Commodity Blog

Commodity Prices – Hogs

Gold posted yet a new record, heading for the longest rally since 1980, and oil fell today on concerns about the debt problems in the US and Europe. US President Barack Obama and congressmen still haven’t reached an agreement on measures to reduce the nation’s deficit budget. The European leaders will meet in Brussels on July 21, but traders don’t expect the summit to bring resolution for the European sovereign-debt crisis. August futures for gold delivery gained $9.60 (0.6 percent) to $1,599.70 as of 10:35 on COMEX. August futures for crude oil delivery fell $0.02 $97.22 per barrel on NYMEX.

Pork prices retreated from the record high as corn prices declined, prompting farmers to increase their hog herds for the first time since 2007. Corn prices reached the lowest level in six months on July 1 as farmers planted the second biggest area since 1944. Hog futures jumped 15 percent this year on CME.

Hog futures rose today, but the increasing food prices prevented the US farmers from expanding their herds, potentially resulting in lack of supplies of pork. The farmers kept for breeding about 5.745 million sows, that’s 0.3 percent less compared to 5.76 million a year ago. June futures for hogs delivery gained $0.01525 (1.5 percent) to $1.027 per pound by 9:50 on CME.

Gold retreated from the record high on the speculation that the precious metal rallied too high, too fast. Silver also declined. A stronger dollar also contributed to the drop of the metals. April futures for gold delivery subtracted $8.70 (0.6 percent) to $1,426.20 as of 13:44 on COMEX, following the jump to the all-time high of $1,448.60 per ounce. May futures for silver delivery declined $0.326 (0.9 percent) to $37.049 per ounce after the price touched $38.18 yesterday, the highest level in 31 years.

Rubber dropped as China’s tightening measures caused the speculation that demand will wane. China’s central bank has raised the interest rates three times since October in an attempt to slow the rapidly accelerating inflation. September contract for delivery of natural rubber went down 0.9 percent to 35,560 yuan ($5,422) per ton in Shanghai.

Oil extended its rally for the fourth day as US stockpiles of crude decreased more than expected. Energy Department reported that crude oil inventories declined 2.15 million barrels to 333.1 million last week, compared to the expected decrease by 1.4 million barrels. The February contract for crude gained $0.3 (0.3 percent) to $92.16 per barrel on NYMEX.

Gold rallied on the signs of increasing imports in India. Ajay Mitra, the managing director for India and the Middle East at the World Gold Council, informed that India’s imports possibly have increased to 800 metric tons from 557 tons in 2009, exceeding its previous record. Spot price for gold was $1,381.90 per ounce in Mumbai yesterday.

Cattle futures reached the record and hogs rose to the highest level in eight months on the speculation that increasing feed costs will force farmers to cut supplies. Corn, the main ingredient in livestock feed, jumped to the highest price in 29 months as the government forecast for US stockpiles worsened. February futures for delivery cattle advanced $0.0175 (1.6 percent) to $1.102 per pound by 13:11 on CME. April futures for hog delivery rose $0.01875 (2.2 percent) to $0.87025 per pound.

Hogs climbed today as demand for pork in the US is recovering. Analysts say that pork was oversold and now is returning to more “fair” price. December futures for hog settlement added $0.01 (1.5 percent) to $0.662 per pound at 13:05 on CME.

Corn and soybeans gained today for a second consecutive day on forecast that favorable weather will increase supplies. Rains in Brazil and Argentina should boost output. December futures for corn delivery slipped $0.015 (0.3 percent) to $5.7575 per bushel as of 13:15 on CBoT. January futures for soybean delivery slid $0.01 (0.1 percent) to $12.34 per bushel.

Cotton climbed to the record today as demand in China grows. Prices also surged on speculation that adverse weather will curb supplies. December delivery for cotton rose $0.05 (3.9 percent) to $1.3426 per pound by 15:20 on ICE, reaching the highest level in 140 years of trade.

Hogs futures gained today on speculation that prices declined too much last week, considering strong demand in the US. Exports of meat rose, also adding to demand. October futures for hog settlement rose $0.00275 (0.4 percent) to $0.7515 per pound by 13 on CME.

Soybean prices dropped today on speculation that demand in China and the US may slow after prices surged. November futures for soybean delivery slid $0.125 (1.2 percent) to $10.10 per bushel as of 13:15 on CBoT, the biggest drop since August 19th. December futures for soybean-oil delivery dropped $0.0048 (1.2 percent) to $40.05 per pound.

Corn slipped today as rains improved outlook for wheat output and on speculation that demand for ethanol would fall after oil prices declined. Speculators continue to bet on price increase, anyway. December futures for corn delivery fall $0.0225 (0.5 percent) to $4.3925 per bushel on CBoT.

