Oil rebounds to $81 as European debt woes ease
SINGAPORE, Nov 18 (Reuters) - Oil rebounded from four-week lows as a weaker dollar and cautious optimism about Ireland's debt crisis rekindled interest for commodities, while a sharp crude inventory decline in the United States supported prices.
"There is concern about Europe, but markets have already priced that in quite aggressively in the past few days," said Mark Pervan, a senior commodities analyst at ANZ in Melbourne.
OIL: Crude edges up toward $81 after 4-week closing low
TOKYO, Nov 18 (Reuters) - U.S. crude futures edged up on Thursday from a a four-week closing low, paring four-day losses that drove prices down more than $7 a barrel amid concerns about global oil demand.
Oil erased $7.37, or 8.39 percent, over four days as worries about euro zone debt and Europe's economy added to doubts about oil demand.
COMMODITY MARKETS: Oil falls, but metals rebound after weeklong rout
NEW YORK, Nov 17 (Reuters) - Commodities were mixed on Wednesday, with crude oil dropping sharply to a four-week low, but other markets like natural gas and copper rose as selective buyers returned after a weeklong rout across raw materials markets.
"Even if China announces some major restriction to curb inflation, the global picture about supply shortages in many commodities is still there," said Romain Lathiere, a fund manager with Diapason Commodities Management.
GLOBAL MARKETS: Dollar, stocks fall on Ireland debt crisis
NEW YORK, Nov 17 (Reuters) - The dollar fell against the euro, yen and Swiss franc on Wednesday as the lack of a solution to Ireland's debt crisis weighed on markets.
"If we get a resolution to Ireland's problems, you could see the euro bounce," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "The overall bias is to the downside, given uncertainty about not just Ireland but Portugal and Spain."
CBOT soyoil stumbled once again, extending the week's losses, as traders reduced risk exposure in the market. Spillover weakness from crude oil futures added pressure to pin prices lower, analysts said. The threat of policy changes in China continued to apply pressure, as soyoil demand is more elastic and receptive to China price controls, said analyst Mike Zuzolo. Soymeal drifted lower with soybeans, but managed to trade in positive territory for most of the day on spillover support from other feed ingredients, corn and wheat, analyst said. CBOT Dec soyoil ended 1.03c or 2% lower at 48.94 cents per pound, and Dec soymeal traded $1.80 or 0.5% lower at $328 a short ton.(Source: CME)
Food Prices To Rise Further In 2011 If Crops Don't Increase-FAO (Source: CME)
Food prices around the world are rising and could increase further in 2011 if production of key crops doesn't expand, the United Nations' Food and Agriculture Organization warned. "Given the expectation of falling global inventories, the size of next year's crops will be critical in setting the tone for stability in international markets," the FAO said in its Food Outlook report. Prices of most agricultural commodities rose in the past six months due to a combination of weather-related crop losses, policy responses to crop shortages by some exporting countries and a weaker U.S. dollar. Sugar recently hit a 30-year high and coffee a 13-year high. Meanwhile, the price of cotton has more than doubled and corn, wheat and soybeans are up 49%, 39% and 35% respectively from a year ago.
"Consumers may have little choice but to pay higher prices for their food," FAO said, noting farmers may seek to tap a number of price rises by diversifying crops to sugar and soybeans, for example, and may not grow enough cereals as a result. "For major cereals, production must expand substantially to meet utilization and to reconstitute world reserves," the report said. The FAO forecasts world cereal production to fall 2.1% in the 2010-2011 crop year, contrasting a June prediction for a 1.2% rise. FAO also expects world cereal stocks to fall 7% on the year, with barley to drop 35%, corn to drop 12% and wheat to drop 10%. The report said only rice reserves will rise, by 6%. The sharp rise in prices could cause the international food import bill to pass $1 trillion for the first time since prices hit record levels in 2008, FAO said.
"With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared," FAO said. FAO forecasts 2010-2011 cereal production at 2.22 billion tons, down 2.1% from the year before, and cereal utilization at 2.25 billion tons, up 1.3%. It expects wheat production to fall 5.1% to 647.7 million tons and utilization to rise 1.2% to 668 million tons. The overall rise in the global food basket price was driven largely by sugar in recent months, FAO said. It forecasts sugar output to rise 7.75% to 168.80 million tons and utilization to rise 2.15% to 166.09 million tons.
