Wednesday, September 14, 2011

20110914 1027 Global Commodities Related News.

Corn (Source: CME)
US corn futures finished sharply lower as traders take profits on previous gains. It's a turnaround from gains yesterday, when prices jumped after USDA made a larger-than-expected cut to its harvest forecast. Tight supply outlook is "still bullish" and today's sell-off gave "all indications of outside liquidation taking place," notes Shawn McCambridge of Jefferies Bache. Commodity funds sold an estimated 15,000 contracts at CBOT, a hefty amount. CBOT December corn drops 22 1/2c to $7.23 a bushel.

Wheat (Source: CME)
US wheat futures ended with steep losses on spillover pressure from corn. The grains are linked since both are used for livestock feed. Yet, wheat prices lack the strength to advance on their own because of poor foreign demand. Increased output and exports from Russia have reduced demand for US wheat. CBOT December wheat drops 25 1/4c to $7.02 a bushel; KCBT December loses 23 1/2c to $8.02 1/2 a bushel and MGEX December slides 24 3/4c to $8.76 3/4.

Rice (Source: CME)
US rice futures finished lower in a setback from a nearly three-year high. Prices retreat after climbing recently on concerns about tightening global supplies. The market had extended gains yesterday even though the USDA raised its outlook for global production and inventories. Spillover selling from losses in the wheat and corn markets added pressure to rice prices, traders note. CBOT November rice drops 28 1/2c, or 1.6%, to $18.08 1/2/hundredweight.

Australia's wheat exports to Indonesia seen rising
JAKARTA, Sept 13 (Reuters) - Australia's wheat exports to Indonesia are expected to rise around 30 percent in the year to September, with better growing conditions giving suppliers a bigger foothold in vital Asian markets, Wheat Exports Australia (WEA) said on Tuesday.
Indonesia, which relies entirely on icornmports for its wheat, currently gets around 60 percent of its supplies from Australia, with Canada and the United States accounting for about 30 percent.

US corn firm on tightening supplies, wheat up
SINGAPORE, Sept 13 (Reuters) - Chicago corn rose for a third straight session as a government forecast of a lower U.S. crop this year continued to buoy the market, while wheat rose around half a percent, recovering from a one-month low on bargain hunting.
"We saw wheat lose ground to corn last night as a result of the USDA report; today it is probably profit taking on the wheat-corn spread," said Brett Cooper, a senior manager of markets at FCStone Australia.

Australia sees record wheat exports, may pressure prices
SYDNEY, Sept 13 (Reuters) - Australian wheat exports could reach a record high in 2011/12, with the harvest also seen close to a new peak, helped by better growing conditions in some key crop areas, the government's chief commodities forecaster said on Tuesday.
The forecast of more wheat supplies from Australia is bearish for the market as it comes against the backdrop of higher-than-expected global production and stockpiles estimated by the U.S. Department of Agriculture.

US corn crop shrinks on heat; high prices curb demand
WASHINGTON, Sept 12 (Reuters) - A 3 percent reduction in the U.S. corn crop after a scorching summer will be largely offset by an abrupt fall in demand from both domestic and export consumers, the government forecast on Monday.
In a report that painted a marginally brighter outlook for world grain supplies thanks to larger wheat and rice crops, the Agriculture Department said U.S. corn yields had deteriorated even more than analysts had forecast, falling 4.9 bushels per acre to 148.1 bushels, lowest in six years.

Ukraine grain exports at 284,000 T Sept 1-9
KIEV, Sept 12 (Reuters) - Ukraine exported 155,000 tonnes of wheat, 121,900 of barley and 7,100 of maize in the first nine days of September, analyst ProAgro said on Monday.
The consultancy said 65,000 tonnes of wheat and 62,900 tonnes of barley had been directed to Saudi Arabia.

Argentine Corn Group Sees Government Freeing 1.5 Million Tons for Export (Source: Bloomberg)
Argentina’s corn association expects the government to agree to an additional 1.5 million export quota amid slumping local prices for the grain. The group, known as Maizar, will meet officials tomorrow to lobby for the quota and also ask for as much as 7 million tons of corn to be authorized for export next year, director Martin Fraguio said today in an interview in Buenos Aires. Argentina’s government requires that corn producers earmark 8 million tons per year for domestic consumption. Output in Argentina was about 21 million tons in the 2010-2011 season. Export quotas are announced over the course of the year.

