News that the Obama administration is paving the way for an increase in oil exports for first time in nearly forty years provides more evidence of high production and ample supplies in North America. The complicated move, involving the Commerce Department and many technicalities may be more symbolic at this stage than an overall lifting of export bans, but has been heralded by some as a fundamental change in the US oil market policy.
Easing of tensions in Iraq, increased output from Libya, and lackluster domestic economic data contributed to lower prices for crude oil and its products this week. The peak of demand for gasoline is typically around the upcoming 4th of July holiday, while demand for diesel fuel may ebb as builders and farmers have likely already purchased fuel to meet their spring and early summer needs.
By midday Friday, August crude oil was trading slightly lower on the week at $105.50 per barrel, while gasoline and diesel fuel each were cheaper by a few cents per gallon as well.
Grains Wait for USDA
Midday Monday, the USDA will release two key reports about the grain markets, which will be closely watched by farmers, consumers, and traders. The Planted Acreage Report will give the USDA's estimate of how much corn, soybeans, and spring wheat were planted throughout the US this spring, while the Quarterly Grain Stocks Report will tally current US stockpiles of the grains.
With corn and wheat prices relatively low compared to soybeans, many farmers planted more beans this year instead of corn and wheat; the USDA is expected to show more than 82 million acres of beans planted this year, a huge jump from last year's 76.5 million acres.
The stockpile report is expected to show over 3.7 billion bushels of corn, a relative abundance, nearly one billion bushels more corn in storage than in 2013. Meanwhile, soybean stockpiles could be significantly smaller than last year, likely shrinking below 400 million bushels.
Ahead of the report, corn and wheat prices were near the lowest price since early February, with July corn worth only $4.42 per bushel, and July Chicago wheat trading Friday for $5.85. Due to the limited short-term supply, July soybeans were much stronger, worth $14.35 per bushel.