Issuu on Google+

Table 1: Commodity Markets by Sector with Highs / Lows since previous years

Sector

New Highs Since

Coffee

Softs

2012

Feeder Cattle

Meats

New High

New Lows Since

Live Cattle

Meats

New High

Palladium

Metals

2001

Cocoa

Softs

2011

Orange Juice

Softs

2012

Gold

Metals

Wheat

Grains

Lean Hogs

Meats

Corn

Grains

2009

Lumber

Softs

2013

Sugar

Softs

2010

Platinum

Metals

2009

Oats

Grains

2012

Soybean Meal

Grains

2012

Copper

Metals

2009

Soybean Oil

Grains

2009

Silver

Metals

2010

Soybeans

Grains

2010

Rough Rice

Grains

2010

Natural Gas

Energy

2012

Cotton

Softs

2009

Heating Oil

Energy

2009

Crude Oil

Energy

2009

2013 2010 2010

New High

2013

Source: barchart.com, finviz.com

natural gas after the U.S.1 Russia’s loss of energy revenue helped to sustain the devaluation of the ruble. This in turn influenced the recently reported 11.37% Russian CPI rate of inflation2 and an increase of the Russian interest rates to 17% from 10.5% in December and then Russia cut rates to 15% on Jan 30th 2016.3 Some OPEC countries are willing to accept a short-term decline in Oil prices, if it will damage the U.S. shale oil industry. June 2006 U.S. crude oil imports peaked at 10.8 million barrels per day on a four week average. The four week average as of December 26, 2014 was 7.5 million barrels per day equating to a 31% reduction of imports.4 The U.S. four

week average of production bottomed at 3.9 million barrels per day in Oct 2005. As of December 26, 2014, the four week average crude oil production in the U.S. was 9.1 million barrels per day. This is an increase of 33% U.S. oil production since 2005.5 As the number one consumer of oil, the U.S. increased production and decreased imports in recent years, leaving a potential glut of the world oil supply. Plus the rallying dollar has made crude oil more expensive around the world. Falling oil prices are good for consumers of petroleum based products, but may hurt producers of the product. Can the reduction of oil prices be both good and bad for the U.S.?

www.stocknewsnow.com • www.snnwire.com • www.MicroCapReview.com

Softs (Coffee, Cocoa, Cotton, Orange Juice, Sugar, Lumber): Rallying markets included coffee, cocoa, orange juice. Declining markets include: Lumber, sugar and cotton. These markets originate from different parts of the world and may have various reasons for moving higher or lower. Coffee: An important factor for coffee to rally in 2014 to highs not seen since 2012 was due to Brazil’s low amount of rain. Brazil is the largest producer of coffee and the largest producer of Arabica beans, thus the low rain factored heavily into coffee prices. (Click here for more information on coffee). Cocoa: Demand for cocoa has outstripped the supply for the last few years. Increased weather concerns have also played into the greater uncertainty of the market. Many cocoa producing countries are the same countries with the highest ebola outbreak in 2014, thus causing production scares, uncertainty and increased pricing. Both production and consumption have increased, but production has increased and decreased over the past decade while consumption has been on a steady upward climb. According to the International Cocoa Organization (ICCO), the estimated ratio of stocks to consumption for the 2013/2014 year has decreased to 38.9, the second lowest since the 2004/2005 crop year.6

Meats Feeder cattle, live cattle and lean hogs all made new highs in 2014. The cost for a good steak was climbing in 2014. There were a few factors for the higher cattle prices in 2014. 1) U.S. cattle inventory reached new lows. According to the USDA, the inventory is the lowest since they began mid-year inventory reporting in 1973.7 2) Yields of feed grain increased and prices fell, allowing cattle producers to hold onto cattle for a longer period of time. 3) As prices are increasing producers are increasing the weight of cattle.8 MicroCap Review Magazine

77


MicroCap Review Winter/Spring 2015