Central Valley Cooperative

Friday Energy News

Steven Johnson — Fri, 18 May 2012 13:11:16 +0000

The energy complex trade is mixed in early trade as the dollar remains strong. June crude oil is trading $0.21 per barrel higher to $92.77. The U.S. dollar keeps climbing as Greece and Spanish banks are downgraded further. Saudi Arabia keep filling customer tanks extra full and China economic growth is waning. The story today is about growth in Europe as proposals now center on spending money in infrastructure to rebuild Greece and gain more jobs. Enterprise and Enbridge have completed the reversal of the Seaway Pipeline shipping Cushing crude oil to the Houston gulf refineries. Seaway Pipeline initial crude oil capacity is 150,000 barrels per day. Eventually they will increase to 400,000 barrels per day. Shipping will begin this weekend. Here in the U.S., QE III continues in discussion circles. This would be a crippling impact on current trends as in the past, QE I and II supported commodities and killed the dollar. The micromanagement of global economies is becoming even more chaotic.

The concern is will the EU be able to stop at Greece, or will Portugal, Spain, and eventually Italy join the flow of bankruptcy. Investors are scared and we can only predict energy demand to slow for Europe and possibly for China as Europe is their number one customer.

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Thursday Energy News

Steven Johnson — Thu, 17 May 2012 20:20:51 +0000

The energy complex trade is mixed in early trade as the dollar remains strong. June crude oil is trading $0.11 per barrel higher to $92.92. The energy complex remains mixed as little has changed with the European situation and specifically Greece. Elections are scheduled and will be deciphered over the next month. More analysts are prediction Greece will drop out, yet Germany’s Merkel keeps the faith of saving Greece. The European Central Bank will stop lending to certain Greek Banks as their financial conditions have deteriorated. Inventory reports did little to disrupt the bearishness of this energy market as global stocks grow and demand remains questionable. Iranian nuclear discussions remain positive and will restart next week.

Can the bears remain in control of this down move in the energy complex? We should test their capacity if the dollar rally ever lets up. At this time, we face a strengthening dollar rally that has been relentless and steady climb higher. The dollar is due for a correction to the downside. As negative as we are, we have a recipe for some short-term bottoming action before we resume lower in the longer term.

Tuesday Energy News

Steven Johnson — Tue, 15 May 2012 12:32:21 +0000

The energy complex trade is mixed in early trade as the dollar takes a breather. June crude oil is trading $0.04 per barrel higher to $94.84. Today’s recovering market is more about normal market action as we are due for a bounce. We have a new French leader, Francois Hollande, as he now pledged to increase economic growth as a challenge to the German dominated austerity program. Greece fails to organize a new government as more elections are in order as the new Radical Left Party now takes the leadership role and yet failed to gather the needed power so far.

The U.S. dollar is breaking out above the 80.725 high set on March 15. On January 13, 2012, we traded a high of 82.045 which is the next major hurdle. The dollar has not spiked higher, but crawled higher in light of the European situation.

We are overdue for a “dead cat bounce” in the energy complex. The continuation of this market retreat is fed by negative global outlook. Some will wait for the Iranian nuclear negotiations to test the bearish outlook.

Monday Energy News

Steven Johnson — Mon, 14 May 2012 12:50:05 +0000

The energy complex trade is lower in early trade as the dollar keeps climbing higher. June crude oil is trading $2.00 per barrel lower to $94.13. Strong U.S. dollar valuation is weighing on commodities. JP Morgan’s 2 billion dollar trading losses are sending tremors through the global banking world. In addition, China’s People’s Bank has reduced bank reserve from 20.5% to 20.0% in an effort to spur the economy. Traders are beginning to worry that China’s economy is weakening more than expected. Then we go back to Greece to find Greek politicians have not formed a new coalition government to lead themselves out of trouble. Many feel that they are farther from any agreement than they have been in a long time and will certainly not be in position to gain favor of further financing requirements and Greek default lies ahead.

Global politics, China, and JP Morgan stories plagued the market today. The outcome become even more unknown and messed up. The dollar strength is the leading factor turning the commodity markets lower as investors seek safety and solid footing. We are breaking lower and below substantial support levels. Short term the bears have control.

