CNC Commodity Market Summary 6.13.08
Energy
Crude closed the week 2.7-percent lower, with the July contract settling $3.68 lower at $134.86 a barrel. Strength of the US dollar and news that Saudi Arabia may begin pumping from a new field was noted for the decline.
"A strong dollar is in our nation's interests. It is in the interests of the global economy," Bush said outside the White House. In an interview with the Times of London Bush added to his earlier comments, saying, "We want the dollar to strengthen".
Saudi Arabian Oil Minister Ali al-Naimi said record prices are "unjustified" and signaling that the state oil company may soon start pumping from a new field.
Natural gas closed the week modestly higher, with the July contract settling 6.8 cents higher at $12.625 per million British thermal units. Strong demand with lagging builds in inventory sent natural modestly higher on the week.
"Storage builds continue to lag and storage adequacy for the coming winter is increasingly hinging on the expectations that this summer's temperatures will return to normal and hence moderate electricity demand compared to last year" analysts at Deutsche Bank said in a research note Friday.
July RBOB gasoline closed 2.5-percent lower on the week at $3.4626 a gallon, and July heating oil closed the week 3.6-percent lower at $3.8368 a gallon.
Metals
Gold closed the week 2.9-percent lower, with the August contract settling $26 lower at $873.10 an ounce. Pro-dollar rhetoric from Washington and the Federal Reserve sent the greenback higher on the week, reducing the appeal of precious metals as a hedge against inflation.
Federal Reserve Chairman Ben Bernanke said the Fed is working with the Treasury to "carefully monitor developments in foreign-exchange markets" and is aware of the effect of the dollar's decline on inflation and price expectations.
When asked if the administration would consider selling other currencies and buying dollars to support the greenback, Paulson said, "I would never take intervention off the table or any policy tool off the table. I just can't speculate about what we will or won't do."
Silver closed the week 1.8-percent lower, with the July contract settling 31 cents lower at $16.56 cents an ounce, and copper closed the week 1-percent lower at $3.5805 a pound.
Grains
Corn closed the week 11.25-percent higher, with the July contract settling 81 cents higher at $7.31 3/4 per bushel. Corn set new highs every day this week on concerns that recent floods in the Midwest will lower crop yields, amid tight supplies. The most active December contract gained 13-percent this week.
Flooding in much of the Midwest this week, receiving as mush as 12-inches has farmers very concerned over crop conditions. Parts of Missouri, Illinois, and Indiana are expected to receive up to 3 inches of additional rain by Sunday.
Soybeans closed the week 7-percent higher with the June contract settling $1.03 higher at $15.60 a bushel. Flooding in the Midwest sent soybeans higher on the week. July soy-meal closed the week 9.7-percnt higher at $409.20 per shot ton, and July soy-oil closed 2.9 percent higher at 66.19 cents per pound.
Wheat closed the week 8.8-percent higher, with the July contract settling 71 cents higher at $8.82 per bushel. Spill-over strength from corn and soybeans overpowered harvest pressure as farmers begin to harvest in the Plains.
July rice closed the week 1.7-percent higher at $20.30 per hundredweight.
Softs
Cotton closed the week 7.7-percent higher, with the July contract settling 5.11 cents higher at 71.63 cents a pound. Strong winds, hot temperatures, and no precipitation all month in Texas, the largest producing state, is increasing speculation for smaller yields.
On Thursday, burn bans in 111 of Texas' 254 counties stayed in affect, with much of the state in moderate to extreme drought conditions, according to the US Drought Monitor map. Last year at this time the entire state reflected no drought.
Cocoa futures closed the week 3.3-percent higher, with the July contract settling $116 higher at $2,973 a metric ton. Cocoa climbed to a fresh 28-year high this week on concerns over dry conditions in West Africa.
In a report last week, investment bank Fortis said it expects a global cocoa shortfall for the third straight year, mainly due to unfavorable weather and rising demand.
Sugar closed the week 8.2-percent higher, with the July contract settling .8 cent higher at 10.54 cents a pound, July coffee closed the week 1-percent lower at $1.3440 a pound, with September at $1.3680.
Meats
Cattle closed mixed on the week, with June live cattle settling 3.2-percent higher at 95.57 cents a pound. Climbing corn prices was noted for the gain in live cattle. August feeder cattle closed the week 6.2-percent lower at $109.15 per hundredweight.
Friday's U.S. Department of Agriculture's midday boxed beef wire showed choice cuts fell $0.36 per hundredweight and select items were $0.34 lower.
Hogs closed the week mixed, with July pork bellies settling 1-percent higher at 73.90 cents a pound. Weak cash hog bids were noted for the action in hogs. July lean hogs closed 2.6-percent lower on the week at 73.60 cents a pound.
