cattle futures drop

May 23rd, 2013

Cattle futures fell for a second straight day on speculation that U.S. beef demand is easing. Hog prices also declined.

Retailers probably have already filled meat orders for grilling demand for the Memorial Day holiday weekend, which starts May 25, said Dick Quiter, an account executive at McFarland Commodities LLC. Meatpackers processed 373,000 cattle during the first three days of the week, down 0.5 percent from a year earlier, U.S. Department of Agriculture data show.

“Demand seems to be a little bit lighter than what they hoped,” Quiter said in a telephone interview from Chicago. “Most of the retail buying for Memorial Day and maybe out even into Father’s Day, they pretty much have got that locked up.”

Cattle futures for August delivery fell 0.1 percent to $1.1915 a pound at 10:28 a.m. on the Chicago Mercantile Exchange. Prices were down 9.9 percent this year through yesterday.

Feeder-cattle futures for August settlement slid 0.1 percent to $1.442 a pound.

Hog futures for July settlement declined 0.4 percent to 93.025 cents a pound. As of yesterday, prices climbed 9 percent in 2013.

- Elizabeth Campbell in Chicago at Bloomberg.

soybean futures rise

May 23rd, 2013

Soybean futures touched a six-month high in Chicago on signs demand will increase in China, the world’s biggest importer of the oilseed, while U.S. supplies shrink before the next harvest.

China’s soybean imports will start increasing sizably from this month and jump 17 percent in the season beginning Aug. 1 to 68 million metric tons, Hamburg-based researcher Oil World said May 21. U.S. supplies before the next harvest will shrink to 125 million bushels, the smallest since 2004, the Department of Agriculture estimates.

“It’s an old-crop market that is extremely tight,” Michael Pitts, a commodity sales director at National Australia Bank Ltd., said by phone from Sydney. “China has been a consistent importer over the year and is likely to continue.”

Soybean futures for delivery in July were little changed at $14.9425 a bushel by 7:38 a.m. on the Chicago Board of Trade. Earlier the price reached $15.025 a bushel, the highest for a most-active contract since Nov. 8. Futures for delivery in November, after the next harvest, fell 0.1 percent to $12.375 a bushel.

Prices rallied to a record $17.89 a bushel in September as U.S. crops were hurt by the worst drought since the 1930s. The USDA expects production to rebound 12 percent from the previous season as fields recover. Still, “there is concern about a lack of soybeans in July and August” in the country before farmers begin collecting the next crop, Oil World said.

Corn for delivery in December, the most-active contract by open interest, fell 0.6 percent to $5.2725 a bushel and wheat for delivery in July gained 0.6 percent to $6.9275 a bushel. In Paris, milling wheat for delivery in November was unchanged at 206 euros ($265) a ton on NYSE Liffe.

Rough rice for delivery in July added 0.5 percent to $15.41 for 100 pounds in Chicago, heading for a third straight gain. Sales from China’s top producing province slumped amid reports some supplies contained traces of cadmium, a toxic metal, state-owned researcher Cngrain.com said May 21. Consumers in some areas may become more willing to buy imported supplies, said Li Qiang, chairman at Shanghai JC Intelligence Co.

- Phoebe Sedgman in Melbourne and Whitney McFerron in London at Bloomberg.

cocoa futures fall

May 22nd, 2013

Cocoa futures fell in London and New York on speculation prices that rallied yesterday climbed too far as rainfall may favor crop development in West Africa, the main growing region. Raw sugar rose in New York.

Cocoa gained 2 percent in London and 1.9 percent in New York yesterday as the pound fell to a six-week low against the dollar after a report showed U.K. inflation slowed more in April than economists forecast. Cocoa growing areas in West Africa got widespread rainfall last week, with the heaviest amounts over southwestern Cameroon and southern Ivory Coast, MDA Weather Services, in Gaithersburg, Maryland, said in a report e-mailed yesterday.

“Cocoa prices recovered in New York as a break in the British pound sponsored some buying pressure in London,” Sterling Smith, an analyst at Citigroup Inc. in Chicago, said in a report e-mailed yesterday. “With no pressing weather issues, we have reservations about this near-term strength.”