Wheat Extends Longest Slump Since October as Rain May Revive Dry U.S. Crop (Source: Bloomberg)
Wheat fell, capping the longest slump in 11 months, on signs that rain this week will improve conditions of dry fields in the U.S. Great Plains just as farmers begin planting winter crops. Storms may bring a half inch (1.3 centimeters) to an inch of rain to parts of Kansas, Oklahoma, Colorado and Texas by Sept. 16, said Mike Tannura, the president of forecaster T-Storm Weather LLC in Chicago. After months of below-normal rainfall, conditions in the region range from “abnormally dry” to “exceptional” drought, the most severe ranking on the University of Nebraska at Lincoln’s U.S. Drought Monitor. The rain “will be welcomed,” Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas, said in a telephone interview. “It’ll allow us to get some seeds in the ground and maybe get them up. But for a lot of areas, it’ll have to be followed up by a lot more moisture, especially in southern Kansas.”

Protest Threatens Key Chinese Rice Project In Cameroon (Source: CME)
Several land-owning villagers have vowed to recover thousands of hectares acquired by authorities and handed to a Chinese project for rice production, some of the villagers said. Villagers Joseph Embolo Fa'a and Celestin Ze Evina were among many arrested in May while protesting against their land being taken for a 6,000-hectare rice project in the town of Nanga Eboko, located some 150 kilometers east of Yaounde. The two appeared in court Monday for their first trial. They were arrested and detained after felling trees and blocking a passage used by cartographers demarcating the land for the project. China's IKO Agriculture Development Ltd. reached an agreement with Cameroon's government in 2006 to obtain 10 hectares to experiment the growing of rice and other crops for eventual expansion to boost the West African nation's output. "But within four years the IKO project has expanded its acquisition of land to 6,000 hectares, without considering traditional customs of the owners," Fa'a said in court.
Officially, Cameroon imports around 500,000 metric tons of its annual yearly consumption of 600,000 tons. The government plans to lift output to cut imports.

France's 2011-2012 Soft Wheat Harvest Seen At 33.4M Tons (Source: CME)
French soft wheat production is likely to fall to 33.4 million metric tons in the July 2011 to June 2012 season from an estimated 35.7 million tons in the same period a year earlier, France AgriMer said. The agency raised its estimate for 2011-12 from a previous forecast of 32 million tons two months ago, as rains in June boosted yields, after a hot, dry spring. "Even if yields vary greatly from one region to another, rains in June reversed some of the spring damage," the agency president, Remi Haquin, said.

CWB Says 60% Of Crops in Western Canada Harvested (Source: CME)
Unseasonably warm temperatures allowed western Canadian farmers to make significant harvest progress, according to the Canadian Wheat Board, or CWB, in its weekly bulletin released. Harvest progress was now well ahead of normal in all three prairie provinces, the CWB said. To date, 60% of the western Canadian grain and oilseed crops have been harvested, compared to about 49% normally. Last year at the same time, harvest operations in western Canada were only 23% complete. Operations in Manitoba were about 75% complete, compared to 61% on average. Harvest activities in Alberta were 53% finished, compared to 44% normally. In Saskatchewan, the harvest was about 61% complete, compared to 50% normally. The forecast for cooler weather means producers are working to harvest as quickly as possible before frost arrives, the CWB said.

