major provider. The US overtook Russia as a supplier of gas to Europe in September 2022 and has since 2023 accounted for about a fifth of the region’s supply.
But last month, Russian-piped gas and LNG shipments accounted for 15 per cent of total supply to the EU, UK, Switzerland, Serbia, Bosnia and Herzegovina and North Macedonia, according to data from ICIS. LNG from the US made up 14 per cent of supply to the region, its lowest level since August 2022, the ICIS data showed.
The reversal comes amid a general uptick in European imports of Russian LNG despite several EU countries pushing to impose sanctions on them. Russia in mid-2022 stopped sending gas through pipelines connecting it to north-west Europe, but continues to provide supplies via pipelines through Ukraine and Turkey according to the FT.
Gasoline prices are continuing to fade as demand is still struggling as consumers bear the brunt of inflation. John Kemp at Reuters points out that, “U.S. GASOLINE prices at the pump (including taxes) are almost exactly in line with the long-term average, once adjusted for inflation. Nationwide prices have averaged $3.59 per gallon so far in June which was in the 52nd percentile for all months since the start of the century.
This week we are looking for crude supply to fall by 2 million barrels. We are also looking for distillate supply to fall by 2 million barrels. Gas supply should pop 2 million barrels and refinery runs should be flat.
Natural Gas is pulling back after the heat driven rally. Hopes for some moderations are giving us a break. Yet Fox Weather is watching the Gulf Of Mexico. They say that, “The National Hurricane Center (NHC) is monitoring a tropical disturbance in the Gulf of Mexico that could develop into a tropical depression or tropical storm this week, and while the system is expected to stay south of the U.S., fears are growing that tropical moisture being pulled north could lead to flash flooding along the Texas, Louisiana and Mississippi coasts.
EBW Analytics is saying that bearish weekend fundamental catalysts for natural gas were plentiful: off-the-charts record heat for late June retreated, production turned upwards to three-week highs, and LNG feedgas ebbed on maintenance at Corpus Christi LNG. Near-term downside appears likely. EBW says that it technically similarly points to a deeper retrenchment following a bearish double-top pattern at $3.16/MMBtu. While long-term fundamentals also appear weak, however, substantial, scorching heat over the next 30-45 days may still yield higher highs first.
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Natural Gas Healthy Pullback in Prep for Bull Continuation
By: Bruce Powers | June 14, 2024
• Natural gas retraced to 2.87, hitting the 38.2% Fibonacci level, with potential support around 2.84-2.82, signaling possible trend adjustment.
Natural gas continued to pull back on Friday from its recent 3.16 trend high. A new daily low for the retracement of 2.87 was reached at the time of this writing. However, natural gas continues to trade near the lows of the day and could reach a lower price level before the week is over. Yesterday’s low completed a 38.2% Fibonacci retracement and led to a bounce earlier in today’s session. Nonetheless, sellers took back control and continue to dominate.
Uptrend Line Support Tested
The next area to watch for support activity is around the uptrend line and it was reached today. But if the line fails to hold the next lower price zone is around 2.84 to 2.82, consisting of a crossover of two trendlines and the 50% retracement, respectively. The uptrend line is a relatively short-term line having defined support of the rising trend starting from the April swing low of 1.58. It is used as a guide and is not so reliable without confirming evidence.
Trends Adjust
Given that the angle of ascent has been relatively steep, an adjustment to a lower slope angle would be common and healthy for the trend. Rising trends that start steep will eventually reach a point where demand can no longer support the price momentum and they will adjust to a lower slope. Alternatively, uptrends that start with a low slope angle typically see the angle increase as the trend progresses. Frequently, there are three angles that might be observed in either scenario.
Potentially Bearish Weekly Pattern
What about the weekly time frame? The weekly chart is about to close the week with a bearish shooting star pattern. But before being alarmed notice that three weeks ago ended with a similar candlestick pattern. It was followed by a resumption of the uptrend after a brief drop below the bearish week. That was followed by a three-week continuation of the uptrend until this week’s high of 3.16.
Pennant Pattern Points to 3.78
The breakout of the bull pennant just got started and if it follows through it projects an initial target up to 3.78. That target is above the 2023 high of 3.64. Nonetheless, the main point is that there looks to be more upside in natural gas for the current trend. The target may be reached or not, but it is supportive of a continuation higher above this week’s high once the retracement is complete.
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The Corn & Ethanol Report
By: Daniel Flynn | June 14, 2024
We kickoff the day with Export Prices MoM & YoY and Import Prices MoM & YoY at 7:30 A.M., Michigan Consumer Sentiment Prel, Michigan 5-Year Inflation Expectations Prel, Michigan Consumer Expectations Prel, Michigan Current Conditions Prel, and Michigan Inflation Expectations Prel at 9:00 A.M., Baker Hughes Oil & Total Rig Count at 12:00 P.M., Fed Goolsbee Speech at 1:00 P.M., and Fed Cook Speech at 6;00 P.M.
