Tuesday, June 7, 2011

20110607 0943 Global Commodities Related News.

Corn (Source: CME)
US corn futures tumble on improved weather and broad-based commodity selling. Warm weather with rains forecast later in the week are good for the crop, most of which has now been planted after a long, soggy spring. "We're heading into summer, and the crop is in the ground and growing," says Chad Henderson, analyst with Prime Ag Consultants. Market will need more supportive weather news to drive higher, he says. Some traders see the drop as nothing more than a correction after recent strength. Wheat and soy also plunged. CBOT July corn ends down 22c $7.32 per bushel; Dec corn down 19 1/4c to $6.67.

Wheat (Source: CME)
US wheat futures finish sharply lower as improving weather conditions ease concerns about output. Beneficial rains fell in dry areas of Western Europe ahead of the upcoming harvest, while farmers in the US northern Plains are making "some progress" planting spring wheat, according to Telvent DTN, a private forecaster. Spillover pressure from steep losses in the corn and wheat markets adds pressure to wheat. CBOT July wheat falls 29 3/4c to $7.44/bushel; KCBT July loses 24 1/4c to $8.90 and MGE July slips 18 1/2c to $10.42.

Rice (Source: CME)
US rice futures end higher as worries about the domestic crop support prices even as other commodities tumble. Drought throughout southern growing areas is causing all sorts of problems for farmers, and mill operators are buying rice on the expectation prices could climb, the US Rice Producers Association says in a newsletter. An analyst adds the market could be supported by the outlook for the Thai market. July CBOT rice climbs 1.9% to $14.74 1/2 per hundredweight.

Funds Boost Bullish Commodity Bets Amid Improving Global Growth Prospects (Source: Bloomberg)
Funds boosted bets on rising commodity prices to the highest in four weeks, led by copper, amid signs that the global economic recovery will remain resilient and boost demand for raw materials. Speculators raised their net-long positions in 18 commodities by 7.3 percent to 1.26 million futures and options contracts in the week ended May 31, government data compiled by Bloomberg show. That’s the highest since May 3. Copper holdings more than doubled. A measure of bullish agriculture bets also climbed as adverse global weather curbed crop production.

U.S. corn farmers at crunch time on planting
CHICAGO, June 3 (Reuters) - U.S. farmers who lag planting corn due to a soggy spring will still opt to seed corn rather take than an insurance payout or plant soy if their farms usually run high yields, a University of Illinois economist said on Friday.
"Farms with higher expected yields will find planting corn more attractive than taking the prevented-planting payment," Gary Schnitkey, University of Illinois economist and crop insurance specialist, told the Reuters Ags Forum.

Soybeans, Corn Fall as Drier U.S. Weather to Aid Planting, Crop Conditions (Source: Bloomberg)
Soybeans fell the most in more than four weeks and corn dropped for a second session on speculation that drier, warmer weather last week allowed U.S. farmers to accelerate planting delayed by an unusually wet spring. Some muddy fields dried out enough to support planting machinery, said Drew Lerner, the president of World Weather Inc. Over the next two weeks, crops will get frequent rains that will aid germination and improve conditions of newly planted crops, Lerner said. The U.S. is the biggest grower and exporter of corn and soybeans.

U.S. wheat ticks up; grain markets eye planting report
SINGAPORE, June 6 (Reuters) - Chicago wheat edged higher supported by a weak dollar, while corn and soy were little changed ahead of a U.S. plantings report expected to show that farmers made progress in crop seeding following dry weather in the Midwest.
"I think it's going to be fairly slow with positioning ahead of those reports," said Adam Davis, a senior commodity analyst at Melbourne-based fund manager Merricks Capital.

Drought-hit China provinces to get rain relief this week
BEIJING, June 6 (Reuters) - Several Chinese provinces that are enduring their worst drought in decades may be hit by thunderstorms and landslides in the next two days, local media said, although it was not clear how much relief it will provide to devastated crops and fish farms .
Rainfall of between 10-152 millimetres could hit China's parched central provinces of Hunan, Anhui and Jiangxi, the China News website reported, citing local weather reports.