Cocoa futures for delivery in July fell 0.2 percent to 1,566 pounds ($2,365) a ton by 11:36 a.m. on NYSE Liffe in London. Cocoa for July delivery retreated 0.6 percent to $2,330 a ton on ICE Futures U.S. in New York.

U.K. consumer prices rose 2.4 percent from a year earlier, compared with 2.8 percent in March, according to the Office for National Statistics. The median forecast of 35 economists in a Bloomberg News survey was 2.6 percent. The pound fell as much as 0.9 percent to $1.5113, the lowest since April 4.

Robusta coffee futures for July delivery were little changed at $2,010 a ton in London. Arabica coffee futures for July delivery fell 0.4 percent to $1.3215 a pound in New York.

White, or refined, sugar for delivery in August was unchanged at $476.30 a ton on NYSE Liffe. Raw sugar for delivery in July rose 0.2 percent to 16.89 cents a pound on ICE. The sweetener has dropped 9 percent in London and 13 percent in New York this year.

“Sugar prices are likely to stay under pressure as the Brazilian crop is gathering speed,” F.O. Licht said in a report dated yesterday. “The fact that millers in the center south continue to concentrate on sugar instead of ethanol as was generally expected, is undermining sentiment further.”

- Isis Almeida in London at Bloomberg.

Dow Jones futures rise

May 22nd, 2013

Dow Jones Futures – U.S. stock futures rose, after equity benchmarks climbed to record highs yesterday, as investors awaited Federal Reserve Chairman Ben S. Bernanke’s testimony on the economy and the central bank’s asset purchases.

Saks Inc. soared 17 percent after people with knowledge of the matter said the retailer has hired Goldman Sachs Group Inc. to explore options including a sale. Target Corp. lost 2.1 percent after profit fell 29 percent as higher taxes and cooler temperatures hampered sales. Lowe’s Cos., the second-largest U.S. home-improvement retailer, slipped 2.6 percent after reporting earnings that trailed analysts’ estimates.

Standard & Poor’s 500 Index futures expiring in June added 0.2 percent to 1,669.5 at 8:49 a.m. in New York. Contracts on the Dow Jones Industrial Average also expiring next month rose 31 points, or 0.2 percent, to 15,386.

“The U.S. economy has gone through a soft patch, but the economy is recovering,” said Pierre Mouton, who helps oversee $6 billion as a portfolio manager at Notz, Stucki & Cie. in Geneva. “The Fed will likely say it is watching economic indicators and may give a timeframe for the end of quantitative easing. That will be difficult for the market to manage.”

Bernanke testifies on the outlook for the U.S. economy before the Joint Economic Committee of Congress at 10 a.m in Washington today. The Federal Open Market Committee also releases the minutes of its April 30-May 1 meeting at 2 p.m. Policy makers said after their last meeting that they will keep buying $85 billion of bonds every month, while standing ready to raise or lower purchases as conditions evolve.

Dow Jones Futures: Record Stimulus

Fed Bank of New York President William C. Dudley said in an interview with Michael McKee airing today on Bloomberg Television that policy makers will know in three to four months whether the economy is healthy enough to allow the central bank to begin reducing its stimulus program.

While some Fed officials have signaled they favor scaling back the quantitative-easing program in the next few months, Bernanke has said he would continue stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent.

The S&P 500 has surged 147 percent from its 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Fed. The index trades at 16.3 times reported operating profit, 16 percent below the average since 1998, data compiled by Bloomberg show.

In Asia, the Bank of Japan reiterated its plan to double the monetary base over two years. Bond yields have jumped, highlighting the risks associated with Prime Minister Shinzo Abe’s campaign to revive the world’s third-biggest economy.

Dow Jones Futures: Existing Properties

In the U.S., a report may show that sales of existing properties climbed in April to the fastest pace in more than three years. Purchases of previously owned residences rose to a 4.99 million annualized rate last month, the most since November 2009, according to the median forecast of 79 economists surveyed by Bloomberg. The National Association of Realtors publishes its release at 10 a.m.

Saks (SKS) jumped 17 percent to $16.05. The company has hired Goldman Sachs to explore its strategic options, according to two people with knowledge of the matter. The New York-based retailer may consider selling itself to a private-equity firm in a leveraged buyout, said the people, who asked not to be identified because the process is private.

