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MARKET WRAP – THE SLOW MELT-UP CONTINUES

Investors cautiously bought stocks ahead of the beginning of earnings season.  The S&P 500 finished the day higher by 0.2%.  The VIX hit a new low of 16.86 on the trading session and volume was extremely light.  Investors are looking increasingly complacent, but with a positive earnings season directly ahead of us the catalyst for a steep sell-off remains non-existent.  Daily Futures has the action from all markets:

U.S. Economy
The U.S. Treasury sold $10 billion of 10-year TIPS today at a yield of 1.30% with a bid to cover ratio of 2.65. The March U.S. T-bonds were down 9/32nds at 115.06/32nds.

Grains and Cotton
The USDA said that last week’s export inspections of:
Corn totaled 20.6 million bushels, down 6% from a year ago.
Soybeans totaled 41.0 million bushels, up 52% from a year ago.
Wheat totaled 11.0 million bushels, down 46% from a year ago.
March soybeans closed down 11.5 cents at $10.105.

Tomorrow morning, the USDA is scheduled to release its estimate of winter wheat seedings along with its monthly supply and demand estimates. March wheat closed up 4 cents at $5.725, its highest close in five weeks.

March cotton closed up 1.80 cents at 74.24, encouraged by China’s high level of imports in December (see article).

Livestock
February cattle closed down .77 at 85.05 while the north-central U.S. enjoys warmer weather this week.

Lumber
Canada’s Mortgage and Housing Corporation said that housing starts were at an annual rate of 174,500 units in December, stronger than expected and up 5.9% from November’s pace. March lumber gained $7.30 to $240.80.

Orange juice
Some areas of central Florida saw temperatures in the 20’s for several hours this morning. According to Reuters news, a meteorologist from AccuWeather said that crop losses in Florida’s citrus groves could reach 10%. March orange juice fell 19.30 cents to $1.3185 with a warmer forecast ahead.

Coffee
The International Coffee Organization said today in their December Coffee Market Report that “coffee supplies are likely to remain tight in 2010 as a result of low production and problems in the quality of coffee beans as a result of adverse weather conditions during harvesting.” March coffee ended down 1.65 cents at $1.4370.

Energies
March natural gas fell 28 cents to $5.432 with warmer temperatures ahead for most of the U.S.

Metals
According to a Bloomberg news survey, 23 analysts expect world copper production to exceed demand in 2010 by an average of 63,500 tons. March copper finished up 4.05 cents at $3.4410.

China’s exports were up 18% in December from a year ago while imports were up 56% in December from a year ago, both stronger than expected. February gold closed up $12.50 at $1,151.40.

Currencies
Statistics Canada said that building permits totaled C$5.9 billion in November, down 4.6% from October’s pace, but up 23% from a year ago. The March Canadian dollar ended down .13 at 96.78.

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