Commodity Blog

Posts Tagged ‘United States’

Gold and silver erased this year’s gains as the credit crisis in Europe continue to weaken demand for raw materials. Talks about Greece exiting the euro-union are becoming more and more serious and some analysts even speculate about collapse of the eurozone. Traders seek a safe haven amid uncertainty and economic turmoil, but it looks like the dollar took the role of refuge that was traditionally attributed to precious metals. Gold was down from $1,541.40 to $1,535.80 per ounce on COMEX yesterday, reaching $1,533.80 intraday — the lowest price since December 29. Silver fell from $27.69 to $26.90 per ounce yesterday — the lowest settlement since December 29, while today it opened at$27.21.

Wheat jumped today for the fourth trading session as bad weather in various parts of the world threatened to curb output. Russia continues to suffer from drought and parts of Kansas suffer from the same problem. Russia is the world biggest exporter. Wheat is the fourth biggest US crop and Kansas is the biggest wheat-growing region of the United States. Wheat climbed from $6.3825 to $6.4325 per bushel as of 00:51 GMT on CBoT today.

Wheat posted the biggest gain in more than two weeks as adverse weather in the United States threatens to curb output. The US Department of Agriculture estimated that 52 percent of crops were in good or excellent condition as of May 13 the Kansas, the biggest US grower, down from 60 percent in the week before. Dry weather in parts of Russia and Ukraine is expected to further reduce supply of the grain. Wheat climbed from $5.9525 to $6.0700 per bushel as of 21:09 GMT on CBoT today, posting the biggest gain since April 27.

Oil and rubber fell on political turmoil in Greece. Greek political parties failed to form a new coalition government, resulting in new election. Polls show that many Greeks favor parties that stand against austerity measures demanded from the European Union and the International Monetary Fund in exchange for a bailout. Greece may leave the eurozone and the resulting fear harm markets. Futures for delivery of crude oil in June fell $0.8 to $93.98 per barrel on NYMEX, the lowest price since December 19. Brent crude advanced from $111.13 to $111.86 on ICE today. The futures for delivery of rubber in October tumbled as much as 5.1 percent to $3,317 per metric on the Tokyo Commodity Exchange, the lowest settlement for a most-active contract since January 6.

Gold traded close to the lowest level this year before rising a little. The precious metal gives little hopes to bulls as problems in Europe make the dollar stronger, subduing commodity prices. The United States also causes some concern, even though it is in far better shape than the debt-ridden European Union. The US Producer Price Index fell 0.2 percent today, even though forecasters promised it to stay unchanged. Gold was up to $1,589.60 today on COMEX after reaching $1,586.10 — the lowest level since January 3.

Cotton reached the lowest level in 21 months today on a forecast that global stockpiles will swell. The US Department of Agriculture predicted that world inventories will climb 10 percent to 73.75 million bales in the season that begins August 1. Rains in Texas improved prospects for crops that were hurt by drought last year, adding to potential supply. At the same time, economic problems in countries across the world are likely to diminish demand for commodities, including cotton. Cotton slumped from $0.8149 to $0.7885 per pound on ICE today after it reached earlier $0.7716 — the lowest price since July 30.

Soybean futures gained today as adverse weather hurt crops in Argentina and Brazil, boosting demand for US exports. The US Department of Agriculture reported that the United States were selling about 100,000 of metric tons daily, rising 10 times since the beginning of April. China was the biggest buyer. Soybeans closed at $14.7450 per bushel today on CBoT, following the drop from $14.6825 to $14.5800.

Crude oil slumped today as growth of US nonfarm payrolls was much smaller than was predicted by analysts. The payrolls rose just by 115,000 in April, while an increase of 173,000 was expected. That confirmed the earlier data that showed slowdown of US employment growth. The report fueled concerns that the global economic recovery is faltering. June futures for delivery of crude oil dropped as much as $2.11 to $100.43 per barrel (the lowest since February 14) before trading at $100.66 as of 13:46 on NYMEX today. Brent oil fell from $116.09 to $113.20 per barrel on ICE after touching $111.76 — the lowest price since February 2.

Crude oil slumped today on concerns that the European crisis will hurt the global economic growth and will damp demand for commodities. European Central Bank President Mario Draghi left the key interest rate unchanged and said on the press-conference today that there are downside risks.

Tom Bentz, a director at BNP Paribas Prime Brokerage, commented:

There are still a lot of worries about Europe. Some of the latest comments from the ECB are indicating downside risk but they are not looking to do anything at this time.

Markets remain depressed by yesterday’s negative data from the United States. US inventories of crude swelled to the 21-year high of 375.9 million barrels. On the positive note, US unemployment claims fell from 392,000 to 365,000 last week, more than was anticipated by analysts.

June futures for delivery of crude slid as much as $2.65 (2.5 percent) to $102.57 per barrel by 13:53 on NYMEX. Earlier, the price posted the biggest intraday decline since April 4, falling to $102.46. Brent crude slipped from $118.25 to $115.99 per barrel as of 18:55 GMT on ICE today, touching $115.93 intraday — the lowest price since February 8.

Copper fell today as attractiveness of industrial metals declined on negative macroeconomic data from Europe and the United States. The bad fundamentals erased yesterday’s positive mood and drove most commodities down.

