MARKET SUMMARY 9-8-2021
U.S crude oil product demand hits an all-time high, despite Delta-COVID concerns, cutting into stockpiles. The latest Energy Information Administration report stated the products supplied by refiners hit an all-time record, measuring the demand for the fossil fuel and its products. The crude oil market has been concerned about the growth of the Delta-Variant of COVID, possibly limiting global demand, but the number state differently. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That’s a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters. The four-week average rose to 21.4 million bpd, highest since September 2019. Crude oil inventories reflected the strong usage, as inventories fell by 7.2 million barrels to 425.4 million barrels, expectations were for a 3.1 million barrel drop. The supply/demand outlook and the impacts of Hurricane Ida brought crude oil prices back towards the $70/barrel level. The next couple reports may be skewed because of the impacts of Hurricane Ida, but the trend for demand will likely stay strong into next year.
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CORN HIGHLIGHTS: Corn futures ended the session mixed with September gaining 2-1/2 and December losing 0-1/2 to close at 5.10-1/2. September finished at 4.98-1/4. Yesterday we covered several items that all, seemly at the same time, are pressuring commodity prices. The catalyst that started the bearish tone is shipping disruptions at the gulf due to hurricane Ida. The market generally does not like uncertainty when it could affect supply movement and consequently it did not take long for futures to give up about 40 cents. On top of Ida, the harvest is quickly approaching as the corn crop, according to many producers, is maturing at a rapid pace this year. An early start to the planting season and warm weather has helped to push the crop along. Today’s trade was again disappointing if you’re bullish as December corn reached a high of 5.16-3/4, up more than five cents. At the current price level, a 5-cent rally isn’t a big deal but after a significant price drop off a recovery of a nickel and then the inability to hold those gains is disappointing. On Friday the USDA will release its monthly supply and demand report. Expectations are that yield could be increased from 174.6 to possibly 177 bushels and a potential adjustment to acres with many believing in upward bias as the June 30 acreage number appeared to be on the low side.
SOYBEAN HIGHLIGHTS: Soybean futures ended the session quietly gaining 2-1/2 cents in November to finish the session at 12.79-1/2. January futures closed 2 higher at 12.79-1/2. An announced sale of 106,000 mmt to China provided initial support as prices experienced double digit gains by mid-morning. Concerns regarding export news (lack of large sales) is continuing to weigh on prices as it appears some export activity will turn to other countries due to problems at the gulf. There is some talk it could take up to a month to get facilities in proper working order. There are rumors export activity but little confirmation. The inability to move beans through the pipeline just prior to harvest could back up supply. There is also some talk of cancellations. Whether cancellations are permanent or if sales will be pushed back for later delivery remains to be seen. 57% of the crop is rated good to excellent, up 1% from last week. Drier weather is expected to push the crop along and speed up the beginning of harvest. Bearish traders will argue rains in August could add yield and that this year’s high prices will bring more acres in production for the year ahead. Yet continued talk of white mold and other diseases may limit total yield gains or negate expected increases. Additionally, it was reported the US Ag attaché raised China soy imports for the 2021-2022 season to a record 101 mmt, up 3 mmt from this past year.
WHEAT HIGHLIGHTS: September futures inching closer to expiration, lost 10 1/2 cents, closing at 6.98 1/4 and December lost 10 1/4 cents, closing at 7.18 1/2. KC September lost 12 3/4 cents, closing at 6.97, with a volume of only 10 contracts today, and December contracts lost 12 1/4 cents as well, closing at 7.04 3/4. Wheat had a bearish reaction to Stats Canada’s report on all-wheat stocks as of July 31st that was released today. Trade was expecting 4.8 mmt and Stats Canada reported 5.7 mmt, which put the market in a tailspin today. Combine that with news this week that Australia might come close to creating a record crop and the Ukraine did indeed create a record wheat crop, easy to see the food for the bears today. Trade is awaiting Friday’s USDA report – expectations are a decline in Canadian, Russian, and EU wheat with increases to Australian production. Yesterday’s crop progress report said 95% of US spring wheat harvest is complete & winter wheat planting is at 5%. Global wheat demand is still strong but as Russian prices continue to run up, US wheat is finally starting to look like a market participant in comparison.
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Author
John Heinberg