Reports & Statistics
Retail sales rose 0.6 percent in June according to the latest Commerce Department report. Economists participating in the Briefing.com survey had expected a 0.4 percent increase.1 The Producer Price Index (PPI) grew by 1.8 percent versus expectations for a 0.9 percent increase.2 Gains in gasoline prices are being noted as the possible cause of the 0.7 percent increase in the Consumer Price Index for June.3
In energies, crude inventories were expected to show a drop of 2.1 million barrels according to a survey by Platts. Instead, they fell 2.8 million barrels according to EIA data. Other expectations were for a build of 750,000 barrels of gasoline and 1.6 million barrels of distillates. Actual numbers were a gain of 1.5 million barrels of gasoline and 600,000 barrels of distillates.4 Natural gas inventories climbed 90 billion cubic feet, bringing the total amount in storage over 25 percent higher than the same time last year.5
Top Commodity News
Precious Metals
Storage for gold and silver bullion may be an issue for Swiss banks. According to recent reports, the necessary secure storage space may be hard to come by as physical and ETF funds’ investments in gold grew.6 The US Mint has temporarily suspended sales of gold, silver, and proof coins.7
Grains & Oilseeds
On Thursday, China announced intentions to auction 500,000 metric tons of soybean and 2 million tons of corn. These auctions are set to begin next week.8 In India, weaker monsoon rains may limit grain production; however, the cancellation of wheat exports should provide a supply cushion.9 A new bill has been introduced aiming to “phase out government support for corn-based ethanol over a five-year period and push commercial development of second-generation biofuels.” The Affordable Food and Fuel for America Act is touted as a way to control volatility.10
Coffee, Cocoa & Sugar
Coffee-growing regions in Brazil likely experienced “dry, sunny, and frost-free weather” according to early week forecasts from Somar weather service.11 The weekend may bring showers, but will also likely be frost-free.12 Also in Brazil, a government-sponsored auction of options contracts for Arabica coffee – the first of four such auctions – resulted in the sale of all 10,000 contracts. The contracts give growers the option to sell 100 bags to the government in November for a set price. According to Conab, “growers paid more than six times the initial asking price for the contracts.” Another auction is set for July 22nd.13 In Malaysia, cocoa grindings for the second quarter fell by 22 percent year-on-year. The country – which gets many of its beans from Indonesia – is Asia’s largest cocoa grinder. The cocoa board released a statement which cited “significant lower demand” as the cause for cutting down grinding capacity.14 In North America, grindings for the second quarter fell nearly 7 percent year-on-year.15 In Ivory Coast, cocoa production for the 2009/2010 harvest may be improved by additional efforts to distribute pesticides as well as chemicals intended to deal with black pod disease.16
Livestock
Pork plants for Smithfield and Tyson will be left idle next Monday. “Low margins and tight hog supplies” are cited as the reasons behind the decision to operate some plants at reduced levels.17 According to the USDA, pork exports in May were down 34 percent from a year ago. However, the US Meat Export Federation has noted that 2008 was a “historic high point” and – when compared to 2007 numbers – May 2009 saw an increase in volume and value.18 Russia has moved to lift some import restrictions on meat products from New York, Utah, and Wisconsin. Certain bans concerning pork remain in effect.19
Coming Up Next Week:
Monday: Crop Progress
Wednesday: Energy Stocks
Thursday: Gas Storage, Existing Home Sales
Friday: Livestock Slaughter, Cattle on Feed
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://money.cnn.com/2009/07/14/news/economy/retailsales_June/index.htm?postversion=2009071408
2 http://www.reuters.com/article/reutersINCOnlineReport/idUSTRE56D2ZY20090714
3 http://www.bizjournals.com/washington/stories/2009/07/13/daily65.html
4 http://www.marketwatch.com/story/crude-inventories-fall-more-than-expectedeia
5 http://www.cattlenetwork.com/Content.asp?ContentID=330895
6 http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86392&sn=Detail
7 http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86213&sn=Detail
8 http://online.wsj.com/article/BT-CO-20090716-704867.html
9 http://online.wsj.com/article/SB124755967109137639.html
10 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=13050
11 http://online.wsj.com/article/BT-CO-20090714-707943.html
12 http://online.wsj.com/article/BT-CO-20090717-708936.html
13 http://www.bloomberg.com/apps/news?pid=20601086&sid=aL8RUSzTjZvw
14 http://online.wsj.com/article/BT-CO-20090715-704070.html
15 http://www.flex-news-food.com/pages/24918/Chocolate/Cocoa/namerica-q2-cocoa-grind-down-675-pct-yryr.html
16 http://www.bloomberg.com/apps/news?pid=20601116&sid=aJKpS9KfvSbI
17 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=13025
18 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=13044
19 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=13074
