Reports & Statistics
The US trade balance posted a wider deficit of 2.2 percent on a decline of 2.3 percent in exports.1 Retail sales for May came in above analysts’ expectations, rising 0.5 percent versus an anticipated 0.2 percent increase. The climb was attributed to gas station sales. General merchandise and department store sales declined. Sales for April were also revised from a 0.4 percent drop to a 0.2 percent drop.2
OPEC says oil production increased 118,800 barrels a day in May versus April. The group is expecting a slowdown of the decline in oil demand.3 The weekly numbers from the EIA showed a decline of 4.4 million barrels of crude oil. A Platts survey4 pointed to analysts’ expectations for an increase of 800,000 barrels, while a separate Reuters’ poll showed a forecast for a 400,000 barrel draw. Falling crude imports were cited. Tuesday’s API report had detailed a 6 million barrel decline in crude stocks.5 Inventories of gasoline fell 1.6 million barrels versus expectations for a build of 800,000 barrels. Distillates were down 300,000 barrels versus the expected 1.4 million barrel increase.6
Top Commodity News
Precious Metals
Growth in Chinese automobile sales was seen as a positive for platinum. Vehicle sales have grown 14 percent in the first five months of the year. Car sales in France and Germany were also up year over year. China’s platinum imports have also increased in 2009.7 India’s imports of gold for May stood at 17.8 tons, 39 percent lower than last year.8 This news comes as the wedding season in that country – traditionally a time to watch gold demand – winds down.9
Grains & Oilseeds
This week’s USDA crop progress report showed that corn planting and growth progress is nearly the same as this time last year. Soybean plantings are 2 percent further along than the same times last year, and emergence 3 percent advanced. Both crops are behind when compared to the five year average.10 Drier weather may have allowed for plantings to approach completion, while cool weather affected emergence, according to the latest Crop Production report.11 In the WASDE, world wheat production forecasts were lowered 1.6 million tons. US wheat supplies were lowered due to a reduced winter wheat forecast; however, lower forecasted consumption meant an increase in projected global ending stocks. Lower corn yield and production forecasts led to lower projections for US feed grains. Projected US ending stocks for soybeans are lowered 20 million bushels based on higher export forecasts.12 Corn forecasts for Brazil may be lowered following frost in the Center South.13
Coffee, Cocoa & Sugar
Good rainfall in Nigeria may boost the country’s light crop cocoa harvest by 30 percent. The harvest may continue into June.14 In Ivory Coast, a strike by dock workers has hampered exports of cocoa beans. The strike affects the port of Abidjan, which ships around 40 percent of the country’s cocoa. The director-general of the port has said that new dock workers are being recruited.15 Striking workers were dispersed by police using tear gas when attempts were made to block new workers.16 A leading Brazilian sugar producer has indicated that higher prices will likely lead to an increase in sugar production from the sugarcane crush. The incentive to allocate more to sugar production instead of ethanol may remain strong.17 In coffee, last week’s temperature drop in Brazil’s main coffee region did not go below freezing. No damage to the coffee bushes was reported.18
Livestock
Cattle and hog price forecasts have been lowered, and total 2009/10 US meat production forecasts reduced. The “slower pace of fed-cattle slaughter” and higher feed costs are the motivation.19 A hog buyout program is on track to assist farmers retiring sows. The program comes at a time when the full effect of the H1N1 virus and rising feed costs may be leading some producers to bankruptcy or liquidation.20 New statistics from China show an oversupply of live pigs. Frozen pork is being purchased for government reserves, but prices in some areas have fallen below breakeven.21 In Brazil, economic issues have led to more beef plant closures and layoffs.22
Coming Up Next Week:
Monday: Crop Progress
Tuesday: Core PPI, Housing Starts, Building Permits, Industrial Production/Capacity Utilization
Wednesday: Core CPI, Energy Stocks
Thursday: Gas Storage
Friday: 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://www.dailyfx.com/story/market_alerts/fundamental_alert/US_Trade_Balance_Deficit_Widens_1244638535104.html
2 http://www.forbes.com/feeds/afx/2009/06/11/afx6531967.html
3 http://www.bloomberg.com/apps/news?pid=20601086&sid=aJvKS21B.9I8
4 http://money.cnn.com/2009/06/10/markets/oil/?postversion=2009061010
5 http://money.cnn.com/2009/06/10/markets/oil/?postversion=2009061010
6 http://www.reuters.com/article/hotStocksNews/idUSTRE5594AY20090610
7 http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=84650&sn=Detail
8 http://www.reuters.com/article/marketsNews/idUSN1044116320090610
9 http://www.guardian.co.uk/business/feedarticle/8555013
10 http://www.drovers.com/news_editorial.asp?pgID=675&ed_id=5572
11 http://usda.mannlib.cornell.edu/usda/current/CropProd/CropProd-06-10-2009.pdf
12 http://www.usda.gov/oce/commodity/wasde/latest.pdf
13 http://www.bloomberg.com/apps/news?pid=20601086&sid=ahnIng.aPqlQ&refer=latin_america
14 http://www.bloomberg.com/apps/news?pid=20601116&sid=a9lO8Rv775EM
15 http://www.bloomberg.com/apps/news?pid=20601116&sid=aKN478ynETCI
16 http://www.guardian.co.uk/business/feedarticle/8547534
17http://www.guardian.co.uk/business/feedarticle/8553233
18 http://online.wsj.com/article/BT-CO-20090604-708224.html
19 http://www.cattlenetwork.com/Content.asp?ContentID=321522
20 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=12591
21 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=12637
22 http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=12618