Toll Brothers Inc. (TOL) rallied 5.4 percent to $37.95. The largest U.S. luxury-home builder said fiscal second-quarter earnings increased as the company’s revenue rose. Demand for new homes has begun to recover as buyers take advantage of low mortgage rates and the supply of existing homes remains tight.

Dow Jones Futures: Job Cuts

NetApp Inc. gained 5.8 percent to $38.77 after the data-storage company said that it will cut jobs and return cash through stock buybacks and dividends.

Zale Corp. (ZLC) surged 26 percent to $6.82. The operator of the Zales and Piercing Pagoda jewelry chains reported third-quarter revenue of $442.7 million, exceeding the $440 million in sales analysts estimated on average.

Pfizer Inc. rose 2.2 percent to $29.40. The world’s largest drugmaker will offer the rest of its shares in the animal health company it spun off, Zoetis Inc., in a stock exchange.

Target, the second-largest U.S. discount retailer, dropped 2.1 percent to $69.75. U.S. retailers have been struggling as an increase in Social Security taxes takes a larger bite out of shoppers’ paychecks while colder-than-normal temperatures hurt sales of spring merchandise.

Lowe’s lost 2.6 percent to $41.33. Chief Executive Officer Robert Niblock has been spending to revamp stores, weighing on profitability. Rainy, colder-than-normal weather in March and April also hampered sales of outdoor merchandise.

Staples Inc. sank 3.1 percent to $14.30. The world’s largest office-supplies chain reported first-quarter earnings from continuing operations of 26 cents, missing the average analyst projection by 1 cent. Sales also fell short of estimates.

- Adria Cimino in Paris and Inyoung Hwang in New York at Bloomberg.

bond futures rise

May 20th, 2013

Bond Futures – The longest decline in Treasuries this year has left U.S. government debt the cheapest since March 2011 when measured by real yields and the best relative value compared with German bunds in more than two decades.

After inflation, 10-year U.S. notes yielded 0.91 percent last week, or 1.77 percentage points more than real yields on U.K. gilts, the widest spread in 25 months. Versus Germany, the securities are the least costly in 23 years when adjusted for the recent record-low interest rates around the world that distorted the normal relationship, according to FTN Financial.

Federal Reserve Chairman Ben S. Bernanke is counting on Treasuries to contain borrowing costs as the central bank buys $85 billion a month in securities to sustain the economic recovery that lifted U.S. consumer confidence to the highest in almost six years. The better relative yield for U.S. bonds may help bolster demand even as Warren Buffett said this month that he pitied fixed-income investors because of about record-low interest rates.

“The Treasury market is cheaper than almost any other comparable market on a relative value basis,” Jim Vogel, an interest-rate strategist at FTN, said by phone May 15. “There is the thought out there that Treasuries are expensive when in reality they offer the most value given the improving economy and the relative real yield they offer compared to others.”

Bond Futures: Relative Yields

The Memphis, Tennessee-based firm has correctly been less bearish on bonds than consensus forecasts for the past two years. In May 2012, the firm’s chief economist, Christopher Low, said 10-year yields would fall to 1.5 percent from a then 1.79 percent. They hit that mark three weeks later, and fell as low as 1.38 percent in July. The rate fell three basis points to 1.92 percent as of 9:38 a.m. in New York.

Treasuries due in at least 10 years were yielding 40 basis points more than non-U.S. sovereign debt on May 16, according to Bank of America Merrill Lynch indexes. As recently as September, U.S. rates were lower than those for the rest of the world.

While yields on 10-year Treasuries rose to 1.95 percent last week, below the average of about 5 percent since 1990, they are 60 basis points, or 0.6 percentage point, higher than similar-maturity German bunds. That’s about double the average since 2003. They are five basis points more than gilts, versus an average of about 30 basis points below over the same period.

Bond Futures: Easy Ownership

“As expensive as Treasuries are, if you compare them to other developed markets it makes it easier to own them,” Raman Srivastava, the head of global fixed income at Boston-based Standish Mellon Asset Management Company LLC, which manages $170 billion, said in a telephone interview on May 15.

In FTN’s analysis, which adjusts for today’s record low interest rates around the world as monetary policies from the U.S., euro zone, the U.K. and Bank of Japan converge to give a more-accurate reading of relative value, Treasuries are about 30 percent cheaper than average, according to Vogel.