The June release of the Producer Price Index by the Bureau of Labor Statistics showed that price inflation in May eased to 2.2%, down from 2.3% in April. Note that CPI inflation has been flat for the last year (at an elevated level), while PPI inflation has been under 2.5% for 14 months. Of note is the decline in Chinese PPI deflation while raw material prices continue to gain. At present, the CRB is 13% higher than a year ago, following a 14% gain in May, and is on track for the 5thconsecutive month higher. Raw material prices and Chinese producer prices have been historically been leading indicators for US CPI and PPI inflation. The Central US pattern has a High Pressure Ridge Dominates E Midwest next 7-8 days, cooler/wetter July is desired: North American remains chaotic in nature. Flooding rainfall of 3-6” is forecast for NE, IA, and MN, while incredible heat and dryness blanket MO and areas east of the Mississippi River into June 22. Rapid soil moisture lies ahead for the mid-South and Eastern Midwest, and the duration of heat is important. The EU model clearly shows the positioning of amplified high pressure Ridging. Cooler temps and daily showers ride along the western and northern edge of this Ridge, and US weather into late month will be two-sided. The Ridge is forecast is to relax after June 21-22, but above normal temps will continue across the Delta, TN, KY, and E Midwest. Confidence in the forecast details beyond 7-days is low, but heat will be featured this summer. July guidance is warm/hot. CBOT futures came in slightly lower as traders position for Central US weather gyrations ahead of the weekend. Traders well understand that its July temperatures and rainfall determine US corn yield, but the coming heat/dryness raises concern that a new Central US weather pattern has emerged – that could continue into July. The debate over the July Central US weather pattern will grow in the coming weeks. Global weather pattern by Ag Resources (ARC) has weather adversity surrounding Central US, US, and Australia Islands of yield potential. Closer attention will be paid to central US forecast as July approaches and as unwanted heat impacts the east and regional flooding impacts the north. US weather is also critical this year as sub-trend yields have been recorded in South America, and as droughts continue to develop in Mexico, N Africa, the Black Sea, and key areas of northern China. Too much and lack of heat are negatively impacting winter crop potential in Europe. The US acting as the world’s grain storage facility has been bearish over the last 12 months. Already ARC expects the US to expand its share of global corn and wheat trade in crop year 2024/25. Additionally, there will be little/no room for even modest yield declines following production loss elsewhere. It’s difficult to be overly bullish or bearish until July-August weather patterns are known. Be prepared for weather and market volatility. Commitment of Traders today….. Key the funds net short positions.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 14, 2024
• Top Movers
Sugar World (CSCE) Futures 2.94 %
Cocoa (NYCSCE) Futures 2.61 %
Cheese 2.59 %
Gold / Silver Ratio 2.51 %
White Sugar ICE Futures 2.27 %
• Bottom Movers
NY Silver COMEX Futures 3.97 %
Orange Juice (NYCE) Futures 3.44 %
NY Natural Gas Futures 2.82 %
Lumber (CME) Futures 2.71 %
NY Palladium Futures 2.55 %
*Close from the last completed Daily
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Natural Gas Faces Healthy Pullback
By: Bruce Powers | June 13, 2024
• After a bullish breakout last week, natural gas faces a normal pullback, with key support levels and higher targets still in sight.
Natural gas triggered a deeper pullback today following a breakdown of an inside day. It was followed by a three-day low of 2.90. Support was seen off that low leading to an intraday bounce. Today’s low tested support around the prior trend high of 2.92, which was followed by a rejection the upside. This is a normal and healthy minor pullback following a clear bullish breakout last week. Natural gas broke out above both the long-term downtrend and bull pennant trend continuation pattern last week.
Uptrend Line Shows Dynamic Support
An uptrend line marks dynamic support for the current advance that began from the April 25 swing low. Also, the downtrend line identifies a price area for potential support. If the uptrend line is broken the downtrend line is the next line to watch for possible support. The two lines cross at a price of 2.84, marking another price to watch. That price area can be watched along with this week’s low of 2.86.
A little lower is the important 20-Day MA at 2.75. Notice that the 20-Day line has now converged with the top boundary line of the pennant pattern. Each is marking a similar price support area. It is also interesting that the day the 20-Day MA hit the bottom boundary line of the pennant on June 6, was the day of the pennant breakout. Although it closed weak, the next day’s upside continuation made up for it.
Trend Anticipated to Resume Following Minor Retracement
Given the strong bullish behavior of natural gas during the current ascent, higher targets remain in sight. At the same time, the relative strength index momentum oscillator (RSI) is beginning to show signs of a bearish divergence. It is still early though but should be watched as the trend progresses.
Breakout Above 3.09 Shows Strength
Given today’s pullback, a rally above the day’s high of 3.09 provides a sign of strength. The next higher target zone, above the nearby 3.18 to 3.20 Fibonacci confluence zone, is the 3.39 swing high from early-January. Nevertheless, a decisive breakout above this week’s high of 3.16 has a good chance of exceeding that swing high eventually, if not on the first approach.
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Agriculture Master Report
By: Bill Moore | June 12, 2024
JULY WHT
July Wht continues its roller-coaster ride – breaking $1.00 off winter wht harvest pressure, ideas of a bumper crop & rain forecast for the Black Sea – after rallying almost vertically $1.70 in only 4 wks off very dry conditions in S Russia! The mkt definitely is marching to the beat of its own drum – after totally ignoring the Brazil 20% export tax news that came out last Thur – which rallied corn & beans sharply! As well, last Friday’s news that Turkey was suspending wht imports for 4 months added to wht’s down! But today, a severely oversold July Wht contract is rallying back up over 25 cents in a long-overdue correction!
JULY BEANS
Last Thursday, the Brazil gov’t unloaded a bombshell announcement of a proposed 20% export tax on their producers – which has them – all of a sudden – becoming very tight holders of their beans! Which of course implies better exports for the US! Beans are 87% in (84-avg) & rated a seasonally high 72% gd-ex! The mkt is anxiously awaiting the JUNE WASDE – tomorrow at 11am, the CONAB ESTIMATE on Thur & the CPI & Fed Notes on Wed at 7:30am & 1:00pm! Upcoming heat in the Midwest has prompted the mkt to add some weather premium! At month end, the USDA will issue its QUARTERLY STOCKS & ACREAGE REPORT on 6-28-24!
JULY CORN
Rising temps in the Midwest in the next 2 weeks have corn futures tacking on a weather premium! As well, exports are running 30% over 2023! Last Thur, a flash sale of 152,000mt of corn to unknown was reported! Routinely, Mon inspections & Thur sales are running over 1.0 mmt! Corn is 95% in (avg-95) with a gd-ex rating of 74% – very high for this time of the year! But of course, the crops are made in July/Aug – not now! The mkt is waiting on the WASDE REPORT & CONAB the next 2 days! Todays mkt is almost $2.00 cheaper than a year ago! This price level plus robust exports & sketchy weather coming favor the upside!
AUG CAT
Aug cat has recovered $4.00 of its recent break – feeding off a strong cash mkt & the best demand period of the year (the grilling season) to move above the 200 day moving average! Recurring bird-flu demand concerns have been absent of late – allowing the mkt to rally close to its May Highs! With FATHERS DAY & THE 4TH OF JULY quickly approaching, the “beef aisles” in the supermarkets will be quite crowded!
