Friday, May 20, 2011

20110520 0943 Global Commodities Related News.

Corn (Source: CME)
US corn futures finish lower as traders take profits after prices climbed 15% in a week on concerns about threatening weather. "We had a big run up. We've got to take profits some time," says Alan Brugler, president of Brugler Marketing & Management. Prices had climbed as rains delayed planting, raising concerns farmers would not produce as big of a crop as previously expected. Concerns persist, as weather forecasts call for conditions to remain wet in the Midwest. CBOT July corn slips 1 1/2c to $7.48 1/4 a bushel.

Wheat (Source: CME)
US wheat futures finish mostly higher on concerns about poor weather threatening output. Rains are delaying planting of spring wheat in the northern US Plains and drought is reducing the winter-wheat harvest in the southern Plains. Supplies of high-protein hard red spring wheat, grown in North Dakota and Minnesota, are tight as buyers search for quality grain, traders say. France and Germany also struggle with dryness, adding to supply concerns. CBOT July wheat falls 5c to $8.12 a bushel; KCBT July jumps 6 3/4c to $9.44 3/4; MGEX July rises 10c to $10.06 1/4.

Rice (Source: CME)
US rice futures end stronger on solid foreign demand for the crop. Export sales of 48,800 tons for delivery before July 31 were up 2% from the previous week, according to the UDSA. Top buyers included Haiti, which booked 14,100 tons, and Mexico, which took 12,400 tons. CBOT July rice rises 12 1/2c to $15.01 1/2 per hundredweight.

OTC commodity positions up 2 pct in H2 2010-BIS
LONDON, May 18 (Reuters) - The value of over-the-counter commodity derivative positions rose by 2 percent in the second half of 2010, driven by a jump in forwards and swaps activity, the Bank for International Settlements said on Wednesday.
Global regulators are attempting to make the OTC derivatives markets more transparent amid criticism that speculation in commodities has fuelled food inflation and high gasoline prices.

Commods likely to recover after short correction-MF Global
SINGAPORE, May 18 (Reuters) - Commodity prices are likely to fall further in the next month or two before rebounding towards the end of the year as demand continues to grow, prompting MF Global  to expand its presence in the sector, a senior company executive said.
Brokerage MF Global Holdings, with a market value of $1.4 billion, maintained its long-term bullish outlook for commodities and expected prices to rise 10-20 percent over the next 12 months from current levels due to a weaker dollar, rising global demand and gradual inventory tightening.

Singapore's Wilmar To Invest CNY300 Mln In China Grain Processing (Source: CME)
Yihai Kerry Group, the China arm of Singapore agribusiness giant Wilmar International Ltd., plans to invest CNY300 million ($46 million) in grain processing facilities in China's southern province of Yunnan, Wilmar and a state-backed Chinese grain agency said separately. The expansion in Yunnan by Yihai Kerry, already a major producer of processed food-grain products in China, is planned despite pressure on profitability from price controls the government has been relying on to contain inflation. The planned facilities, to be located in the province's Jinning county, will include logistics and distribution sites, and processing facilities for grain, potato and walnut products, the China National Grains & Oils Information Center said. Wilmar set up the Yunnan subsidiary, Yihai Kerry (Kunming) Foodstuffs Industries Co. Ltd., in December, and construction on the plant will start soon, a Wilmar spokesman said.
The subsidiary is 70% owned by Yihai Kerry Investments Co. Ltd., the parent company said in a statement. Yihai Kerry's sales in Yunnan of 650,000 metric tons a year are valued at more than CNY3 billion, the CNGOIC said. The Singapore company's advance in China comes despite pressure from the government's price controls on food products. Beijing has asked the company, along with other large domestic producers, to cap prices of cooking oils as part of the government's efforts to contain inflation. Last week, Wilmar, the world's largest palm oil producer, said its net profit in the January-March quarter fell to $386.7 million from $401.4 million in last year's first quarter. The company attributed the decline partly to narrower profit margins for consumer products, as "government regulations in some countries" prevented it from raising prices in response to higher raw material costs. It also attributed the dip, which wasn't as sharp as expected, to fair-value losses.
"The Group remains positive on its prospects, despite a challenging operating environment in China arising from the monetary tightening and anti-inflationary measures implemented by the Chinese government," said Kuok Khoon Hong, Wilmar's chairman and chief executive. Grain processing in China has traditionally been dominated by local companies such as Cofco Ltd. Yihai Kerry's foray into the wheat-processing sector is only about five years old.