Treasury 10-year notes fell in each of the past three weeks, the longest stretch since December. Yields have risen from 1.66 percent on April 26 amid reports showing gains in jobs and consumer confidence. The price of the benchmark 1.75 percent security due May 2023 declined 15/32 last week, or $4.69 per $1,000 face amount, to 98 5/32, Bloomberg Bond Trader data show.

Savers dependent on bond payments are “victims” of central bank policies to lower borrowing costs, Buffett, the chief executive officer of Berkshire Hathaway Inc. (BRK/A), said at the company’s annual shareholder’s meeting in Omaha, Nebraska, May 4.

Bond Futures: Rally ‘Over’

“I feel sorry for people that have clung to fixed-dollar investments,” he said.

Bill Gross, who runs the world’s biggest bond fund for Pacific Investment Management Co. in Newport Beach, California, said in an interview on Bloomberg Television May 16 that the three-decade bull market for bonds “was over.”

He still increased Treasuries to 39 percent of his $293 billion Total Return Fund (PTTRX) in April, the highest level since July 2010. Treasuries, for now “are a better alternative than cash,” he wrote in a May 1 investment outlook.

Treasuries have lost 0.33 percent this year, including reinvested interest, compared with 0.93 percent for the global sovereign bond market, Bank of America Merrill Lynch indexes show. The MSCI All-Country World Index of equities has risen 7.5 percent this year, and corporate bonds have returned 2.08 percent as measured by Bank of America Merrill Lynch Indices.

Bond Futures: Bond Overreaction

Three Federal Reserve regional bank presidents, Richard Fischer of Dallas, Charles Plosser of Philadelphia and Jeffrey Lacker of Richmond, called last week for the central bank to phase out the $40 billion monthly purchases of mortgage-backed securities. It’s also buying $45 billion of Treasuries a month.

“The market has overreacted to the tapering signals from a Fed that is still on hold for some time, and inflation fundamentals globally and domestically are still weak,” Michael Pond, head of global inflation-linked research in New York at Barclays Plc, said in a phone interview on May 15. Treasuries are “attractive on a relative basis,” he said.

Gross domestic product may grow by 2 percent in 2013, down from 2.2 percent last year and the 2.7 percent posted in 2006 before recession and worst financial crisis since the Great depression, according to the median estimate of more than 80 economists surveyed by Bloomberg.

Growth globally is also depressed, with Japan forecast to expand 1.4 percent the euro region to contract 0.5 percent, according to separate Bloomberg surveys of economists.

Bond Futures: Auction Demand

Evidence of bond demand can also be seen in the government’s debt auctions. The Treasury’s $777 billion in bond sales this year have attracted an average of $3 in orders per dollar sold, making this the third-strongest year ever and compared with the record $3.15 in 2012, according to data released by the Treasury and compiled by Bloomberg.

“It doesn’t look like a great big bond market selloff is coming anytime soon,” Jack McIntyre, a money manager who oversees $44.5 billion for Brandywine Global Investment Management LLC in Philadelphia, said in a May 16 telephone interview. “At the end of the day growth is still mixed, inflation is fairly tame and the Fed’s foot is still on the easing pedal.”

Treasury returns are enhanced by the slowdown in inflation. The consumer price index in the U.S. fell 0.4 percent in April following a 0.2 percent decrease in March, the first back-to-back declines since 2008, according to the Labor Department.

Falling commodity prices are weighing on inflation. The Standard & Poor’s GSCI Total Return Index of 24 raw materials has declined 8.6 percent from this year’s peak in February.

For international investors, a rising dollar also has the potential to boost returns from Treasuries. For yen based investors, this year’s losses in U.S. bonds would translate into a gain of 18.7 percent after currency conversions.

IntercontinentalExchange Inc.’s U.S. Dollar Index (DXY) rose to 84.371 on May 17, the highest level since July 2010.

“A stronger dollar weighs on commodity prices and thus inflation,” said Richard Gilhooly, an interest-rate strategist at TD Securities Inc. in New York. “What is negative for inflation is a positive for Treasuries, especially given the U.S. real yield differential against everyone else.”

- Cordell Eddings in New York at Bloomberg.

natural gas futures climb

May 20th, 2013

Natural gas futures advanced for a second day in New York on forecasts for above-normal temperatures that would boost demand for the power-plant fuel.

