Friday, July 1, 2011

20110701 1221 Global Commodities Related News.

Corn (Source: CME)
US corn futures finish at 3 1/2-month lows as surprising USDA data fuelled a record-breaking price drop. USDA stunned traders by pegging corn plantings and inventories as of June 1 well above expectations. Increase in supplies gives the market cushion in case poor weather hurts output this year, analysts say. Market participants had been worried about strong demand and unfavorable weather draining supplies. Nearby CBOT July corn, trading without limits, drops 69c to $6.29 a bushel. December corn falls the 30c limit to $6.20 1/2

Wheat (Source: CME)
US wheat futures settle limit down at the CBOT under spillover pressure from exchange-limit losses in corn, which dragged down wheat as both grains are used for animal feed. Larger-than-expected corn supplies indicate farmers may not feed as much wheat as expected, analysts say. Wheat will "remain the most adequately supplied of the grains next year," according to Morgan Stanley. CBOT September wheat drops the daily 60c limit to $6.14 1/4 a bushel KCBT September sinks 56 3/4c to $7.07 1/4 and MGE September falls 54 1/2c to $7.95.

Rice (Source: CME)
US rice futures close up the daily 50c limit as USDA slashes its plantings estimates. Government pegged rice plantings at 2.7M acres, down from its March estimate of 3M. Cut fuels supply concerns as growing areas have struggled with poor weather this spring. Flooding from the Mississippi River submerged some acres, and the South has recently been too hot and dry. CBOT July rice, trading without limits, climbs 62c to $13.88 1/2 per hundredweight. September rice jumps the 50c limit to $14.84 1/2.

US Corn Futures Plummet On USDA Reports (Source: CME)
Futures prices for U.S. corn plummeted after federal forecasters reported larger-than-expected supplies and raised their outlook for the fall harvest. Corn for July delivery fell as much as 12% on the Chicago Board of Trade, establishing new records for an outright daily price move and percentage change in the market. Corn for delivery for later in the year and in 2012 fell 30 cents, the daily limit on one-day declines. The July contract wasn't subject to that limit since it is nearing expiration. Traders were shocked by two reports from the U.S. Department of Agriculture. One report estimated U.S. farmers planted 92.3 million acres of corn this spring, up 1.7% from an estimate issued just three weeks ago. The other report put the amount of corn in U.S. inventories as of June 1 at 3.67 billion bushels, down 15% from a year ago, but well above analysts' expectations.
Corn prices rallied to a record high in early June as traders fretted that precariously low supplies and ongoing strong demand could lead to scattered shortages by the end of the summer. Furthermore, the fall crop was seen not being able to replenish inventories as wet spring weather kept farmers from planting all the corn they could. Today's report undercut those twin worries, driving the historic selloff. "This is a definitely a shock to the system. We had two whammies with acreage and stocks," said Jerry Gidel, analyst for North America Risk Management Services, a brokerage in Chicago. Corn plantings this year are estimated to be the second highest since 1944, behind only the 93.5 million acres planted in 2007, according to the USDA. Many analysts, however, expected the agency would mimic a lower estimate from June 9 that had pegged plantings at about 90.7 million acres. The report was based on surveys of farmers, while the earlier report was based on agency projections.
The USDA also said it expects farmers to actually harvest 84.9 million acres, a 1.7-million-acre increase from the June 9 forecast. Expectations for a smaller planting were driven by excessive rains and flooding in the eastern Corn Belt and northern Plains in April and May that kept farmers out of their fields. The agency said that planting was indeed delayed in early May through much of the Midwest, but the "planting conditions improved during May in most of the corn-producing areas of the country." Traders "underestimated how the acres lost in the east could be made up by plantings in the west, and by plantings on the lawn," said John Kleist, senior analyst at ebottrading.com, an Illinois brokerage. Yet, federal officials acknowledged its crop data could have been skewed by the poor weather. The USDA, in a statement issued separately from the plantings estimates, said it would survey farmers again in North Dakota, South Dakota, Minnesota and Montana in July to find out what they planted.
The government collected planted acreage information during the first two weeks of June, but "a large percentage of acres remained to be planted" at that time, the USDA's National Agricultural Statistics Service said. Morgan Stanley, in a note to clients, predicted the USDA would eventually lower its estimate for how much corn will be harvested due to flooding in the Midwest. The firm said it was still "broadly bullish" on corn prices. As for supplies, the USDA put corn inventories, whether stored on farms or in off-farm facilities, at 3.67 billion bushels as of June 1. That's a 15% decrease from the 4.3 billion bushels in stockpiles available a year ago, yet analysts were expecting a 23% decrease. Many analysts didn't expect demand would pull back this spring and leave more grain in storage. Livestock producers have been scrambling to find physical supplies of corn for feed, while ethanol producers are expected to consume a record 5.05 billion bushels of corn next year.
The reports left some analysts and traders to question the accuracy as projections didn't appear to match what they are seeing in the market. "I think you probably raised many more questions than you answered today and you're probably going to raise a credibility issue with the USDA," said Jim Gerlach, president of A/C Trading, a commodities brokerage in Indiana. The selloff in corn futures pressured the soybean and wheat markets. Wheat for September delivery recently fell 7.9% to $6.20 3/4 a bushel, while soybeans for August delivery dropped 1.2% to $13.12 a bushel at the Chicago Board of Trade.

