Today saw equities return to their winning ways, as positive data from around the country pushed major indexes higher, with the S&P 500 tacking on 14 more points in today’s trading session. A healthy jobs report pointed towards more hiring around the nation, and hopefully to a stronger recovery, as the process has been lagging thus far. The commodity world saw yet another strong day as the majority of individual contracts saw gains on good data and a further weakening U.S. dollar. The UBS Bloomberg CMCI index gained 34.5 points along with the RJ/CRB Commodity benchmark which jumped 6 points on the strong commodity performance for the day.
One of the biggest commodity winners of the session was sugar, as the benchmark sugar no. 11 contracts spiked a healthy 6.7% on the day, the biggest jump the sweet commodity has seen since October of 2010. The most likely culprit for the jump came from one of the world’s largest sugar producers, Brazil. An industry group reported that the sugar output of Center South Brazil is expected to drop as much as 1 million metric tons this season. As analysts from around the world have grown weary of the potential sugar output, and a possible shortage, prices skyrocketed. “Persistently weak crushing data out of Center South Brazil has supported prices as the market begins to price in a full-year cane crush below 540 million metric tons,” said one Morgan Stanley analyst, suggesting that investors may see elevated sugar prices throughout the near term [see also Ultimate Guide To Sugar Investing].
On the losing side of the equation, natural gas had a rough trading day amid the weekly EIA report on supplies. While natural gas supplies were expected to increase by about 81 bcf, today’s report showed that stockpiles jumped by 95 bcf, an unexpected leap that points to less natural gas being used than initially forecast, putting downward pressure on the price of this popular commodity, as contracts dropped about 1.2% on the day. The popular ETF, United States Natural Gas Fund LP (UNG) which tracks futures contracts of natural gas, saw its daily volume nearly double, as traders looked to either quickly move out of positions or take advantage of the second straight losing day for natural gas [see also Commodity ETFs: It Takes Two To Contango].
Disclosure: Charts courtesy of Barchart. No positions at time of writing.