JULY HOGS
Seasonally, hogs should be trending up now but the above chart tells a different story – as July Hogs have plummeted $19 (111-92) since early April! Even though in a premier demand period, the Hog Mkt has been victimized by severe export woes – leaving the mkt oversupplied first, China stopped buying our pork long ago & now Mexico has devalued their peso – discouraging their imports of our pork as well! The mkt is grossly oversold & is certainly entitled to a correction – but it badly needs a fundamental boost – and a resumption of solid foreign trade would be a good place to start!
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The Corn & Ethanol Report
By: Daniel Flynn | June 13, 2024
We kickoff the day with Export Sales, PPI MoM & YoY, Core PPI MoM & YoY, Initial Jobless Claims, Continuing Jobless Clams, Jobless Claims 4-Week Average, PPI Ex Food, Energy and Trade, and PPI Ex Food, Energy & Trade MoM & YoY at 7:30 A.M., EIA Natural Gas Storage at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., Fed Williams Speech, 15-Year & 30-Year Mortgage Rate at 11:00 A.M., and 30-Year Bond Auction at 12:00 P.M.
The Bureau of Labor Statistics reported that the May CPI inflation rate at 3.3%, down from 3.4% in April. While the rate of increase in consumer prices is well below 2022 and 2023, it’s still well above the Fed’s target. Moreover, the May Consumer Price Index set a record high of 314.1 (percentage of 1982-1984), furthering eroding the purchasing power of the US dollar. Charts show us the rolling 48-month change in the US dollar purchasing power, which has lost 18.4%, or the worst decline since November 1984. Then Reaganomics took hold and the country was moving back to prosperity. A far cry from Bidenomics and his malarkey tour. The June WASDE left its corn balance sheet unchanged. The lack of adjustments made to South American corn crop sizes indicates actual yield data in Brazil is needed-yield data will be increasingly available in the next 30-days- and so in the short-term price discovery is centered exclusively in Northern Hemisphere weather patterns. Ag Resources (ARC) this week trimmed planted US corn area by 500,000 acres and maintains USDA’s 24-25 export forecast is at 100 Mil Bu too low. End stocks of 1.8 Bil Bu keep Dec corn bound to a range of $450-$520 for now. Any fall in the US corn yield below 175 bushels per acre (BPA) opens July corn futures to testing $5.00 as US corn stocks fall to 1.5-1.6 Bil Bu and minimum pipeline stocks are calculated at 1.25-1.35 Bil. Be prepared volatility-particularly excessive heat blankets in E Plains & Midwest next week and likely persists into July. ARC also pointed out major/lasting bearish trends are unlikely at $450-$460 Dec CBOT corn. WASDE lowered 24/25 global exporter carryover 1 MMT’s amid lowered projected 23/24 stocks in Russia and South Africa. No other changes of note were made. CBOT futures came in mixed today with soybean oil futures weaker, while grains are mounting a rally. Traders are closely following US weather forecasts and trying to assess the impact on yield. June looks to be one of the warmest & driest since 2000, and a sharp contrast to the spring which was one of the top ten wettest. July weather will make or breaks corn crops, and the market is adding weather premium to price amid the coming heat and lack of rainfall. However, the N Plains and the NW Midwest will see frequent “ring of fire” storm systems that produce above normal rainfall and cloud cover allowing more highs in the 80’s. The initial heat & dryness can favor crop yields if it is followed by near or above normal July rains. However, should the hot/dry pattern continue beyond the next 10-days, Central US crop stress will dramatically increase. Remember the many Tropical Depressions causing flooding in Florida with an active Hurricane Season forecasted, and funds at record net shorts on grains.
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Exceeding Congressional Authority. The Energy Report
By: Phil Flynn | June 13, 2024
Commodity price volatility is exploding after the Fed disappoints. Some markets including the petroleum markets, even after the soft inflation reading, oet confused after an Energy Information Administration (EIA) report that had in data almost improbable asked the late surge of votes by Joe Biden in that last election. Now the American Petrolem Institute (API) accuses Biden’s EPA of exceeding their congressional authority. I guess sort of like when they defied the constitution and the Supreme Court to give away your tax money to pay for some student loans in an attempt to win votes.
Oil prices try to shake off yesterday’s Fed Statement that suggested that many Americans are not wrong about hating this Biden economy even as the Administration tells them things are so great. The Fed sees that inflation is cutting into most Americans pocketbooks and their financial security. The Consumer Price Index number showed inflation rose 3.3% from a year earlier, that was a three-year low and slowing from April’s 3.4% rate, the Fed seemed to think it was too little too late. The Fed said that they expect core inflation to be 2.8% by year’s end, that was higher than their last inflation forecast of 2.6%. And they project that unemployment will stay at its current 4% rate by the end of this year and edge up to 4.2% by the end of 2025. The Fed said that they’ve seen only modest further progress towards their 2% inflation goal in recent months and now they see the Fed funds rate at a median of 5.1% at the end of 2024 that’s just decreased the odds dramatically of the two rate cuts this year and even the one rate cut is now in question by some analysts.
Still my base case is that we will see a rate cut before the election. Most of the bets are on December cut. That is why my expectation is we will see some more data that will confirm the slowdown in inflation. Today’s producer price that price index could be key in the direction of markets.
After last week’s EIA report, I wrote an article titled “OPEC and Other Oils” which pointed out that the main driver in a surge of demand was in the ‘other oil’ category. Once again that “oil category” is raising eyebrows as the EIA has had weeks of wild swings in oil and demand adjustment numbers and has the market now focused on other oils that include the gasoline additive naphtha and miscellaneous other products includes all finished petroleum products not classified elsewhere, including petrolatum, lube refining byproducts (aromatic extracts and tars), absorption oils, ram-jet fuel, petroleum rocket fuels, synthetic natural gas feedstocks, and specialty oils.
According to Tim Dallinger some of the demand for that could be refiners and oil producers trying to reduce their emissions. The reality is that the swings in the other oil data are unlike anything we’ve ever seen in this category since they’ve been keeping records. After the demand for other oils surged last week, it plunged by 1.5 million barrels a day. In such wild swings and the crude oil supply numbers by the EIA on massive adjustments, it’s possible that the EIA is just having a very difficult time identifying what type of oil is going into storage and into refineries and that’s just throwing it into the other oil category until they figure out what the heck they’re dealing with. In this week’s report the Energy Information Administration had to adjust downward their crude oil number by 1.51 million barrels a day.
