Commodities Market Update April 11, 2019

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April 11, 2019 | by Joel Fingerman
Dear Joel:
Grains
The April USDA WASDE report was released Tuesday and the data were generally bearish to commodity prices. US corn ending stocks were reported at 2.035 billion bushels, greater than the average estimate of 1.991 billion bushels (Chart 1, 2018 bar). World corn ending stocks were reported at 314.1 million metric tons, up from 308.5 million metric tons in the March report (Chart 2, 2018 bar).
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US soybeans ending stocks were at .895 billion bushels, slightly less than the average estimate at .898 billion bushels (Chart 3, 2018 bar). World soybeans ending stocks were at 107.36 million metric tons, up from 107.17 million metric tons in the March report (Chart 4, 2018 bar).
With the exception of US corn ending stocks, the ending stocks remain at record levels. The market dropped with the release of the WASDE report, but ended the day basically unchanged.
However, the flooding in the Midwest and near term weather forecasts could delay or prevent planting, causing commodity prices to rise.
Chart 1
Chart 2
Chart 3
Chart 4

 

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Commodity Market Update April 4, 2019

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April 04, 2019 | by Joel Fingerman

Dear Joel:

Energy

Since March 6, 2019, front-month crude oil prices have increased more than $6, from $56.22 to $62.46 per barrel. Chart 1 of the forward curves for those two dates also shows the contango coming out of the market to a primarily backwardated market. As of March 6, the contango was over two dollars from the April contract at $56.22 to the December contract at $58.61 (red line).

As of April 3, the contango was only nine cents from the May contract at $62.46 to the July contract at $62.55; after that, the forward curve is backwardated. Backwardation supports rising prices, and, in turn, rising prices generally increase backwardation. The forward curves are indicating higher prices.

Chart 1


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Commodity Market Update, Portuguese Translation March 22, 2019

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Commodity Market Update Portguese Translation March 22, 2019

Energia

Antes de 2014, o petróleo bruto produzido nos EUA, por lei federal, não podia ser exportado.
Quando a lei foi alterada em meados de 2014, as exportações de petróleo dos EUA aumentaram
para cerca de 0,5 milhões de barris por dia. A partir de meados de 2017, com o aumento da
produção nacional de xisto bruto, as exportações de petróleo aumentaram dramaticamente para
3,39 milhões de barris por dia (Gráfico 1, linha preta).

Com uma produção recorde de petróleo bruto sendo ofertada, os estoques de petróleo bruto
podem estar em níveis mais baixos (Gráfico 1, linha vermelha). Com fortes exportações e menores
níveis de estoques de petróleo bruto, os preços do petróleo bruto WTI dos EUA terão apoio e
devem ficar acima de US $ 60 o barril.

Gráfico 1

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Commodity Market Update March 21, 2019

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Commodity Market Update March 21, 2019

Energy

Prior to 2014 crude oil produced in the US by federal law could not be exported.  When the law was changed in mid-2014, US crude exports increased to about 0.5 million barrels per day.  Starting in mid-2017 with increasing domestic shale production of crude oil, crude exports increased dramatically to 3.39 million barrels per day (Chart 1, black line).  With record crude oil production for supply, crude stocks can be at lower levels (Chart 1, red line). With strong exports and lower levels of crude stocks, US WTI crude oil prices will be supported and can be expected to stay above $60 a barrel.

Chart 1

Commodity Market Update March 13, 2019

Commodity Market Update March 13, 2019

Grains

Last Friday the USDA released the March WASDE (World Agriculture Supply Demand Estimates)
report. The average estimate for soybeans ending stocks was 902 million bushels; the report
was at 900 million bushels (Chart 1, 2018 bar). The estimate was close to the actual, and the
data remain bearish to price, especially the stocks to use ratio of 21.9% (Chart 2, 2018 bar).

Chart 1

Chart 2

The average estimate for wheat ending stocks was 1.020 billion bushels; the report was at
1.055 billion bushels (Chart 3, 2018 bar). The report was bearish to price when compared to the
estimate, and yet the ending stocks have been declining for the last three years. However, the
stocks to use ratio remains bearish to price at 55.6% (Chart 4, 2018 bar).

