Written by Sumit Roy  |

July 20, 2012

Morning Call: NatGas Holds Above $3, Gold Falls As Spanish Yields Spike, Soybeans Hit New Record

Details

Commodities are mostly lower today.

Renewed eurozone worries are pushing commodities down, but soybeans are at a fresh record high on the back of persistent supply fears. There are no major economic data releases scheduled for today.

In Europe, Spanish interest rates jumped back near record highs amid concerns about the health of the country's banking system. The Spanish 10-year bond yield was last trading up by 14 basis points to 7.15 percent—not far from the 7.29 percent record set last month.

The U.S. Dollar Index rose 0.46 percent to 83.27 thanks to safe-haven buying.

• The dollar's strength is pushing gold lower today. The yellow metal was last trading down by $6.40, or 0.4 percent, to $1575.03, while silver shed $0.33, or 1.19 percent, to $26.92.
  
  Platinum fell by $8.60, or 0.61 percent, to $1409.90 and palladium lost $6.25, or 1.07 percent, to $577.25.
  
  "Given the collapse of the rupee, gold prices in India are still close to record highs, which is killing the jewelry market at the moment," Citigroup analyst David Wilson said. "Physical investor demand, when you look at ETFs, is not positive, so you would need speculative demand to be making up the difference, and it's not. That's related to the issue of growing skepticism over whether there will be U.S. QE."
  Gold holds near $1580 as soft euro, stocks weigh
  
  
• Crude oil prices are taking a breather after rallying for much of the week. Brent was last trading down by $1.62, or 1.5 percent, to $106.18, while WTI fell by $1.53, or 1.65 percent, to $91.13.
  
  "After seven sessions of gains it's only natural to have some pre-weekend profit-taking," said Andrey Kryuchenkov, an analyst at VTB Capital. "It's the demand side that's especially concerning, and sustained gains past $108 in London may be hard to justify. Geopolitics will still support, with matters getting out of hand in Syria, and more hostile rhetoric between the U.S. and Iran."
  Oil Drops From Nine-Week High on Signs Demand May Weaken
  
  
• Natural gas is holding above $3/mmbtu amid the ongoing heat wave across the United States. As we outlined in a report on Thursday, we expect the uptrend to continue.
  
  Gas was last trading up by $0.03, or 0.83 percent, to $3.02.
  Natural Gas Will Break Above $3, But Storage Surplus Decline Will Slow
  
  
• While corn and wheat are taking a pause today after surging in recent sessions, soybeans is at yet another record high. The grain was last trading up by $0.28, or 1.63 percent, to $17.62 after reaching as high has $17.77.
  
  Corn is unchanged at $8.08 and wheat is down by $0.05, or 0.56 percent, to $9.29.
  
  "There's not much reason for us to see a slowdown in the price rally," said Erin FitzPatrick, an analyst at Rabobank. "The size of the 2012-13 harvest is shrinking every day that we don't get rain or a cooling off in the U.S. It's fundamentally still bullish, even though we're at these record prices."
  Crop Traders Extend Bullish Streak on U.S. Drought
  
  
• Copper is giving back all of the prior session's gains and then some on technical selling and economic concerns. The industrial metal was last trading down by $0.09, or 2.42 percent, to $3.45/lb on Comex.
  
  "We can't rule out the possibility of Beijing rolling out more monetary easing or investment policies soon, which will push base metals prices higher," said Wan Ling, an analyst with CRU Group.
  LME copper edges off two-week top on China property warning
  
  

What to Watch For: