May 13, 2008

Energy

Heating oil lit the fire for energies today, climbing nearly 4-percent to a fresh all-time high, with the June contract settling 14 cents higher at $3.70 a gallon. Strong demand and shrinking refinery utilization continues to push distillates higher.

Stockpiles of U.S. distillates in the week ended May 2 were pegged at 2.6 percent below the five-year average, the Energy Department said May 7th. Diesel prices climbed to a record $4.39 a gallon on Tuesday. It was at $3.657 a month ago.

Supplies of distillates in developed countries fell 6.7 percent to 477.6 million barrels in March from last year, according to International Energy Agency estimates.

Crude oil closed over 1-percent higher today, with the June contract settling $1.57 higher at $125.80 a barrel. Spill-over strength in heating oil, and news that Iranian President Mahoud Ahmadinejad told the state-run Fars news agency that Iran was reviewing oil output sent crude higher.

June RBOB gasoline settled 4 cents higher at $3.20 a gallon, and June natural gas settled 12.1 cents higher at $11.422 a million British thermal units.

Grains

Soybeans gained nearly 3-percent today, with the July contract settling 37 cents higher at $13.79 ½ a bushel. Favorable corn planting conditions, strong demand, and a farmer strike in Argentina sent soybeans significantly higher on the session.

Favorable corn planting conditions in the Midwest are lowering the probability that farmers would be switching out of some corn acres into soybeans. Corn crop yields typically decline unless planted before the middle of May.

Increasing expectations for a resumption of Argentina's farmers strike on news that Argentine Agrarian Federation president Eduardo Buzzi said "the resumption of protests is imminent." Argentina's government refused to discuss modifications of the grain export tax.

Corn fell for the third straight session, with the July contract settling 7 1/2 cents at $6.07 1/4 a bushel. Improving planting conditions in the U.S. Midwest with forecasts for no major storms before May 21st will accelerate plantings that have experienced extended delays due to wet weather.

Rice slid limit-down today, with the July contract setting 50 cents lower at $22.24 per hundredweight. The U.S. Department of Agriculture's weekly crop progress report yesterday showed U.S. rice plantings were 74-percent as of Sunday, up from 61-percent last week. Increasing plantings is seen as bearish to prices.

July wheat settled 9 3/4 cents lower at $7.95 3/4 per bushel, July oats gained a penny to settle at $4.11 a bushel, July soy-meal settled $11.70 higher at $350.20 per short ton, and July soy-oil settled 82 points higher at 62.10 cents per pound.

Softs

Orange juice fell to a 4-week low with the July contract settling 315 points lower at $1.1265 a pound. Weak demand and climbing estimates for this year's Florida crop, continues to weigh on orange juice.

Cocoa fell 4.6-percent today, with the July contract settling $127 lower at $2,624 per metric ton. Strength in the U.S. dollar versus the British pound was noted for today's decline. Cocoa in West Africa, the world's largest producer, is traded in British pounds, so an increase in the value of the dollar versus the pound results in lower prices in the U.S.

July sugar settled 49 points lower at 11.16 cents a pound, July coffee settled 130 points lower at $1.3725 a pound, and July cotton settled 91 points lower at 70.90 cents.

Meats

Cattle futures closed mixed toady, with August feeder cattle settling 12 points lower at 99.97 cents a pound. Mixed mid-day boxed beef quotes gave the market little direction. August feeder cattle settled 187 points higher at 112.65 cents a pound.

The U.S. Department of Agriculture's mid-day boxed beef wire reported choice cuts fell $0.31 per hundredweight, while select items were $0.08 per hundredweight higher.

Hog futures closed modestly higher today, with June lean hogs settling 65 points higher at 77.67 cents a pound. Strong demand and rising cash prices continue to send hogs higher. July pork bellies settled 87 points higher at 80.42 cents a pound.

Metals

Gold futures sank the most in 2-weeks, with the June contract settling $15.30 lower to $869.60 an ounce. April retail sales, excluding autos, increased more than forecasted. Stronger retail sales numbers increase the probability that the Federal Reserve will stand pat on interest rates.

Interest-rate futures signify a 94-percent chance the Federal Reserve will keep its benchmark rate unchanged at 3-percent at the next policy meeting on June 25th.

July silver settled 40 cents lower at $16.83 an ounce, July platinum settled $49.90 lower at $2,073.40 an ounce, June palladium settled $5.95 lower at $440.85 an ounce, and July copper settled 2 cents lower at $3.73 a pound.

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