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Crude Oil, Tech Guy's Comment, Rain Days Update 04/03/2022

Highlights


It is clear the Russian military pressure on Ukraine’s capital city of Kyiv has rescinded and moved east toward the Russian border. No one thinks they are going home, rather they are consolidating their 2014 gains in Eastern Ukraine. Watch our predicted Rain Days for Rondonópolis and Campo Grande, Brazil. That’s the double crop corn area and the weather forecast is turning dry next week. That sandy soil does not hold water… nor nitrogen.

 

For the second consecutive month, Saudi Arabia’s and Iraq’s state oil regulators announced last Thursday they have increased prices of crude oil and refined products for April loading. They expect crude markets to be tight for some time to come.


However, USA crude oil demand data reported by the Energy Information Administration (EIA) has been significantly overestimated compared to the final monthly oil demand, oil data analytics firm OilX said on Friday.


The weekly demand estimates in March already showed that recent demand strength had been easing and may turn out to be even weaker if recent weekly errors compared to the monthly data continue.


Thursday’s EIA petroleum supply monthly report showed that total oil demand averaged 19.731 million barrels per day in January. However, EIA's weekly data pegged crude demand at 21.7 million bpd. Editorial comment: Sounds like USDA math.


The number of active drilling rigs in the USA rose by 3 last week, 2 for crude oil and 1 for natural gas. Total drilling rigs stand at 673, that is 243 more than a year ago.


Russia pumped 11.01 million barrels per day of crude and condensate in March, down slightly from 11.08 million in February according to Reuters News’ sources.


Germany is considering nationalizing the German units of Russian oil and gas giants Rosneft and Gazprom due to fears the companies could run into financial troubles and leave Germany high and dry with no gas and no refined petro products.

 

USDA reported Friday the ethanol corn crush was 405.2 million bushels in February and the USDA revised the January corn crush 14.3 million bushels lower to 463.5 million bushels.


The February soybean total crush came in at 174.4 million bushels.

 

Matt reported over 800,000 birds in South Dakota have been euthanized and the word Friday another 500,000 are infected.

 

Ukraine has begun exporting grain; the tonnage is 10 to 15% of its normal and expected pace. It going by rail to Romanian ports in the western area of the Black Sea.

 

Tech Guy’s Comments:


Time, numbers, math and ratios are very important for technicians and charting. Math is the truest, most unwavering language known to man. The answers that it gives us are always correct. Interpreting the daily and weekly math in charts is more forgiving than intraday 30 minute or hourly bars.


Just like people and nature, the market's energy vibrates with regularity and schedules or patterns. The length of time on daily legs of a trend tend to be similar in corn and beans. Say the first leg is 34 days, you'd be looking for the next 2 legs up to be within a few days of 34 days. Also, if the first leg of a 3rd leg rally (5 waves up where the corrections are labeled 2 and 4) is 100 points, the second leg is usually an expansion of leg one (1¼, 1½ or 1¾ times) the first leg. Let's assume the technician is looking for 1½ times the first leg for leg 2 (3rd wave). That would be 150. Then you would add 150 to the lowest trade price of the correction after leg 1, which would be labeled leg 2. The 3rd leg up (5th wave) can be shorter, the same or longer than the 2nd leg up (wave 3). The waves expand more often in commodities than in equities and financials. The 1-2-3-4-5 counting system is from Elliott Wave theory.


In extreme times, the 3rd leg can be multiples of leg 2. The 3rd up leg of the 1973 July bean contract was approximately 4 times (400%) the 2nd one. That was the year futures hit $14, never to be seen again for 35½ years (2008).


I have labeled the Soybean Continuation Chart below with:

Price length


Time length


And assigned numbers at the end of each leg (1-2-3-4-5), where 1-3-5 are the up legs and 2, 4 are corrective (down) legs. The number 4 label is a 5 wave correction labeled a-b-c-d-e where 4 is e (end) - the market could be at the end of the 4 leg or we may have to adjust a bit lower or longer.


The tricky part with numbering is there is usually more than one way to count the waves as you will see in the chart. I labeled the waves such because of the importance of timing in the grains and oilseeds. Please spend some time studying the chart and notes.


Friday's close traded to within 1½ cent of the Feb 25th low of $15.79. This is an important price area; the market will either pivot (reverse direction) higher or a failure of the support and move lower. If May beans close above the February 25th low on tomorrow, the 5 wave has probably begun, and the 5 wave high would be 38+ days later or the week of May 9th.


Keep in mind that April 1st is the same as Oct 1st in South America. As life is starting anew here, it is ending there.

 

Rain Days Update


The Western Corn Belt has 2 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 3 more rain days than yesterday.


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