Last week they had to increase their oil adjustment by 1.3 to 6,000,000 barrels a day so that means a downward adjustment of supplies of 2.477 million barrels a day which just having the major impact and the market questioning whether this report really reflects the real state of crude oil supplies in this country. In other words, it’s very possible that some of the supply that is being counted as barrels of oil as being misidentified and maybe giving the market a false sense of security as to where our supply situation is.
There is also a question as to why the US imported the most oil last week since 2018. The EIA said that the U.S. crude oil imports averaged 8.3 million barrels per day last week, up by a whopping 1.2 million barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.2 million barrels per day, up an incredible 11.4% more than the same four-week period last year. Even after all the adjustments, the EIA says that supply in every major category is below average. The EIA says that, “S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.7 million barrels from the previous week. At 459.7 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year.
Total motor gasoline inventories increased by 2.6 million barrels from last week and are slightly below the five-year average for this time of year. Distillate fuel inventories increased by 0.9 million barrels last week and are about 7% below the five-year average for this time of year.
Demand over the last four-week period averaged 19.8 million barrels a day, down by 0.8% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, down by 1.3% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels a day over the past four weeks, down by 3.5% from the same period last year. Jet fuel product supplied was up 11% compared with the same four-week period last year.
While gasoline prices have come down in recent weeks, the Biden administration is still feeling the heat from Americans that are not only being hit with much higher gasoline prices over the last few years but also because of overall inflation and now the industry is standing up. The Biden administration with their restrictive policies will only serve to make America less competitive economically in the future when it comes to energy policy.
Reuters is reporting that, “The nation’s largest oil trade group, which includes Exxon Mobil (XOM.N), and Chevron will file a federal lawsuit on Thursday seeking to block the Biden administration’s efforts to reduce planet-warming emissions from cars and light trucks and encourage electric vehicle manufacturing, the group said. The U.S. Environmental Protection Agency issued new tailpipe emission rules in March that will force the nation’s automakers to produce and sell more electric vehicles to meet the new standards. Under the rule, the administration projects up to 56% of all car sales will be electric between 2030 and 2032.
The American Petroleum Institute (API) says the EPA has exceeded its congressional authority with a regulation that will eliminate most new gas cars and traditional hybrids from the U.S. market in less than a decade. “Today, we are taking action to protect American consumers, U.S. manufacturing workers and our nation’s hard-won energy security from this intrusive government mandate,” API Senior Vice President and General Counsel Ryan Meyers said. In the final rule, Biden slashed its target for electric vehicle adoption amid auto worker backlash, but the watering down of the measure did little to pacify an oil industry that needs gas-powered cars to survive. For both Biden and his Republican rival, Donald Trump, the road to the White House goes through industrial states Michigan, Wisconsin and Pennsylvania where workers fear that the EV transition threatens jobs.”
Prices have recovered their OPEC plus taper tantrum and we’re getting more commitments from OPEC cheaters that they will make compensation cuts that might make any increase in production negligible.
Reuter reported that, “Iraq’s oil ministry said on Wednesday it is fully committed to compensating for any crude oil overproduction in 2024, referencing estimates by secondary sources of overproduction by 203,000 barrels in May above levels agreed with OPEC+. The ministry “is committed to the production level required in the agreement, of 4 million barrels per day, for June and the subsequent months, in addition to compensating the surplus production since the beginning of this year throughout the compensation period, which will run until September 2025,” it said in a statement.
The natural gas recovery seems to have stalled as supplies seem to be getting caught up with demand. Above average heat has powered the move but now we await the report from EIA.
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Orange Juice Rug Pull?
By: Barchart | June 12, 2024
• Orange Juice Rug Pull?
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Natural Gas Bullish Continuation Targets 3.20 and Beyond
By: Bruce Powers | June 11, 2024
• Natural gas surged above 3.15, aiming for the 3.18-3.20 zone, supported by a bull pennant breakout and a bullish 20-Day and 200-Day MA crossover.
Natural gas triggered a bullish trend continuation today as it rallied above Monday’s high of 3.15. It is on track to close strong, near the highs of today’s trading range. It looks like the next higher target zone from 3.18 to 3.20 will be reached. The 88.6% Fibonacci retracement and an extended Fibonacci target define the range.
Bull Breakouts Follow Through
Last week natural gas triggered a breakout from a bull pennant trend continuation pattern. The fact that the breakout of the pennant occurred around the same time as a breakout above the long-term downtrend line triggered, makes it more interesting. Trendlines by themselves are not too reliable as a signal, but this breakout is more interesting because of the pennant. The pennant consolidation formed near resistance and therefore the two breakouts are starting the next leg up rather than triggering a breakout further into an advance when momentum is more likely to die off following a breakout.
Bullish Confirmation Signs
Further supporting bullish evidence includes the recent bullish crossover of the 20-Day MA above the 200-Day MA, and a successful test of support at the 20-Day line recently. If natural gas can eventually exceed the 2023 high at 3.64, further confirmation of a bullish reversal will be indicated. Further, a rally above the next swing high of 3.39 and daily close above that price level, improves the chance that the 2023 high may be exceeded. The monthly chart also reflects improving demand in natural gas as the 20-Month MA was exceeded this month for the first time since natural gas fell below it in December 2022.
Pennant Targets 3.78
There are several interim targets on the way to the calculated target from the pennant pattern starting with the 88.6% retracement. The pennant structure provides a potential target of 3.78. That is above the 2023 peak of 3.64. Nevertheless, it is still a way away and the target may never get hit. If the 3.18 to 3.20 price zone is exceeded, January swings high at 3.39, followed by the 2023 high at 3.64 become targets.
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Grains Report: Wheat, Rice, Corn and Oats, Soybeans, Canola and Palm Oil
By: Jack Scoville | June 11, 2024
• WHEAT
General Comments: Wheat was lower in all three markets again yesterday as the US harvest expands and even as adverse world growing conditions are still around. There are more reports of hot temperatures coming this week to Russian growing areas. It has also been very dry there. The weather is still a key, with extreme dryness reported in Russia and parts of the US and too wet conditions reported in Europe. However, US producers are reporting strong yields so far and very good conditions. Big world supplies and low world prices are still around.
