Coffee falls, natural gas rises

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Sep 20, 2013

Fed Keeps Pump Primed
 
The Federal Reserve surprised markets on Wednesday with an announcement that they were not changing anything.
 
The Fed reported that they will continue buying $85 billion of bonds per month in an effort to stimulate the economy by keeping interest rates low. This came as a surprise to most investors who had been expecting them to reduce the purchases by $10 billion. Instead, the “quantitative easing” program (QE3) is continuing in full swing until the Fed sees more evidence of an improving economy.
 
The immediate response to this news were swift rallies in gold, stocks, bonds, and foreign currencies, all of which benefit from lower US interest rates. Gold had the largest gain, rallying more than $55 per ounce (+4.2%) to $1,367 on Wednesday. By the end of the week, the yellow metal had given up half of its gain, trading Friday for $1,338.
 
Coffee Grinds Lower
 
Coffee prices fell to $1.11 per pound this week, the lowest price in over four years. Prices have been in decline as US inventories of coffee swell to levels not seen since 2009. In addition to already large inventories, large crops could be hitting the global market soon. The world’s largest coffee producer, Brazil, is benefitting from rains during the coffee trees’ flowering stage that should boost production of next year’s crop. Meanwhile, Vietnam is beginning its harvest of the world’s second largest crop, which could put near-term pressure on prices.
 
For now, baristas and home brewers should benefit from lower prices, which are down 64% from the high of $3.06 made in 2011.
 
Natural Gas Rises
 
Natural gas prices lifted to a two-month high this week on news that inventories are currently 5% lower than last year.
 
Unseasonably warm weather in September has increased demand for air conditioning and electricity, much of which is ultimately generated by natural gas. This strong demand has helped to keep natural gas inventories lower, helping prices rise.
 
Other traders are eying weather in the Gulf of Mexico, home to 5% of US natural gas production. Although the Gulf of Mexico has largely been spared from significant damage this hurricane season, there is still potential for tropical storms to affect the offshore oil and natural gas production rigs scattered throughout the Gulf.
 

Comments

Contango

Re: "The Federal Reserve surprised markets on Wednesday with an announcement that they were not changing anything."

It's been a good week.

The "Bernanke Put" is still in place.

The S&P 500 low was 666 in Mar. '09.

Yesterday it closed at 1709.

That's a 157% increase!

Anyone who wasn't in the Mkt. missed these gains.

The Mkt's still got room to move. But for how long???

Remember "Stein's Law":

"If something cannot go on forever, it will stop,"

2cents

Was at a CNG based show this week, we have as a best guess 200 years of gas and a lot of converting going on right now. If you put a $4k compressor in your garage you can drive for ~ $.65 a gallon. Now how the fed gonna get their road tax??

Contango

Re: "Road tax"

The last talk I read was of some type of govt. monitoring system so motorists would pay per mile driven.

Any thoughts at the show?

Yep! Lost a few “shekels” on nat-gas (UNG) when fracking crashed the price. Have since made it back - and more.

2cents

(Any thoughts at the show?)

There are a lot of options, CNG/gasoline combo, CNG/Diesel combo, all CNG. Nice thing with combos is if CNG runs low and no filling station near, the other fuel transfers automatically. There is a large potential for my company to make widgets for this industry, I filed one patent two months ago and another to follow soon. This was a small show in Cleveland, the bid show is in KY.

http://greatlakestruckexpo.com/

http://www.truckingshow.com/

The Hero Zone's picture
The Hero Zone

I am all for options but I am a little wary on what happens in a wreck. More specifically the kaboom it'd cause. Was that addressed at all? I appreciate when others share their business experience and personal insights!

2cents

By design Hero, A friend of mine who is a private consultant has been designing brackets for these tanks for big trucks. There is a lot of data in just the mounts to be considered, G forces and all of this.

http://www.wisegasinc.com/wg-cyl...

The Hero Zone's picture
The Hero Zone

Thanks! It was a good read. I know that natural gas has been used before in vehicles and haven't heard of any fireballs rocketing down the highway (nor block-leveling explosions in city buses that use the substance) but there is always that thought, yaknow? Especially after that propane factory explosion.

It takes feelings to ask questions, but reason to understand answers. So thanks for giving me a lead to pursue as I read up more on this.

Contango

@ The Hero Zone:

One my favorite people to listen to is T. Boone Pickens.

He's been preaching nat-gas long before even fracking.

http://www.boonepickens.com/

He also reminds me of my late-great father-in-law who also was an Okie and spoke not unlike him.

Contango

Re: "CNG/gasoline combo, CNG/Diesel combo, all CNG."

Understood.

But like the Prius, the govt. is only getting a smaller percentage of revenue from the gas tax.

Another road building and maintenance funding mechanism needs to be created.

Perhaps some form of privatization and tolls?

Best wishes for much success with your patents!

2cents

Thank you, it is a full time job trying to stay on top of things in todays world, just finished Sunday 7AM breakfast meeting with my EE.

As for tolls, I use a Turnpike Easy Pass, possibly something like this could be used in the future in place of a fuel tax, or maybe a random odometer reading from your vehicle at random places, collecting the tax after the fact may be very difficult at best! I totally agree that taxes need to be collected for road repair and construction, it would be nice to know they went to just those applications.

The Big Dog's back

Without the road tax what are you going to drive on? And you own a business? Oh boy.