Commodities Watch: Gold, Silver Sell-off Continues; US Now Net Exporter of Refined Oil Products; Coffee Prices Slide (GLD, SLV, SBUX, GMCR)

The sell-off in shiny metals leads off today’s commodities news. We also note new data that shows the US is a net exporter of oil for the first time in 20 years and some hope that coffee prices might moderate.

Gold prices are down almost $32/ounce in the early afternoon today, to around $1,508/ounce. Silver has fallen below $40/ounce, to about $39.10/ounce, off more than 8% again. The slide in silver, which started on Monday, has been attributed to three margin hikes by the CME as well as silver bumping up against the psychological barrier of $50/ounce. The rate hikes were initiated to try to smooth out the volatility in silver, but the only thing it seems to doing so far is switching the direction of volatility.

If silver breaks through $38/ounce, and stays there, an even bigger sell-off might be in the cards. That’s the price where the big April run-up in silver started.

Gold is following silver, but because the gold market is far larger and more liquid than the silver market volatility has been less and no margin rate hikes have hit traders. The gold:silver ratio fell to 32 last week, but has come back to nearly 39 today. The historical gold:silver ratio is about 60, meaning that silver could still fall a long ways.

The SPDR Gold Shares Trust (NYSE: GLD) is off by about -1.5%, to $147.67, in a 52-week range of $113.08-$153.61. The iShares Silver Trust (NYSE: SLV) is off nearly -5%, at $38.62, in a 52-week range of $16.73-$48.35.

A new study from the American Petroleum Institute, which uses data from the US Energy Information Administration, shows that in the first quarter of 2011, the US exported 2.49 million barrels a day of refined products compared with imports of 2.16 million barrels a day. The study is cited on the Smart Planet web site.

Exports are led by diesel fuel and finished gasoline, both of which are very profitable for refiners to export from the Gulf Coast, either to the US northeast or abroad. One might conclude that importing crude, refining it, and then exporting the finished product is a very good deal for US oil companies. And one would be correct.

Finally today, a word about coffee prices, which have fallen nearly -4%, to firmly below $3.00/pound. Some of the drop is profit-taking, but there is also a chance that this year’s harvest could increase without to much difficulty. Traditionally, when coffee prices have risen, new land is acquired and planted. But improvements in irrigation, fertilization, and husbandry could produce higher yields in the less than three years it takes for a new coffee tree to produce.

With coffee sellers like Starbucks Corp. (NASDAQ: SBUX) and Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) already raising prices, a larger crop later this year could lead either to the companies taking bigger profits or lowering prices to customers. The choice is probably an easy one.

Paul Ausick