Precious Metals: December gold closed at $1,622.30 per ounce, up $5.00 on the attraction for precious metals after recent sharp declines. While the equity market declines have in the past led to transfer of funds to perceived safe havens such as treasuries and gold, the sharp gains in gold over the past few months did not attract the "safe haven" seekers as it has in the past because of those gains. The decline from the intra-day high of $1,900 to the low of around $1,609 attracted buyers on Friday but of no consequence to the loss. We have suggested the sidelines and continue to do so. Decemjber silver closed at $29.98 per ounce down 54.2c to its worst monthly performance in early 30 years. January platimum closed at $1525.10, down $7.80 while December palladium lost $10.00 to close at $613.60. Both white metals are considered quasi industrial commodities tied to Auto manufacturing and oil refining. With reduced demand in these areas, prices remain under pressure. We prefer the sidelines here as well.
Grains and Oilseeds: December corn closed down the permissible daily limit of 40c to $5.92 ½, losing 6.32%. The USDA reported a supply increase 20% higher than analysts projections and that prompted massive long liquidation in corn. Corn use declined 2.3% in the three months ending August 31st from the year earlier period. Expectation for decline in demand for corn use in animal feed, fuel through the conversion to ethanol, and food added to the negativity. We had suggested the long side of corn and are now reconsidering our position. We will keep our clients advised. December wheat fell by 45c per bushel to close at $6.09 ¼ in a general selling "spree" in grains in line also with the selloff in equities. Wheat has lost 23% in September, the sharpest monthly decline since March of 1974. November soybeans lost 51c per bushel, or 4.1% to $11.79 after trading as low as $11.75. Beans have declined 19% in September, it’s biggest monthly loss since September of 2008. Larger than expected corn and wheat supplies indicating much less grain was being fed to animals and that trend my continue. On October 12th a new USDA report will be released and until then we would limit positions.
Cattle & Hog report: December cattle closed at $1.2265 per pound, up 1.4c on shortcovering after recent price declines. December hogs closed at 87.8c per pound up 1.825c. We have not been watching these markets closely this week.
Coffee, Cocoa and Sugar: December coffee closed at $2.2895, at 2.2c on continued long liquidation. December cocoa closed at $2605 per tonne, down $89 on long liquidation tied to the U.S. market decline. October sugar closed at 26.34c per pound down 51 points. We have not watched these markets as our concentration was tied to financials and the global financial crisis.
Cotton: December cotton closed at $1.0019 per pound down 2.03c or 1.99%. We recently suggested buying cotton basis the December contract at or below $1.00 per pound after its recent sharp price declines. Our opinion remains unchanged.
John L. Caiazzo