Chart 3

Chart 4The average estimate for corn ending stocks was 1.736 billion bushels; the report was at 1.835
billion bushels (Chart 5, 2018 bar). The report was bearish to corn prices. However, the overall
data for corn are less bearish than soybeans or wheat. Ending stocks have been decreasing for
the last three years and the stocks to use ratio, 12.4%, (Chart 6, 2018 bar) is the lowest in the
last five years.

Chart 5

Chart 6

Commodity Market Update March 7, 2019

Energy

The calendar spread of NYMEX May Crude – NYMEX June Crude for the 2019 contracts has decreased from positive 60 cents last May (Chart 1, black line) to negative 39 cents as of March 5. These calendar spreads of consecutive months are often called “front-to-back” spreads. The value of the front-to-back spreads often is inversely correlated to crude stocks at Cushing, Oklahoma (Chart 2), the delivery point of the NYMEX crude oil contracts. As stocks increase at Cushing, there tends to be downward pressure on the front-to-back spreads. Cushing stocks have been increasing since last August, from 20 million barrels to 47.5 million barrels as of March 1 (Chart 2, red and black lines), and correspondingly the May-June Crude spread has been decreasing. See the Chart 3 scatterplot of this inverse relationship. Should the Cushing stocks continue to increase, as we expect, this will continue to pressure the front-to-back crude calendar spreads.

Chart 1

Chart 2

Commodity Market Update (Portuguese Translation) February 14, 2019

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February 14, 2019 | by Joel Fingerman
Dear Joel:
Grãos
Na sexta-feira passada, o USDA
publicou o relatório WASDE de
fevereiro. Em geral, não havia dados
imprevistos contidos no relatório e,
portanto, nenhuma grande reação de
preço com a divulgação do relatório.
Os Estoques Finais de Milho estavam
em 1,735 bilhão de bushels, enquanto
as expectativas eram de 1,708 bilhão
de bushels (Gráfico 1, barra 2018). A
razão entre estoques e uso foi de
11,7% (Gráfico 2, barra 2018). Embora
não fortemente otimista, os dados são
favoráveis aos preços do milho.
A nova plataforma do Fundamental
Analytics será lançada em março de
2019. Para ver o que a plataforma
FA pode fazer por você, inscreva-se
em um teste gratuito em nosso site
ou entre em contato com um dos
nossos colaboradores.
Estaremos oferecendo um preço
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Os estoques de soja fecharam em 910 milhões de bushels, enquanto as expectativas
foram de 955 milhões de bushels (Gráfico 3, barra 2018). A razão entre estoques e
uso foi de 22,2% (Gráfico 4, barra 2018). Os dados mantêm a tendência de baixa nos
preços com estoques finais em níveis recordes e com recorde também na razão de
estuques e usos.
Gráfico 1
Gráfico 2
Gráfico 3
Gráfico 4
Energia
Apesar do tempo mais frio que o normal, o spread do calendário de gás natural de
março a abril é agora negativo, com os preços futuros de abril sendo negociados
acima dos de março (Gráfico 5, linha preta). Traders atualmente acreditam que o
fornecimento de gás natural será suficiente para a demanda de gás natural em
fevereiro.
Os contratos futuros em aberto de gás natural para março recentemente iniciaram
um declínio acentuado (Gráfico 6, linha preta). A queda dos contratos em aberto,
enquanto os preços estão caindo, é geralmente um indicador de posições
compradas saindo do mercado. Isso pressionará os preços, fazendo com que o
spread entre março e abril se torne mais negativo.
Gráfico 5
Gráfico 6
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The Fundamental Analytics Team

DOE Insights February 13, 2019

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Crude Oil Stocks Build, Greater than Expectations
 
The DOE reported Total Crude Oil Inventories increased by 3.6 million barrels to 450.8 million barrels for the week ending February 8, 2019, while the expectations average was for a 2.7 million barrel build.
Overall hydrocarbon supplies increased by 6.5 million barrels to 1,266 million barrels.
Crude Oil Production remained at 11.9 million barrels per day.
Total Crude Imports decreased by 900,000 barrels per day to 6.2 million barrels per day, a record low for this time of the year.
Total Refinery Crude Runs were down 900,000 barrels per day to 15.77 million barrels per day.
The crude oil stocks build was bearish to crude oil price, but news reports of the Saudis reducing crude exports and cutting production supported the market. The build came despite the record low in crude imports. While March crude futures settled up about 90 cents today, there remains downward pressure on prices from increasing concerns over the US-China trade negotiation and slowing global economic growth.
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Gasoline
 
