MARKET WRAP – STOCKS SOAR

Stocks rocketed higher today after positive trade data in China, better than expected continuing claims in jobs data and comments from China that the dollar was overextended and the Euro could see support.  Trichet also confirmed that he has no plans to stop buying government bonds in Europe.  The Euro rallied over $1.21 on the news and equities rallied an incredible 3% on the day.  Volatility remains the name of the game here.  The intra-day swings have become gut wrenching on both the long and short side of the trade.  Volume was moderate on the day and breadth was strong at 5:1.  All in all it was a good day for the bulls, but nothing has really changed in the bigger fundamental picture.

From Daily Futures:

U.S. Economy
The U.S. Labor Department said that jobless claims were down 3,000 to 456,000, more than expected.

The U.S. Census Bureau said that exports were down $1.0 billion to $148.8 billion in April while imports were down $.8 billion to $189.1 billion. The result was $40.3 billion of net imports, a little less than expected.

The U.S. Treasury Department sold $13 billion of 30-year T-bonds at a median yield of 4.14% with a bid to cover ratio of 2.87. The Treasury Department also posted a federal budget deficit of $135.9 billion in May, less than expected. The September U.S. T-bonds fell 1.26/32nds to 122.18/32nds.

Grains and Cotton
The USDA’s 2010-2011 U.S. ending stocks estimate for:
Corn was reduced from 1.818 to 1.573 billion bushels.
Soybeans was reduced from 365 to 360 million bushels.
Wheat was reduced from 997 to 991 million bushels.
Sugar was reduced from 844,000 to 764,000 short tons.
Cotton was was reduced from 3.0 to 2.8 million bales.

December corn closed up 6.25 cents at $3.647 after today’s reduction in the USDA’s ending stocks estimate.

The USDA’s U.S. ending stocks to use ratio for cotton in 2010-2011 is now 17%, the lowest in 15 years. December cotton closed up 1.44 at 79.07, near its highest close in 20 months.

According to Weather.com, the cotton crop around Lubbock, Texas is getting hit with 100-degree heat today. There are chances of rain early next week, but then high temperatures are supposed to return on Thursday.

The USDA’s 2010-2011 world ending stocks estimate for:
Corn was reduced from 154 to 147 million tons.
Soybeans was increased from 66 to 67 million tons.
Wheat was reduced from 198 to 194 million tons.
Cotton was reduced slightly from 50.1 to 49.6 million bales.

Livestock
The USDA said that it expects beef production to be down 2% in 2010 and again, in 2011. The price of choice steers is expected to average 94 cents per pound in 2010. August cattle were up .30 at 87.77.

The USDA said that it expects pork production to be down 4% this year, but up 3% in 2011. The price of barrows and gilts is expected to average 55.5 cents per pound (75 cents lean) in 2010. August hogs fell .22 to 80.05.

Japan’s government confirmed the presence of foot and mouth disease in Miyazaki, one of Japan’s largest beef and pork producing regions (see article).

Orange juice
The USDA increased its estimate of the 2009-2010 Florida orange crop from 132 to 134 million boxes with help from favorable weather in May. The projected juice yield remained at 1.55 gallons per box at 42.0 degrees Brix. July orange juice closed up 2.40 cents at $1.4025 anyway.

Coffee
In today’s May Coffee Market Report, the International Coffee Organization estimated 134 million bags of world production in 2010-2011 and 134 million bags of consumption in calendar year 2010. They also said that total exports were down 8% in the first seven months of 2009-2010 from a year ago. July coffee jumped up 2.55 cents to $1.3700.

Metals
China’s Customs Bureau confirmed that exports were up 48.5% in May from a year ago, the biggest monthly gain in six years and much more than expected. July copper ended up 1.25 cents at $2.8625.

Energies
July crude oil closed up $1.10 at $75.48, boosted by China’s export news and a possible lessening of concerns about Europe. Also, the International Energy Agency slightly increased its estimate of 2010 world oil demand to 86.44 million barrels per day (mbd), up from 84.76 mbd in 2009.

The U.S. Department of Energy said that underground supplies of natural gas were up 99 billion cubic feet last week to 2.456 trillion cubic feet. Supplies are now up 1% from a year ago. July natural gas was down 3 cents at $4.647.

Currencies
Australia’s Bureau of Statistics said that the unemployment rate improved from 5.4% to 5.2% in May with a net gain of 26,900 jobs, more than expected. The June Australian dollar jumped up 2.15 cents to 84.85, the highest close in three weeks.

Japan’s Cabinet Office said that real GDP was up 1.2% in the first quarter of 2010 and up 4.2% from a year ago, the same as last month’s estimates.

Statistics Canada said that exports were down 1.0% in April at C$32.9 billion while imports were down 2.2% to C$32.8 billion. The result was $175 million of net exports in April. The June Canadian dollar closed up 1.19 cents at 96.94, the highest close in three weeks.

The Bank of England met and kept the interest rate unchanged at .50%, as expected.

The European Central Bank (ECB) kept its interest rate unchanged, at 1.0%, as expected. ECB President Trichet said that the bank will keep buying government bonds to help get through the latest financial challenges (see article). The June euro closed up 1.11 cents at $1.2096.