Overnight News: The southern Great Plains should get mostly dry conditions. Temperatures should be above normal. Northern areas should see mostly dry conditions. Temperatures will average above normal. The Canadian Prairies should see mostly dry conditions. Temperatures should average above normal.
Chart Analysis: Trends in Chicago are down with no objectives. Support is at 606, 595, and 569 July, with resistance at 630, 640, and 650 July. Trends in Kansas City are down with no objectives. Support is at 600, 623, and 598 July, with resistance at 660, 675, and 690 July. Trends in Minneapolis are down with no objectives. Support is at 669, 659, and 648 July, and resistance is at 700, 710, and 725 July.
• RICE
General Comments: Rice closed lower in July yesterday as the contract continues to liquidate longs and shorts in a violent way. The big US crops are now in doubt from reports of extreme rains in southern growing areas and especially near Houston. Supply tightness is expected to give way to increased production this year and greatly increased supplies this Fall. These ideas are reflected in the prices seen in the old crop and the new crop. Big storms have brought significant rains to crops in Texas, but the weather is better now.
Overnight News:
Chart Analysis: Trends are mixed. Support is at 1763, 1741, and 1725 July and resistance is at 1798, 1825, and 1835 July
• CORN AND OATS
General Comments: Corn closed a little higher yesterday on news that Brazil has proposed new export taxes on Agricultural goods of 20%. Congress must approve the measure, but farmers there are already reported to be halting sales to see what happens next. The US Midwest is still seeing good growing conditions. The market anticipated that crop condition ratings would be very high in the USDA reports last week and will anticipate high crop ratings this week. Oats were lower on good growing conditions found in the northern US and into Canada. The weather in the Midwest has been very wet but it is drier now. Demand has been the driving force behind the rally. Increased demand was noted in most domestic categories along with rising basis levels, and export demand has been strong.
Overnight News:
Chart Analysis: Trends in Corn are mixed. Support is at 438, 436, and 434 July, and resistance is at 454, 461, and 467 July. Trends in Oats are down with no objectives. Support is at 330, 323, and 317 July, and resistance is at 350, 368, and 374 July.
• SOYBEANS
General Comments: Soybeans and the products closed mostly higher yesterday despite good growing conditions in the US against weaker demand ideas and on reports of increased taxes for Brazil farmers. The government there has proposed a new tax on farm production and exports of up to 20%. Congress must approve the measure, but reports indicate that Brazil farmers are pulling back from sales to see what happens next. There were wire reports that China prices are weakening amid veery strong imports from Brazil. Reports indicate that China remains an active buyer of Soybeans in Brazil but might have to cut back on demand if the domestic market does not improve. China said that it has increased exports of Soybean Meal due to the weaker internal demand. Domestic demand has been strong in the US but has suffered as crushers were crushing for oil. Oil demand has suffered as cheaper alternatives for feedstocks hit the biofuels market.
Overnight News: Chna bought 104,000 tons of US Soybeans.
Chart Analysis: Trends in Soybeans are down with no objectives. Support is at 1166, 1157, and 1146 July, and resistance is at 1210, 1224, and 1236 July. Trends in Soybean Meal are mixed to down with objectives of 350.00 and 324.00 July. Support is at 350.00, 345.00, and 342.00 July, and resistance is at 373.00, 376.00, and 381.00 July. Trends in Soybean Oil are mixed to down with objectives of 4330 and 4130 July. Support is at 4310, 4270, and 4250 July, with resistance at 4530, 4690, and 4780 July.
• CANOLA AND PALM OIL
General Comments: Palm Oil was lower today. Export demand has been very strong in recent private reports. There is talk of increased supplies available to the market, but the trends are up on the daily and weekly charts. Canola was also mostly higher despite reports of generally good conditions in Canada as the Canadian Dollar rallied.
Overnight News:
Chart Analysis: Trends in Canola are down with no objectives. Support is at 614.00, 603.00, and 597.00 July, with resistance at 642.00, 645.00, and 660.00 July. Trends in Palm Oil are mixed. Support is at 3850, 3780, and 3600 August, with resistance at 4080, 4140, and 4300 July.
DJ Malaysia’s May Palm Oil Exports 1.38M Tons; Up 12%, MPOB Says
Malaysia’s palm oil exports were up 12% on month at 1.38 million metric tons in May, the Malaysian Palm Oil Board said.
The following are details of the May crop data and revised numbers for April, issued by the MPOB:
May April Change
On Month
Crude Palm Oil Output 1,704,455 1,501,995 Up 13.48%
Palm Oil Exports 1,378,443 1,234,502 Up 11.66%
Palm Kernel Oil Exports 87,827 85,901 Up 2.24%
Palm Oil Imports 20,761 34,762 Dn 40.28%
Closing Stocks 1,753,544 1,744,860 Up 0.5%
Crude Palm Oil 979,352 964,049 Up 1.59%
Processed Palm Oil 774,192 780,811 Dn 0.85%
Midwest Weather Forecast Scattered showers and storms. Temperatures should average below normal.
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Softs Report: Cotton, OJ, Coffee, Sugar, Cocoa
By: Jack Scoville | June 11, 2024
• COTTON
General Comments: Cotton was lower yesterday as growing conditions are good and demand is not. USDA said that 60% of the US crop was rated good to excellent on Tuesday afternoon. Big storms were reported in Texas recently that could damage crops. There are also some big problems with too much rain in the Delta and Southeast in recent weeks. Demand has been weaker so far this year but there are hopes for improved demand with the lower prices. Chinese consumer demand has held together well, and Chinese demand for Cotton has started to increase.
Overnight News:
Chart Trends: Trends in Cotton are mixed. Support is at 70.80, 69.60, and 69.00 July, with resistance of 76.00, 80.30 and 83.20 July.