Gas gained as much as 2.6 percent after Commodity Weather Group LLC in Bethesda, Maryland, predicted warmer-than-average weather in the Northeast and Great Lakes region through May 24. The high in New York on May 22 may be 82 degrees Fahrenheit (28 Celsius), 10 more than usual, according to AccuWeather Inc. in State College, Pennsylvania.

“The weather continues to confound the bears,” said Phil Flynn, a senior market analyst for Price Futures Group in Chicago. “Temperatures have gone from colder than normal to warmer than normal. There’s been an incredible amount of volatility with the weather situation.”

Natural gas for June delivery rose 7.4 cents, or 1.8 percent, to $4.129 per million British thermal units at 9:45 a.m. on the New York Mercantile Exchange. Trading volume was 7.4 percent below the 100-day average for the time of day. Prices have climbed 23 percent this year.

The discount of June to October futures, a measure of supply expectations for the summer, narrowed 0.4 cent to 7.8 cents.

June $4 puts were the most active options in electronic trading, dropping 2.7 cents to 3.2 cents per million Btu on volume of 190 at 1:15 a.m. Puts accounted for 59 percent of trading volume.

The futures jumped the most in three weeks on May 17 after the U.S. conditionally approved the Freeport LNG liquefied natural gas export project in Texas.

Natural Gas Futures: Hedge Funds

Hedge funds reduced bullish natural gas bets by the most in three months last week. Money managers cut net-long positions, or wagers on higher prices, by 3.7 percent in the seven days ended May 14, the biggest drop since Feb. 12, according to the Commodity Futures Trading Commission’s May 17 Commitments of Traders report.

The measure climbed last month to the highest level in records dating back to January 2010.

The high in Cleveland on May 22 may be 80 degrees Fahrenheit, 10 more than average, according to AccuWeather. Power generation accounts for 33 percent of U.S. gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.

The Freeport project was the second to receive approval from the Energy Department to send gas to countries that don’t have free-trade agreements with the U.S. The terminal would be able to export 1.4 billion cubic feet a day. The Freeport development, partly owned by ConocoPhillips (COP), Dow Chemical Co. (DOW) and Osaka Gas Co. (9532), must still win approval from the Federal Energy Regulatory Commission.

Natural Gas Futures: LNG Exports

In May 2011, the department conditionally approved Cheniere Energy Inc.’s Sabine Pass LNG Terminal in Louisiana for a rate of as much as 2.2 billion cubic feet a day. The government has weighed 20 applications for export terminals in recent months, which could ship the equivalent of 41 percent of U.S. total production this year, Energy Department data show.

The U.S. may export 6.5 billion cubic feet a day of natural gas from seven projects by mid-2016, Morgan Stanley said in an e-mailed report today.

Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $3.80 per million British thermal units this year, higher than the previous estimate of $3.52, the EIA said May 7 in its monthly Short-Term Energy Outlook. The average may slump to $3.77 in the third quarter before climbing to $3.92 during the final three months of the year.

Gas inventories totaled 1.964 trillion cubic feet in the week ended May 10, 4.1 percent below the five-year average and 26 percent less than last year’s level, the EIA’s weekly storage report showed on May 16.

- Christine Buurma in New York at Bloomberg.

s&p 500 futures advance

May 17th, 2013

S&P 500 Futures – U.S. stocks advanced, putting the Standard & Poor’s 500 Index on track for its fourth straight week of gains, as gauges for leading indicators and consumer sentiment advanced more than estimated.

Northrop Grumman Corp. climbed 3.8 percent after increasing its share-buyback program by $4 billion. Boeing Co. and JPMorgan Chase & Co. added added more than 2 percent to pace gains in the Dow Jones Industrial Average. (INDU) J.C. Penney Co. slid 3.7 percent after its first-quarter loss widened.

The S&P 500 (SPX) rose 0.5 percent to 1,658.59. at 11:55 a.m. in New York. The equity benchmark is heading for a 1.5 percent weekly gain. The Dow advanced 61.95 points, or 0.4 percent, to 15,295.17, a fresh record. Options contracts on stocks, exchange-traded funds and indexes expire today, leading investors to adjust their holdings of some securities. Trading of S&P 500 stocks was 3.4 percent higher than the 30-day average at this time of day.

