Stocks rallied on the day after positive jobless claims data and some relief over fears in Greece. It looks like the EU is going to support Greece after all. Details on the support remain few, but investors are anticipating aid. The S&P 500 closed higher by 1%. The gains were led by big moves higher in commodities and tech. Volume was moderate and breadth was very strong at 3:1. The VIX lost over 5% on the day as fear continues to slowly come out of the market. The S&P is now down 3.2% for the year and just 6% from the highs set last month.
U.S. Economy
The U.S. Labor Department said that jobless claims were down 43,000 last week to 440,000, a bigger drop than was expected. The March 2011 eurodollars were up .015 at 98.625.
The U.S. Treasury sold $16 billion of 30-year T-bonds at a median yield of 4.64% with a bid to cover ratio of 2.36, weaker than expected. The March U.S. T-bonds ended down 10/32nds at 117.08/32nds.
Grains and Cotton
The USDA released its long-term projections today. In 2010-2011, they expect:
12.96 billion bushels of corn production and a 145 million bushel reduction of ending stocks.
3.23 billion bushels of soybean production and an 84 million bushel increase in ending stocks.
2.0 billion bushels of wheat production and an 11 million bushel reduction of ending stocks.
7.74 million tons of sugar production and a 457,000 ton increase in ending stocks.
15.90 million bales of cotton production and a 280,000 bale increase in ending stocks.
All of the above estimates are likely to change at next week’s annual USDA Ag Forum.
The weekly USDA grain exports report should be released tomorrow after this week’s winter storm disrupted work in the mid-Atlantic states. March corn ended up 2.75 cents at $3.645.
Livestock
In today’s long-term projections from the USDA, they said that they expect U.S. cattle inventory to reach a low of 91.9 million head in 2011 before steadily climbing higher thereafter. They also expect Nebraska choice steers to average 90.75 cents a pound this year and 94.19 cents a pound in 2011. April cattle were unchanged at 91.55.
The USDA also expects U.S. hog inventory to bottom at 64.98 million head in 2011 before expanding again. They estimated that cash hogs will average 45.53 cents per pound this year (61.5 cents lean) and 46.85 cents per pound in 2011. April hogs closed down .50 at 67.67.
Cocoa
Expectations that world demand will outpace production in 2010-2011 helped May cocoa close up $76 at $3,116.
Sugar
May sugar closed up .97 at 26.90 while world stocks are still tight.
Orange juice
Temperatures are expected to reach the mid-30’s in central Florida on Saturday morning and early next week. Even so, that should not be cold enough to cause additional damage to the citrus crop. March orange juice fell 2.65 cents to $1.3430.
Energies
The International Energy Agency increased its estimate of world oil demand in 2010 to 86.5 million barrels per day, more than the U.S. Energy Department’s estimate of 85.3 million barrels per day. April crude oil was up .83 at $75.72.
The weekly U.S. inventory reports for crude oil and natural gas will be released tomorrow due to this week’s winter storms. This afternoon’s 6 to 10 day forecast from the National Weather Service is expecting below average temperatures for the eastern half of the U.S.
Metals
April gold closed up $18.40 at $1,094.70, helped by the announcement of European aid to Greece and news that Vietnam’s central bank lowered the value of its currency for the second time in three months.
May copper jumped up 14.30 cents to $3.1515, attributed the continuation of strong economic growth in China.
Currencies
Australia’s Bureau of Statistics said that the unemployment rate improved from 5.5% to 5.3% in January with a net gain of 52,700 jobs. That was much better than expected and the lowest unemployment rate in eleven months. The March Australian dollar closed up 1.50 cents at 88.89.
Leaders from the European Union announced that they have reached a deal to provide aid to Greece. Also, the unemployment rate in Greece increased from 9.8% to 10.6% in November. The March euro finished down .0048 at $1.3687.
Real GDP in Spain was down .1% in the fourth quarter of 2009 and down 3.1% from a year ago.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.