Commodity Blog

Archive for January, 2010

Corn is the most widely grown crop in the United States. 332 million metric tons of the crop are harvested annually in the U.S. What prospects are for the corn in 2010?

By the end of 2009 future seemed to be bright for corn prices as adverse weather caused late planting in the U.S. But everything has turned upside down when the U.S. Department of Agriculture predicted that US corn production will reach a new record. USDA estimated 2009 corn crop as much as 13.15 billion bushels, while analysts forecast yield to be about 12.82 billion bushels. U.S. corn exports forecast went down by 50 million bushels to 2.1 billion bushels, further pushing down outlook for corn prices. U.S. exporters also have to deal with competition from Argentinean corn. Production of corn in Argentina may reach 17 million bushels, compared with estimated 12 million bushels, and at least 9 million bushels will be available for export. Slow recovery of U.S. economy does not help demand, and therefore prices, either.

Yet not everything looks dim for corn. Low prices improved exports by 20 percent this month. Recent reports about low soil moisture in Argentina corn growing areas are also supportive for corn prices. As you see, conditions can change significantly over small amount of time, making hard to say which price should be expected. USDA forecasted the price for the corn to be in a range of $2.90-$4.50 per bushel, suggesting with such a wide range that Department is unsure too. Analysts say that “there are not many fundamental reasons for high corn prices” and “technical support should not allow prices to fall much more”.

The technical analysis, that includes the indicators’ data and major pivot points for Brent Oil, Gold, Silver and Copper as traded on spot market as of January 30th 2010:

Crude oil gained after the report that the U.S. economy improved at the fastest pace in six years, suggesting that demand may increase. Oil rose as much as 1.6 percent as U.S. gross domestic product went up 5.7 percent in the fourth quarter, the best performance since the third quarter of 2003. March delivery for crude oil added $0.71 (1 percent) to $74.35 per barrel as of 10:10 the New York Mercantile Exchange.

Wheat futures slid as the stronger dollar made supplies from the U.S., the largest producer of the grain in the world, less appealing to overseas buyers. The dollar gained 0.5 percent versus the basket of six major currencies. March futures for wheat delivery lost $0.045 (0.9 percent) to $4.825 per bushel at 10:20 on CBoT.

Gold fell in London as the dollar gained, decreasing the metal’s attractiveness as an alternative store of value. The dollar rose on concern that demand for European assets will decrease with Greece’s fiscal problems spreading further, while the U.S. economy advanced more than expected last quarter. Immediate delivery for gold slipped $8.17 (0.8 percent) to $1,078.93 per ounce by 15:17.

Latest commodity prices (ICE, NYMEX, CME) as of 16:01 GMT:

Oil (Brent) — $72.65
Gold — $1,076.95
Silver — $16.11
Palladium — $414.00
Platinum — $1,509.92
Copper — $6,800.00
Aluminum — $2,087.00
Nickel — $18.600.00
Zinc — $2,122.00
Cocoa — $3,207.00
Sugar — $29.85
Corn — $361.50
Soybean — $932.25

Corn rebounded from the lowest level in 16 weeks after the report that exports from the U.S., the biggest grower in the world, will rise. Exports went up 20 percent in the four weeks ended January 21st, compared with the previous year, after prices dropped 14 percent this month. Production of ethanol is also increasing. Analysts predict that low prices will spur demand. March futures for corn delivery added $0.01 (0.3 percent) to $3.5925 per bushel by 11:07 on the Chicago Board of Trade.

Analysts say that gold is still bullish in long term, despite its fall 11 percent down from its record last month. The precious metal’s drop can be considered “a normal pullback” and ”the long-term momentum” is still present. Gold is little changed, erasing a previous gain of 5.9 percent, as the dollar rebounded versus the basket of six major currencies this month.

Latest commodity prices (ICE, NYMEX, CME) as of 18:19 GMT:

Oil (Brent) — $71.90
Gold — $1,079.30
Silver — $16.11
Palladium — $413.50
Platinum — $1,515.30
Copper — $6,830.00
Aluminum — $2,097.00
Nickel — $18.100.00
Zinc — $2,143.00
Cocoa — $3,246.00
Sugar — $28.79
Corn — $360.25
Soybean — $926.50

Wheat dropped to the weekly low on expectation that U.S. President’s plan to limit risk-taking by banks will cut investment in commodities, including U.S. grain. Barack Obama may announce further details of his plan to restrict proprietary trading or investing in hedge funds and private-equity funds. March futures for wheat delivery decreased $0.045 (1 percent) to $4.8925 per bushel as of 10:08 on CBoT.

Crude oil and gasoline tumbled to the lowest level in five weeks after the report that stockpiles of the motor fuel climbed to a 22-month high. Demand for fuel fell 2 percent compared to the previous year in the four weeks ended January 22nd. Gasoline consumption dropped 0.4 percent from the previous week. Refineries worked at 78.5 percent of capacity. March delivery for crude oil slid $1.05 (1.4 percent) to $73.66 per barrel by the 14:30 on the New York Mercantile Exchange.

Latest commodity prices (ICE, NYMEX, CME) as of 19:12 GMT:

Oil (Brent) — $71.99
Gold — $1,087.80
Silver — $16.49
Palladium — $409.50
Platinum — $1,516.54
Copper — $7,048.00
Aluminum — $2,147.00
Nickel — $17.800.00
Zinc — $2,205.00
Cocoa — $3,260.00
Sugar — $28.28
Corn — $358.50
Soybean — $931.75

In this video ONN‘s Kevin Cook and David Hightower from www.futures-research.com talk about the recent developments in the copper stocks and the drawdown in the U.S. oil refinery. Big copper consumers a simply stockpiling copper, while the falling crude refinery rates suggest that in a short-term perspective the economy will continue to decline, pulling the commodities down. But the general supply and demand picture didn’t change much, as the normal supply is still higher than the demand in most commodities, suggesting a long-term bullish picture.

The technical analysis of the spot gold, presented in this video, employs a rather interesting theory based on the long-term super cycles, according to which the gold is rising since 2006. These cycles run for 21–23 months and currently we are in the beginning of the third cycle. A cycle has a parabolic shape and begins with a decline and after 6–8 months switches to growth, ending with a new record maximum. So, for the long-term traders it’s still a good opportunity to sell, holding a short gold position for about a half a year and then buy, aiming to catch another peak. Of course, cycles aren’t surefire and you shouldn’t risk too much, relying on such kind of analysis.