Commodity Blog

Posts Tagged ‘CME’

Cattle prices touched a record for the fifth time this month as cattle suppliers are unable to keep up with rising demand for US beef. Farmer’s haven’t been able to provide enough supply to meatpackers as drought made them to cut herds earlier this year. Prices for feeder-cattle also rose. April futures for delivery of cattle gained 0.5 percent to $1.285 per pound by 9:27 on CME and reached the record high of $1.29325 earlier. March contract for feeder-cattle deliver went up 0.5 percent to $1.547 per, while earlier the settlement reached the all-time high of $1.55275.

Orange-juice futures also reached a record today. Citrus crops in Texas were hit by greening disease that has already caused an extensive damage to plants in Florida. At the same time, the US Food and Drug Administration halted juice imports from Brazil to check for banned fungicide. Futures for delivery of orange juice in March rose by the exchange limit of $0.1 (5 percent) to the record of $2.1065 per pound as of 11:00 on ICE.

Crude oil declined today as threat of sanctions against Iran lessened. There are rumors that the International Atomic Energy Agency will discuss with Iran its nuclear program. In the meantime, European Union officials said that an embargo on Iranian oil exports may be postponed for six months. There is no more rush to buy oil and prices reacted accordingly. February futures for crude oil delivery slipped $0.79 (0.8 percent) to $98.31 per barrel by 13:36 on NYMEX. Brent oil declined from $111.01 to $110.91 per barrel as of 20:53 GMT today on ICE, while earlier it touched $109.71 — the lowest price since January 3.

Cattle advanced as demand for beef rose, while supply decreased. Beef price increased 5 percent in the United States this year, following the 10 percent increase in 2011. Beef exports jumped 25 percent in the 10 months ended October 31 from a year ago, while cattle herds were record small last year. April futures for cattle delivery rose 0.9 percent to $1.264 per pound at 13:00 on CME.

Cattle prices posted a record for the second time this month as prospects of rising beef exports from the US spurred the speculation about tightening supply.

US exports of beef rose 27 percent over the year ended August. The US Department of Agriculture predicted production of beef will decline 4.9 percent in 2012 as high feed costs caused farmers to trim their herds.

The positive fundamental reports from the US helped commodities, including cattle. The retail sales rose, the import and export prices increased, while the federal budget deficit shrank.

December futures for cattle delivery rose 0.3 percent to $1.232 per pound as of 13:00 yesterday on CME, following the advance to the all-time record $1.243. Prices advanced 1.1 percent over this week. The previous all-time high was reached on October 3.

Silver continued its biggest downward rally since May 2011, following the decline of the liquidity in the markets and the increased risk-aversion expressed even against the ”safe commodities.” The intraday low set today is the minimum level since November 2010.

The whole metals market can be described with a phrase “extremely bearish.” While previously the fall in the industrial metals would mean an uptrend in the precious metals, the recent trading sessions show that all metals can fall simultaneously and to do it very well. Although some analysts say that silver is falling because the investors have to close their position to cover the expanding stock market losses, silver has its own reasons to fall.

Last Friday, CME announced an increase of the margin requirements for the futures trading in silver. These new requirements take effect today. While the Federal Reserve is concerned with the stagnation in the economic recovery, there will be no new quantitative easing round, which means that the banks will have less cash to speculate on the gold/silver market.

Silver fell from $30.75 to $30.01 per troy ounce on the spot market as of 17:23 GMT today, following a drop to as low as $26.11/ounce during the early trading session. It lost more than 24% since Wednesday.

Commodities, led by metals, continued their slump. The leaders of the Group of Twenty nations have met in Washington to discuss the economic problems in the world, most importantly the European debt problems. The meeting had some positive effect on currency markets, but commodities didn’t paid attention to it. Perhaps, commodity traders simply don’t believe policy makers have means to prevent the global economy from sliding into a new recession.

The Standard & Poor’s GSCI Index of 24 commodities slumped 1.3 percent to 599.25 as of 15:47, following the drop to 594.12, the lowest level since December 2. CME Group Inc. (the owner of the COMEX exchange) increased margins on gold, silver and copper futures.