E. Coli Ban Proposed For Six More Strains (Source: CME)
The Department of Agriculture plans to add six types of E. coli bacteria to its list of adulterants barred from raw beef sold in stores, given evidence that they can sicken people just as the better-known O157:H7 type can, people familiar with the matter said. The move, which drew protests from the meat industry, shows a greater sensitivity to the potential for illness from contaminated meat after recent outbreaks including one involving salmonella that has led to the recall of 36 million pounds of ground turkey. People briefed on the USDA plan said it was set to take effect in March 2012 after a public comment period. USDA officials declined to comment.
Thousands of people get sick from E. coli O157:H7 every year, but other types of E. coli can also lead to thousands of illnesses a year, Peter Gerner-Smidt, a branch chief for the Centers for Disease Control and Prevention, said in an interview last year. The USDA late last year completed work on tests that can be used to rapidly detect the additional six types of E. coli. These six strains are found in ground beef and the cattle it comes from at levels comparable to E. coli O157:H7, according to a presentation made in 2007 by USDA scientist Denise Eblen. James H. Hodges, executive vice president of the American Meat Institute, an industry group, said Monday that the six strains were less prevalent than E. coli 0157:H7, though he said they can be as virulent.
Three people were sickened in June and July 2010 after eating ground beef contaminated with E. coli 026, one of the bacteria types the USDA now plans to test for. In that case, 8,500 pounds of beef produced at a Cargill Inc. plant in Pennsylvania were recalled. Meat packers question whether these six strains pose a significant health threat, in part because preventive measures already in place typically kill the bacteria. The American Meat Institute on Monday criticized the USDA proposal. "Imposing this new regulatory program on ground beef will cost tens of millions of federal and industry dollars, costs that likely will be borne by taxpayers and consumers," Mr. Hodges said. "It is neither likely to yield a significant public health benefit nor is it good public policy."
Most E. coli infections are contracted by eating undercooked meat. Beef with the strains of E. coli considered adulterants can't be sold in raw form. It can still be used in processed foods that use cooked beef because the heat kills the bacteria, though producers get a lower price. E. coli 0157:H7 has been considered the most common type of the bacterium that sickens people, and it is currently the only type USDA inspectors test for at meat-packing plants. Severe stomach cramps, bloody diarrhea, fever and vomiting are some of the most common symptoms of E. coli poisoning. In severe cases, kidney failure and death can result.

Raw sugar mostly flat, October premium eyed
LONDON, Sept 13 (Reuters) - ICE raw sugar futures were mostly flat in early trade with the premium on the front month edging up while arabica coffee and cocoa were slightly lower.
The premium was trading around 1.50 cents a lb in early trade, well below Monday's peak of more than 2.00 cents but still significantly above last week when it traded as low as 0.57 cent.

Vietnam Coffee-Sales of fresh beans slow
HANOI, Sept 13 (Reuters) - Vietnamese exporters may have sold between 20,000 tonnes and 50,000 tonnes of coffee from the next 2011/2012 crop, far below the figure of around 200,000 tonnes sold at the same time last year, traders said on Tuesday.
The slowing trade in fresh beans in Vietnam, the world's second-largest coffee producer after Brazil, came as both exporters and foreign buyers took precautions after overseas traders said up to 100,000 tonnes of beans had faced delays or defaults.

Brazil CS sugar output down 9.4 pct - Unica
SAO PAULO, Sept 12 (Reuters) - Sugar production in Brazil's center-south totaled 20.4 million tonnes from the start of the season to Sept. 1, down 9.4 percent from the same date a year earlier, cane industry association Unica said in a statement on Monday.
Cane crush since the beginning of the season in April reached 338.1 million tonnes, down 11 percent from a year earlier. Ethanol production lagged last year's output by 18.6 percent at 13.8 billion liters, Unica said.

Ivorian cocoa output to slip in upcoming crop -BCC
ABIDJAN, Sept 12 (Reuters) - Ivory Coast's cocoa production during the forthcoming 2011-12 main crop will fall short of last year's record, the head of industry regulator BCC told Reuters on Monday.
"We have not yet finished our work to come up with a specific projection, but we are expecting much less this year," Eric Koffi told Reuters by telephone.

Ivorian light rains, sun support cocoa crop-farmers
ABIDJAN, Sept 12 (Reuters) - Light rains mixed with average sunshine in Ivory Coast's cocoa growing regions last week were in line with levels needed for the good development of the 2011/12 main cocoa crop, farmers said on Monday.  
Farmers in the principle cocoa growing regions in the west said they expected a healthy crop compared with last season.

India extends unrestricted cotton exports beyond Oct 1
MUMBAI, Sept 12 (Reuters) - India has extended unrestricted cotton exports in the new marketing year that begins from Oct. 1, according to an official notification late on Monday.  
India will continue with unrestricted cotton exports in the new marketing year beginning Oct. 1, Trade Secretary Rahul Khullar told reporters on Friday, a move that could depress global prices which have halved since a record high in March.

Ghana cocoa purchases hit 1,014,778 T
ACCRA, Sept 12 (Reuters) - Cocoa purchases declared by private buyers to Ghana's industry regulator Cocobod hit 1,014,778 tonnes by Sept. 1 since the start of the season in October, according to data from Cocobod obtained by Reuters on Monday.
The figure includes 97,967.6 tonnes registered during the first 12 weeks of the No. 2 world cocoa grower's 13-week light crop, during which beans are sold to local grinders at a discount instead of being exported.