Beijing To Tame Food, Fuel Prices(Source: CME)
China said it is ready to clamp price controls on daily necessities to bring down inflation, dusting off a measure from socialist central planning in a new sign of alarm by Chinese leaders who have been striving to cool economic growth through more conventional means such as raising interest rates. A statement from the State Council pledging to use administrative measures to tame rising prices of food and energy, and to cushion the poor with higher welfare payouts, appeared mainly to reflect government concerns that inflation could trigger social unrest. Accelerating food prices -- the biggest single component of China's inflation, now running well above the government's target of 3% for the year -- are hurting China's neediest households, and their plight could get worse as the country heads into what is forecast to be an unusually cold winter that threatens to disrupt transport and bring new fuel shortages.
Some economists interpreted the statement as a signal that the government was more concerned about the political fallout of inflation than with economic overheating in general. The last time Beijing resorted to price controls was when inflation spiked in 2008. Still, the measures feed into anxieties among investors that China will roll out increasingly stringent anti-inflation measures that will put a sudden brake on its growth. The State Council said the government would intervene "when necessary" to impose temporary controls on the prices of "important daily necessities and factors of production." It promised to crack down on speculators who have been driving up the price of agricultural commodities. And it outlined moves to boost the supply of diesel, used for farm vehicles, and control energy prices. Talk of price controls has worried investors for several days and has helped to send China's stock markets swooning.
The benchmark Shanghai Composite Index has lost 10% in the past four trading days, including a 2% drop Wednesday. That China feels it is necessary to use price controls has signaled that policy makers have been too reactive to the inflation threat, instead of getting ahead of the problem, says Li-Gang Liu, head of China economics for ANZ Bank in Hong Kong. "If they use too harsh monetary policy to tighten credit supply in the remainder of the year, it's quite likely we will see some sort of hard landing going forward," Mr. Liu says. Supermarkets and restaurants across China are passing on rising agricultural prices to their customers. McDonald's Corp. blamed growing costs for a decision to increase prices at its more than 1,100 China outlets by up to one yuan, or 15 U.S. cents, on a range of items, including Chicken McNuggets, pies, and ice cream.
A Chinese hard-landing scenario has helped roil international markets at a time when investors are consumed with European debt problems and rising bond yields in the U.S. China is seen by investors as having played a major role in reflating the global economy after the collapse of Lehman Brothers, and a bruising inflation fight could mean the world's fastest growing large economy could become weighed down. Expectations that China will curb its voracious appetite for commodities has sent prices lower for everything from crude oil to soybeans.
Trade Risks A Major Barrier To Agriculture Investment-Survey(Source: CME)
Political risks and opaque trade policies remain the largest barrier to investment in the agricultural sector, according to a published survey of global industry participants. More than 77% of respondents said they expect pension investments in the sector will increase in 2011-12, with South America and Russia and Eastern Europe expected to offer the greatest investment opportunities in the future. But uncertainty over government policies, like the export embargoes imposed by Russia and Ukraine this summer, were cited as a major concern by more than half of the 190 fund managers, farmers and institutional investors surveyed. "With the continuing agricultural supply and demand story and the issue of food security increasingly in the news, more and more investors are starting to investigate investing in agriculture as an asset class," said Nick Falkowski, conference director at Terrapin, which undertook the survey in preparation for its Agriculture Investment Summit 2011 next June.
Ag spec jitters justified after China crackdown: Maguire
-- Gavin Maguire is a Reuters market analyst. The views expressed are his own.
CHICAGO, Nov 16 (Reuters) - Judging by the stampede out of nearly all the major commodity crops Tuesday, China's plans to crack down on domestic speculators in its agriculture markets has clearly spooked international traders and investors as well.
But as impressive as the day's hefty losses were in markets such as corn, soybeans, wheat and rice, the scale of large speculator net positions in these crops remains close to record high levels -- suggesting there is potential for further massive liquidation should the exodus continue.