Four suspected U.S. E.coli cases linked to Germany
ATLANTA, June 5 (Reuters) - The United States has stepped up surveillance of some imported fresh vegetables and raw salad greens, but there are no signs the U.S. food supply has been tainted by a deadly E.coli bacteria that has sickened thousands in Europe, officials said on Sunday.
The number of suspected U.S. cases involving the E.coli bacteria remained at four on Sunday, all of whom had recently visited Hamburg, Germany, officials said.

Governments should pop commodity bubbles-UN report
GENEVA, June 5 (Reuters) - Direct government intervention may be needed to burst bubbles in commodity markets inflated by a new herd of financial investors, a U.N. study found.
Excessive speculation has added around 20 percent to international oil prices, sending false signals to policy makers, said the report published on Sunday.

French 2011-12 Wheat Production Could Fall 10-15% On Drought-FEC (Source: CME)
French wheat production could fall by 10-15% in the 2011-12 crop year following France's worst drought on record, non-profit organization France Export Cereales said. "Concerning the impact of drought on production potential, there is no doubt that French wheat production will go down this year," Leandro Pierbattisti, FEC analyst, said. France's worst drought on record is set to weigh heavily on its wheat harvest, French Agriculture Minister Bruno Le Maire said last week, potentially denting global wheat supplies. However, "France, Germany and the U.K. all received welcomed rainfall over the weekend, with further rainfall due over the coming three days. Central and Eastern France are due further sustained showers," FC Stone commodity risk manager said in a report.
According to a report released by the French government weather agency Meteo France, the 2011 spring was both the warmest and the driest on record, with a higher average temperature and less rain than in 1976, the previous most severe drought since the agency began compiling the data. FEC estimates French wheat production for the 2010-11 crop year at 36.5 million metric tons.

Russia grain exports to restart in July-attache
WASHINGTON, June 3 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Russia:
"The Russian government will not extend its grain export ban beyond July 1. Experts estimate Russia's grain export potential in 2011 at 13 to 15 million tonnes depending on the grain crop 2011."

US Grain Exports Expected To Drop As Foreign Output Rises (Source: CME)
U.S. grain exports are expected to fall in the year ahead as farmers around the world ramp up production to cash in on a global boom for crops. Prices for corn and wheat have surged since last summer, creating an incentive for farmers in South America and the former Soviet Union to ramp up plantings with an eye on exports. That means more competition for the U.S., the world's top grain exporter, which has seen its inventories depleted over the last year due to a surge in foreign demand. "When you get into high prices and ample stocks outside the U.S., U.S. exports tend to drop sharply," said Terry Reilly, grains analyst at Citigroup in Chicago. Foreign buyers are looking to other nations for supplies or producing more of their own grain. Yet a slowdown in export sales abroad isn't likely to undercut prices as U.S. inventories are expected to remain low and domestic demand from food processors, ethanol makers and livestock producers remains strong. Analysts warn it is still early.
Factors, from Russia putting new tariffs in place to China's harvest falling short of expectations, could cause U.S. export sales to pick up. Weakness in the U.S. dollar also could boost interest from foreign buyers. Citigroup projects U.S. wheat exports will drop 23.5% to 975 million bushels in the current crop year that began this month. Corn exports are projected to fall nearly 8% to 1.75 billion bushels in the coming crop year that starts in September. Those projections are more dramatic than the outlook of federal forecasters. The U.S. Department of Agriculture predicts corn exports will fall 5% to a nine-year low, while wheat exports will tumble 21%, yet still remain above levels in the 2009-2010 crop year. Pulling export buyers away from the U.S. is the return of Russia, once the world's third-largest grain exporter. Russia last week said it would resume exports July 1 after implementing a ban last August when a historic drought devastated its crops.
Russia could export as much as 13 million tons of wheat in the current marketing year, up from four million tons last year, Reilly said. That would account for 10% of global wheat exports, which the USDA projects at 127 million tons. Ukraine also is easing restrictions on grain exports amid expectations for a rebound in production after last summer's drought. The countries are expected to take business from the U.S. to countries in North Africa and Asia. Egypt, the world's top wheat importer, has already expressed interest in rekindling its relationship with Russia. Federal forecasters in a recent report wrote "export prospects are sharply diminished," citing increased competition as Black Sea production and exports rebound. As for corn, a large crop in Argentina, the world's second largest exporter of the grain, is expected to eat into U.S. business. The USDA projects Argentina's corn output will jump 18% from last year to a record 26 million tons and its exports will rise 24% to 18 million tons.