Wet Weather Sours US Sugarbeet Harvest (Source: CME)
As U.S. farmers begin pulling sugarbeets out of the ground, the crop is looking smaller than expected, which could crimp supplies of the sweetener this season and drive up prices for consumers. The U.S. Department of Agriculture trimmed its forecast for sugar produced from beets by almost 4% to 4.58 million short tons. Abnormally wet weather this spring and summer delayed the planting of the crop, the source of more than half of the country's domestically produced sugar. The beets require about six months underground to produce the maximum amount of sugar and are usually planted in April. This year, the wettest in nearly a century for the northern Midwest where many of the beets are grown, planting started nearly a month late in some areas. "We've had a rough go of it," said Tom Knudsen, vice president of the Minn-Dak Farmers Cooperative in Wahpeton, N.D., in the heart of the country's largest sugarbeet-growing region. "We had continuous rain. It causes disease, rot."
Knudsen said the co-operative's 2,000 farmers increased their planted acreage by 7% this season, but output will likely be one-third lower than last year. Ray Van Driessche, community and government relations manager for the Michigan Sugar Company, said the crop produced by the growers-owned cooperative will be about 8% smaller than last year due to the late plantings. "We had a lot less growth time," he said. The U.S. consumes about 11 million short tons of sugar annually and needs to import some of the sweetener each year to meet demand. But the USDA limits the amount of low-tariff or duty-free sugar that can be imported each year to protect domestic sugarcane and sugarbeet farmers.
The USDA has set the limit at the minimum dictated by the World Trade Organization for the 2012 fiscal year that starts Oct. 1, as it has done every year since 2006. But the USDA admitted supplies of the sugar are running low and over the summer it expanded the period that low-tariff or duty-free sugar can enter the country by one month on either side of the fiscal year. But if that isn't enough to meet demand, consumers could be facing higher prices at home, especially if a cold snap hurts the U.S. sugarcane crop, which is harvested in the winter. "We could be looking at higher prices for the consumer," said Sterling Smith, an analyst at brokerage Country Hedging. "We are vulnerable here and we're also coming into a cold spot with potential frost. Raw sugar futures for October delivery on IntercontinentalExchange settled Monday at 29.57c a pound, up 1.8% on the day, still more than 44% higher than an eight-month low touched in May.

Brazil 2011 ethanol imports to top 1 bln lts-Unica
SAO PAULO, Sept 12 (Reuters) - Brazil will import 1.1 billion liters of anhydrous ethanol in the 2011/12 season (April-March) to meet increasing local demand and to cover local supply shortfalls, sugar cane industry association Unica said on Monday.
The world's second largest ethanol producer, after the United States, imported 78 million liters of the fuel in the previous season.

USDA trims corn use for ethanol to 5 bln bu in 11/12
WASHINGTON, Sept 12 (Reuters) - Ethanol makers will use slightly less corn to make the renewable motor fuel as higher corn prices and lower gasoline use curtail demand, the U.S. government said Monday.
The U.S. Agriculture Department lowered its estimate of corn used to produce the renewable fuel to 5 billion bushels in 2011/12, down 100 million bushels, or 2 percent, from 5.1 billion bushels forecast during August. The estimate was nearly in-line with usage during 2010/11 when 5.020 billion bushels were used to produce ethanol.

IEA cuts global refinery run forecasts for Q3, Q4
LONDON, Sept 13 (Reuters) - Global oil refineries are likely to process less crude oil for the rest of 2011 than previously forecast due to extended outages at large plants in Asia and sluggish demand, the International Energy Agency (IEA) said on Tuesday.
The Paris-based agency, the adviser for 28 industrialised countries, revised its outlook for global refinery runs down by about 300,000 barrels per day (bpd) for both the third and fourth quarters.

Japan utilities' LNG usage hits record high in August
TOKYO, Sept 13 (Reuters) - Japan's 10 utilities consumed a record 4.81 million tonnes of liquefied natural gas in August, up 15.4 percent from a year earlier, industry data showed on Tuesday, as they burned more gas to offset a fall in nuclear power generation.
The utilities produced 84.18 billion kilowatt-hours of electricity in August, down 12.1 percent from a year earlier, the Federation of Electric Power Companies of Japan said, matching a Reuters projection.