Corn Extends Worst Monthly Loss Since 2008, Wheat Falls on U.S. Plantings (Source: Bloomberg)
Corn extended its biggest monthly loss since October 2008 and wheat tumbled to the lowest level in almost a year after the U.S. reported acreage and inventories that topped estimates by analysts. Corn for December delivery slumped as much as 6.3 percent to $5.815 a bushel, the lowest for the most-active contract on the Chicago Board of Trade since Dec. 16, and traded at $5.8875 at 10:14 a.m. Singapore time. The grain lost 17 percent in June, narrowing the gain in the past year to 53 percent.

Corn rises for 3rd day, wheat firm ahead of USDA report
SINGAPORE, June 30 (Reuters) - U.S. corn futures gained nearly 1 percent on Thursday, rising for a third straight session, while soybeans added 0.4 percent on growing concerns over crops amid strong demand.
"The focus now is more on soybeans and corn, soy plantings may come short of overall estimates," said Ker Chung Yang, an agricultural commodities analyst at Phillip Futures in Singapore.

India panel to decide on rice, wheat exports-food min
NEW DELHI, June 29 (Reuters) - India's food ministry is not against grains exports and a panel of ministers will decide on rice and wheat exports, the food minister said on Wednesday, without specifying any time frame.
"Food ministry is not negative to exports, but we will have to look at the demand in view of the Food Security Bill. We will place the issue before EGoM (Empowered Group of Ministers)," K.V. Thomas told reporters.

India food ministry gives nod to possible grain exports
NEW DELHI, June 29 (Reuters) - India's food minister gave a nod to possible exports of grains because of bumper crops and overflowing storage on Wednesday, after government sources told Reuters there could be one million tonnes of both wheat and rice offered.
India is one of the world's biggest producers of rice and wheat but also one of the largest consumers and has kept a tight rein on exports since 2007 to ensure it can provide cheap food grains to the poor.

Floods, rains cast shadow over U.S. crop prospects
CHICAGO, June 29 (Reuters) - Flooding in key farming areas of the United States has begun to damage corn and soybean crops, and is raising concerns about this fall's harvest at a time when supplies are tight, analysts said on Wednesday.
Floods likely prevented North Dakota farmers from planting 6 million acres of cropland this spring, said Drew Lerner president and senior agricultural meteorologist of World Weather Inc.

