Commodity Blog

Commodity Forecasts

Wheat prices advanced as the dollar fell, spurring demand for the U.S. grain. The U. S. currency slipped as much as 0.4 percent versus a basket of major currencies. Global stockpiles may climb 19 percent to 195.9 million metric tons in the year ending May 31st, slowing the wheat price increase. The grain price may also fall as U.S. have to compete with other exporters. May futures for wheat delivery advanced $0.015 (0.3 percent) to $4.95 per bushel on the Chicago Board of Trade.

Sugar futures dropped to the weekly low on speculation that world demand will decline. Analysts say that with increasing global inventories “the bulls will lose their opportunity for a strong rally”. May futures for raw-sugar delivery dropped $0.0062 (2.8 percent) to $0.2157 per pound on ICE.

Copper prices slid on concern that demand for the industrial metal will decline in China with stalled economic recovery. Earlier the metal fluctuated, following the dollar and the U.S. equities. May futures for copper delivery slid $0.007 (0.2 percent) to $3.4105 per pound on NYMEX.

Analysts forecast that gold priced in euro will continue to hit new highs. When price will reach its previous peak a cup and handle pattern may occur as investors start selling, causing some decline in price. After that price tend to rise greatly. Gold rose to 836.98 euro per ounce, an all-time record, on March 2nd.

Copper scrap discount to New York-listed futures declined by half in two months on deficit of used metal. Demand for the copper is rebounding on speculation that economic recovery will increase consumption. In the same time, scrap copper becoming scarcer because of harsh winter in the U.S. as snow hampers collection of scarp. May delivery for copper shrunk 0.3 percent to $3.4245 per pound by 11:17 on NYMEX.

Corn, soybeans and sugar fell today as a stronger dollar curbed demand for commodities as an alternative investment. The dollar rose as much as 0.3 percent versus a basket of six major currencies. May futures for corn delivery slid $0.03 (0.8 percent) to $3.8325 per bushel by 12:02 on the Chicago Board of Trade. May futures for soybean delivery declined $0.15 (1.6 percent) to $9.48 per bushel on CBoT. May futures for raw-sugar delivery fell $0.007 (2.9 percent) to $0.237 per pound on ICE.

Wheat prices may decline 14 percent with start of new harvests in the next few months. World wheat production was predicted to reach 677.4 million metric tons. Russia, the third biggest grower in the world, plans to rise grain export by 32 percent in the next five years, putting even more strain on wheat prices. Analysts forecast that wheat may fall to $150 per ton.

Oil gained after forecast about winter storms in the U.S. this week. The National Weather Service is predicting that temperatures will be below average for the next 6–10 days. According to weather forecast Washington temperatures will be 10 degrees Fahrenheit (12 degrees Celsius) below normal as of February 14th, while New York will be 8 degrees below average by February 13th.

U.S. inventories of distillate fuel, including heating oil and diesel, decreased last week after temperatures fell. OPEC governor stated today that global oil supplies are enough to satisfy demand for the first half of 2010.

March delivery for crude oil advanced $0.73 cents (1 percent) to $71.92 per barrel by 11:58 on the New York Mercantile Exchange. March delivery for heating oil rose $0.016 (0.9 percent) to $1.8908 per gallon. March settlement for Brent crude gained $0.61 (0.9 percent) to $70.20 per barrel on ICE. Hedge-funds and other large speculators reduced bets on increasing oil prices for a third week.

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”.

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.

The author of this video approaches with to the gold and USD analysis with the help of Elliott Waves, Fibonacci retracements and the average lifespan of the gold cycles. According to this technical analysis the gold can retrace at least to $750/ounce as the bullish series of Elliott Waves are over. In case the the widening channel is broken on the gold chart, the commodity may go down to the early 2000’s levels. Meanwhile the dollar will probably continue to trade inversely to the gold, making it a good indicator for the commodity markets. Watch the video for the charts and more interesting details:

White sugar price reached to the highest level since 1989 in London as concern about supply deficit forces India and other importers to increase stockpiles. India, the biggest consumer in the world, are going to import at least 7 million tons of sugar this season, third of that number being white, or refined, sugar. Worldwide demand for sugar will exceed supply by 13.5 million metric tons in the 2009–10 season. March delivery for white sugar gained $11.20 (1.5 percent) to $743.90 per ton on the Liffe exchange.

Analysts predict that gold may decline as a stronger dollar eroded appeal of the precious metal as an inflation hedge. The U.S. currency rose 0.8 percent versus the euro today. If the greenback rally continues, gold is going to go down. Immediate delivery for gold was little changed, remaining at $1,133.50 per ounce by 11:12 in New York.

Analysts predict that soybeans imports in China may remain high in March as ”lower costs boost crushing margins”. The margin rose to $46 per metric ton by January 13th. Imports of soybeans in China are expected to reach 4.2 million tons in January causing concern about oversupply.

Some analysts forecast shortages for crude oil as supply is unable to catch up rebounding demand. Worldwide oil consumption will return to pre-crisis level at the third quarter of 2010, while projects for new oil sources are “still lagging as a result of the credit crunch”. Crude oil futures reached $78 per barrel level today in New York.

Demand for steel may drop with lending cuts in China, the biggest consumer in the world. Steel production in China increased 13 percent to 565 million tons in 2009 as demand from builders, home-appliance manufacturers and automakers was boosted by China’s $586 billion stimulus spending. China’s steel output may rise 5 to 10 percent exceeding 600 million metric tons in 2010.

Sugar dropped after the dollar gained, cutting appeal of some riskier assets. The greenback gained 0.7 percent versus a basket of six major currencies. The rising dollar puts some commodities under pressure. March futures for raw-sugar delivery slid $0.0014 (0.5 percent) to $0.2762 per pound as of 9:48 on ICE.

Hog futures reached the nine-months high as rising demand for the meat pushed the U.S. wholesale-pork prices to the record in 15 months. Wholesale pork climbed 8.4 percent to $0.7305 per pound yesterday, the highest level since October 2008. Analysts say that historical price patterns show the possibility for wholesale pork to reach $0.75 per pound before going down. April futures for hog settlement added $0.0065 (0.9 percent) to $0.734 per pound by 11:00 on the Chicago Mercantile Exchange.