Commodities Correct after recent Strong Rallies

By: Emanuel_Balarie

Grains
Corn fell for the fourth straight day, with the July contract settling 8.25 cents lower at $5.99 a bushel. Improving planting conditions in the U.S. Midwest with forecasts for no major storms before May 21st will accelerate plantings that have experienced extended delays due to wet weather.

Soybeans held firm today after gaining nearly 3-percent yesterday. The July contract settled unchanged at $13.79 ½ a bushel. New crop futures closed higher with the November contract gaining 7 1/4 cents at $13.33 a bushel. Favorable corn planting conditions, strong demand, and a farmer strike in Argentina sent soybeans steady to higher on the session.

Favorable corn planting conditions in the Midwest are lowering the probability that farmers would be switching out of some corn acres into soybeans.

Farmers in Argentina will meet tomorrow to decide whether to extend their protest against higher export taxes. Soybean processing in Argentina declined 50 percent in March as farmers withheld supplies during a three-week strike.

Rice closed limit-down for the second straight day, with the July contract setting 75 cents lower at $21.49 per hundredweight. The U.S. Department of Agriculture's weekly crop progress report Monday showed U.S. rice plantings were 74-percent as of Sunday, up from 61-percent last week. Increasing plantings is seen as bearish to prices.

Wheat fell to a 6-month low, with the July contract settling 31 3/4 cents lower at $7.64 per bushel. Speculation that importers are waiting until next months harvest in the U.S. before making new purchases, on expectations that prices will come down on a huge U.S. crop.

July oats fell 3 1/2 cents at $407 1/2 a bushel, July soy-meal settled $1.50 higher at $351.70 per short ton, and July soy-oil settled 60 points lower at 61.50 cents per pound.

Softs

Cocoa closed 1-percent higher, with the July contract settling $25 higher at $2,649 per metric ton. Rising demand for chocolate in China and India amid tight supplies was noted for the bullish tone in the cocoa market today.

Orange juice settled modestly lower today, with the July contract settling 70 points lower at $1.1195 a pound. Spill-over weakness from broad based commodity selling, combined with a weather premium building before hurricane season sent orange modestly higher.

July cotton settled 91 points lower at 69.99 cents a pound, July coffee settled 45 points higher at $1.3770 a pound and July sugar settled 11 points lower at 11.05 cents a pound.

Meats

Cattle futures closed modestly higher toady, with August feeder cattle settling 10 points higher at 100.22 cents a pound. Higher mid-day boxed beef quotes gave the bulls a reason to run higher. August feeder cattle settled 10 points higher at 112.75 cents a pound.

The U.S. Department of Agriculture's mid-day boxed beef wire reported choice cuts gained $0.59 per hundredweight, while select items were $0.34 per hundredweight higher.

Hog futures closed higher today, with June lean hogs settling 50 points higher at 78.17 cents a pound. Strong demand and rising cash prices continue to send hogs higher. July pork bellies settled 112 points higher at 81.55 cents a pound.

Energy

Crude oil fell 1.3-percent today, with the June contract settling $1.58 lower at $124.22 a barrel. Strength in the U.S. dollar and a report from the EIA stating that demand for oil will grow less than expected sent crude lower on the session.

The US EIA reported that U.S. crude oil inventories rose by 200,000 barrels in the week ending May 9. The build in inventories was less than analysts' expectations of a gain of 2.25 million barrels.

The EIA also reported that US gasoline stockpiles fell by 1.7 million barrels, which was larger than analysts' consensus forecasts for a drop of 200,000 barrels. In addition, the agency forecasted that demand will grow by 1.03 million barrels a day, 230,000 barrels a day less than the previous forecast.

Natural gas climbed to the highest level in 28-months, with the June contract settling 18 cents higher at $11.60 per million British thermal units. A delay in the restart of a platform producing 900,000 cubic feet per day in the Gulf of Mexico was noted for much of today's gain.

June RBOB gasoline settled 2 cents lower at $3.18 a gallon and June heating oil settled 8 cents lower at $3.62 a gallon.

Metals

Gold closed modestly lower today, with the June contract settling $3.10 lower at $866.50 an ounce. Strength in the U.S. dollar, and falling energy prices reduces the appeal of precious metals as a hedge against inflation.

July silver settled 22 cents lower at $16.61 an ounce, July platinum settled $34.30 lower at $2,039.10 an ounce, June palladium settled $3.15 lower at $437.70 an ounce, and July copper settled 5 cents lower at $3.68 a pound.

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By Emanuel Balarie

http://www.commoditynewscenter.com

Emanuel Balarie is a highly regarded advisor who advises high net worth individuals and institutions on the commodity markets and managed futures investments. Mr. Balarie’s research has been published internationally and has appeared recently in The Wall Street Journal , Reuters, and Money Week , as well as on CNBC and MSNBC.

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