December futures for delivery of gold tumbled as much as $101.90 (5.9 percent) to $1,639.80 per ounce on COMEX, the biggest drop since March 2008. The metal posted the biggest two-day decline since February 1983 — 9.3 percent. Futures for delivery of silver in December slid $6.477 (18 percent) to $30.101 per ounce, the biggest fall since October 1979. December futures for delivery of copper fell $0.2085 (6 percent) to $3.28 a pound. The two-day decline of the metal was 13 percent, the biggest since October 2008.

US farmers may cut most of their breeding cows to reduce losses because of drought. Texas ranchers may sell or slaughter 500,000 beef cows as the dry weather made them to expensive to feed. The losses of the states’ farm may reach $5.2 billion as the past 11 months were the driest since 1985 in the region. December futures for delivery of cattle advanced 1.1 percent to $1.192 by 13:00 on CME.

India’s production of sugar may reach a highest level in four years. Analysts predict the output may total 25.83 million metric tons in the year starting October 1, compared with 24.2 million tons estimate for this year. The high production may prompt India to lift the limit on exports. The resulting boost of supplies on global markets can drive prices down. Sugar spot price fell 1.1 percent to $0.2760 from $0.2790.

Gold futures retreated from the record, showing the biggest drop in 7 weeks, after COMEX boosted margin requirements. CME Group Inc. (owner of COMEX) increased margin required to trade gold contracts by 22 percent. As a result, traders liquidated their positions en masse. The situation reminds the one with the silver earlier this year, when the increase of margin requirement put an end to the impressive rally of silver and caused a hit to the precious metal, from which it still hasn’t recovered. Gold looks too strong to fall in a same way. Moreover, the margin increase occurred when the yellow metal had a clearly bullish trend, while silver was caught by the CME decision during a correction. Still, caution is advised. December futures for gold delivery fell $32.80 (1.8 percent) to $1,751.50 by 13:39 on COMEX.

Corn, soybeans and wheat gained today as the US Department of Agriculture cut its forecast for harvest. The USDA decreased its estimates compared to July predictions because of excessively hot weather in parts of the US. Estimates for corn were lowered by 4.1 percent, for soybeans by 5.2 percent and for spring harvest of wheat by 5.2 percent. December futures for delivery of corn rose $0.255 (3.7 percent) to $7.14 per bushel as of 13:40 on CBoT. November futures for delivery of soybeans gained $0.3025 (2.3 percent) to $13.3175 per bushel. Contract for delivery of wheat in December advanced $0.1375 (1.9 percent) to $7.33.

The severe drought in Texas, US, is bringing the hay crops to the lowest level in more than a century, pushing the feed prices for the dairy and beef producers up. Texas produces not only cattle but is also the biggest growing region for hay, which is used as the cattle feedstock across the whole country.

Price of some varieties of hay rose more than 50 percent during the last 12 months. The ongoing worst ever recorded drought destroys the grass and forces farmers to opt for more expensive cattle feed — mainly corn.

It’s estimated that this year, only one crop of hay will be collected compared to three crops harvested during normal years. The farmers are expected to harvest 57,605 million acres of hay this year — the lowest level since 1909. The corn is currently sown on 92,282 million acres — the highest post World War II level.

Corn futures is currently trading at $676.25 per bushel on CME as of 15:18 GMT today — up 0.26 percent during the day.

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.

Cocoa fell on as concerns about the political tensions in the Ivory Coast eased. The troops of Alassane Ouattara, the internationally recognized winner of the presidential election, gained control of the capital. May future for cocoa delivery fell as much as $70 (2.3 percent) to $2,987 per metric ton as of 12:06 on ICE.

Cattle futures jumped to the record on the anticipation of higher demand from Japan. The retail prices for beef in the US touched the all-time high last month as supplies declined. June futures for cattle delivery rose $0.01675 (1.4 percent) to $1.19575 per pound by 13:00 on CME. The price rose to the record $1.198 earlier.

Soybeans gained to the highest level in a week on the speculation that supply may decline as farmers prefer to plant corn. US Farmer may forecast to plant 76.79 million acres with soybeans this year, compared to the previous forecast of the US Department of Agriculture of 78 million acres. May future for soybeans delivery added $0.08 (0.6 percent) to $13.695 per bushel at 10:41 on CBoT.