This Week Last Qeek Last Year Average
Cotton Planted 80 70 78 80
Cotton Squaring 14 9 10 12
Very Poor Poor Fair Good Excellent
Cotton This Week 2 6 36 49 7
Cotton Last Week 3 5 31 54 7
Cotton Last Year 2 13 36 40 9
• FCOJ
General Comments: FCOJ closed higher yesterday in correction trading. The market remains well supported in the longer term based on forecasts for tight supplies and very hot weather in Florida. Retail prices in May hit a new record high of $9.69 a gallon, 9% higher than last year. The reduced production appears to be at the expense of the greening disease. There are no weather concerns to speak of for Florida or for Brazil right now. The weather has improved in Brazil with some moderation in temperatures and increased rainfall amid reports of short supplies in Florida and Brazil are around but will start to disappear as the weather improves and the new crop gets harvested.
Overnight News:
Chart Trends: Trends in FCOJ are down with objectives of 403.00 and 370.00 July. Support is at 417.00, 406.00, and 389.00 July, with resistance at 452.00, 473.00, and 477.00 July.
• COFFEE
General Comments: Both markets closed closed lower yesterday despite short supplies that could be made worse by ideas of reduced offers of Robusta and on forecasts for another couple of weeks of dry weather in Vietnam. There were also reports of poor Robusta yields in Brazil during the harvest. Ideas of less production in Vietnam are driving the rally. There were indications that Brazil and Vietnam producers were now offering Coffee, buts in small amounts, Vietnamese producers are reported to have about a quarter of the crop left to sell or less and reports indicate that Brazil producers are reluctant sellers for now after selling a lot earlier in the year. Exports from Brazil have remained strong.
Overnight News: The ICO daily average price is now 223.08 ct/lb. Brazil will get mostly scattered showers with near normal temperatures. Central America will get mostly dry conditions. Vietnam will see scattered showers.
Chart Trends: Trends in New York are mixed. Support is at 218.00, 212.00, and 208.00 July, and resistance is at 239.00, 241.00 and 245.00 July. Trends in London are up with no objectives. Support is at 4180, 4060, and 3990 July, with resistance at 4540, 4660, and 4780 July.
• SUGAR
General Comments: Both markets closed lower on harvest progress in Brazil and the charts show that trends are turning up. Trends are mixed on the daily charts and up on the weekly charts. End users need Sugar but are not finding too much available in the cash market. There are still ideas that the Brazil harvest can be strong for the next few weeks amid dry harvest weather, but now the cry weather is causing concern about developing Sugarcane in center south areas. Harvest weather is called good in center-south Brazil. There are worries about the Thai and Indian production, but data shows better than expected production from both countries.
Overnight News: Brazil will get rains in the south and scattered showers in the north. Temperatures should average above normal. India will get mostly dry conditions and below normal temperatures.
Chart Trends: Trends in New York are mixed to up with objectives of 1990 and 2090 July. Support is at 1840, 1800, and 1770 July and resistance is at 1950, 3000, and 2050 July. Trends in London are mixed to up with objectives of 581.00 and 608.00 August. Support is at 536.00, 528.00, and 522.00 August, with resistance at 570.00, 578.00, and 586.00 August.
• COCOA
General Comments: Both markets were lower yesterday, but chart trends are still up. Production concerns in West Africa as well as demand from nontraditional sources along with traditional buyers keep supporting futures. Production in West Africa could be reduced this year due to the extreme weather which included Harmattan conditions. The availability of Cocoa from West Africa remains very restricted and projections for another production deficit against demand for the coming year are increasing. Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast and Ghana continue. Demand continues to be strong, especially from traditional buyers of Cocoa.
Overnight News:
Chart Trends: Trends in New York are mixed Support is at 9410, 8930, and 7870 July, with resistance at 10210, 10520, and 11120 May. Trends in London are mixed. Support is at 7260, 6610, and 6160 July, with resistance at 8190, 8250, and 8730 July.
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Price Caps Woking Some, What? The Energy Report
By: Phil Flynn | June 11, 2024
Oil prices had its best day in two months as the market got over its OPEC cut “taper tantrum”. The market seemed to awaken to the fact that with demand trends being what there are and production cuts by OPEC and falling rig counts in the US, we are sleepwalking into a global oil supply deficit. Yet at least according to U.S. Treasury secretary Janet Yellen, the sanctions on Russian oil were working “somewhat”. Well, if she means they are working for Russia, then she is right.
Russia built a new market for its oil and gas and according to data from the Russian finance ministry, Russia’s revenues from oil and gas surged by 73.5% in the January through May period of 2024 compared to the first five months of 2023. After raking in so much cash from places like China and India and other black-market buyers throughout Europe, they can afford to be a bit magnanimous when it comes to cutting back production to try to get in line with their promises to the OPEC cartel. The oil market took notice after it was announced that Russia made one of its deepest production cuts in a year, lowering their production in 9.393 million barrels a day. There was a cut of 344,000 barrels a day and while they are still about 34,000 barrels above their target range, it shows a sign of good faith that Russia is on board with the production cuts as we have been predicting for some time.
Still, some OPEC members are struggling or cheating on the production cut. I know, it’s shocking. According to a Platts Survey, OPEC increased output by 120,000 barrels a day despite Russia’s cut. The OPEC cheater list happens to be the usual suspects such as Iraq in Nigeria. On the compliance side, the gold stars go to not only Russia but Kazakhstan and Mexico. Mexico cut their oil output to a four year low. This came as Venezuela flooded the markets ahead of sanctions.
Janet Yellen tries to convince the world that price caps work somewhat yet the black oil market trade continues to flourish. Sanctions enforcement is abysmal.
According to Tanker Trackers, have witnessed or identified 221 shift oil transfer sessions in the Riau archipelago, which is double what they saw a year ago.
Bloomberg said, “Russia has shipped about 3.4 million barrels a day of crude so far this year, valued at about $37 billion at the point of export, and working around western sanctions has been part of that.
Russian oil proceeds to the state budget increased almost 50% in May from a year ago. And while Russia’s oil producers are set to flourish here in the United States a cutback in the right counts is starting to raise questions as to whether US oil production is getting close to a peak.
Yesterday the markets saw in report from Bloomberg that got a lot of attention that said that unless the US oil rig count starts to rise, then U.S. oil production could fall by as much as 1,000,000 barrels a day as existing oil fields start to see a decline.
Bloomberg pointed out that drilling in the US shale patch dropped to the lowest level in almost two-and-a-half years as operators vowed to make good on promises to investors for subdued production growth this year.
