Play Turner’s Take Ag Marketing Podcast Episode 284
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In today’s podcast we go over the macro markets and why strong corporate profits will encourage the Fed to follow through with tapering starting in October. We also talk about the Natural Gas market and why we think it continues to rally this fall and winter. Finally we dive into the grain markets, talk about the coming transition in seasonal trends, and why the grain and oilseeds could rally once US exports pick up again. Make sure you take a listen to this week’s Turner’s Take Podcast
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Natural Gas is up 30 cents. NG started the day up 10 cents but then gained another 20 after the EIA reported only a 29 Bcf injection for the weekend ending Aug 20. The market was looking for 39 Bcf with some analysts estimating injections in the 40s. Natural Gas stocks are already tight and this is the time of year the US needs to be building large stocks for the winter. Total working gas in storage as of Aug 20 was 2,851 Bcf, which is 563 Bcf below last year and 189 Bcf below the five year average. While are no shortages now, the market could get very tight later this year if winter cold starts early or if the winter is colder than normal.
Below are daily and monthly charts of NG. The breakout today could see prices eventually challenge the $4.92 highs from 2018. If we get an early and cold winter traders will be talking about the $6.00 resistance level from 2014 and 2010. During the years when Natural Gas was in tight supply (2003-2009), $6 was major support.
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Daily Natural Gas Chart
20 Year Monthly Natural Gas Chart
Grains & Oilseeds
The CBOT continues to chop. Old crop basis continues to sag as grain is priced before Sept futures FND and end users are willing to wait for new crop harvest. During years if adequate to burdensome stocks this is a bearish period. Old crop and new crop is tight for corn and beans so the market is more choppy than bearish.
The last week of August tends to be low volume and choppy. The markets will start to gain steam once we get past labor day. The next WASDE is Sept 13 and we’ll be expecting the USDA to lower production again for the US, Canada, and Brazil. Demand may weaken for old crop soybeans has high prices did ration demand. The US should also see better export demand and business switches from S. America to the US.
For now we think the market continues to trade in range. We have a bullish bias for the fall and winter due to expectations of strong demand. La Nina will be a threat again this winter for Argentina and Southern Brazil and could hurt their crop production for another growing season. For the moment the market is focused on the confirmation of new crop production and the lack of export demand. Stay tuned!
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