U.S. Commodities: Oil Falls After Japan Quake Shuts Refineries
Crude oil fell, capping the first weekly drop in a month, after Japan’s strongest earthquake on record shut refineries and dissidents in Saudi Arabia failed to stage planned protests.
The 8.9-magnitude temblor unleashed a 7-meter (23-foot) tsunami that killed hundreds of people in Japan, the world’s third-largest oil-consuming country. Saudi Arabian police and anti-riot vehicles patrolled central Riyadh today, preventing a “Day of Rage” proclaimed by activists.
“This is in response to the tsunami and the lack of the Day of Rage in Saudi Arabia,” said Hamza Khan, an analyst at the Schork Group Inc., a consulting company in Villanova, Pennsylvania. “If the Japanese refineries are down, then we’re going to see lower demand for crude oil.”
In other markets, grains after Japan, a major importer of U.S. crops, was struck by the quake, threatening to curb demand. Cocoa also dropped. The UBS Bloomberg Constant Maturity Commodity Index fell 0.7 percent to 1,723.48, This week, the gauge declined 3.9 percent, the most since May. The measure was down for the fifth straight day, the longest slump since August.
Oil futures for April delivery tumbled $1.54, or 1.5 percent, to $101.16 a barrel on the New York Mercantile Exchange, the lowest settlement since March 1. The price declined 3.1 percent this week.
Futures still have gained 21 percent since Oct 1. A civil war in Libya, a member of the Organization of Petroleum Countries, and turmoil in northern Africa and the Middle East has roiled markets. President Barack Obama said today that he is prepared to release oil the U.S. Strategic Petroleum Reserve if fuel supplies tighten and cost jump.
Corn, Wheat
Corn futures for May delivery fell 18.5 cents, or 2.7 percent, to $6.6425 a bushel on the Chicago Board of Trade. Earlier, the price touched $6.5275, the lowest for a most-active contract since Jan. 31.
Japan, the largest buyer of U.S. corn, is checking ports and grain depots for damage after a tsunami that engulfed towns on the northern coast, the Ministry of Agriculture, Forestry and Fisheries said. Farmland was flooded with burning debris in some areas as the tidal surge swept inland, images from state broadcaster NHK showed.
The quake “will likely impact grain trade” after ports in Kushiro, Hachinohe, Ishinomaki and Kashima were hit by the tsunami, and some feed mills and livestock operations were hurt, the U.S. Grains Council said.
‘Economic Shock’
“There is no way to assess even the direct damage to Japan’s economy, or to the global economy,” Carl B. Weinberg, the chief economist at Valhalla, New York-based High Frequency Economics Ltd., said in a note to clients. “Experience tells us that the economic shock can be, and likely will be, much bigger than anyone can imagine.”
Japan is the second-biggest buyer of U.S. wheat and rice and ranks third for soybeans, government data show. Last month, grain prices surged to the highest since 2008 as rising demand and adverse weather cut inventories.
Wheat futures for May delivery dropped 21.75 cents, or 2.9 percent, to $7.1875 a bushel. Earlier, the price touched $7.0375, the lowest since Dec. 1. This week, the grain plunged 14 percent, the most since December 2008.
Soybean futures for May delivery dropped 21 cents, or 1.5 percent, to $13.345 a bushel. This week, the price fell 5.6 percent, the most since October.
Rice futures for May delivery fell 4 cents, or 0.3 percent, to $13.01 per 100 pounds. Earlier, the price touched $12.48, the lowest since Oct. 6. This week, the commodity tumbled 8.3 percent, the most since January 2009.
Cocoa
Cocoa fell, capping the biggest weekly drop since May, on speculation that supplies from Ivory Coast, the world’s biggest exporter, will increase after the government threatened to seize undeclared inventories.
Ivorian exporters have until March 31 to ship bean stockpiles or face “sanctions,” a spokesman for President Laurent Gbagbo said March 9. Gbagbo has refused to step down following a November election that international observers say was won by Alassane Ouattara, who has asked shippers to hold back exports to deny funds to his rival.
“The market is realizing there is still a lot of supply, as the situation in Ivory Coast is forcing suppliers to export in order to pay the domestic tax,” said Jonathan Bouchet, an analyst at OTCex Group, a broker in Geneva.
Cocoa for May delivery fell $33, or 1 percent, to $3,412 a metric ton on ICE Futures U.S. in New York. Prices dropped 6.7 percent this week, the most since May 14.
Commodities settled as follows:
Precious metals: April gold up $9.30 to $1,421.80 an ounce May silver up 86.9 cents to $35.935 an ounce April platinum up $16.10 to $1,781.70 an ounce June palladium down 90 cents to $765.50 an ounce
Livestock: June live cattle unchanged at $1.1695 a pound August feeder cattle up 0.35 cents to $1.37625 a pound June lean hogs down 1.95 cents to 99.5 cents a pound
Grains: May soybeans down 21 cents to $13.345 a bushel May corn down 18.5 cents to $6.6425 a bushel May wheat down 21.75 cents to $7.1875 a bushel May rice down 4 cents to $13.01 per 100 pounds May oats down 5.5 cents to $3.505 a bushel
Food and Fiber: May coffee down 6.15 cents to $2.744 a pound May cocoa down $33 to $3,412 a metric ton May cotton up 3.96 cents to $2.0494 a pound May sugar up 0.15 cent to 28.86 cents a pound May orange juice down 2.3 cents to $1.6795 a pound
Energy: April crude oil down $1.54 to $101.16 a barrel April natural gas up 5.9 cents to $3.889 per million British thermal units April heating oil down 1.59 cents to $3.029 a gallon April gasoline down 3.19 cents to $2.9877 a gallon
Others: May copper up 1 cent to $4.2075 a pound May lumber up $2 to $311.10 per 1,000 board feet
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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