Natural Gas, Cocoa Pop: Market Bits

NEW YORK ( TheStreet) -- Cocoa was helping to lead commodities Thursday early afternoon on short covering -- extending gains from the past three days.

Cocoa for July delivery was rising 2.2% to $3,136 a metric ton.

"Price movements in the cocoa market lately have been meaningless," says PFGBEST Research analyst Robin Rosenberg. "With hundreds of thousands of tons of cocoa about to flood the market, you would think the market would head lower. Perhaps there are just too many shorts?"

Once the leadership power struggle in the world's leading cocoa-exporting country, the Ivory Coast resolves itself, the market could be flooded with a massive amount of cocoa exports. It will take some time for the country to normalize itself though, Rosenberg said.

"Stop them the shorts out and then we might see a semblance of normality return to the market," the analyst commented.

iPath Dow Jones-UBS Cocoa Subindex Total Return ETN ( NIB) was adding 1.9% to $44.34.

Natural gas for May delivery was gaining 2.3% to $4.234 per million British thermal units -- extending gains from the previous day -- after the EIA (Energy Information Administration) reported that inventory built up less than expected on a weekly basis.

Natural gas storage levels rose 28 Bcf (billion cubic feet) to 1,607 Bcf as of Friday, Apr. 8. Analysts polled by Bloomberg thought levels would rise 35 Bcf.

In addition, inventory was 137 Bcf less than that from a year ago.

"This is largely technical, and not a massive and sudden tightening of supply," a Gelber & Associates report said.

Nevertheless, "it forced many to make a decision today, driving the contract well past the $4.219 100-day moving average that has topped the recent price clus-ter." The report said if natural gas futures can break that technical barrier, there may be more short covering into the weekend. "Should we close below, look for some selling tomorrow."

Natural gas plays were trading in mixed territory.

Westport Innovations ( WPRT) was losing 1.6% to $24.80, Fuel Systems Solutions ( FSYS) was adding 0.8% to $27.97, Devon Energy ( DVN) was falling 0.2% to $87.55, Newfield Exploration ( NFX) was losing 1.2% to $69.86, Cheniere Energy ( CQP) was unchanged at $18.27 and Kinder Morgan Energy Partners LP ( KMP) was up 1.2% to $75.19.

(Published at 1:32 pm)

Wheat futures were tumbling on weather forecasts, better Russian and Ukrainian wheat production levels and profit taking in commodities.

Wheat for May delivery tumbled 1.9% to $7.38 ½ a bushel.

"Wheat is actually being hit hard because of the forecasts," said MaxYield Cooperative Grain Solutions Team Leader Karl Setzer. Weather forecasters are predicting widespread rains on some of the driest regions of the Plains, many of which are wheat-producing regions. "As a result, we are seeing risk premium pulled back out of the futures market on wheat."

In addition, Russia and Ukraine's wheat crop are expected to be much larger than last year, Setzer said. Russia has decided to re-enter the export market after banning exports since last August as they conserved the grain during their own wheat drought.

"Australian officials are also talking of not only a better wheat crop than a year ago, but the largest one in history. The global market is in little danger of running out of wheat."

Wheat was sinking with other commodities, such as palladium, Brent crude oil, soybeans and corn on profit-taking -- instigated by Goldman Sachs' announcement that it's abandoning its long positions in a basket of commodities, the analyst said. "Some of the longs in the commodities were established $2 to $4 ago, and speculators are finally taking this off the table," Setzer explained.

Crop nutrient company Mosaic ( MOS) was falling 2.3% to $75.05, while peer Agrium ( AGU) was losing 0.5% to $88.42. Farm equipment maker Deere ( DE) was flat at $93.63.

Food companies General Mills ( GIS) and Kellogg ( K) were rising 0.4% to $36.75 and $55.08, respectively. Meanwhile, restaurant McDonald's ( MCD) was down 0.2% to $76.76, while its competitor Wendy's Arby's ( WEN) was falling 1% to $4.76.

(Published at 10:42)

The British pound was rallying against other major currencies Thursday morning on strong economic data.

The UK pound sterling was rising 0.3% against the dollar to $1.6324 and 0.4% against the euro to EUR 1.1309.

The United Kingdom's consumer confidence index rebounded to 44 in March from a record-low of 39 in a month ago.

But in the coming days, "the pound-dollar should continue to trend sideways going into the following week, and the majority of the MPC (Monetary Policy Committee) is likely to retain a neutral tone for future policy as the ongoing weakness in the real economy bears down on price growth," predicted Daily FX currency analyst David Song.

The Bank of England's policy meeting minutes is scheduled for release on Apr. 20.

CurrencyShares British Pound Sterling Trust ( FXB) was rising 0.4% to $162.21 and CurrencyShares Euro Trust ( FXE) was trading sideways at $143.80. PowerShares DB US Dollar Index Bullish ( UUP) was falling 0.1% to $21.47.

U.S. Treasury notes were rising Thursday morning on negative economic news.

The two-year note was rising 0/32, pushing the yield down to 0.730%, the ten-year note was adding 4/32, lowering the yield to 3.443% and the 30-year bond was advancing 6/32, pushing the yield down to 4.533%.

The number of Americans filing new unemployment claims rose significantly more than expected last week, the Labor Department said early Thursday.

Prices at the wholesale level ticked higher in March, as rising energy prices exerted pressure on finished goods prices.

This week, the government is selling $66 billion in Treasury notes. On Tuesday, $32 billion in new, three-year notes were sold. On Wednesday and Thursday, $21 billion and $13 billion in ten-year and 30-year reopenings were sold. In a security reopening, the U.S. Treasury issues additional amounts of a previously issued security.

PowerShares 1-30 Laddered Treasury ETF ( PLW) was rising 0.2% to $27.53, ProShares UltraShort 7-10 Year Treasury ( PST) was falling 0.1% to $42, SPDR Barclays Capital International Treasury Bond ETF ( BWX) was up 0.2% to $60.45 and ProShares Ultra 7-10 Year Treasury ETF ( UST) was up 0.5% to $80.60.

A report from fixed-income technology firm BondDesk Group says that Treasury yields decreased substantially during the first half of March as investors sought shelter amid the dual crises of the Libyan military conflict and the tragedy in Japan. "During times of global financial distress, U.S. Treasuries are typically seen as a safe haven," the report said.

But during the second half of the month, Treasury yields began to reverse themselves as the United Nations took over military operations in Libya and the scope of the damage in Japan was better understood, according to the BondDesk Group report.

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-- Written by Andrea Tse in New York.

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