US corn, soybeans tumble as speculators exit
SYDNEY, Nov 17 (Reuters) - U.S. corn tumbled nearly 3 percent to a fresh six-week low as grain and oilseed markets were pressured by a stronger dollar and fears about Chinese monetary tightening.
"Clearly there's a whole lot of speculative money coming out of this market, being led out of Asia," said Adam Davis, senior trader at Merricks Capital.
FAO sees more wheat in 2011/12 but warns on supply
MILAN, Nov 17 (Reuters) - Wheat plantings in Europe and the United States are rising in response to this year's lower global harvest, but the world must remain on the alert for future shortages, the United Nations' food agency said on Wednesday.
The FAO cut its estimate of 2010 world cereals output to 2.216 billion tonnes from its previous forecast of 2.239 billion tonnes.
EU approves Syngenta buy of Monsanto's sunflower unit
BRUSSELS, Nov 17 (Reuters) - Syngenta , the world's largest agrochemicals company, won conditional EU regulatory approval on Wednesday for its $160 million acquisition of U.S. peer Monsanto's global hybrid sunflower seeds business.
The European Commission, which acts as the competition regulator in the EU, looked at the case because Syngenta had agreed to sell sunflower hybrids, commercialised or under official trial in Spain and Hungary, as well as material used for creating hybrids or being developed in the two countries.
Brazil soy growers sell 31 pct of new crop-Celeres
SAO PAULO, Nov 16 (Reuters) - Brazilian soybean producers have sold 31 percent of the 2010/11 soybean crop that farmers started planting in late September, up from 29 percent a week earlier, analysts Celeres said on Tuesday.
As of Nov. 12, sales of the new crop -- which is seen at a record 69.1 million tonnes -- were ahead of the 19 percent sold at this time last year. Celeres also said forward sales were ahead of the 24 percent sold on average over the last five years at this point, with international soy prices at 15-month highs.
China readies price controls to tackle food inflation
BEIJING, Nov 16 (Reuters) - China will unveil food price controls and crack down on speculation in agricultural commodities to contain inflationary pressure that its central bank governor highlighted as a risk on Tuesday.
With consumer prices rising at their fastest pace in more than two years, the National Development and Reform Commission, the country's top planning agency, is preparing a "one-two punch" of actions to rein in food costs, official media reported.
India 2009-10 Vegetable Oil Imports At Record 9.24 Mln Tons(Source: CME)
India's vegetable oil imports in the marketing year that ended on Oct. 31 rose 6.7% to a record 9.24 million metric tons as lower international prices boosted domestic demand, a trade body said. Edible oil imports in the year totaled 8.82 million tons, higher than the previous year's 8.18 million tons, the Solvent Extractors' Association of India said. It said a stronger per capita consumption in India, no tax on crude edible oil imports and a nominal duty on refined oils, helped increase imports. The depreciation of the U.S. dollar against the Indian rupee helped too, it added. India is the world's second-largest vegetable oil importer after China and meets more than half its requirements through imports. The trade body said vegetable oil imports in October 2010 rose to 832,699 tons from 667,276 tons a year earlier. Crude palm oil imports grew 8% from a year earlier to 476,039 tons, while imports of refined, bleached and deodorized palm olein rose 51% to 132,292 tons. Soyoil imports more than doubled to 124,850 tons during October from 56,218 tons a year earlier. India imports palm oil mainly from Indonesia and Malaysia, and soyoil mostly from Brazil and Argentina. During 2009-10, crude palm oil imports declined marginally to 5.17 million tons and RBD palm olein imports fell 2.4% to 1.21 million tons, the trade body said. Soyoil imports during the marketing year jumped 68% to 1.67 million tons, it added. Imports of sunflower in October 2010 more than doubled to 36,445 tons, while for the year, they climbed to 630,005 tons from the previous year's 590,175 tons. As at Nov. 1, total edible oil stocks at ports were estimated at 670,000 tons. This comprises of 400,000 tons of crude palm oil, 60,000 tons of RBD palm olein, 140,000 tons of soyoil and 70,000 tons of sunflower oil. Indian companies have also entered into contracts to import another 780,000 tons of edible oil. Non-edible oil imports in 2009-10 declined 9% to 418,068 tons. Non-edible oil is used mainly to make soaps, detergents, and for other industrial purposes.
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