Written by Sumit Roy  |

May 10, 2012

Market Wrap: NatGas Rallies After Bullish Inventory Report; Corn Plunges On Stocks Forecasts, Gold Near $1600

Details

Volatility in commodity markets continued, but prices ended the session in mixed fashion.

Commodities traded mixed today, while stocks rose modestly, as markets took a breather after intense selling pressure in recent sessions. The grain complex witnessed volatility after the USDA released its latest supply-and-demand forecasts; corn fell, while soybeans rose.

In economic news, China's trade balance surplus for April totaled $18.43 billion, double the expectation of $9.9 billion.

Imports and exports came in weaker than analysts had estimated. Imports in the month grew by only 0.3 percent year-over-year in April, well below the 10.9 percent anticipated growth. Exports grew by 4.9 percent, below the expected 8.5 percent.

Meanwhile in the U.S., the number of people filing for unemployment claims held steady at 368K last week.

• Precious metals traded narrowly mixed, as the intense selling pressure of recent sessions ebbed a bit. Despite the sizable correction in prices over the past week, analysts at Goldman Sachs still see much higher values by the end of the year.
  
  "The case for higher gold prices remains in place," said Goldman, which sees the yellow metal hitting $1840 by the end of the year. "U.S. economic and employment data has now disappointed for several weeks, European election results point to further stress in the euro area, while anecdotal data suggests that physical gold demand remains resilient."
  
  Gold was last trading up by $6.90, or 0.43 percent, to $1596.30/oz, while silver lost $0.07, or 0.24 percent, to $29.20. Platinum fell by $8, or 0.54 percent, to $1487 and palladium edged up by $1, or 0.16 percent, to $613.
  
  
• Crude oil prices were mixed today, as Brent edged lower by $0.49, or 0.43 percent, to $112.71, while WTI added $0.15, or 0.15 percent, to $96.96.
  
  In the short term, prices may take their cues from movements in the broader financial markets, while in the medium term, they may continue to fall amid surging production from OPEC and the United States.
  
  
• Natural gas prices rose slightly after the EIA reported that operators injected 30 bcf into natural gas storage last week, a bit less than the 32 bcf that was anticipated.
  
  "It means that things have turned, as far as the storage situation, and as the summer moves on we are going to begin to eat into the surplus," said Brad Florer, a trader at Kottke Associates. "The bounce definitely has teeth and there seem to be reasons for it instead of some short-covering."
  
  Gas was last trading at $2.49/mmbtu, a gain of $0.02, or 0.81 percent, on the session.
  
  
• The latest supply-and-demand data from the USDA offered a mixed bag. Corn stocks at the end of next season may rise to 1.881 billion bushels, the department projected—the highest level in seven years, while soybeans stocks may fall to four-year lows.
  
  "Corn is trading a whole different set of fundamentals than soybeans. The global corn crop is huge and the soybean crop is going to get tight next year, there's no doubt about that," said Karl Setzer, analyst at MaxYield Cooperative.
  
  Corn was last trading lower by $0.15, or 2.3 percent, to $6.26/bushel, while soybeans added $0.22, or 1.57 percent, to $14.50 and wheat gained $0.02, or 0.04 percent, to $5.94.
  
  
• Copper rose by $0.03, or 0.72 percent, to $3.69/lb on Comex.
  
  "Copper is taking a breather after the heavy shake-up across markets we have seen in the past few days, but there is still a lot of uncertainty out there. There are concerns about China, about the outlook for Spain, Greece and the eurozone," said Credit Suisse analyst Stefan Graber.