“You’ve got the leading indicators helping the market today,” Thomas Nyheim, a Wilmington, Delaware-based fund manager for Christiana Trust, which oversees about $16 billion, said in a phone interview. “We’re seeing good signs for the economy, you’re getting this grinding, slow growth that just keeps coming out.”

The index of U.S. leading indicators climbed in April, a rebound from March that suggests the world’s largest economy may be poised for further expansion. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.6 percent last month after falling a revised 0.2 percent in March that was steeper than previously reported, the New York-based group said today

S&P 500 Futures: Consumer Sentiment

Consumer confidence rose in May to the highest level in almost six years as an advancing stock market and cheaper gas prices helped lift Americans’ outlook on the economy. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 83.7 in May from 76.4 the prior month, a report today showed.

The U.S. bull market has entered its fifth year. The S&P 500 has surged 145 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases from the Federal Reserve.

The rally pushed 193 stocks in the S&P 500, or 39 percent of the gauge, to their highest levels in at least 52 weeks on May 15, the most in Bloomberg data going back to 1993.

About 90 percent of stocks in the benchmark index traded above their average prices from the past 50 days as of yesterday, according to data compiled by Bloomberg, approaching the two-year high of 93 percent reached January.

S&P 500 Futures: Banks, Industrials

Financial and industrial companies increased 1 percent for the biggest gains among 10 groups in the S&P 500 today. JPMorgan Chase added 2 percent to $51.99, the most since June 2007.

Boeing, the world’s largest plane maker, rose 2.5 percent to $98.99, the highest since October 2007. United Technologies Corp., maker of Pratt & Whitney jet engines and Otis elevators, advanced 1.7 percent to a record $96.80.

Northrop Grumman climbed 3.8 percent to $82.01. The weapons maker said it will add $4 billion to an existing $1 billion share-repurchase program and retire 25 percent of its shares outstanding by 2015.

Automaker shares jumped 2.5 percent as a group, the most among 24 industries in the S&P 500. Ford Motor Co. added 3 percent to $15.08. European Union car sales rose in April for the first time since September 2011, the Brussels-based European Automobile Manufacturers’ Association said today.

S&P 500 Futures: Penney, Nordstrom

J.C. Penney dropped 3.7 percent to $18.09 after its first-quarter loss widened as the department-store chain works to rebound from former Chief Executive Officer Ron Johnson’s failed makeover. CEO Myron Ullman, who took the position back from Johnson last month, has been increasing promotions to revive sales while pursuing a $1.75 billion loan.

Nordstrom Inc. retreated 1.3 percent to $60.36 after the retailer posted first-quarter revenue that trailed analysts’ estimates and cut its sales forecast for the year.

Brocade Communications Inc. slumped 4.3 percent to $5.50 after the maker of network equipment said it expects third-quarter adjusted earnings of 11 cents to 13 cents a share, trailing the average forecast of 15 cents by analysts in a Bloomberg survey.

Autodesk Inc. tumbled 9.8 percent to $35.88 for the biggest decline in the S&P 500. The maker of engineering-design software said it sees full-year revenue growth of 3 percent, lower than its February forecast of 6 percent.

- Nikolaj Gammeltoft in New York and Namitha Jagadeesh in London at Bloomberg.

Natural gas futures remain

May 17th, 2013

Natural gas futures will trade below $4 per million British thermal units for the rest of the year, according to a KPMG LLP Global Energy Institute survey of U.S. energy executives.

The survey showed 73 percent forecast that the price will range from $3 to $4 in 2013. Gas for June delivery settled at $3.932 yesterday, down 12 percent from the 2013 high of $4.444 in intraday trading on May 1.

“Greater assurance of supply appears to be stabilizing commodity price environments and enabling large investments,” said Regina Mayor, Houston-based oil and gas sector leader for KPMG. “At the same time, marginal production remains shut in which could quickly be reinstated.”

Natural gas stockpiles rose 99 billion cubic feet last week to 1.964 trillion, the U.S. Energy Information Administration said yesterday. A deficit to the five-year average narrowed to 4.1 percent from 5 percent the previous week.

About 62 percent of the executives surveyed said the U.S. can attain energy independence by 2030, up from 52 percent last year. About a quarter said independence is possible by 2020.

