American markets tumbled in Thursday trading as the second day of Fed Chairman Ben Bernanke’s testimony weighed on U.S. equities. In the report, Bernanke seemed to quell any notion of stimulus in the near future, suggesting that the economic situation will have to deteriorate further if another round of QE is in the cards. Industrial goods, services, and tech were all big losers on the day while health care and consumer companies managed to rise above the overall market to close the session. In international markets, Asia started the day mixed as Chinese and Indian benchmarks rose, but Australia and Japan both fell, leaving the region pretty much flat overall. European markets, however, were down across the board as pretty much all the benchmarks on the continent lost about 1% in the day’s trading.
Meanwhile the U.S. dollar managed to rise on the day against many of its major rivals as a lower likelihood of QE more than made up for more worries about the debt ceiling talks. The U.S. dollar index rose by 0.4% on the day, boosted by strength against the euro and the yen although weakness was seen against the safe haven franc as well. Unsurprisingly, this dollar strength led by the Bernanke comments created significant headwinds for many commodities pushing most resources lower on the day. Three of the four major commodity indexes sank on the day; only the S&P GSCI Index was able to stay in the green, rising by 8.24 points to finish just below the 700 mark.
One of the biggest winners in the commodity world was in the orange juice market as futures for the breakfast staple gained just under 2.2% in the session. Today’s gains came thanks to continued worries over the weather in the major growing regions of Florida as well as low inventory levels in both the U.S. state and Brazil. Unusually dry weather in the spring has coupled with exceptionally warm temperatures across much of Florida to damage parts of the crucial crop. In fact, a recent report by the USDA lowered its outlook for the state’s crop by 0.7% pushing total estimated supplies down to 139 million boxes. Thanks to this as well as predictions of more inclement weather, some are looking for orange juice futures to continue their run for the rest of the year. “Retail prices will be hitting records by winter time,” Jimmy Tintle, an analyst at Transworld Futures said an interview for Bloomberg. “We’ll still have a rally into next year and production will be down.” Thanks to this, orange juice futures were up 4.15 to 196 for near month delivery and up 2.45 to 182.32 for November delivery, adding to the recent gains of the crop.
One of the biggest losers in the commodity world was in the sugar market as futures for the sweet commodity declined by just over 4% on the day. Today’s losses were largely due to a crop report from the major producer of the crop, Brazil. The sugar industry group Unica slashed its estimate for the main producing region by much less than initially expected; estimates called for at least a three million ton reduction while the actual came in at just 2.2 million tons. “The production estimates show the situation is not as bad as people were expecting,” Jack Scoville said in a telephone interview from Chicago. “Production in other parts of the world seems strong. Bears keep pointing to increased supplies around the world as a reason to see futures move lower.” As a result, sugar futures experienced their biggest one day decline in two months as contracts for October delivery declined to the 29 cent mark while March 2012 delivery saw its prices fall by a cent to just above the 28 cent level.
Disclosure: No positions at time of writing.