Thursday, January 6, 2011

20110106 0958 Global Market Related News.

OIL: Crude extends gain towards $91 on U.S. jobs
SINGAPORE, Jan 6 (Reuters) - Oil extended gains on  Thursday as upbeat private payroll data helped markets recover  from a mid-week slump on expectations that a sustained  economic recovery at the world's top consuming nation will  boost growth in energy demand.
Earlier on Wednesday, oil fell after suffering the biggest single-day drop since mid-November on Tuesday. Crude was initially led lower by a stronger dollar, which typically weighs on commodities as they become more expensive for buyers using other currencies.

COMMODITIES: Rebound from rout after US jobs data, end up
NEW YORK, Jan 5 (Reuters) - Strong U.S. jobs data ignited a broad commodities rebound on Wednesday, a day after prices fell their most in seven weeks.
"What's happening now is the global economic recovery story has become just as important as the dollar story, if not more," said Adam Sarhan at Sarhan Capital in New York. "That's the shift we're starting to see."

GLOBAL MARETS: Dollar jumps, oil rebounds on big U.S. jobs gain
NEW YORK, Jan 5 (Reuters) - The U.S. dollar jumped and crude oil prices rebounded on Wednesday after surprisingly strong data on private-sector jobs added to growing evidence the U.S. economy is on the path to recovery.
"Today's all about data reaction; you had a blowout ADP report," said Michael Cloherty, head of rates strategy at RBC Capital Markets in New York.

Record High Prices Could Spark Food Riots-UN FAO Economist (Source: CME)
Global food prices hit a record high in December and are likely to continue rising this year due to inclement weather, raising the possibility of a return of the food riots that broke out when prices last surged in 2008. "The longer [food prices] remain high, the longer there is a possibility of a repeat of 2007 and 2008" food riots, said Abdolreza Abbassian, a senior economist at the United Nation's Food and Agriculture Organization. Global food prices rose to a record high in December, according to the FAO's monthly Food Price Index published Wednesday. The FAO's food price index, which monitors the monthly change in a basket of commodities including meat, dairy, cereals, oils and sugar, rose for the sixth month in a row to 214.7, a record high in nominal terms, according to data going as far back as 1990, and up 4.3% compared with November. The surge was largely driven by significant monthly price increases in oilseeds, cereals and sugar; white sugar prices alone recently hit 30-year highs.
The indexes for each of those food groups rose 8.1%, 6.4%, and 6.7%, respectively, in December from November. Food prices have jumped because poor weather conditions across the globe have significantly curtailed crop harvests. Russia, for instance, banned grain exports over the summer due to one of its worst droughts on record while severe flooding in Australia has crimped its raw sugar output by 20%. The FAO's food price index previously surged to a record high of 213.5 in June 2008 when poor harvests around the world and rising commodity prices, particularly oil, made food more expensive. Riots broke out in developing countries, which struggled to pay higher prices to import food. Inflation also rose due to higher food prices and could rise again. Euro-zone inflation jumped past the bloc's target rate for the first time in more than two years, data released this week showed. Economists said the rise was likely due to higher food and energy prices.
Abbassian said food riots are unlikely for the moment, partly because poorer countries have had on average better crops this year than in 2007-08. The economist also said that prices for important staple foods such as cereals and rice are still below their record highs. Rice is priced at half its high two years ago while cereal is trading 13% below its high, he added. Nevertheless, he said poorer countries will at some point have to tap the international markets for foodstuffs. "That is the worrisome development...We consider the [current] prices quite punitive for the poorer countries," he said. Abbassian said prices will more likely rise this year than fall due to poor weather. Any potential price correction, therefore, isn't likely to happen before the middle of the summer when the next harvests are due to begin.

FACTBOX-Commodity index rebalancing in 2011
Jan 4 (Reuters) - Index funds invested in commodities will kick off their annual rebalancing exercise this week, adding risk to under-exposed markets like natural gas and paring back from the overly-weighted agriculture sector, data from investment banks showed.
The Dow Jones-UBS and the SPGSCI indexes, which command anestimated $200 billion of passive investment in commodities, typically adjust their weightings in the first two weeks of January, based on their formula for dividing allocations between futures markets.

Aussie floods hit freight market, ship rates slide
LONDON, Jan 4 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, slid to its lowest in over 20 months on Tuesday as floods in Australia hit coal shipments.
The biggest floods in decades have wreaked havoc in Australia's Queensland state, the country's largest exporter of coal, shutting down coal mines and paralysing the transport of goods.

PRECIOUS-Gold stable after deepest fall since mid-Nov
LONDON, Jan 5 (Reuters) - Gold steadied on Wednesday, a day after its largest sell-off in nearly two months, buoyed by consumer demand, which helped offset the potentially negative impact of the dollar extending gains after upbeat U.S. data.
The rise in the dollar against a basket of currencies acted as a headwind to gold, which usually profits from weakness in the greenback, yet the drop in price has encouraged some opportunistic buying from jewellers and other consumers of physical metal.

FOREX-Dollar boosted on data, sovereigns support euro
LONDON, Jan 5 (Reuters) - The dollar held firm on Wednesday, bolstered by further evidence that the U.S. economic recovery is becoming self-sustaining, though its gains against the euro were slowed by central bank demand for the single currency.
A recent series of economic data has raised hopes for a sustainable U.S. recovery and lent support to the dollar. The latest such numbers on Tuesday showed new orders received by U.S. factories rose unexpectedly in November.

US analyst cuts Argentine corn, soy crop estimates
CHICAGO, Jan 4 (Reuters) - Closely-watched private U.S. crop analyst Michael Cordonnier said on Tuesday he had lowered his forecast of Argentine 2010/11 soybean production for a third straight week due to hot and dry weather in the world's third largest soybean exporter.
He reduced his estimate to 45 million tonnes from 48 million tonnes. Cordonnier also cut his estimate of Argentine corn production to 19.5 million tonnes from 21.5 million.

Commodities falls weaken world equities
LONDON, Jan 5 (Reuters) - Commodity prices fell for a second day in a row hurt by profit-taking and a stronger dollar and putting pressure on world equity markets.
"There is some optimism with regards to the U.S. economy, but that is mixed with concerns over where Europe is going in the short- to medium-term. We are likely to remain very data sensitive," said Keith Bowman, equity analyst at Hargreaves Lansdown.

Corn, soy to revisit 2008 peaks this year-top analyst
CHICAGO, Jan 4 (Reuters) - U.S. corn and soybean prices will extend their current rally to threaten their all-time highs from 2008 within the next three months, according to the analyst who topped the Reuters poll for a second year running.
Prices for both commodities will rise a further 18 percent or more due to the threat of dry La Nina weather in South America and as traders get a sense of this year's demand from China, which shocked markets last year by making its biggest U.S. corn purchases since at least 1999, said Charlie Sernatinger, veteran grain analyst with ABN Amro in Chicago.

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