Commodities Futures and Options Brokerage

Paragon Commentary

Futures File: Natural Gas, Soybean Oil & Metals

Feb 17, 2017

Heat Wave Deflates Gas Prices

Natural gas prices are collapsing, reaching a three-month low near $2.83 per million British thermal units.

The market is selling off as temperatures across the U.S. are projected to be 15-30 degrees warmer than usual this weekend, sapping demand for the heating fuel. Overall, this winter was extremely warm; the National Oceanographic and Atmospheric Administration (NOAA), estimates that heating demand for natural gas is nearly 20% below average.

Without significant heating demand, natural gas inventories could stay near record levels and may pull prices lower still.

Longer-term, the U.S. natural gas market may be increasingly dependent on exports to keep demand in line with production. Foreign sales have been rapidly increasing, especially to Mexico, although exports still account for less than 5% of U.S. production.

 

Soybean Oil Slides Lower

The market for soybean oil (labeled “vegetable oil” in the supermarket) is looking cloudy; prices dropped beneath 33 cents per pound on Friday for the first time since October.

Bean oil is falling even as the price for soybeans has been robust. Demand for soybean meal, a livestock feed ingredient, has been strong, which has encouraged processors to buy more beans and crush them into meal. This crushing process separates the oil from the high-protein meal and has created an abundance of soybean oil.

Soybean oil is consumed widely in the food industry as a cooking oil, processed food additive, and as the basis for many salad dressings, mayonnaises, and margarines, but those sources of demand don’t typically rise drastically to soak up excess supply.

As a result, the soybean oil glut will likely need to be met by exporting the excess oil or converting it into biodiesel, a demand source that currently consumes nearly 20% of U.S. bean oil.

 

Metals Rocket on Global Anxiety

Gold and silver have been blasting higher, driven primarily by global concerns.

While our government has been battling internal leaks and allegations against former National Security Advisor Michael Flynn, there have been major missile launches by North Korea, Russia, and Iran, a signal that America’s adversaries may be testing limits on the global stage.

These actions inspired fearful investors to buy gold and silver, which reached $1245 and $18 per ounce on Friday, respectively.

1 (888) 452-8751

Paragon Investments, Inc.

Kansas • Colorado • Nebraska •
Missouri • Indiana • Florida

 

DISCLAIMER: Past performance is not necessarily indicative of future results and the risk of loss does exist in futures trading. Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions, market data, and recommendations are subject to change at any time. This brief statement does not disclose all of the risks associated with trading commodities, futures, and options. For more information, see Disclaimer/Legal statements. The information contained on this Web site does not constitute a solicitation to buy or sell by Paragon Investments, Inc.. This Web site is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Paragon Investments, Inc. © 1997-2013 No Claim to Orig. U.S. Govt. Works.

© year Paragon Investments, Inc.