Friday Energy News

Steven Johnson — Fri, 11 May 2012 12:59:38 +0000

The energy complex trade is lower in early trade as the dollar keeps climbing higher. June crude oil is trading $1.17 per barrel lower to $95.93. OPEC announced it is pumping crude oil at levels not seen since the summer of 2008 when we have record demand. OPEC announced they are pumping 32.42, up 317,000 barrels per day from last month and in excess of what the market can currently use. The IEA agrees that OPEC pumped 1.3 million barrels per day above April’s demand for global oil. They stated this is a well-supplied market. In addition, several days ago, Saudi told they are stock piling oil. We would assume that in preparation for the embargo of Iranian crude oil. Iranian meetings will be conducted in Vienna with the IAEA with the focus for the official May 23 meeting in Baghdad.

Thursday Energy News

Steven Johnson — Thu, 10 May 2012 12:36:12 +0000

The energy complex trade is lower in early trade as the dollar keeps climbing higher. June crude oil is trading $0.68 per barrel lower to $96.13. More of the same as equities fall for 6 day and the number look red again. No matter what the fundamentals are, the unwinding of Greece and potentially the euro is pressuring markets lower. The dollar is slowly breaking higher which further pressures commodities in general. Overnight, more Chinese data indicates exports and imports are slowing, implying a slowing Chinese economy. Yesterday’s DOE inventory reports supported the futures market as product draws outweighed crude oil builds. Brent crude oil is gained on WTI due to the North Seas Buzzard field may have shutdowns.

Trade levels remain in a consolidating pattern after initially moving lower. We have early weakness, find support and then rally into the close. Neither the bulls nor the bears have the dominant stance. I will contend that the euro is in further troubles as softening global energy demand will weaken prices. The wild card remains Iran.

Agronomy Topic of the Week: Fungicide at V5

Chad Phillips — Wed, 09 May 2012 16:21:31 +0000

Application of fungicides on corn at tassel to R1 growth stages has become increasingly popular in the past few years. Discussion over fungicide application around the V5 stage of corn has also become a hot topic.

Agronomy Topic of the Week: Tissue Testing

Chad Phillips — Wed, 09 May 2012 16:09:53 +0000

Many nutrient deficiencies can be identified by the appearance of the crop but usually when that is the case economic injury has already occurred, yield has already been affected.

Wednesday Energy News

Steven Johnson — Wed, 09 May 2012 12:44:34 +0000

Energy – generally lower as we focus on Greek concerns – equities lower and dollar crawls higher – report day. June crude oil is trading $0.80 per barrel lower to $96.21. Today is inventory day and we have a friendly API report, yet the energy market continues to drift lower. Further Greek fears of possible default and a future that may lead Greece to exit the Eurozone softens global equity markets and energy markets. Worries extend to what it may mean to Portugal, Spain and even Italy if Greece is not saved. API crude oil stocks are at record levels with a jump of +7.781 Million barrels. The API showed heating oil and gasoline stocks fell almost 8.5 million barrels. These draws rallied the RBOB gasoline and heating oil late in yesterday’s trading session.

Yesterday’s market action turned much softer with limited follow through in all pits. Then the API came out and products rallied. We are due for a rally, but how high can we rally. Perhaps we will not until Greece is out of the news. But today is report day and anything can happen.

Tuesday Energy News

Steven Johnson — Tue, 08 May 2012 13:04:28 +0000

The energy complex trade is lower in early trade as the dollar keep climbing higher. June crude oil is trading $1.12 per barrel lower to $96.82. We have a continuation of lower energy markets as global equity markets soften and the U.S. dollar firms. This is day 2 after the European elections stir the political viability of the German austerity proposals and rules. The general populations have had enough and want to get a breath of fresh air with new leadership. Investors’ confidence is fading. Adding to bearish fundamental are comments from Saudi Arabia powerful Oil Minister Ali Naimi stating that oil prices are “too high” and that they need to come down. Terrorism remains a threat with the announcement that the U.S. discovered a new plot to take down a U.S. bound airliner.

More market talk has surfaced that the Capline pipeline may be reversed to bring Canadian crude oil south rather than gulf crude oil north. This is a 1.2 million barrel per day crude oil pipeline that has been used sparingly as the Chicago regional refineries have been blessed with an ample supply of cheaper Canadian crude oil. This compares in size to the 150,000 barrel per day Seaway pipeline that will reverse operations this morning. This is a push by Marathon as one of several owners that certainly must seek a return on investment with that pipeline that operates at only partial capacity. The conversion of this pipeline, if it occurs, would equalize North American Crude oil prices very quickly.

The fact that the energy market did not continue to sharply sell off gives the bulls a chance. However most will state that we are officially trading bear markets so any rally form here is a bear market correction and we will move lower. Yesterday’s market actions did little to solve price direction questions.