Thursday, September 22, 2011

20110922 0928 Global Commodities Related News.

Corn (Source: CME)
US corn futures finish lower under spillover pressure from steep losses in the soybean market. Selling expands to the grains as the oilseed reaches a six-week low. Corn and wheat had been higher earlier in the session but "threw in the towel when the beans started to" tumble, says Mike Zuzolo of Global Commodity Analytics and Consulting. Commodity funds were sellers in all three markets, unloading an estimated 5,000 corn and 9,000 soybean contracts. CBOT December corn drops 4 1/2c to $6.85 3/4 a bushel.

Wheat (Source: CME)
US wheat futures finish at a 6-week low, pulling back from early gains on increasing jitters about poor demand. Export sales have been weak recently as Russian wheat is lower-priced than US wheat on the global market. Egypt, the world's top buyer, issued a tender for wheat and will likely continue to buy from Russia, traders say. Concerns about the shaky global economy add to worries about commodity demand. CBOT December wheat slips 8c to $6.66 3/4 a bushel, KCBT December drops 4 1/2c to $7.60 1/2 and MGEX December slides2c to $8.40 1/2.

Wheat Falls to Two-Month Low as Demand May Ebb on Global Economic Concerns (Source: Bloomberg)
Wheat futures fell to a two-month low on concern that the global economy will falter, diminishing demand for commodities. After Chicago grain markets closed, the U.S. Federal Reserve said there are “significant downside risks” to the economic outlook. The Standard & Poor’s 500 Index dropped as much as 3 percent, and the Thomson Reuters/Jefferies CRB Index of raw materials slid 1.1 percent. “The economy, not only in the U.S., but the global economy continues to struggle,” Jerod Leman, a broker at Wellington Commodities in Carmel, Indiana, said in a telephone interview. “There is concern that we’ll slip back into recession, and that would slow down demand for commodities.”

U.S. wheat, soy tick up; corn awaits China's move
SINGAPORE, Sept 21 (Reuters) - U.S. wheat and soy futures ticked higher despite escalating worries about the global economy and the IMF warning the United States could slip back into recession, while corn hardly moved as dealers awaited a possible purchase by China.
Under normal circumstances we would expect prices to rise. But what we have right now in terms of the global economic environment is anything but a normal environment, and that's what's pressuring prices lower," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia in Sydney.

India rice court case withdrawn, exports seen unchanged
NEW DELHI, Sept 21 (Reuters) - A court case seeking to stop the exports of one million tonnes of rice from India has been withdrawn, the chief of the trade body which filed the petition said on Wednesday, but this may not lead to the consignment being shipped.
As a result exports of common rice from India will remain for now at 2 million tonnes announced by the food minister this month.

Russian grain harvest 81.1 million tonnes so far
MOSCOW, Sept 21 (Reuters) - Russia harvested 81.1 million tonnes of grain by bunker weight by Sept. 20, up from 53.5 million tonnes a year ago and 79.4 million tonnes by the same date in 2009, Agriculture Ministry data said late on Tuesday.
Grain has been harvested from 34.7 million hectares, or 79 percent of the harvesting area, a ministry statement said.

Corn fungus adds to hard year for U.S. farmers
OVERLAND PARK, Kan., Sept 20 (Reuters) - Corn farmers in some parts of the U.S. Plains are finding their newly harvested crop has to be heavily discounted or cannot be sold at all due to the presence of a vicious fungus that makes the corn dangerous to eat. The culprit is "aflatoxin" - toxins produced by a fungus that can harm and possibly kill livestock and are considered carcinogenic to animals and humans.

France says aid impasse could spark EU food crisis
BRUSSELS, Sept 20 (Reuters) - France warned Germany and other countries on Tuesday that they risked provoking a food crisis in Europe because of their opposition to an EU-funded food aid scheme for the bloc's poorest citizens.
"In the current economic crisis, this programme is proof of the European principle of solidartity. It would be unacceptable for Europe to abandon its most vulnerable citizens," French President Nicolas Sarkozy said in a statement.

Dry Argentine weather fuels fight for crop acreage
BUENOS AIRES, Sept 20 (Reuters) - Dry weather that is delaying corn plantings in the world's No. 2 exporter, Argentina, could force some farmers to turn over more land to later-planted soybeans instead.
Growers in the South American country recently started sowing 2011/12 corn, but parched fields are slowing their progress, leading industry analysts to predict some will hold off and plant more lucrative soy toward the end of the year.

Not much rain relief for drought-stricken U.S. Plains
CHICAGO, Sept 20 (Reuters) - Only minor rainfall was expected this week in the drought-stricken U.S. Plains, leading to even more worries about the fate of seeding the 2012 hard red winter wheat crop, an agricultural meteorologist said Tuesday.
"A few light showers in northwest Texas and most of Oklahoma Wednesday through Thursday, but only about a third of an inch," predicted Don Keeney, meteorologist with MDA EarthSat Weather.

