May 7, 2008

Softs

Sugar closed modestly lower today, with the July contract settling 9 points lower at 11.73 cents a pound. Strength in the U.S. dollar was seen as more negative than crude oil's record high was positive for sugar, which is used to produce ethanol.

U.S. sugar beets were 54-percent planted as of Sunday, well below the five-year average of 81-percent.

July coffee closed down 250 points at $1.3110 a pound, July cotton settled one point higher at 70.37 cents a pound, July orange juice settled 60 points higher at $1.219 a pound, and July cocoa settled $44 lower at $2,682 a metric ton.

Meats

Hogs closed higher today, with June lean hogs settling 52 points higher at 75.27 cents a pound. Strong demand and rising cash prices continue to send hogs higher. July pork bellies settled 27 points higher at 76.77 cents a pound.

Cattle closed modestly higher, with June live cattle settling unchanged at 91.82 cents a pound. Strength in the boxed-beef wire and technical buying sent cattle mostly higher on the session. May feeder cattle settled 17 points higher at 105.72 cents.

Metals

Gold settled modestly lower, with the June contract settling $6.50 lower at $865.50 an ounce. Strength in the U.S. dollar reduces the appeal of precious metals as a hedge against inflation. July silver settled 16 cents lower to close at $16.70 an ounce.

June palladium settled $5.65 lower to close at $425.75 an ounce, July copper settled 5 cents lower at $3.83 a pound, and July platinum settled 80 cents lower at $1,969 an ounce.

Energy

Crude oil continues its assault on gravity, with the July contract settling $1.69 higher at $123.53 a barrel. Strength in the U.S. dollar, and a larger than expected build in crude inventories could not hold crude down as the market jumped to a fresh all time high on higher than expected gasoline demand.

U.S. oil inventories jumped 5.65 million barrels, or 1.8 percent, to 325.6 million barrels last week, an Energy Department report showed today. The build in crude inventories was over 3-times larger than the 1.63 million barrels analysts were expecting.

A magnitude 6.8 earthquake off the Japanese coast increased concerns that they might switch from nuclear power plants to fuel oil to generate electricity.

June RBOB gasoline settled 1.27 cents higher at $3.1182 a gallon. June heating oil settled 9.38 cents higher at $3.4473 a gallon, June natural gas settled 17.7 cents higher at $11.327 per 1,000 cubic feet.

Grains

Soybeans fell 2.5-percent today, with the July contract settling 32 cents higher at $13.09 a bushel. Rising energy prices, and speculation that Argentinean farmers will resume their protests over higher export tax sent soy higher on fears of increasing demand on tight U.S. supplies.

The crude oil influence on soy-oil, which is used to produce bio-diesel, resulted in a gain of over 2-percent today with the July contract settling 132 points higher at 59.16 cents per pound. July soy-meal settled $6.40 higher at $334.20 per short ton.

Rice closed limit-up, with the July contract settling 50 cents higher at $21.60 per hundredweight. Myanmar's cyclone that devastated the region has reportedly damaged the country's main rice-growing region. Speculation that Myanmar will need to import rice sent rice limit-up on the session.

Corn closed over 1-percent higher today, with the July contract settling 6 3/4 cents higher at $6.13 a bushel. Soggy fields in the U.S. Midwest have prevented many farmers from getting the corn crop into the ground. Planting delays lower the probability of maximum yields.

USDA reports that 27-percent of the corn crop is planted as of May 4, up from 10-percent the previous week. This number is well behind last year's pace of 45-percent, and even further behind the five-year pace of 59-percent.

Forecasts call for rain throughout the Southern Midwest Tuesday night into Wednesday and into the weekend. Weather this time of year in the Midwest can be very volatile with forecasts usually being met with skepticism.

Corn crop yields typically decline unless planted before the middle of May. Plants need to pollinate before the arrival of hot summer weather.

July wheat settled 10 1/2 cents lower at $8.07 1/2 cents per bushel, and July oats fell 4 1/2 cents at $4.15 1/2 a bushel.

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