The U.S. produced 84 percent of its own energy last year, the most since 1991, according to data from the EIA. U.S. oil production reached a 23-year high of 7.37 million barrels a day in the week ended May 3.

- Dan Murtaugh in Houston at Bloomberg.

soybean futures rise

May 17th, 2013

Soybean futures rose in Chicago, set for the biggest weekly gain since January, on signs of sustained Chinese demand and on speculation a pickup in U.S. corn planting may leave less acreage for sowing the oilseed.

China, the biggest soybean importer, purchased 79 percent of 346,634 metric tons sold by U.S. exporters in the week ended May 9 for delivery in the year beginning Sept. 1, the Department of Agriculture reported yesterday. That takes total U.S. sales for the next marketing year to 8.86 million tons before most farmers even planted their crops, USDA data show.

“Sustained U.S. soybean export sales to China supported soybean values,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a report today.

Soybeans for delivery in July added 0.7 percent to $14.37 a bushel at 4:54 a.m. on the Chicago Board of Trade. The weekly increase of 2.7 percent would be the biggest since the week ended Jan. 18.

Corn for delivery in July gained 0.4 percent to $6.4425 a bushel on volume that was 51 percent below the 100-day average for that time of day. Prices are up 1.3 percent this week.

U.S. corn is now estimated to be about 60 percent planted, Paris-based farm adviser Agritel wrote in an online report today. As sowing of the grain progresses, there’s less risk of acres being shifted to soybeans, the company said.

“U.S. farmers may plant more corn and fewer soybeans than was previously expected,” Arnaud Saulais, a broker at Starsupply Commodity Brokers in Nyon, Switzerland, wrote in a note to clients today.

About 6 percent of the U.S. soybean crop was planted as of May 12, behind last year’s pace of 43 percent and an average of 24 percent in the previous five years, according to the USDA.

Wheat for delivery in July slipped 0.3 percent to $6.855 a bushel, set for a 2.7 percent loss this week. Milling wheat for delivery in November traded on NYSE Liffe in Paris rose 0.2 percent to 209 euros ($269) a ton.

- Luzi Ann Javier in Singapore and Rudy Ruitenberg in Paris at Bloomberg.

gold futures fall

May 17th, 2013

Gold bears are dominant again after prices resumed their slump and billionaire George Soros joined investors selling holdings in exchange-traded products that have retreated to a two-year low.

Seventeen analysts surveyed by Bloomberg expect prices to fall next week, with eight bullish and three neutral, the highest proportion of bears in two weeks. The analysts were divided a week ago after gold rebounded as much as 13 percent from the two-year low of $1,321.95 an ounce on April 16. ETP holdings slid 16 percent to 2,207.1 metric tons this year, the lowest since July 2011, data compiled by Bloomberg show.

Prices that rallied as much as sevenfold in the past 12 years entered a bear market last month after some investors lost faith in gold as a store of value and equities rallied on mounting confidence the U.S. economy is improving. The slump spurred a surge in demand around the world, with coin purchases from the U.S. Mint rising to a three-year high in April. This month’s sales are on course to be 65 percent lower and global ETP holdings increased on just one day in the past six weeks.

“The momentum has slowed significantly,” said Jeremy Baker, a senior commodities strategist who oversees about $800 million of assets at Harcourt Investment Consulting AG in Zurich and who forecasts prices may drop as low as $1,200 in six months. “The safe haven has definitely lost its gleam. We are in a declining phase here.”

Gold Futures: Standard & Poor’s

The metal fell 18 percent to $1,379.53 in London this year and is trading 28 percent below its September 2011 record. Gold is the second-worst performer this year in the Standard & Poor’s GSCI gauge of 24 commodities, after silver. The S&P GSCI dropped 2.4 percent since the start of January and the MSCI All-Country World Index (MXWD) of equities rose 11 percent. Treasuries returned 0.1 percent, a Bank of America Corp. index shows.

Demand in India and China, the two biggest gold consumers, surged after prices slumped. The U.S. Mint, which said April 23 it ran out of its smallest gold coins, sold 42,000 ounces of American Eagle bullion coins so far in May, compared with 209,500 ounces in April, its website shows. Prices may fall to $1,100 in a year as the metal “is going to get crushed,” Ric Deverell, head of commodities research at Credit Suisse Group AG, told reporters in London yesterday.

