Market Highlights 10th Jan 2008

Spotlight: Wheat fell on speculation of increased plantings. Copper fell on concern of an economic slump. Oil fell after the weekly energy report showed that distillate and gasoline stockpiles increased last week. Gold rose on speculation of a weakening dollar.

Energy: Crude oil fell after an Energy Department report showed that U.S. fuel stockpiles surged last week as refineries bolstered operating rates. Gasoline inventories rose 5.22 million barrels to 213.1 million barrels, the Energy Department said yesterday, the biggest gain since December 2006 and three-times the increase forecast by analysts in a Bloomberg News survey. Crude oil supplies in the world's largest energy consumer fell 6.74 million barrels to 282.8 million on Jan. 4, having shed 31.8 million barrels in the past eight weeks, the report showed. Supplies fell as refiners increased operating rates to 91.3 percent of their plant capacity, the highest since August. Distillate fuel stockpiles, including heating oil and diesel, rose 1.52 million barrels to 128.7 million.

Agriculture: Wheat fell, erasing earlier gains, as hedge-fund and index-fund managers bet corn and soybeans will outperform the grain this year after farmers sowed more wheat to capitalize on higher prices. About 48.5 million acres of winter wheat were planted from September through November, as prices rose toward a record in December, according to a Bloomberg survey of analysts and traders. That's almost an 8 percent increase from the previous year and the most in 12 years.
Coffee output in Brazil, the world's biggest producer and exporter of the commodity, will fall short of demand this year, driving up prices, a research agency said. Domestic and overseas demand for Brazilian coffee will likely reach 46 million bags in 2008, exceeding estimated output of 41.2 million to 44.1 million bags, the University of Sao Paulo's agricultural commodities research agency, known as Cepea,

Precious Metals: Gold rose on speculation the Federal Reserve will continue to cut interest rates, weakening the dollar and boosting the investment appeal of the precious metal. Interest-rate futures show a 78 percent chance the Fed will lower the overnight lending rate 0.5 percentage point to 3.75 percent by Jan. 30, compared with a 24 percent chance a week ago.

Industrial Metals: Copper declined from a two-month high on renewed concern the U.S. economy will slump, slowing global growth and curbing metals demand. The U.S. is probably slipping into a recession, Goldman Sachs Group Inc. said. Global economic growth will slow for a second straight year in 2008, the World Bank said.

(Source: Bloomberg)
(Source: Bloomberg)