I remember that Monday morning 19 years ago like it was yesterday. Trading the markets watching CNBC market news and the watching the events unravel before my eyes. Just as my Mother and Father told us kids, they remember exactly that day on December 7th, 1941 and never forgot what they were doing that day. The did not have the luxury of T.V., only radio and all gathered around. I just want to thank all the first responders who served and sacrificed for our country. God Bless You All!

Today we start of with CPI, Export Sales and Real Earnings, at 7:30 A.M., Crop Production, USDA Supply/Demand, and WASDE reports at 11:00 A.M., Baker Hughes Oil and Total Rig Count at 12:00 P.M. and Monthly Budget Statement (AUG) at 1:00 P.M.

Following the latest updates from the National Hurricane Center which was 8:00 P.M. last night with Depression 2 located over north-central Gulf of Mexico with slow movement and development has these disorganized storms moving southwestward over the north and western Gulf of Mexico. Disturbance 1 is a large area of disorganized thunderstorms extending from near central and Northwest Bahamas crossing the Bahamas and Florida today and entering the Gulf of Mexico this weekend which is a threat of disruptions to shipping and production of crude oil and natural gas. Tropical Storms Paulette and Rene are both keeping their moving west-northwest at 9 knots, but too early to determine what part of the U.S. coastline be impacted by these storms. An finally we have Disturbance 3 a few hundred miles southeast of the Cabo Verde Islands moving westward across the Atlantic and has a 60% chance of becoming a hurricane.

These storms should spark a short covering rally when we saw the crude selloff just through support at 3713. With all the disruption scenarios and more threats on the way, I do not believe anyone would want to be short going into the weekend. In the overnight electronic session, the October crude oil is currently trading at 3734 which is 4 points higher. The trading range has been 3746 to 3696.

On the Natural Gas Front World Oil reports that Natural Gas is losing it’s luster as a “bridge fuel” in renewable energy. With the cancellation of the Atlantic Coast pipeline and Ireland’s decision to scrap backing for an import terminal this summer is the latest signs that gas is falling out of favor with everyone from regulators to asset managers. I do have one question, how is that solar and wind power working in Southern California and helping to fight the wildfires in the north in California? Just not enough power in the grid to feed demand when it arises. This market like crude oil may as well see a short covering rally with the storm threats in the gulf.

On the Corn front we had quite the close in yesterday’s trading action with December corn settling at 365 up 4 ¾ cents. This is really based on lower yield implications and more export possibilities to China, the wild card, if they honor their agreement to Phase 1 of the Trade deal signed in January. Today’s Big 3 reports should have an impact on prices when released at 11:00 A.M. In the overnight electronic session the December corn is currently trading at 367 which is 2 cents higher. The trading range has been 368 ½ to 364 ¾.

On the Ethanol Report front production is up modestly while supplies are tightening. The EIA said last week’s production averaged 941,000 barrels a day, an increase of 19,000 barrels a week ago, but down 82,000 from a year ago, while blending’s hit an eight-week low. The USDA’s report today will show corn for ethanol use estimates. There were no trades posted in the overnight electronic session. The October contract settled at 1.306 and is currently showing 1 bid @ 1.100 and 1 offer @ 1.320 with Open Interest at 42 contracts.

Have a Great Trading Day!
Dan Flynn
God Bless the USA!