Bullion fell in six of the past seven months as the S&P 500 Index of U.S. stocks rose to a record, the dollar reached a nine-month high against six major currencies and unprecedented money printing by the world’s central banks failed to spur inflation.Expectations (USGGBE10) for consumer price increases, as measured by the break-even rate for 10-year Treasury Inflation Protected Securities, fell 8.4 percent this year, reaching an eight-month low yesterday.

Gold Futures: Goldman Sachs

Gold demand fell 13 percent to the lowest in three years in the first quarter as record ETP sales outweighed an increase in buying from China and India, the London-based World Gold Council said in a report yesterday. A further drop in ETP holdings will probably mean lower prices, Goldman Sachs Group Inc. analyst Jeffrey Currie wrote in a report dated May 14.

Soros Fund Management LLC cut its stake in the SPDR Gold Trust, the biggest gold ETP, by 12 percent to 530,900 shares now valued at about $71.1 million in the first quarter, a Securities and Exchange Commission filing showed May 15. The 82-year-old reduced his holding by 55 percent in the fourth quarter. Funds run by Northern Trust Corp. and BlackRock Inc. cut their stakes by more than half in the latest quarter, filings showed.

Gold Futures: Biggest Holder

Schroder Investment Management Group bought 2.1 million shares in the SPDR (GLD) fund, a filing showed. John Paulson, the largest investor in the product, maintained a stake that lost about $165 million in the first quarter. The billionaire is standing by the metal even after his Gold Fund saw declines of about 47 percent this year, two people familiar with the matter said this month. Global gold ETP holdings tracked by Bloomberg are valued at $98.1 billion, from $147.7 billion in October.

The metal gained 57 percent since the end of 2008 as the Federal Reserve was joined by central banks in Europe and Japan in seeking to boost economic growth by buying bonds. Bank of America says policymakers cut interest rates more than 500 times since June 2007. Prices may rebound to average $1,650 in the fourth quarter, Commerzbank AG said in a May 7 report.

“When the fundamentals are the same but the price lower, it strikes me that gold is on sale,” said Adrian Day, who manages about $140 million of assets as the president of Adrian Day Asset Management in Annapolis, Maryland.

Gold Futures: Central Banks

Central banks may help boost demand for bullion as they expand reserves. Nations from Brazil to Russia added 534.6 tons last year, the most since 1964, and may buy 450 to 550 tons this year, according to the World Gold Council. TD Securities Inc. estimates consumers will sell about 1,550 tons of used gold this year, the least since 2008, curbing a source that typically accounts for about one in every three ounces of global supply.

Almost two-thirds of the likely drop in ETP holdings has probably already happened because most institutional investors have made their sales, Deutsche Bank AG said in a May 14 report. Hedge funds and other managers cut bets on higher prices on Comex by as much as 80 percent since October, U.S. Commodity Futures Trading data show.

In other commodities, six of nine people surveyed expect raw sugar to fall next week and three were neutral. The commodity slid 13 percent to 16.95 cents a pound on ICE Futures U.S. in New York this year.

Lower Corn

Fourteen of 29 surveyed anticipate lower corn prices next week and nine said the grain will gain, while 15 said soybeans will fall and eight expect higher prices. Fifteen traders predicted declines in wheat and seven were bullish. Corn slid 7.7 percent to $6.4425 a bushel this year in Chicago as soybeans added 1.9 percent to $14.3675 a bushel. Wheat is down 12 percent at $6.87 a bushel.

Eight traders and analysts surveyed expect copper to drop next week, six were bullish and two were neutral. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, slipped 7.9 percent to $7,301.50 a ton since the start of January.

While the S&P gauge of raw materials fell 7.4 percent since Feb. 14, it’s still above the five-year average. More than half of those contacted in a May 14 survey of investors, analysts and traders who are Bloomberg subscribers said the U.S. will be among the markets offering the best returns over the next year.

“There seems to be a view that growth is picking up in U.S. but inflation is not picking up,” said John Toohey, the San Antonio, Texas-based vice president of equity investments at USAA Investments, which manages about $54 billion of assets. “That is the worst for gold. Prices will remain under pressure unless we see something that leads people to think there is inflation in the system or there is going to be more monetary easing or you see a large institutional buyer of gold.”

- Nicholas Larkin in London at Bloomberg.