USDA: Russia 2010 Grain Losses May Be Overstated By 6 Mln Tons (Source: CME)
Russia may have more grain to export than expected after farmers and officials exaggerated losses by up to 6 million tons last summer, the U.S. Department of Agriculture's Moscow attache said. Many regions reported a total wipeout of crops last summer in a bid to get government compensation after the worst drought to hit the country in more than a century devastated Russia's harvest. But the USDA's attache said that in some regions yields may still have reached 0.2-0.3 tons of grain per hectare, meaning the 2010 harvest may have been 3-6 million tons more than the government figure of 61 million tons. "Analysts point out that reliable, unbiased data on grain production is still absent in Russia," the report said. Russian Prime Minister Vladimir Putin announced at the end of last month that Russia will allow grain exports as of July 1. The move has weighed on wheat prices as traders anticipated the arrival of some of the world's cheapest grain on the international market.
The USDA said analysts estimate Russia may export up to 3 million tons of the 2010 harvest and another 10 million-12 million tons from the upcoming 2011-12 harvest, depending on its size. Observers say the decision to export has been prompted by the need to empty much-needed storage space ahead of the 2011-12 harvest, which the government forecasts could reach 85 million-90 million tons.

UN Agency Urges Controls On Financial Investors In Commodity Markets (Source: CME)
An increase in financial investment in associated derivatives markets has had a significant impact on the prices of a wide range of commodities, and must be countered by regulatory action, including direct interventions in those markets, a United Nations agency said. Prices for many commodities have been rising since the mid-2000s, but volatility has also increased greatly. Much of the increase in prices appears to have been driven by fundamental factors such as rising demand from fast-growing developing economies and concerns about supply shortages linked to political changes in the Middle East. But politicians in some developing economies have argued that an increase in financial investment in commodity markets has exaggerated those moves, hitting poorer countries particularly hard.
French President Nicolas Sarkozy has put commodity prices at the top of the agenda of the Group of 20 industrialized and developing nations this year, and a number of international regulators are working on proposals to improve the workings of commodity derivatives markets. But some commodity producing countries, and governments in those nations in which commodity derivatives markets are based, are wary of an increase in regulation that, in their view, could further distort prices and affect commodity production. In a new report, the United Nations Conference on Trade and Development came down firmly on the side of those who argue financial investment has affected prices, and needs to be controlled. "Rising volumes of financial investments in commodity derivatives markets has encouraged herding behavior through which price determination in commodity markets increasingly follows the logic of financial investment rather than market fundamentals," UNCTAD said.
UNCTAD estimated that prior to the recent dip, "excessive speculation" had accounted for 20% of the price of crude oil. It noted that commodity prices have increasingly responded to the release of important economic data, such as U.S. unemployment figures. That was difficult to explain from the perspective of supply and demand, but suggested an increased correlation with the bond, equity and foreign exchange markets in which financial investors have traditionally traded. "For cocoa...there can hardly be any link between United States employment and world chocolate consumption," UNCTAD said. UNCTAD said that by pushing prices higher and increasing their volatility, the growing role of financial investors was distorting global economic policy making.