According to the article, Adam Rich, deputy chief investment officer at Vaughan Nelson, a Houston-based investment manager said that “We could probably keep the 12-13 million barrel-per-day level for six to nine more months, but if we don’t see rig counts really start moving up here, that’s going to be a big problem.”
Add to that threats by Senate Democrats who go after US shale oil producers for price fixing is going to create a situation that is potentially going to leave the United States very undersupplied and very dependent on foreign sources of oil. Will the madness ever end?
Regardless oil prices had a huge comeback day yesterday one of its best day of months after people started to realize that the OPEC “taper tantrum” regarding the OPEC production cuts was way overdone and the fact that we are facing a potential supply deficit later in the year.
And if you look at OPEC data, they expect the demand for their crew to add average roughly 43.65 million barrels a day of the second half of 2024 to that table that would imply a crude deficit leading to a drawdown of 2.63 million barrels a day,. That is assuming that they were going to maintain its April production of 41.02 million barrels.
Goldman Sachs also said in its latest report that it expects a supply deficit of up to 1.3 million bpd by the third quarter of 2024 as travel and cooling demand ramps up through the summer. That has been in line with what the energy report has been saying. Obviously, we’re glad the market is starting to come to that same assessment.
And while gasoline demand in the United States has been rocky it’s still not that far from being able to get back near record highs.
We know that air travel demand is the highest level that’s been since 2019 now there are signs that global demand is starting to pick up. There are even reports of shortages of jet fuel in Japan as the yen has made travel to Japan attractive.
So overall there seems to be a global oil demand bounce. Bloomberg reported that, “- Gunvor Group, one of the biggest independent oil traders, is snapping up benchmark-defining cargoes of crude oil that other companies are offloading, a possible indication of the firm being bullish. The Geneva-based company has kept 17 out of 18 North Sea crude cargoes that have been put into so-called forward chains so far this month. The total volume controlled by one single company is the highest since at least December 2019 when Bloomberg started compiling data. Each cargo is 700,000 barrels.
Years ago, I was involved in a potential refinery project that never got off the ground. The plan was to try to take advantage of the shale oil revolution. Te problem that we have in the United States that our US refineries were not really built refine the light shale oil. The idea was to build a refinery to solve that problem.
Yet that that time the inability to be able to hedge the niche market became a difficulty and was eventually a nonstarter for the potential investors.
Yet years later it seems that a refinery project that is looking to do exactly that is getting off the ground because on so many levels it makes sense. Yet they are facing some of the same challenges.
Reuters is reporting that, “Element Fuels Holdings, a Dallas-area startup proposing to build the first all-new U.S. oil refinery in nearly 50 years, on Thursday said it was relaunching efforts to build a large plant in South Texas.
The Brownsville, Texas, project has been proposed by entrepreneur John Calce at least twice before by his ARX Energy, and Jupiter startups, with one leading to a bankruptcy filing. The project was originally owned by a holding company that also owned Centurion Terminals.”
Element is looking to raise funds for the first phase, which will allow the refinery to process about 50,000 to 55,000 barrels per day of naphtha feedstock into gasoline. The company estimates the initial phase will cost about $1.2 billion, Calce said. The company said it was in talks with banks, private credit funds as well the U.S. Department of Energy for funding from the Inflation Reduction Act.’ I wish them luck.
Yesterday’s sharp rebound should have broken the downtrend for oil and products.
We should be in a buy the brake’s mode perhaps until the 4th of July. We have macro headwinds with inflation data and the Fed, but the trend is back up as demand should outpace supply.
We also get the American Petroleum Institute (API) report. We expect a draw of 2 million barrels on Crude oil. We also expect to see the same draws for gasoline and distillate. After massive crude adjustments in the Energy Information Administration (EIA)report as well as a hug surge in demand for other oils last week, we could be due for a very bullish report as the adjustments start to level out.
The mishmash energy policy of course is keeping people confused but now there is more pressure to give consumers the choice and what type of vehicle they buy and where they drive and when they drive it. Now in a pressed release “U.S. Senate Commerce Committee Ranking Member Ted Cruz (R-Texas) announced his plan to force a vote on President Biden’s anti-consumer EV mandate.
Cruz will introduce a disapproval resolution under the Congressional Review Act (CRA) to overturn a soon-to-be final rule from the National Highway Traffic Safety Administration (NHTSA) that would effectively ban gas-powered vehicles and mandate electric vehicles for American consumers. As proposed, NHTSA’s Corporate Average Fuel Economy (CAFE) standards for passenger cars and light-duty trucks would increase the price of a new gas-powered vehicle by nearly $1,000 with, at best, speculative benefits. When combined with the administration’s massive increase in CAFE civil penalties and the Environmental Protection Agency’s (EPA) vehicle emissions rule, the expected final rule will raise car prices for consumers and hurt U.S. auto workers.”
Natural Gas has been getting the nice rebound hitting the highest price since January on the hot temperatures and weather but one of the things that has been relatively quiet has been this start to the hurricane season that was being predicted to be so active. And while the Atlantic looks extremely quiet for right now Fox Weather is keeping an eye on the gulf. Fox Weather says that another window of tropical development is looking more likely this upcoming weekend for the Gulf of Mexico.
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The Unseen Forces Shaping Grain Markets: Fund Positioning, End User Behavior and Their Influence on Price
By: Barchart | June 10, 2024
“The beatings will continue until morale improves” keeps playing in my head as I watch these grain markets trade in what would normally be a somewhat seasonally friendly timeframe. My visions of $5.00 plus December corn feel like they are fading as the excitement in wheat and subsequent $1.80 run in price did much less than I had anticipated when it came to fund participation and rally depth in corn.
Don’t get me wrong, it’s not as though managed money hadn’t worked to cover their shorts ahead of planting. I talked about the push to cover their position during the stretch of wet weather at the start of May here adding that it would likely take an additional catalyst to get funds willing to go long.
Fast forward nearly a month and the relatively rapid jump in planting pace to ahead of average at the end of May across much of the country and an additional decent weather outlook for much of June has traders believing trendline yields on potentially higher acres than projected in March remain in reach.
As we start June there are few things we can say with certainty but one of them is that while there are pockets where rain seemed to beget rain, keeping some acres unplanted, the percentage of ground sitting idle this year is not likely to be anomalous.
