Global Futures Weekly Recap
Weekly Recap of the Metals, Energy, Grains, Meats, and Softs Markets
Gold closed 7.3-percent lower on the week, with the December contract settling at $730.30 an ounce. Golds appeal as a flight to safety or as a hedge against future inflationary pressure from liquidity injections could not support gold from massive fund liquidations.
Gold is often seen as safe haven, traditionally sending prices higher during periods of economic uncertainty, but its recent fall has defied conventional wisdom. Fund liquidation, falling energy prices, and a dramatic rise of the U.S. dollar are seen as the major drivers for the drop in gold prices.
Copper futures fell 23-percent this week, with the December contract settling 50 cents lower at $1.6865 a pound. Increasing concerns the world is heading into a long recession have caused copper prices to nose-dive 39-percent in October. Copper fell to the lowest price since September 2005.
December silver fell 0.4-percent on the week settling at $9.295 an ounce, December platinum collapsed by nearly 9-percent settling the week at $802.30 an ounce, and December palladium settled nearly unchanged at $174.50 an ounce.
Crude oil fell for the fourth-consecutive week, with the December contract settling over 11-percent lower on the week at $64.15 a barrel. Production cuts from OPEC did little to support oil prices as speculation the weakening global economy will reduce consumption of petroleum products, combined with the rapidly climbing value of the U.S. dollar continues to send crude lower.
The 13 members of the Organization of Petroleum Exporting Countries decided to lower supply by 1.5 million barrels a day from November, oil ministers said at the end of a meeting at the group's Vienna's headquarters. The cut was seen as priced into the market with analysts anticipating a cut of 1 to 1.5 million barrels a day.
Saudi Arabia, the group's largest producer, will reduce its production target by 466,000 barrels a day. Iran, the second-biggest, will reduce output by 199,000 barrels, OPEC said in a statement. Kuwait will reduce production by 132,000 barrels and the United Arab Emirates will cut output by 134,000 barrels.
Grain traders had there eyes on the crumbling equity markets, strength in the U.S. dollar, and purging hedge funds. Corn and soybeans continued their free-fall by 8-percent on the week, with wheat futures sliding a more modest 3.5-percent.
With much of the crop out of the ground, the fundamental picture is shifted to export data and whether or not the global economic slowdown will continue to erode demand.
The U.S. Department of Agriculture reported corn export sales for the week ended Oct. 16 were 789,600 metric tons, 19-percent lower than the prior week. Corn exports were at high end of estimates, which ranged from 500,000 to 900,000 metric tons. December corn settled the week 30 1/4 cents lower at $3.72 3/4 a bushel.
Weekly U.S. export sales of wheat for the week ended Oct. 16, came in at 383,900 tons, 19-percent lower than the previous week. Wheat exports were at the low end of estimates, which ranged from 300,000 to 550,000 metric tons. December wheat fell 50 cents on the week at $5.16 1/4 a bushel.
The U.S. Department of Agriculture reported total weekly soybean export sales for the week ended Oct. 16 were 784,100 metric tons, 24-percent lower than last week. Analysts had forecast sales between 600,000 and 900,000 metric tons. November soybeans finished the week 30 cents lower at $8.63 3/4 a bushel.
Cocoa fell 7-percent on the week, with the December contract falling $145 at $1,977 a metric ton. Strength in the U.S. dollar and speculation the consumer will pull in their spending on luxury items, like chocolate, was noted for the decline.
Southwestern Nigerian farmers have suspended their cocoa harvest, while blocking roads in an effort to push prices higher as profit margins dwindle. Farmers are hoarding their crop in the hopes that prices will return to higher levels.
Sugar, which is used in the production of ethanol, fell in the wake of lower oil prices. March sugar settled the week .82 cent lower at 10.76 cents a pound. December coffee settled the week 7 cents lower at $1.0865 a pound and November orange juice settling 2.9 cents lower at 80.65 cents a pound.
Cattle settled the week 5-percent lower, with December live cattle settling less than 4.7 cents lower at 87.85 cents a pound. Concerns that cash strapped consumers will rotate into cheaper proteins has sent cattle futures 18-percent lower over the past 10-weeks. November feeder cattle settled the week 4.82 cents lower at 93.825 cents a pound.
Hog futures closed the week mixed, with December lean hogs gaining 2.2 cents at 58.50 cents a pound. Fund liquidation continues to weigh on prices. February pork bellies fell 3.25 cents on the week, at 84.325 cents a pound.
U.S. federally inspected hog slaughter this week dipped below the year-ago figure for the first time since May 2007. The U.S. Department of Agriculture estimated the week's total at 2.296 million head, compared with 2.314 million a year ago.