US, France Differ On Ways To Improve Global Food Security (Source: CME)
France and the U.S. remain at odds over two key G-20 proposals in a plan that France believes is necessary to prevent global food shortages and help farmers around the world produce more. After months of negotiations with countries in the Group of 20 largest industrialized and developing nations, French Agriculture Minister Bruno Le Maire said he has achieved a "consensus of necessity" from member countries that a new global food security plan is needed. After a meeting Friday between Le Maire and U.S. Agriculture Secretary Tom Vilsack, both officials said there were differences in methods, but unity in the goal to stabilize food supplies. The U.S. support of genetically modified plants as key in boosting crop yields and the French proposal to build and fill emergency stockpiles of food staples such as wheat, rice and corn in developing countries continue to split the two countries.
"We just want to build, wherever it's needed, emergency reserves in case there is a food crisis...anyplace in the world," Le Maire said in an interview. He said the proposal is to leave it up to the United Nation's World Food Program to decide where the reserves should be located and which commodities would be stockpiled. "There is the desire on the part of some nations to have physical reserves," Vilsack said. "Our view is that you don't need to do that if you have transparency and you know pretty much who is growing what and how the harvests are. You can figure out where the surpluses are and where the shortages are." Transparency by countries in how much food they are producing and storing is something that Le Maire and Vilsack agree on and both officials pointed to China as one of the most secretive. In that regard, Le Maire said, he has made much progress.
The French minister was in Beijing last week and it was there he said the Chinese promised they were developing a reporting and statistics system that would shed more light on what and how much the country is producing. Initially the Chinese simply said no to the idea, Le Maire said, but now it looks as if it could happen. He said he hopes to have an answer when the G-20 agriculture ministers meet in Paris on June 22 and 23. Another consensus between France and the U.S. is that the world needs to significantly boost agricultural production, but they differ on the use of biotechnology to achieve that increase. Vilsack stands firmly behind the role of genetically modified seeds play in helping farmers get higher yields from limited farm land, while Le Maire stressed that France remains unconvinced about the safety of engineered crops. France has made recent strides in accepting genetically modified crops, but continues to keep some barriers up.
In July last year France approved 38 varieties of genetically modified corn, but kept in place a ban on planting them, according to Paul Winters, a spokesman for the U.S.-based Biotech Industry Organization. Nearly all of the corn, soybeans and cotton planted in the U.S. are genetically modified. Le Maire, in a February address to the United Nations General Assembly, warned that the world's population will reach 9 billion by 2050 and to feed them "a 70% increase in agricultural production" will be needed.

EU To Hold Extraordinary Meeting On E Coli (Source: CME)
European farming ministers will hold emergency talks on an E. coli outbreak that has killed at least 22 people amid cross-border anger over devastation for vegetable producers. "It has been decided that the EU agriculture and food safety ministers will meet (Tuesday) at 2:00 pm (1200 GMT) in Luxembourg," 10 days earlier than planned, Marton Hajdu, spokesman for the European Union's current Hungarian chair, told AFP. All but one of the deaths occurred in Germany, the source of the enterohaemorrhagic E. coli (EHEC) outbreak which has affected 12 countries. The other victim died in Sweden. The bacteria has left some 2,000 people ill across Europe. The outbreak was originally but falsely blamed on Spanish cucumbers, and growers have seen their produce shunned, with Russia and Qatar among states that have applied temporary bans on fresh-produce exports.
And although sprouts from a German grower are now being tested, with results due today, Spanish government anger at Germany jumping to conclusions comes on top of mounting calls from German, Dutch, French, Belgian and Portuguese growers' organisations for compensation or emergency aid to the farming sector. The EU commissioner for agriculture, Dacian Ciolos, and the health commissioner, John Dalli, will each attend the meeting. "They will be taking stock of the situation of the EHEC outbreak--both from the market perspective and also food safety," Hajdu added. Cases of E. coli poisoning have been reported in more than 12 other countries, including Austria, Britain, the Czech Republic, Denmark, France, The Netherlands, Norway, Spain, Sweden, Switzerland and the United States. Each was related to German travel.
The World Health Organization has identified the bacteria as a rare E. coli strain never before connected to an outbreak of food poisoning and said to be extremely aggressive and resistant to antibiotics. Ciolos last week said "limited" emergency aid to farmers could be explored, and a European diplomat who did not want to be identified said states want concrete proposals from the Romanian.

Coffee, cocoa down, tight supplies white sugar
LONDON, June 6 (Reuters) - ICE arabica coffee and cocoa futures fell in early trade after poor jobs data fuelled fears of a slowdown in recovery of the U.S. economy, while sugar firmed, buoyed by tight supplies of white sugar. ICE raw sugar futures inched up in light volumes, underpinned by tight availability of refined sugar, combined with new-crop loading delays at ports in Brazil.

