Crude oil settled higher as traders were taken by surprise with a Government report showing a decline in US Distillate inventories. Oil prices initially declined as most traders reacted on instinct to the build in crude oil stocks and pushed the market lower. These losses were quickly recouped following a decline in distillate stocks. Most analyst had forecasts for a build in stocks.
Crude Oil fell to its lowest level in two weeks as investors were hit by a series of Bearish news stories. Forecasts for warmer weather conditions in both the short and medium term sparked selling. Reports have also emerged that speculative investors have were actively building short positions during Friday's session.
Early yesterday afternoon the Government of Japan announced that it had lifted the ban on imports of US Beef. This followed the conclusion last Thursday by Japan's Food Safety Commission that US and Japanese beef share similar risk levels.
Although the lifting of the ban is certainly encouraging to a resumption in cattle trade between the US and Japan it is important to see what the announcement really means for trade and what drove the announcement. The following are two articles which provide some interesting facts and figures and show perhaps why the live cattle futures markets reacted so mutely to the announcement.
March Cocoa closed up 13 or 0.89% at 1478. Reports of fresh violence in the Ivory Coast, the world’s largest Cocoa producer, failed to excite the market. At this stage reports are of military personal being attacked and overrun. The market did not seem too concerned as the violence did not occur in Cocoa growing regions.
COCOA: January - December 2005 (source eSignal)
February Live Cattle closed up 0.37% or 0.35 at 95.2 cents/lbs. The market traded higher as momentum built from last weeks gains. Stronger cash market prices and news of a significant snow storm in northern Kansas and Nebraska also supported the move higher. Severe weather conditions stress Cattle which reduces the quality of beef as well as reducing the flow of beef products to the market.
Live Cattle: July - November (source eSignal)