May 23, 2008

Grains

Soybeans closed nearly unchanged this week, with the July contract settling 7 cents lower at $13.71 a bushel. News that negotiations between Argentine farm leaders and government officials failed to resolve disputes over rising export taxes sent the market over 40 cents higher today, closing just off the highs of the week.

Speculation that a resolution between farm leaders and Argentine officials were near, sent soy lower, earlier in the week. Rising energy prices and Friday's failed resolution to the strike pushed soybeans to close the week just off the highs.

Demand for soybeans traditionally shift from the U.S. to South America this time of year as farmers in Argentina have just harvested, while farmers in the U.S. are beginning to plant. Any disruptions add pressure to already tight U.S. supplies.

Corn gained 5-percent this week, with the July contract gaining 21 3/4 cents at $6.12 3/4 a bushel. Corn closed at a 3-week low Monday on improving planting conditions, while finding support from rising energy prices, corn bounced higher to close Friday at the highest level for the week.

Wheat fell 3-percent this week, with the July contract settling 23 cents lower at $7.52 1/2 a bushel. Wheat started the week slightly higher before Texas began harvesting what is expected to be the largest crop ever. Wheat fell to a 6-month low Thursday.

July rice settled the week 28 1/2 cents higher at $20.35 per hundredweight, July soy-meal settled the week $13.40 lower at $336.60 per short ton, and July soy-oil settled the week 171 points higher at 63.56 cents per pound.

Softs

Cotton fell 4-percent this week with the July contract settling 275 points lower at 69.21 cents a pound. Falling export sales was noted for the bearish tone for cotton this week. Cotton has not closed outside of daily range of May 1. Any close above or below could give the market some direction in what has been sideways trading.

Cocoa fell nearly 4-percent this week, with the July contract settling $99 lower at $2,577 a metric ton. Currency swings continue to rule trade amid a lack of fresh fundamental news.

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.

Sugar fell over 11-percent this week, with the July contract settling 1.02 cents lower at 10.01 cents a pound. Brazil, the world's largest producer of sugar, is expected to harvest 498.1 million metric tons in the center south region for a gain of 16-percent from last year's crop. Increasing crop estimates is bearish on prices.

Orange juice fell 1-percent this week, with the July contract settling 1.3 cents lower on the week at $1.072 a pound. Weak demand and climbing estimates for this year's Florida crop, continues to weigh on orange juice.

Meats

Cattle futures were mixed on the week, with August feeder cattle gaining 2-percent on the week to settle at $115.225 per hundredweight.

Strong cash prices were noted for the gains in cattle. June live cattle finished the week 2.5-percent higher at $93.875 per hundredweight.

The U.S. Department of Agriculture's Friday mid-day boxed beef wire reported choice cuts gained $0.13 per hundredweight, while select items were $0.09 per hundredweight higher.

Hogs were higher on the week, with July pork bellies settling over 2-percent lower at $75.975 per hundredweight. Speculation that cash prices are topping out sent pork lower on the week. July lean hogs settled the week 1-percent higher at $77.15 per hundredweight.

Metals

Gold gained 2.7-percent this week, with the June contract settling $25.60 higher at $925.80 an ounce. Climbing energy prices increases the appeal of precious metals as a hedge against inflation. Silver climbed 7.8-percent this week, with the July contract gaining $1.33 at $18.29 an ounce.

U.S. producer prices, excluding food and energy, rose more than analysts expected in April. Food costs last month jumped the most in 18 years, increasing worries over inflation.

Copper fell 3.2-percent this week, with the July contract settling 11.4 cents lower at $3.736 a pound. Climbing inventories and concerns over slowing demand was noted for the decline on the week.

Copper inventories monitored by the London Metal Exchange have surged 13-percent this month, reaching the highest level since March 17. China imports of copper fell 19-percent in the first quarter from a year earlier.

July platinum gained 2.3-percent this week settling at $2,183 an ounce and June palladium gained less than 1-percent this week settling at $457.30 an ounce.

Energy

Crude oil gained 4.7-percent this week, with the June contract settling $6.01 higher at $132.30 an ounce. Falling inventories of U.S. crude oil when analysts had expected inventories to gain modestly, and the falling dollar pushed crude oil over $135 a barrel Thursday.

The Energy Department's Energy Information Administration reported that U.S. crude oil inventories fell by more than 5 million barrels last week. Analysts had expected a modest increase.

Heating oil closed 7.5-percent higher this week, with the June contract settling 28 1/2 cents higher at $3.98 1/2 a gallon. Strong demand and inventories continues to push distillates higher.

Gasoline futures gained 4.6-percent this week, with the June contract settling 14.85 cents higher at $3.3685 a gallon, June natural gas settled the week 64 cents higher at $11.73 per million British thermal units.

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