Issue #245 - May 6, 2008
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May 7th - May Cotton
May 8th - May SGX Nikkei
May 9th - May OJ
May 12th - May ICE Gas Oil
May 14th - May Barley/Canola/Chi,KC,MN,WCE Wheat/Corn/Hogs/LIFFE Cocoa/NY Cocoa/Oats/Rice/Soybean Meal/Soybean Oil/Soybeans
May 8th - May OSE,SGX Nikkei/TOPIX
May 9th - May Can$/Currencies/Dollar Index/Mx Peso, Jun NY Coffee/Sugar 11
May 12th - Jun ICE Brent
May 14th - May Hogs
The Canadian Dollar gained the most in 3 weeks as government data showed that their economy may dodge a slowdown. On Tuesday, Canada's Ivey PMI came out well above expectations showing that business and government spending continued to expand sparking the Loonies' move higher.
In addition, the Canadian Dollar extended its gains once crude oil surged to new all-time highs of $122.73 per barrel, supporting Canada's exports. Currently, look for continued strength in the Loonie as high crude and commodity prices continue to provide support.
Crude oil futures closed above $120 a barrel for the first time today as the market showed conviction that record prices won't necessarily trip up global demand. Heating oil and gasoline futures also settled at all-time highs.
The Energy Information Administration on Tuesday projected triple-digit prices for months to come, issuing a new monthly outlook that forecast crude prices averaging $114 a barrel in the second half of the year. While the agency anticipates U.S. demand will slip by 190,000 barrels a day this year to its lowest annual level since 2003, it expects emerging economies to keep world demand expanding 1.4%, to 86.6 million barrels a day.
More bullish news for buyers, equity analysts at Goldman Sachs issued a report saying prices of $150 to $200 a barrel seem "increasingly likely" six months to two years from now. The same group of analysts made waves three years ago when they identified a "super-spike" lifting prices as high as $105 a barrel which seemed to be an outrageous prediction at the time.
Weekly U.S. oil inventory data due Wednesday could provide guidance for the market later in the week. Analysts expect crude stockpiles to have risen by 1.4 million barrels last week. Gasoline stockpiles are expected to fall by 400,000 barrels, while distillates increased by 800,000 barrels. The rate of refinery use is expected to climb by 0.4 percentage point to 85.8% of capacity.
NEW YORK (CNNMoney.com) -- Stocks gained Tuesday as investors looked beyond record-high oil prices and big losses at financial firms and instead continued to bet that the economy is stabilizing and the worst of the credit crisis is over.
The Dow Jones Industrial average (INDU) added 0.4%, according to early tallies. The broader Standard & Poor's 500 (SPX) index gained 0.8% and the Nasdaq composite (COMP) gained 0.8%.
Stocks fell in the morning as oil prices spiked to a record $122.35 a barrel and Fannie Mae and other financial firms reported big quarterly losses. But the market stabilized by midday, as investors looked beyond rising crude prices and opted to scoop up technology and financial shares.
The national average price for a gallon of regular unleaded gas slipped to $3.610 from $3.611 the previous day, according to AAA. It was the fifth day in a row of declines after gas prices hit records for 17 straight days.
Other markets: The dollar fell versus the euro and the yen.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.90% from 3.86% late Monday. Bond prices and yields move in opposite directions.
The corn market has been in a range since the end of March, basically trading $6.00 to $6.40. Trade the range until the market tells you otherwise. The market went up to $6.38 and could not get the momentum to push higher so we saw a sell off. This has been typical behavior of the corn market as of late. Look at selling at $6.35 and buying at $6.05.
The market is watching the US dollar and outside markets in addition to the very important weather forecasts and planting progress numbers. It's just a back and forth trade. Have a short term mentality and trade the range until you see the December corn trade below $5.80 or above $6.50. Keep in mind that the USDA report comes out Friday morning and that might give the market new direction.
The following are estimates in billions of bushels for U.S. grain and soybean ending stocks for the 2007-08 and 2008-09 marketing years. The U.S. Department of Agriculture is scheduled to release updated supply and demand tables at 7:30 a.m. CST Friday, May 9.
2007-08
| Average | Range | April 2007-08 USDA |
2006-07 USDA |
|
|---|---|---|---|---|
| Corn | 1.320 | 1.240-1.434 | 1.283 | 1.304 |
| Soybeans | 0.152 | 0.130-0.160 | 0.160 | 0.574 |
| Wheat | 0.243 | 0.232-0.257 | 0.242 | 0.456 |
2008-09
| Average | Range | April 2007-08 USDA |
|
|---|---|---|---|
| Corn | 0.707 | 0.481-1.114 | 1.283 |
| Soybeans | 0.273 | 0.158-0.352 | 0.160 |
| Wheat | 0.424 | 0.280-0.501 | 0.242 |
The following are estimates in billions of bushels for 2008 US all wheat and winter wheat production based on conditions as of May 1.
2008-09
| Average | Range | 2007 Production |
|
|---|---|---|---|
| All Wheat | 2.298 | 2.171-2.400 | 2.067 |
| All Winter Wheat | 1.701 | 1.595-1.750 | 1.516 |
| Hard Red Winter | 0.964 | 0.896-1.000 | 0.962 |
| Soft Red Winter | 0.519 | 0.370-0.552 | 0.358 |
| White Winter | 0.222 | 0.202-0.250 | 0.197 |
US Corn: 27% planted, 45% year ago, 59% average
US S Wheat: 58% planted, 58% year ago, 62% average
US Soybeans: 5% planted, 8% year ago, 14% average
US W Wheat: 22% very poor-poor, 31% fair, 47% good-excellent
Gold made a modest gain as crude oil reached record highs and the dollar dropped below 73. We could see gold test $900 an ounce again but right now the trade is technical in my opinion. We need to see gold break out of its range but we need new buyers for that to happen. When Wall Street is nervous, money flows into gold so we'll have to wait and see what traders do this week.
News came that the International Buying Fund won approval from its board of governors on reforms to its income model that include the sale of more than $11 billion in Gold, to paraphrase George Gero, VP with RBC Capital Markets Global Futures. It isn't known, however, if this will pass Congress. Definitely a story to follow.
June Comex/Globex gold is trading at $878.40 up $4.30 and July Comex/Globex silver is at $16.96 up 13 cents.
On Tuesday, cocoa racked up large gains on a softer US Dollar. Currently, the rally throughout cocoa can mainly be attributed to a weaker greenback and overall strength in the commodities. As of now, analysts are estimating that if the US Dollar continues to show weakness and commodity prices remain strong, this could be the move that pushes cocoa prices above $3,000. However, if the greenback begins to show strength, it could spark broad based commodity selling causing cocoa to test its recent lows of $2555.
Corn plantings this week again came in lower than most trade estimates coming in at 27% planted versus last years 45%. The markets are watching the weather to see if there is going to be any new delays in corn planting. Crude oil making new highs at $122 a barrel and US dollar being lower has helped lead to a higher grain market.
We are recommending producers buy December 2008 5.00 corn puts at 20 cents. Chicago Wheat puts at a 7.50 price level are also trading around the twenty cent range. We are also looking at put protection in the beans with 9.40 November puts running at 30 cents.
Call today to let us help you develop a marketing plan that best fits your operation.
Past results are not necessarily indicative of future results. Because the risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.