Rains to reduce wheat harvest in central Ukraine
KIEV, June 30 (Reuters) - Heavy rains across Ukraine's central and southern regions are likely to reduce the yields of wheat and barley by 5 to 10 percent, a senior weather forecaster said on Thursday.
Tetyana Adamenko, who heads the agricultural department of the Ukrainian state meteorological centre, told Reuters that the body, which forecast the harvest of up to 44.5 million tonnes of grain in 2011, would review its crop forecast in mid-July.

Ukraine's grain exports fell to about 12 million tonnes in the 2010/11 from 21.5 Mln 09/10 - UKRAINIAN GRAIN UNION
Jun 30 (Reuters) -    KIEV, June 30 (Reuters) - Ukraine's grain exports fell to about 12 million tonnes in the 2010/11 season from 21.5 million in the previous one, Ukrainian Agrarian Confederation (UAC) grain union said on Thursday.
UAC director Serhiy Stoyanov told a news conference that in the June 1-29 period Ukraine had exported 1.34 million tonnes of grain including 600,000 of wheat, 240,000 of barley and 460,000 of maize.

Pakistan Wheat Exports At Near Standstill (Source: CME)
Pakistan's wheat exports have come to a near standstill, with shipments being delayed because the provincial government in Sindh isn't allowing transit of grain from Punjab to the port in Karachi, trading executives said. Pakistan's wheat exports have hit a record 2.0 million metric tons this year, and contracts for shipments of another 200,000 tons to Southeast Asia, the Middle East and Africa are yet to be executed. Pakistan has been filling a crucial gap in the global milling wheat trade earlier this year due to lack of supply from the Black Sea region. The Sindh provincial government is cracking down on exports from Punjab, which it is citing as the reason for rising local prices, they said. Over the last four days, wheat-laden trucks from Punjab haven't been able to reach Karachi port, said Muhammed Najib Balagamwalla, chairman of Karachi-based commodities trading company SeaTrade Group.
Traders said three shipping vessels for loading of around 65,000 tons of wheat are anchored at Karachi port and another for 12,000 tons will arrive soon. Since the trucks carrying wheat are accompanied by valid export permits from authorities in Punjab, the local Sindh government's actions to impound them aren't justified, said a Karachi-based exporter. Sindh government officials couldn't be immediately reached for comment, but according to local media reports, the authorities there have expressed concern that some traders might be using fake permits to export wheat. The Sindh government is against exports of wheat, which it says are creating shortages in some regions, and the matter will now be taken up with the federal government, the local reports said. However, Punjab has permitted exports of wheat from its latest crop, which was harvested in April and May.
Exporters insist that Pakistan still has the potential to export a few hundred thousand tons of wheat in July and August without affecting local supply because of a bumper crop of 24 million tons. Sindh local wheat procurement has fallen short of target by around 500,000 tons because middlemen are paying around PKR100 per 40 kilograms less to the farmers than the state-set intervention price, and then selling the grain to the government for a profit, said SeaTrade's Balagamwalla.

India Monsoon Rains Cover Most Parts (Source: CME)
India's monsoon rains have covered most parts of the country until June 30 and widespread rainfall is expected over the largest sugarcane growing state Uttar Pradesh in the next three to five days, the India Meteorological Department said. Rainfall from the start of the monsoon season until June 30 was 182 millimeters, 11% above the long-term average, the weather office said in its latest update. The department said a slight increase in rainfall activity is also expected in the southern regions, while scattered rains are likely over central parts. Monsoon rain in India was 10% above average between June 23 and June 29, although the level was lower than the previous week's due to weak rains in some eastern and western regions as well as the southern part, the weather office said. The country received 56.6 millimeters of rain during the period, compared with the 50-year average of 51.6 millimeters, the Department said.
There might be a lull in the rains in the first week of July and that may continue until mid-July, said an official with the weather department. Last week, the weather office forecast that monsoon rainfall this year is likely to be 95% of the long-period average, lower than the 98% it projected in April. The weather office also said that rainfall during July and August, which account for more than 60% of the seasonal showers, is expected to be 93% and 94% of the 50-year average, respectively. The June-September monsoon season brings about 70% of India's annual rain and is crucial for summer-sown crops such as rice, sugarcane, pulses, cotton and oilseeds as about 60% of the country's farmland is rain-fed. This year, the monsoon entered India's mainland two to three days early on May 29 through the southern state of Kerala.