Zambia Sees 1.7M Tons Of Surplus Corn After Bumper Harvest-President (Source: CME)
Zambia has at least 1.7 million metric tons of surplus corn following a bumper harvest in the mineral-rich southern African country, the Zambian presidency said. Zambia's 2010-11 (May-April) corn output increased by at least 8% to hit a historic record three million metric tons, aided by government farmer support programs, the country's agriculture minister announced. "Our farmers are the cornerstone of Zambia's economy. You are the ones who are helping build a future of food security, stability and economic growth, free from poverty," a presidential spokesman was quoted as saying.

Mexico Corn Production To Reach 25 Mln Tons In 2012 - Official (Source: CME)
Mexico's corn production is expected to reach 25 million metric tons in 2012 and continue increasing steadily in the long term, officials with the Agriculture Ministry said. "Mexico will continue being the biggest worldwide producer of [white] corn," Ernesto Fernandez-Arias, deputy minister of the ministry's agricultural aid unit, said at a press conference. Of the total estimated corn output for next year, 23 million tons will be white corn and 2 million tons will be yellow corn, according to the ministry. Land cultivated with corn is expected to increase to 8 million hectares as high international prices motivate farmers to plant more. By 2014, Mexico will be producing about 27 million tons, officials say. Earlier this year, freezes caused almost complete losses in the white corn production of Sinaloa, a northern Mexico state. The government immediately launched replanting efforts, and about 2 million tons of the state's total 4 million tons were recuperated.
Officials have said Mexico will produce 23.3 million tons of corn this year, down from last year because of the freezes. The ministry initially forecasted a record 25 million ton harvest for this season. An official with the U.S. Department of Agriculture who spoke at the event was less optimistic about the long-term prospects, saying she expects it will take 10 years for Mexico's corn production to reach 27 million tons. Mexico's yields are expected to rise to 3.7 tons per hectare from 3 tons per hectare between this year and 2020, said Sally Thompson, director of the market and trade economics division for the U.S. Department of Agriculture. "We predict higher yields will support an expansion in production," she said. According to Agriculture Minister Francisco Mayorga, the country's increased corn production is part of a national effort to become more self-sufficient. "One of the biggest challenges of humanity is to produce a sufficient amount of food," he said.
Mexico produces mostly white corn, which is used for human consumption. Its yellow corn output is used mostly to feed livestock because Mexicans consider the yellow grain to be too sweet.

Rabobank: World '11-12 Wheat Output +10 Mln Tons At 657.6 Mln Tons (Source: CME)
World wheat output is forecast to rise 10 million metric tons to 657.6 million tons next season, Rabobank said, but it warned that severe drought in Europe and wetness in the U.S. could cut that figure further. Giving its first forecasts for the 2011-12 crop year, the bank said the global markets face a production deficit for a third consecutive season, meaning stocks will be drawn down to 167.5 million tons by the end of the season. Prices, as measured on the Chicago Board of Trade, are expected to stay around $7.90 a bushel in the second quarter of 2011, rising to $8/bushel in the third, but falling back to $7.50/bushel by the end of the year. "Prices [are] expected to remain elevated but showing a very different trend to the rally seen in 2010," said the report. Wheat prices in Chicago surged more than 60% from around $6.00 a bushel in the summer of 2010 to peaks of nearly $10 a bushel in February 2011.
The estimate paints a more bullish picture than the U.S. Department of Agriculture's forecasts last week, which pegged production at 669 million tons next crop year--the third largest on record--leaving a marginal net deficit of only 1 million tons for the season. Rabobank said it expects further downgrades from the USDA this season as excessive moisture in the Northern plains of the U.S. and Canada limit plantings and the worst crop ratings for 15 years boost abandonment rates. "Based on current crop conditions, the USDA's forecast for a 21 million ton year-on-year increase in world wheat production is in our view too high," said Rabobank. Wheat prices soared by more than 4% in Paris and 5% in the U.S. Wednesday as the worst drought to hit Europe in decades dimmed hopes for a rebound in output in the world's largest grain-producing region next season.

