Commodity Blog

Posts Tagged ‘housing’

Copper, oil and gold advanced as good news from Europe and the United States bolstered commodities. Oil also rose on the speculation that the US inventories declined.

The European Union pledged €150 billion to the International Monetary Fund that the IMF will use to help in the battle with the region’s sovereign-debt crisis. The German Business Climate index unexpectedly increased to 107.2 in December from 106.6 in November, while analysts predicted it to drop to 106.2. Spain sold its three- and six-month bills at an auction yesterday, exceeding its maximum target.

The US housing starts increased from 627,000 to 685,000 and the building permits rose from 644,000 to 681,000 in November.

February futures for crude oil delivery advanced $3.19 to $97.24 per barrel on NYMEX. Brent oil was at $107.15 per barrel today as of 3:11 GMT on ICE after jumping from $104.30 to $107.00 yesterday. Gold advanced from $1,615.50 to $1,620.20 per ounce today on COMEX, following yesterday’s rise from $1,596.40 to $1,615.00. Copper traded near its opening level of $3.3720 per pound today, while the metal climbed from $3.3230 to $3.3640 yesterday.

Copper climbed today as economic data signaled that the US hosing market is recovering. Housing starts climbed from 549,000 to 629,000 and building permit advanced from 609,000 to 624,000 in June. Tomorrow, the report about existing home sale is expected to show an increase from 4.81 million to 4.92 million. September futures for copper delivery climbed $0.0515 (1.2 percent) to $4.4545 per pound as of 7:44 on COMEX.

Wheat advanced today to the highest level in a month as cattle breeders may turn to the grain as an alternative feed after corn price surged. Prices for corn jumped to the highest level in five weeks on the forecast that hot weather in the US will reduce yields. September futures for delivery of wheat rose $0.2 (2.9 percent) to $7.095 per bushel by 11:55 on CBoT.

The macroeconomic data signaled that the US economy is stalling and that send commodities tumbling. Copper and crude oil suffered and even gold slid.

The number of housing starts in the housing starts declined to 523,000 in April, while it was 585,000 in March. Forecasts predicted an increase to 580,000. The New York Manufacturing Index slumped to 11.9 in May from 21.7 in April, while it was expected to stand at 20.7.

The reports hit hard commodities across the board. The Thomson Reuters/Jefferies CRB Index of 19 raw materials dropped for the third consecutive day.

June contract for delivery of crude oil went down $0.46 to $96.91 per barrel on NYMEX. Futures for delivery of gold in June dropped $10.60 (0.7 percent) to $1,480 per ounce by 14:00 on COMEX. Delivery for copper in three months slid $40 (0.5 percent) to $8,799 per metric ton on LME as of 18:05.

Crude oil fell to its new minimum level since July 7 today as the traders reacted to the speculations about the stalling global economic recovery and sold the commodity after the US housing report showed a decline in the existing home sales to the lowest level in the index history.

The oil is quite sensitive to the pace of the global growth, and if new signals of the feared second wave of the recession loom on the horizon, speculators tend to sell their crude contracts as soon as possible. Being one of the most speculatively traded commodity is a nice advantage during the growing market but it’s a bane during the time when the annual rate of the home sales falls by more than 25 percent in one month in United States.

Today is the fifth straight bearish day for the oil. Since the end of the recent rally (August 4), the commodity had only two bullish daily trading sessions. The analysts forecast a growth of the crude oil inventories for the last week (the report will be released tomorrow). Under the increased supply’s pressure, the prices will probably continue going down.

Spot oil (Brent) is current trading at $72.75 per barrel as of 15:22 GMT. It closed at $73.65 yesterday and touched as low as $72.20 earlier today.

Copper dropped today from its record prices on speculation that demand for the metal would wane as house prices in China will tumble. Chinese government was concerned after house prices jumped 68 percent in the first quarter that soaring prices would create bubble that sooner or later burst, crippling the nation’s economy. The government was already attempting to cool the overheated economy and bring prices down. Now Chinese banking regulators are going to perform stress tests on banks to discover how they would fare in case of a 60% slump of Chinese house prices. Housing market has great influence on copper prices as construction makes up a quarter of copper demand.

Frank McGhee, the head dealer at Integrated Brokerage Services LLC, thinks that “if China wants to signal a slowdown, then the copper rally may have run its course”. Another analyst said that that it’ll be good if annual growth of Chinese demand would be limited by 8 percent.

September futures for copper delivery slid $0.0480 (1.4 percent) to $3.3565 per pound by 11:21 on COMEX. Yesterday, price reached $3.4105, the highest level since April 29th. Delivery for copper in three months dropped $94.50 (1.3 percent) to $7,410.50 per metric ton on LME.

The copper grew at the fastest speed since June 25 today as the markets reacted to the increased building permits that were reported in United States today. Today’s growth was also spurred with a continued decline of the commodity’s stockpiles.

Copper is a major beneficiary of the growing real estate market. For the first time since March, the U.S. building permits showed a growth — from 574,000 to 586,000 (seasonally adjusted annual rate). It surpassed rather pessimistic growth expectations by the market analysts. According to them, any more or less good news from the housing market are going to be helpful for copper.

Copper stockpiles monitored by the London Metal Exchange decreased by 0.8 percent or 3,250 metric tons today. That’s 23rd straight session of decline of the copper stockpiles. Some analysts believe that the copper has left the bearish trend zone and is going to be bullish until the end of the year and for some part of 2011.

Spot copper is currently trading near $6,645.00 per metric ton as of 16:50 GMT after opening at $6,517.00 today. It has gained 1.93 percent during the day — the biggest upward movement since June 25 (3.03 percent).

Demand for corn and soybean rises after price slump boosted attractiveness of these commodities. After several weeks of decline caused by the increased square of the farmers’ crops (because of the cool, wet weather) prices rebound. Soybean have a biggest gain in a week and two-day slide of corn stopped. December corn futures went up $0.0175, or 0.5 percent, to $3.27/bushel as of 10:44 on the Chicago Board of Trade. November futures for soybean gained $0.1575 (1.8 percent) to $9.0575/bushel.

Rise of inflation caused gain in gold as the traders want to hedge their assets. U.S. housing starts rose to the biggest level since November 2008, while building permits grew at a fastest pace this year in June, giving higher outlook for inflation. August gold futures gained $1.90 (0.2 percent) to $937.30 as of 11:27 on NYMEX.