Gasoline Stocks Build, Less than Expectations
 
Total MotorGasoline Inventories increased by 400,000 barrels to 258.3 million barrels for the week ending February 8, 2019. The expectations average was for an 800,000 barrel increase.
Implied Demand was down by 390,000 barrels per day to 10.0 million barrels per day.
Gasoline Production decreased by 240,000 barrels per day to 9.62 million barrels per day.
The DOE report was moderately bullish to gasoline prices with the relatively strong demand for this time of the year. Gasoline prices rallied with the report release, stronger than crude, so the gasoline crack improved. However, the margins are still not profitable.

Distillates
Distillates Stocks Build, Expectations were for a Draw.
 
Total Distillates Stocks increased by 1.2 million barrels to 140.2 million barrels for the week ending February 8, 2019, while the expectations average was for a 1.1 million barrel draw.
Total Distillates Production was down by 360,000 barrels per day to 4.76 million barrels per day.
Total Distillates Implied Demand decreased by 870,000 barrels per day to 5.03 million barrels per day.
The DOE report was bearish to distillates prices. Heating oil prices dropped from the day’s high with the report release. However, the heating oil prices remained positive for the trading day, and the March heating oil crack spread is greater than $27.
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Commodity Market Update February 13, 2019

Our weekly commentaries and updates will remain free until April 2019. Effective April 2019, a subscription will be required in order to receive them. Of course, clients of Fundamental Analytics and BlackSummit Financial Group will continue receiving our weekly content for free.
We would be happy to discuss this commentary with you and provide additional market insights. Feel free to call us at 312-348-7518 or email us at joel.fingerman@fundamentalanalytics.com
February 13, 2019 | by Joel Fingerman
Dear Joel:
Grains
Last Friday the USDA issued the February WASDE report. In general, there were no unanticipated data contained in the report and so no major price reaction with the release of the report.
Corn Ending Stocks were 1.735 billion bushels, while expectations were for 1.708 billion bushels (Chart 1, 2018 bar). The Stocks to Use ratio was 11.7% (Chart 2, 2018 bar). While not strongly bullish, the data are supportive of corn prices.
The new Fundamental Analytics platform will launch in March 2019. To see what the FA platform can do for you sign up for a free trial on our website or contact one of associates.
We will be running a special introductory price for those who sign up between March 15th and May 15th.
Benefits of FA:
  • Easy to use, web-based and menu driven platform.
  • Extensive history of data.
  • Superior graphing capabilities
  • Competitively priced.

 

Corn Ending Stocks were 1.735 billion bushels, while expectations were for 1.708 billion bushels (Chart 1, 2018 bar). The Stocks to Use ratio was 11.7% (Chart 2, 2018 bar). While not strongly bullish, the data are supportive of corn prices.
Soybeans Ending Stocks were 910 million bushels, while expectations were for 955 million bushels (Chart 3, 2018 bar). The Stocks to Use ratio was 22.2% (Chart 4, 2018 bar). The data remain bearish to prices with record Ending Stocks and record Stocks to Use ratio.
Chart 1
Chart 2
Chart 3
Chart 4
Energy
Despite colder than normal weather, the March-April natural gas calendar spread is now negative with April futures trading higher than March futures (Chart 5, black line). Traders currently believe natural gas supplies will be sufficient for natural gas demand during February.
The March natural gas futures contract open interest has recently begun a steep decline (Chart 6, black line). Open interest decreasing while prices are dropping is usually an indicator of longs exiting the market. This will put pressure on prices causing the March-April calendar spread to become more negative.
Chart 5
Chart 6
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The Fundamental Analytics Team

CFTC Crude Oil Report for February 12, 2019

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Latest CFTC Report
       The CFTC Commitment of Traders Reports will be incrementally updated on Tuesdays and Fridays until the reports are current
     The CFTC Commitment of Traders Report as of Tuesday, January 15, 2019 shows the Non-Commercials Net Long Positions increased during the week by 26,897 contracts to 359.611 contracts.  6,343 Long positions were closed and 33,240 Short positions were covered.
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