Corn Prices Could Rise 35%, Wheat 25% In 2011-12 -Renaissance Capital (Source: CME)
World grain prices could rise up to 35% from already historically-high levels in 2011-12 if a rebound in global production comes in line with recent decades, said a report from Renaissance Capital. Analyst Charles Robertson said growing demand, especially for corn, is likely to eat into already-low world stocks even without a feared cut to yields from poor weather. "We can easily imagine a 35% rise in corn prices and a 25% rise in wheat prices from August 2011 to July 2012," said the report. "The food-price threat for 2011-2012 is very significant, but may disappear in August." Grain prices have surged in recent weeks, with corn hitting a record high last month, as weather problems in the U.S. and the most severe European drought in decades sparked fears of poor crops from the world's top exporters. Markets are jittery after a succession of natural disasters in 2010 sapped output and left users eating into stock levels.
Corn inventories in particular are now near historically-low levels and forecasters fear even a record world crop wouldn't be enough to replenish supplies. Using a range of models based on historical supply responses, Robertson predicts corn output is most likely to rise by about 15 million metric tons in 2011-12 to 840 million tons, drawing stocks down to a mere 6.3 weeks of consumption. "The global corn harvest may well fail to match demand, even if there is no severe drought in the EU, China or the U.S., suggesting stocks could fall further in 2011-2012," he said. In wheat, an average scenario would see output rise by 2.5 million tons to 650 million tons, leaving stocks flat and boosting prices by 10%. In a more negative scenario, output would fall and stocks would decline to 148 million tons, pushing up prices 30%.

Sugar Price May Extend Gain as Brazil Output Slows, Survey Shows (Source: Bloomberg)
Sugar may rise next week on signs that output is dropping in Brazil, the world’s biggest grower. Seven of 11 traders, analysts and brokers surveyed by Bloomberg News said that raw sugar traded in New York probably will advance. Two forecast a loss, and two said prices would be little changed. Before today, futures for July delivery gained 1.7 percent this week, closing yesterday at 21.82 cents a pound.

Oil Climbs in New York Trading as Investors Bet U.S. Jobs Support Demand (Source: Bloomberg)
Oil rose in New York as investors speculated a decline yesterday was too much and that a bigger- than-forecast drop in jobless claims signals fuel demand may increase in the world’s biggest crude-consuming nation.


China may cut tax rebates on aluminium profile exports-sources
HONG KONG, May 19 (Reuters) - China may cut tax rebates on exports of aluminium profiles to 9 percent in June or July but leave the rebate unchanged on plate aluminium, the most active semi-finished aluminium product export, industry sources said on Thursday.
Exports of aluminium profiles, used in the construction sector, and plate, used in the manufacture of industrial products, are currently subject to a 13 percent tax rebate.

RUSAL may cut aluminium output by 0.5 pct in '11
MOSCOW, May 19 (Reuters) - The world's top aluminium producer, Russia's UC RUSAL , said on Thursday it might cut its 2011 metal output forecast by less than 0.5 percent this year due to supply problems at two Siberian smelters.
"In connection with the collapse of the railway bridge over the Abakan River in Khakas region that was used to deliver... raw materials to Sayanogorsk and Khakas aluminium smelters, the company decided to reduce production at both smelters," it said in a statement.