Malaysia's Petronas to build $1.6 bln petrochem complex
KUALA LUMPUR, Sept 13 (Reuters) - Petronas [PETR.UL] plans to build a $1.6 billion petrochemical complex in Brunei with Germany's BASF , Malaysia's state news agency Bernama reported on Tuesday quoting Prime Minister Najib Razak.
No further details on the complex were immediately available. Bernama said Petronas' unit Malaysia Marine and Heavy Engineering  will build a fabrication yard in Brunei but did not give a value for it.

Vietnam refinery at full capacity
HANOI, Sept 13 (Reuters) - Vietnam's Dung Quat oil refinery is running at full capacity from Tuesday and all of its products will be absorbed by  domestic markets, a senior official said.
The 130,500 barrel-per-day (bpd) facility now uses all of its crude oil input from the Bach Ho field, said Chief Executive Officer Nguyen Hoai Giang of Binh Son Refining and Petrochemical Co, which operates the refinery in Vietnam's central region.

Oil Trades Near Six-Week High as Investors Speculate Storms Cut Stockpiles (Source: Bloomberg)
Oil traded near a six-week high in New York as investors speculated that storm disruptions in the Gulf of Mexico reduced supplies in the U.S., the world’s biggest crude consumer. Futures swung between gains and losses after the American Petroleum Institute said crude stockpiles fell the most in five weeks during the seven days ended Sept. 9. An Energy Department report today may show they slipped 3 million barrels as Tropical Storm Lee shut output in the Gulf. Maria, the 14th named storm of the Atlantic hurricane season, gained speed on a path that may take it toward refineries in Canada. “When you’re in a fairly tight supply situation to begin with, these temporary disruptions have an impact,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said by telephone today.

Gold May Advance for Second Day as European Debt Risk Drives Haven Demand (Source: Bloomberg)
Gold may advance for a second day as Europe’s sovereign-debt crisis boosts demand for the metal as a haven investment. Immediate-delivery gold increased 0.2 percent to $1,837.43 an ounce before trading at $1,836.97 at 9:55 a.m. in Melbourne. December-delivery bullion rose as much as 0.6 percent to $1,840.70 an ounce in New York and traded at $1,839.80 an ounce. German Chancellor Angela Merkel said she won’t let Greece go into “uncontrolled insolvency” because of the risk of contagion for other euro-zone countries. Greek Prime Minister George Papandreou plans to hold a conference call with Merkel and French President Nicolas Sarkozy today on developments in Greece and the euro area, said Papandreou’s Athens office.

Investors Search For Land Of Opportunity (Source: CME)
With food prices relatively strong even during recent market turmoil, investors remain keen for exposure to agriculture. One popular theme: investing in land. Bringing more land under cultivation is crucial to meeting global food demand, as crop yields stagnate. From 1990 to 2007, farmers squeezed about 1% more maize, rice or soybeans per year from their land, down from the 2%-3% growth between 1961 and 2007, according to OECD figures. So the search is on for more land to plant. Brazil alone could have 190 million hectares of under-utilized land, according to Renaissance Capital, equivalent to the European Union's total farmland. One answer has been to transform large areas of scrub land, known as cerrado, into arable land, by reducing the soil's acidity to make it suitable for cattle grazing and soybean cultivation.
Agrifirma, a private investment company backed by financier Lord Rothschild, raised $159 million in 2008 to invest in 40,000 such hectares. With cerrado land prices rising fast, and more crops being harvested from the land, it hopes to generate a 20% internal rate of return for its investors over a five to seven year period. Last week, it transferred around half of its assets to a new joint venture with Brazilian private equity firm BRZ Investimentos, which will majority-own the company and invest a further $82 million. Technological development, available land and adequate property rights made the cerrado attractive to Agrifirma. Such a happy confluence of factors may be hard to find elsewhere. With 85% of the world's farmland held in smallholdings of two hectares or less, many countries are nervous of foreign investors looking to build large land banks that disrupt rural life. Brazil itself is considering laws to restrict foreign land ownership, one factor behind Agrifirma's deal with BRZ.
Agricultural companies can't escape the underlying volatility of commodity prices, or land values. SLC Agricola, a listed Brazilian cotton and soybean producer, saw its return on equity fluctuate from 15.9% in 2008, to 0.7% in 2009, back to 14.1% in 2010, with its land value returns moving wildly. Adecoagro, another Brazilian company, saw first half earnings at $28 million this year after a $70.6 million loss in the same period in 2010. Agrifirma itself recently shelved plans for a Hong Kong flotation. But with market volatility spiking, appetite will likely return for the ultimate hard asset: land.

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