Will geopolitical concerns ignite crude market?

A Pemex spokesman concurred that the two operations “are complementary”. “The finance ministry’s hedge is to protect direct government income and this hedge is directly to protect our income to meet the financial balance goal,” he said. The size of the two operations is also wildly different. The government has spent an average of about $1.0 billion a year on its oil hedge for the past decade, and last year netted $2.65 billion from the program. The Pemex hedge covers a maximum of 409,000 barrels per day for the May to December period at a price of $42 per barrel, that being the target price established in the budget for 2017.

Natural gas is stalling straight ahead of tomorrow’s injection report. We are looking for a 67 bcf injection but that won’t be enough to remove supply tightness concerns in this structurally short market.

 

Lumber went thud in the aftermath of the Trump Tariff. The reason was that the market had been anticipating the move for some time. Canadian lumber producers have already been raising prices for months in anticipation of the retroactive tax.

Copper concerns?         

 BHP cuts its 2017 guidance for copper and iron ore according to the FT. Freeport cut its production targets after a problem with the Indonesia government.

Rain makes grain but also slows planting. Despite the farmer’s progress being better than expected as the farmers seem to be moving around the raindrops; it appears that the outlook is looking a bit wet. The grain markets seemed to get support on renewed late planting reports. WX Risk reports there were two areas of significant rain in the last 24 hours. One area was over northern Minnesota and the eastern half of North Dakota (some of this was snow). Rainfall amounts range from 0.25 -1.0"/ 6-25mm and the coverage was 60 to 70%.  The second area of moderate rain fell over eastern Wyoming and the western half of Nebraska as well as far southwestern South Dakota. Rainfall amounts here were a little heavier range from 0.25 -1.5" 6-38mm and again the coverage was 60-70%.

 

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