When it comes to watching what is happening in price, there are a few things developing that have me scratching my head. Some I can understand to a certain extent, while others have me wondering if something has happened in the market to cause a fundamental shift in how end users approach managing their risk and the factors money managers look at when it comes to trading grains.
One of the questions plaguing the market that has me somewhat confused is cash driven, with the lack of end user participation, even when the worries over a wheat production shortfall out of the world’s largest exporter were on the rise, described as remarkable. Typically, at this point in the marketing year traders would have a certain amount of wheat sold to world buyers, with the ability to forecast additional sales and margins as each region harvests their crop and works to assess its own market needs.
This year traders out of Europe and the US say new crop export contracts are nearly non-existent as the world end user has become almost as disengaged as the farmer. The lack of market participation beyond hand to mouth purchasing is putting pressure on basis and spread, rewarding elevators for holding tight to supply via more carry in the spreads, but keeping basis levels wide enough end users who wait find themselves also rewarded.
I can’t help but wonder what is driving the reduced market participation and what it means. Obviously at face value it’s bearish as the days of traders pushing for supplies no matter what kind of jumps in price we had seen appear to be well behind us. Wider basis levels and carries say we have more than enough supplies to satisfy nearby demand as well.
In addition to signals from the cash market on what is happening currently, balance sheets predict a continued run of reasonable production, with this week’s supply and demand update from the USDA unlikely to show any signs we need to look to ration demand.
Of course, it could be as simple as China’s lack of participation is helping folks around the world feel more comfortable with waiting. The Chinese government announced officials will purchase more local supplies of wheat for reserves this year than last as quality and yields are expected to be better and concerns over world production have the attention of leaders.
Some believe China’s recent slowdown in feed grain purchases will come to an end soon as crops in the country get planted, while others feel their approach to the market in the months ahead will be slower and more methodical. Whatever China does over the next few weeks will play a pivotal role in ending stock outlooks, as any indication they will return to the market to make big purchases could help boost global export demand, especially if yields prove disappointing.
While the lack of end user participation has me scratching my head, as I mentioned, it at least makes sense from a market signal standpoint—I struggle to understand what is driving some of the relentless selling pressure we are seeing out of managed money in certain commodities. Fund selling in crude last week was one of the largest chunks of selling we have seen for any week dating back to 2013, and while you could say the decision by OPEC + nations to raise production in the fourth quarter or an announced release from SPR were behind the move, the headlines in my opinion did not match up to the move.
Fund selling in corn and beans was more aggressive than expected last week as well, marking one of the many occurrences we have seen over the last year where Friday’s CFTC data surprises us with a greater swing than expected.
Perhaps the fund's attitude towards crude and the grain markets has nothing to do with one another and it’s just a happy coincidence, but that feels unlikely when looking at all the other odd “happy coincidences” we have seen in these markets the last few years.
Whatever it is driving fund positioning and the need to maintain a healthy short—whether it is interest rate influenced or driven by something else, we will be hard pressed to sustain a significant rally without a change in heart or opinion.
Even with that in mind, I still feel we must continue to watch what is happening around the world closely. There are some possible shifts in the market that may take some time to show themselves with adjustments to production and market flow that are currently being masked by abundant old crop supplies and the ambivalent world buyer.
We are a week or so away from getting our first glimpse at what pollination weather could look like for much of the US, with increased risks of heat possible. One thing we have learned in recent years is overnight heat remains something to watch when it comes to potential yield loss, keeping the weather outlook imperative for price in the weeks ahead.
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Commodities Daily Market Movers (% Price Change)
By: Marty Armstrong | June 11, 2024
• Top Movers
Eggs 8.33 %
Zinc (99.995%) Spot 3.13 %
Zinc 3.12 %
Zinc (99.995%) Futures 3.02 %
NY Crude Oil Futures 2.93 %
• Bottom Movers
Oats (CBOT) Futures 4.2 %
Tokyo Silver Futures 3.25 %
Wheat #2 3.2 %
Wheat CBT Futures 3.19 %
Cotton 2.86 %
*Close from the last completed Daily
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Natural Gas Price Forecast: Bull Breakouts Signal Strong Uptrend
By: Bruce Powers | June 7, 2024
• Following a new daily high close in the uptrend, natural gas surged on Friday, confirming a bull pennant breakout and triggering a trendline break.
Following a new daily high close for the uptrend yesterday, natural gas took off on Friday, confirming a bull pennant breakout and triggering a trendline break. Moreover, a bull trend continuation signal triggered above 2.92, on the way to the day’s high and a weekly high of 2.97. However, the market continues to trade near the highs of the day at the time of this writing, and it could reach a higher price level before the weekend.
Unless there is a pullback before today’s close, it is on track to close strong, in the top quarter of the day’s range and possibly above the prior trend high at 2.92. The stronger the close, the more likely it should be able sustain upward momentum.
Dual Breakout: Bull Pennant, Long-term Trendline
Today’s breakout is the latest technical clue that the uptrend in natural gas is improving and becoming more sustainable. Although there were two attempted breakouts of a bull pennant trend continuation pattern recently most of the structure of the pattern was retained. Given today’s strong momentum through a clear breakout level indicates that the market has recognized the change. The downtrend has defined dynamic resistance for the full trend beginning from the 2023 peak at 3.64. That peak is now at risk of being broken eventually if the uptrend continues to strengthen.
Improving Technical Clues
Keep in mind that today’s high puts the price of natural gas up by 95% from the February trend low. That is a healthy swing historically in a relatively short amount of time. Nevertheless, support was successfully tested near the 20-Day MA recently, indicating that the 20-Day line is a good near-term line to watch for the current trend. Also, today’s rise moves natural gas further away from the long-term 200-Day MA, a sign of long-term strength.
Pennant Target Above 2023 High
The measuring objective from the bull pennant offers an initial target of 3.78. That price target is above the 2023 high of 3.64. On the way up it must contend with possible resistance around the 78.6% Fibonacci retracement at 2.99 and the prior interim swing high resistance at 3.02. An interim prior swing high is at 3.39. The weekly chart also contains bullish clues after today as this week’s candlestick pattern should negate the prior two week’s bearish candles.
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