Reports & Statistics
The US trade deficit was narrower than economists had anticipated at a monthly deficit of $26 billion for May. The forecast was for $28.8 billion. Imports fell to their lowest level since July of 2004, and exports increased to $1.9 billion.1
In energies, OPEC is suggesting that it will take “another four years to recover to 2008 levels”.2 The US Energy Information Agency (EIA) has revised its forecast for world demand higher by 170,000 barrels per day.3 This week’s supply data from the EIA showed a drop of 2.9 million barrels in crude oil inventories. The forecast according to Reuters was for a 2.4 million barrel decline. Gasoline stocks gained 1.9 million barrels versus expectations for a 600,000 barrel gain. Distillates grew by 3.7 million barrels, more than the forecast for a 2 million barrel gain and the highest level since December of 1984.4
Top Commodity News
Precious Metals
Minefinders Corp is reporting higher silver and gold production in its Dolores mine in Mexico. In the second quarter, gold increased to over 23,000 ounces (up 65 percent) and silver jumped over 400,000 ounces (up 49 percent).5 The Finance Minister of India has announced that within the 2009/2010 budget, import duty on gold bars and silver will be doubled.6 The Bombay Bullion Association has reported that gold imports were down 50 percent year over year during the first half of 2009. The World Gold Council is showing that demand for gold jewelry in India fell during the first quarter.7
Grains & Oilseeds
The latest estimates from Brazil’s Agriculture Ministry suggest that drought and frost have damaged crops. Corn output estimates have been lowered to 49.45 million metric tons, down from 58.65 million tons last year. Soybean output estimates are lowered to 57.13 million tons compared to 60.02 million tons last year.8 According to the latest World Agricultural Supply and Demand Estimates (WASDE) release from the USDA, wheat supplies in the US will be higher and production will be 96 million bushels above the previous forecast. Wheat’s global ending stocks are projected 1.4 million tons lower. US corn production forecasts are raised, while global ending stocks are lowered 1 percent. Soybean production in the US is forecast to increase. Global ending stocks for soybeans are unchanged.
Latest WASDE – http://www.usda.gov/oce/commodity/wasde/latest.pdf
Latest Crop Production – http://usda.mannlib.cornell.edu/usda/current/CropProd/CropProd-07-10-2009.pdf
Weather continues to make headlines, and hot, dry weather in the South may be causing crop stress.9 According to officials, the winter wheat harvest production will be half of what it was last year.10
Coffee, Cocoa & Sugar
The latest suggestion that El Nino weather patterns have returned could affect cocoa re-planting in Indonesia, the third largest producer. The investment bank Fortis believes there may be a “significant disruption to the cocoa sector from the El Nino weather pattern”.11 On the demand side of the sector, the European Cocoa Association says Europe’s cocoa grind has dropped around 11 percent year-on-year.12
In the Indian State of Karnataka, heavy rains have improved the coffee crop outlook. The widespread precipitation may also make the stem and berry borer pests go dormant, reducing their potential threat. However, too much moisture may increase the risk of “wet foot”, a cause of damaged roots and dropping berries.13 In sugar, Australia will likely harvest 10 to 15 percent less cane than 2008/2009, according to the nation’s largest sugar miller. Early year flooding, which affected cane production in Queensland, was cited as the cause.14 Morgan Stanley is predicting a global sugar deficit of 2.8 million metric tons for 2009/2010, around 2 million tons more than previously forecast.15
Livestock
The latest WASDE shows a lower forecast for US meat production. Beef production was forecast lower based on lower expected feedlot placements and lighter carcass weights. Pork production forecasts were increased in response to higher second quarter slaughter and heavier carcass weights.16 A Purdue University economist is expecting “only a 1 percent decrease in pork production over the next 12 months”, based on heavier carcass weights and larger litters.17
Coming Up Next Week:
Monday: Crop Progress
Tuesday: PPI, Retail Sales
Wednesday: Energy Stocks, CPI, Industrial Production/Utilization
Thursday: Gas Storage
Friday: Housing Starts/Permits
Disclaimer: Futures and options trading involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Copyright 2009 LaSalle Futures Group
1 http://www.mortgagenewsdaily.com/channels/fed-economy/07102009-trade-balance.aspx
2 http://www.keyc.com/node/24531
3 http://www.reuters.com/article/GCA-Oil/idUSTRE5664U120090707
4 http://www.reuters.com/article/fundsFundsNews/idUSN0848120020090708
5 http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86042&sn=Detail
6 http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=85930&sn=Detail
7 http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=85861&sn=Detail
8 http://www.bloomberg.com/apps/news?pid=20601086&sid=auXl5cbq22Aw
9 http://www.agweb.com/get_article.aspx?pageid=152047
10 http://www.google.com/hostednews/ap/article/ALeqM5jmPWjqkm9KCq2mTFeugyZXmuzLUgD99BGPFG0
11 http://www.flex-news-food.com/pages/24825/Cocoa/Indonesia/el-nino-delay-indonesias-cocoa-replanting.html
12 http://www.flex-news-food.com/pages/24792/Cocoa/European-Union/european-q2-cocoa-grind-falls-113-pct-yryr.html
13 http://www.thehindubusinessline.com/2009/07/09/stories/2009070951381600.htm
14 http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSSYD53530220090709
15 http://www.bloomberg.com/apps/news?pid=20601081&sid=aMLfs43Ippqo
16 http://www.usda.gov/oce/commodity/wasde/latest.pdf
17 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=1293418