IGC Ups 2011-12 World Grain Output Forecast (Source: CME)
The International Grains Council raised its estimate for world corn production by 15 million metric tons only hours after the U.S. Department of Agriculture stunned markets with its own estimates. The IGC now expects farmers to produce 858 million tons of the grain, up from its previous estimate of 843 million tons and 33 million tons higher compared with last year due to improving hopes for crops in the U.S. and China. Boosted by a slight rise in hopes for the world wheat crop to 666 million tons, the London-based organization now forecast global grain output will total 1.81 billion tons in 2011-12, up 17 million tons from its earlier prediction. "Changes include higher than anticipated carry-in stocks of wheat in Russia and an increased U.S. maize crop forecast," said the report. "There are also sizeable upward adjustments in the production and consumption figures for China stemming from the latest official crop data."
The news comes as world grain markets plunged in the wake of the USDA's latest report, released earlier today. European wheat futures crashed to an eight-month low and U.S. corn prices fell to their 30 cents daily trading limit in Chicago after the body stunned the market with an unexpected hike to its estimate for U.S. corn plantings and stocks next year. Yet despite the rise in output, the IGC still expects a deficit in world markets next year as consumption of grains rises 1.4% to 1.82 billion tons due to a 12 million ton rise in the use of feed grain in Europe and China.

Sugar steady below 3-1/2-month highs, coffee firms
LONDON, June 30 (Reuters) - ICE raw sugar futures consolidated near 3-1/2-month highs, supported by lower than expected Brazilian output, in early trading on Thursday, while coffee firmed, buoyed by reports that frost had reached at least two minor coffee regions in Brazil's Parana state.
Sugar futures rose and traded below Wednesday's 3-1/2-month highs, supported by lower-than-expected crush data in Brazil as dealers expressed concerns over a slow start to the harvest in the centre-south.

Brazil coffee dodges frost during a chilly night
BRASILIA, June 29 (Reuters) - Brazil's southeastern coffee regions passed through a chilly night without frost, four cooperatives said on Wednesday, after a freeze the previous night that reached a comparatively small number of farms.
Weather forecaster Somar said temperatures would keep rising in the coming days in the coffee zones of the world's top grower, but fall sharply again next week. It did not expect any frost despite "critical temperatures" expected next week.

Cheap land, less coca key to new Colombia coffee belt
BOGOTA, June 29 (Reuters) - Colombia's traditional coffee belt is losing out to a new group of producers as cheap land, lower labor costs and replacing cocaine by coffee push output growth in some southern states, growers and experts say.
Colombia, the world's top producer of high-quality Arabica beans, has experienced a migration of crops from its traditional "Eje Cafetero" zone as other provinces make gains due increases in the acreage of coffee plantations.

Rain too little to hurt Brazil cane crushing
SAO PAULO, June 29 (Reuters) - Rain early this week over Brazil's center-south was too weak to affect crushing of the new crop -- now in full swing, weather forecaster Somar said on Wednesday.
This should help mills make up for delays earlier in June when rains delayed harvesting of the world's biggest cane crop.

Oil Drops on Signs of China, U.S. Slowdown; IEA and OPEC Supplies Increase (Source: Bloomberg)
Oil declined, trimming the biggest weekly gain in almost three months, as signs of slowing manufacturing growth in China and the U.S., the world’s biggest energy users, stoked speculation fuel demand may falter. Futures slipped as much as 0.7 percent, dropping for the first day in four, after China’s Purchasing Managers’ Index fell to the lowest since February 2009. A report today may show a slowdown in U.S. manufacturing. Prices also slid as the U.S. offered 30.2 million barrels of oil from strategic reserves under an IEA plan to stabilize prices and OPEC boosted supplies.