Cattle futures surged as unusually hot weather in US may cause decrease of animals’ weight, reducing beef supplies from the US. Hogs prices also rose. Animals tend to gain less weight when weather is hot as they eat less food. And weather is hot as average temperature in major cattle-producing states was 43 degrees Celsius (110 Fahrenheit).

Average weight of steer carcasses at slaughter was 391.5 kg (863 pounds), 2.9 percent less compared to the same period in the previous year. CME-monitored inventories of pork bellies dropped 73 percent in the year through July after hog producers in the US cut herds to curb their losses in 2008 and 2009. Low supplies should support prices. On the other hand, high prices may damp demand from retailer.

October futures for cattle delivery rose $0.01575 (1.7 percent) to $0.958 per pound as of 11:44 on CME. October futures for hog settlement went up $0.0015 (0.2 percent) to $0.79075 per pound.

Hogs futures slipped today on forecast that high US pork prices may diminish retail demand. Meatpackers shipped 9.215 million pounds of pork last week, the worst week since late June. October futures for hog settlement slid $0.003 (0.4 percent) to $0.793 per pound at 9:42 on CME.

Raw sugar experienced a strongest decrease in almost two moths on speculation that supplies from Brazil and India, the world’s largest producers, would increase, erasing the global deficit. Production in Brazil’s Center South increased by 26 percent in the first half of July, while cane planting in India was boosted by rains, which were 2.5 percent above the 50-year average in July. October delivery for raw sugar slumped $0.0079 (4.1 percent) to $0.1861 per pound by 9:45 on ICE.

Coffee futures dropped the most in two weeks on speculation that the commodity rallied too much, considering the anticipated high supplies from Brazil, the biggest producer. Global coffee production may grow 12 percent to 135 million bags in the year starting October 1st. September delivery for Arabica coffee slid $0.0475 (2.8 percent) to $1.6775 per pound as of 10:04 on ICE.

Cocoa futures gained today after the report about increased demand in North America. The cocoa grind increased by 12 percent in the second quarter to 117,657 metric tons compared to the previous year. Analysts say that grinding numbers show strong demand and support prices. September delivery for cocoa rose $21 (0.7 percent) to $3,165 per ton on ICE.

Hogs futures went up today as hot weather in the U.S. causes decrease of animals’ weight, causing concern about declining pork supply. The animals tend to eat less with such jot weather, decreasing their weight. Hogs purchased yesterday by pork processors weighed 2 kilograms (4.44 pounds) compared to the same day in the previous month. October futures for hog settlement gained $0.00375 (0.5 percent) to $0.757 per pound on the CME.

Cattle and hogs futures gained today on outlook that demand for U.S. exports would rise as stocks gained and the dollar fell. The dollar tumbled today as much as 0.8 percent versus the basket of six major currencies, increasing attractiveness of U.S. exports. August futures for cattle delivery gained $0.01275 (1.4 percent) to $0.9075 per pound by 9:14 on CME. August futures for hog settlement went up $0.00525 (0.7 percent) to $0.80575 per pound.

Copper prices rose today as declining stockpiles suggested that demand would remain strong despite the slowdown of the global economic recovery. LME-monitored inventories declined 12 percent this year and fell to the lowest level in seven months today. September futures for copper delivery rose $0.092 (3.2 percent) to $3.9925 per pound by 11:33 a.m. on COMEX.

Corn prices dropped today on prediction that rainfalls would increase soil moisture and boost harvest in the U.S., the largest exporter in the world. Analysts say that prices are high enough, despite fewer than planned acres were sowed last month because of unfavorable weather. December futures for corn delivery slid $0.0275 (0.7 percent) to $3.8175 per bushel as of 12:54 on CBoT.

Raw sugar rose today for a third consecutive day on outlook for increasing purchases from Russia next month as the import tax was lowered. Analysts say that sugar prices may go up 30 percent in 2010 on rising demand, low output and transportation delays. October delivery for raw sugar gained $0.0026 (1.6 percent) to $0.1654 per pound on ICE.

Cattle and hogs slid today on concern for economic growth as the U.S. payrolls was lower than expected. Demand for meat also tends to fall in July and August because of hot weather. August delivery for cattle futures slipped $0.002 (0.2 percent) to $0.8975 per pound as of 12:01 p.m. on CME. August settlement for hog futures dropped $0.008 (1 percent) to $0.8105 per pound.

Cocoa dropped today on concern that the U.S. economic recovery would stall, damping demand for commodities. U.S. nonfarm payrolls dropped in June more than expected. Housing market and manufacturing sector also showed signs of weakness. September delivery for cocoa declined $70 (2.3 percent) to $2,971 per metric ton on ICE.