The eurozone manufacturing Purchasing Managers’ Index slipped from 47.7 in March to 45.9 in April, the lowest level in 34 months. German unemployment increased by 19,000 jobs. That was an unpleasant surprise as analysts predicted a small decrease.

While traders get used to bad news from Europe, the USA usually was a source of optimism. It was not so today. Factory orders declined by 1.5 percent. Employment rose by 119,000 — not a bad figure if one forgets that forecasters promised an increase by 178,000.

All in all, today was a bad day for commodities. Nonfarm payrolls will on be released on Friday and should have a great impact on markets, confirming today’s employment report or proving it wrong. An interesting thing is that poor employment may be not a totally bad for riskier assets. The Federal Reserve may consider a next round of easing if the employment situation will become bad enough. Quantitative easing means a weaker dollar and higher prices for commodities as a result.

Copper price was down from $3.8300 to $3.7855 per pound as of 18:37 GMT on COMEX today, while daily low was $3.7655.

Gold and other precious metals retreated today as positive market sentiment decreased demand for safer assets. The Standard & Poor’s 500 Index of stocks jumped as much as 1.2 percent, showing that traders were willing to risk.

Institute for Supply Management reported that US manufacturing Purchasing Managers’ Index rose from 53.4 in March to 54.8 in April. Analysts predict that reports this week will show that US employment grew with faster pace. The report of China Federation of Logistics and Purchasing showed that China’s manufacturing PMI advanced from 53.1 to 53.3.

Demand for safety of precious metals may yet return as problems in Europe continue to have an adverse impact on the global economy. Yesterday’s report about a recession in Spain trimmed optimism among investors. Political struggle in France doesn’t help traders’ sentiment either.

Gold slipped from $1,665.00 to $1,663.30 per ounce as of 20:23 on COMEX today, erasing earlier advance to $1,670.50. Silver declined from $31.05 to $30.93 per ounce and palladium went down from $682.35 to $680.05 per ounce today.

Crude oil fell on speculation that US inventories will advance to a highest level in 21 years. Analysts estimated that stockpiles climbed 2.5 million barrels to 375.5 million last week. The report from the Energy Department will be released tomorrow.

Demand for oil may wane as the global economic growth is slowing. Reports showed that manufacturing in China rose less than expected and business activity in the United States slowed. Spain’s gross domestic product fell 0.3 percent in the first quarter of this year, following the same rate of decline in the previous quarter. Two quarters of economic decline means the country has entered the recession.

Futures for delivery of crude in June fell $0.15 to $104.72 per barrel on NYMEX. Brent crude dropped from $119.65 to $119.47 per barrel yesterday on ICE and traded today at about $119.28.

Crude oil futures advanced today as growth of US household spending overshadowed slower-than-expected economic growth. US gross domestic product rose 2.2 percent in the first three months of 2012, compared to expectations of a 2.6 percent increase. Personal expenditures increased 2.9 percent in the first quarter of this year, up from 2.1 percent in the previous quarter. The average forecast was 2.3 percent. Crude oil contract for June delivery rose $0.38 cents to $104.93 per barrel on NYMEX, the highest price since April 2, while over the week prices were up 1.8 percent. Brent oil advanced from $119.58 to close at $119.70 per barrel today on ICE.

Gold price rose today as central banks and hedge funds boosted their purchases of the precious metal. The International Monetary Fund reported that Mexico, Russia and Turkey expanded their reserves by 44.8 metric tons valued at $2.4 billion in March. Prices for gold rose as Federal Reserve Chairman Ben Bernanke stated that the Fed will continue to stimulate the US economy. The comments weakened the dollar, bolstering raw materials. Many analysts believe that gold would gain next week. Gold spot prices increased by $$4.40 to close at $1,664.00 per ounce today on COMEX.

Cattle futures climbed today, following yesterday’s drop. Futures fell yesterday after a case of bovine spongiform encephalopathy (or simply mad cow disease) was discovered in the United States. Four biggest importers of US meat (Canada, Japan, Mexico and South Korea) said that they will continue to buy US beef, causing prices to rebound today. Live-cattle futures for delivery in June rose as much as 1 percent to $1.12675 per pound as of 11:01 on CME, following yesterday’s drop by the exchange’s 3-cent limit to $1.11575.

Crude oil advanced today after the Federal Open Market Committee said that the US economic recovery will gradually accelerate over time. The FOMC left the monetary policy unchanged today and said in the statement that it “expects economic growth to remain moderate over coming quarters and then to pick up gradually”. US crude oil inventories increased by 4.0 million barrels, while total motor gasoline inventories decreased by 2.2 million barrels last week. June futures for delivery of crude oil advanced $0.84 (0.8 percent) to $104.39 per barrel by 13:33 on NYMEX, while earlier it reached $104.57, the highest level in a week. Brent crude climbed from $118.33 to $119.08 per barrel as of 18:33 GMT on ICE today, while earlier it declined to $117.45.

Gold fell as demand remained low despite the festival in India that is considered to be a good time to buy precious metals. The uncertain political situation in France and Netherlands also damps demand for the metal. On the other hand, data shows that central banks across the world continue to buy gold for expanding their reserves. Gold price fell from $1,641.30 to $1,629.90 on COMEX today.