India plans mining licence to attract foreign investors
NEW DELHI, June 29 (Reuters) - India's draft mining bill will offer a prospecting licence guaranteeing the holder the right to produce 100 percent of any find, as the country seeks to attract foreign money and technology to its underperforming mining sector.
The bill will also create an independent regulator for the sector, Mines Secretary S. Vijay Kumar told Reuters, and should be approved by end-2012.

India plans mining licence to attract foreign investors
NEW DELHI, June 29 (Reuters) - India's draft mining bill will offer a prospecting licence guaranteeing the holder the right to produce 100 percent of any find, as the country seeks to attract foreign money and technology to its underperforming mining sector.
The bill will also create an independent regulator for the sector, Mines Secretary S. Vijay Kumar told Reuters, and should be approved by end-2012.

Japan July-Sept crude steel demand seen up 1.5 pct
TOKYO, June 30 (Reuters) - Japanese demand for crude steel in July-September will be just 1.5 percent higher than the previous three months despite a robust recovery in the manufacturing sector as inventory levels remain high, the trade ministry said on Thursday.
A government survey of domestic steel users, such as carmakers and electric appliance makers, in combination with high inventory levels point to total demand for crude steel of 26.92 million tonnes for the period, the second quarter of the 2011/12 financial year, the ministry said.

Turkish steel prices to increase moderately
ISTANBUL, June 30 (Reuters) - Turkish steel prices will rise in 2011-2012, but are unlikely to hit the record highs hit in 2008, as growing domestic demand and exports to new markets will be offset by a drop in exports to the Middle East and North Africa, a top Turkish industry official said.
"I was expecting steel prices to increase more in 2011 but because of political unrest in the Middle East and North Africa this was delayed," Namik Ekinci, chief executive of steelmaker Ekinciler and chairman of the Turkish steel exporters association told Reuters in an interview.

Malaysia says Lynas rare earths plant must meet conditions
KUALA LUMPUR, June 30 (Reuters) - Malaysia on Thursday asked Australian rare earths miner Lynas Corp  to meet recommendations by an independent review panel on its $230-million plant, while the firm reaffirmed a year-end target for the start of production.
The plant will shore up global supplies of rare earths but is a hot political issue for Malaysian Prime Minister Najib Razak's government as the opposition plays up public concern over safety and environmental issues stirred by the plant.

Copper Declines for the First Day in Four After Rallying to Two-Month High (Source: Bloomberg)
Copper in London dropped for the first time in four days, paring a weekly increase, as some investors sold the metal to lock in gains after the metal climbed to a two-month high yesterday. Zinc and lead also declined. Three-month delivery copper on the London Metal Exchange fell as much as 0.6 percent to $9,375 a metric ton, and last traded at $9,383 by 8:04 a.m. Singapore time. The metal, which reached $9,430.15 a ton yesterday, is 3.7 percent higher this week, set for its best week in 12.

METALS-Copper rallies on relief over Greece, end of H1
LONDON, June 30 (Reuters) - Copper rallied to its highest in two months on Thursday, boosted by renewed risk appetite that stemmed from the safe passage of Greece's austerity plan, as well as positioning ahead of the end of the first half.    
Three-month copper  on the London Metal Exchange traded up a third of a percent at $9,350 at 1010 GMT, compared with a close of $9,320 a tonne on Wednesday. It earlier reached a peak since May 3 at $9,380 a tonne.

PRECIOUS-Gold eases as Greek optimism offsets dollar lift
LONDON, June 30 (Reuters) - Gold buckled under the weight of growing investor appetite for risk on Thursday after Greece looked increasingly likely to push through austerity measures, which offset the potentially bullish impact of a weaker dollar.
The price of gold is on course for an eleventh consecutive quarterly gain during the second three months of 2011.

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