India's Maharashtra cuts 2010/11 sugar output f'cast
MUMBAI, June 6 (Reuters) - India's western Maharashtra state, the biggest sugar producer in the country, has revised downward its 2010/11 sugar output forecast to 9 million tonnes from the previous 9.1 million tonnes, said a senior state government official.
"Production of 9 million tonnes is possible in the current year. Many sugar mills were forced to close operations due to early arrival of monsoon rains," said the official at the state's sugar commissioner's office.

Czarnikow sees 10.3 mln t sugar surplus '11/12
LONDON, June 3 (Reuters) - Czarnikow on Friday forecast a global sugar surplus of 10.3 million tonnes in 2011/12, as growers increase plantings to take advantage of high prices, after a small deficit of 0.5 million tonnes in 2010/11.
"The 2011/12 season should deliver a sharp rise in global production as producers around the world respond to high sugar prices," the London-based merchant said.

India sugarcane, cotton acreage up in 2011
MUMBAI, Jun 3 (Reuters) - Farmers in India have planted sugarcane over 5 million hectares till date in the current kharif season, up from 4.8 million hectares last year, data from farm ministry showed.
Cotton has been sown in 1.48 million hectare as compared to 1.15 million hectares the year ago, farm ministry said in a statement.

Crude Declines for a Third Day on Speculation OPEC Will Increase Quotas (Source: Bloomberg)
Oil dropped for a third day in New York amid speculation OPEC may increase output quotas when it meets in Vienna tomorrow. Futures slipped as much as 0.4 percent today after falling to the lowest in two weeks yesterday. The Organization of Petroleum Exporting Countries may increase production limits, Barclays Plc said June 6. Prices also declined amid signs fuel demand is faltering along with economic growth.

South African Coal Has First Gain in Four Weeks on Increased China Buying (Source: Bloomberg)
Coal export prices gained for the first time in four weeks at South Africa’s Richards Bay terminal as China, the world’s biggest consumer of the fuel, accelerated buying in the face of power shortages. Prices at Richards Bay, the continent’s largest facility for shipping coal, rose 0.2 percent on average in the four days to June 3 to $118.49 a metric ton, according to data from Petersfield, England-based researcher IHS McCloskey. China boosted its coal imports 64 percent in the two months through April.

Protest hits Chile key copper mine for second day
SANTIAGO, June 5 (Reuters) - Chile's fourth biggest copper mine, Codelco's  El Teniente, was producing at less than half of capacity for a second day on Sunday after most staff workers stayed home to avoid violence by striking contractors, the company said.
El Teniente, which produces about 2.5 percent of the world's mined copper or 404,000 tons-a-year, continued to work with a skeleton staff to keep production at 40 percent of capacity by processing stocked material.

US copper premiums up on tight scrap, shipping costs
NEW YORK, June 3 (Reuters) - U.S. copper premiums crept higher this week, buoyed by rising shipping costs and a lack of available scrap metal, an issue that could keep primary cathode premiums on the rise in the months ahead.
"Premiums are moving slightly up because the freight rates are killing us," one Midwest dealer said.
"If you're going to any distance from the docks, you're probably anywhere from 5.5 to 7 cents per lb."

Iron Ore-Prices rise for first time since May, China on holiday
SINGAPORE, June 6 (Reuters) - Spot iron ore prices are set to regain more ground this week after rising for the first time in about a month on Friday as Chinese steel mills returned to the market to replenish run-down inventories.
Prices of the steelmaking ingredient had fallen to more than two-month lows before Friday's recovery on limited interest from top buyer China.

METALS-Copper firms on soft dollar, Chile strife
LONDON, June 6 (Reuters) - Copper gained on Monday, buoyed by a softer dollar following weak economic data out of the United States and output disruptions in producer Chile.
Three-month copper on the London Metal Exchange  traded at $9,166 a tonne by 0920 GMT from a close of $9,099 on Friday. There was no trade on the Shanghai Futures Exchange due to a one-day holiday in China.

PRECIOUS-Gold rises as dollar sags, US outlook clouds
LONDON, June 6 (Reuters) - Gold rose for a second day on Monday, drawing strength from investor concerns over the outlook for U.S. growth after Friday's surprisingly weak employment data and a decline in the dollar to one-month lows.
U.S. employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent, stoking worries that economic growth may be faltering and supporting sentiment in gold, which is seen as a safe-haven investment during times of economic uncertainty.

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