Copper market surplus 118,000 T in 1st qtr-WBMS
LONDON, May 18 (Reuters) - The global copper market recorded an 118,000 tonne surplus in the first three months of this year, compared with a 43,000 tonne surplus for the whole of last year, the World Bureau of Metals Statistics said on Wednesday.
Refined copper production in the first three months rose to 4.76 million tonnes, up 1.8 percent compared with the same period last year. World mine production in January to March was 3.89 million tonnes, up 3.4 percent from the previous year.

Japan April copper cable shipments down 1.4 pct yr/yr
TOKYO, March 23 (Reuters) - Japanese copper wire and cable shipments fell 1.4 percent from a year earlier in April as strong demand for temporary housing partially offset a plunge in auto demand after a devastating earthquake on March 11. 
April shipments totalled an estimated 55,400 tonnes, down from revised March shipments of 56,207 tonnes, data from the Japanese Electric Wire and Cable Makers' Association showed on Thursday.

China warns importers about low-quality Indian iron ore
BEIJING, May 19 (Reuters) - Chinese importers need to pay more attention to the quality of Indian iron ore after an inspection revealed that more than a third of deliveries to a key eastern province were substandard, the country's quality watchdog said on Thursday.
The General Administration of Quality, Supervision, Inspection and Quarantine (AQSIQ) said 36.13 percent of Indian ore shipments delivered to Jiangsu province in the first four months of the year did not make the required grade.

S.Korea buys 1,000 T zinc; seeks 3,000 T aluminium
May 19 (Reuters) - South Korea has bought 1,000 tonnes of zinc ingots for shipment by July 15 to the port of Incheon via a tender closed on May 12, state-run Public Procurement Service said.
The government's procurement agency bought it from a domestic zinc refiner Young Poong Corp  at a premium of $105 per tonne over London Metal Exchange (LME) cash prices on a cost, insurance and freight (CIF) basis, the agency said late on Wednesday on its website (www.g2b.go.kr).

Kazakhstan's Q1 uranium output up 9 pct yr/yr
ALMATY, May 19 (Reuters) - Kazakhstan, the world's largest uranium producer, boosted its output of the metal by 9 percent in year-on-year terms in the first quarter of 2011 to 4,444 tonnes, state nuclear firm Kazatomprom said on Thursday.
Kazatomprom's share in the nation's output amounted to 2,543 tonnes in the first three months of this year.

METALS-Copper falls on dollar, ahead of jobs data
LONDON, May 19 (Reuters) - Copper fell on Thursday in cautious trade ahead of U.S. jobless claims and as a firmer dollar ate into gains made in the previous session, when it rose the most in two months in a commodity-wide rebound. Three-month copper on the London Metal Exchange  was off $15 at $9,050 a tonne by 0959 GMT. It rose more than $260, or over 3 percent on Wednesday, its biggest rise since March 17.
"We had a strong bounce yesterday, which means it's going to be a bit cautious now. You can't just dismiss the correction at the beginning of this month as simply a blip," said BNP Paribas senior metals market strategist Stephen Briggs.

PRECIOUS-Gold cuts losses as dollar dips, oil rallies
LONDON, May 19 (Reuters) - Gold pared some losses on Thursday as the euro edged up against the dollar and oil prices firmed but prices were still set for a daily decline as investors took their cue from currency markets. Spot gold  was bid at $1,494.69 an ounce at 1105 GMT, against $1,496.30 late in New York on Wednesday. U.S. gold futures for June delivery  fell $2.4 to $1,493.5.
An early bounce in the euro  helped gold to a session high near $1,500, with investors wary towards the dollar after minutes of a Federal Reserve meeting in April did not indicate the Fed was ready to start tightening policy any time soon.

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