Rice (Source: CME)
US rice futures finish weaker under pressure from losses in wheat and corn markets. Losses in wheat, in particular, weigh on rice because both grains are global food staples. Additional pressure stems from forecasts for increased output from Pakistan, an analyst says. The country's exports are seen up 11% at 4M tons, according to the Rice Exporters' Association of Pakistan. That's 2.6% above USDA's last forecast for Pakistan's exports. CBOT November rice slides 5 1/2c to $17.14/hundredweight.

Rising Asian demand feeds corn, soybean bulls
NUSA DUA, Indonesia, Sept 21 (Reuters) - Robust Asian demand will keep intact a bullish outlook for corn and soybean in the long term, although current high prices have hit a ceiling as investors steer clear of economic uncertainty in developed nations, industry officials said this week.
Rising demand for feed in emerging economies, boosted by population and economic growth, will be the key driver for soybean and corn for years to come, as consumption swings away from staple grains towards meat, participants at an industry meeting in Indonesia said.

Indonesia's U.S. wheat imports set to fall
NUSA DUA, Indonesia, Sept 21 (Reuters) - United States wheat exports to top Asian importer Indonesia may fall next year due to increased competition and rising output from rivals Canada and Australia, a senior official at U.S. Wheat Associates said on Wednesday.
Last year, the United States shipped about 800,000 tonnes of wheat to Southeast Asia's biggest economy, Michael Spier, the association's vice president for South Asia, told Reuters at the SE Asia US Agricultural Co-operators Conference.

Russian wheat seeks to conquer fresh markets
HAMBURG/LONDON, Sept 20 (Reuters) - Russian wheat exporters aim to ramp up sales to nascent markets such as South America due to their cheap price edge, which may also give a boost to freight rates which are struggling with a ship glut.
Millions of tonnes of low-priced Russian wheat have surged onto global markets since Russia ended a near year-long grain export ban in July, sweeping aside competitors including those from Europe and the United States.

China to release 3.7 mln tonnes corn reserves, imports expected
BEIJING/SINGAPORE, Sept 20 (Reuters) - China will sell about 3.7 million tonnes of state corn reserves by November in a bid to cool record prices  and take the heat off food inflation, which the government fears may fuel social unrest.
Tuesday's announcement by the State Grain Administration is likely to support corn prices, with some traders in the United States saying the world's second-biggest consumer of the grain was asking about buying up to 5 million tonnes of U.S. corn.

China to consume 15-20 mln T wheat for feed -Canada wheat body
SINGAPORE, Sept 20 (Reuters) - China's feed industry is expected to consume 15 million to 20 million tonnes of wheat in 2011/12 if corn prices remain high, a Canadian Wheat Board official based in Beijing said on Tuesday.
"We see a lot of switching from corn to wheat in China," Haiguang Shi, a vice president of the Canadian Wheat Board, told Reuters at a grains conference in Singapore. "Wheat prices are 15 percent below corn, so that's why a lot of feed mills are shifting to feed wheat."

Obama Administration Proposes Cutting Farm Subsidies (Source: CME)
The Obama administration is proposing to cut billions of dollars in agriculture subsidies as part of a $3 trillion deficit-reduction plan rolled out this week. First on the farm subsidy chopping block is a program that pays out about $5 billion per year to farmers. The Obama administration is proposing to cut $3 billion worth of these payments. Much of the "direct" payments that have been going to farmers since the 1990s now go to producers who don't need the money and may not even be planting crops on the acres, according to the White House plan. "Direct payments do not vary with prices, yields, or producers' farm incomes," the Obama administration said. "As a result, taxpayers continue to foot the bill for these payments to farmers who are experiencing record yields and prices; more than 50% of direct payments go to farmers with more than $100,000 in income."
About one million farmers on 260 million acres of land spread around 364 of 435 congressional districts do collect direct payments, according to the U.S. Department of Agriculture and the Environmental Working Group, a organization that wants to eliminate some farm subsidies and use the money to protect natural habitats. There is plenty of opposition, though, in Congress to slashing the direct payment subsidy program. An earlier, smaller proposal by the Obama administration to decrease the same direct payments was rejected by the U.S. House of Representatives. Lawmakers in June removed a provision from the fiscal year 2012 agriculture spending bill that sought to prevent farmers with an adjusted gross income of more than $250,000 from receiving direct payments. Farmers are now prevented from receiving those payments only if they have an AGI exceeding $750,000.
The Obama administration is also proposing to cut $8.3 billion worth of spending on subsidized crop insurance over a 10-year span. "Our Nation's farmers and agricultural bankers understand the value of this effective risk management program, and currently 83% of eligible program crop acres are enrolled in the program," according to the White House plan. "However, the program continues to be highly subsidized and costs the taxpayers approximately $8 billion a year to run: $2.3 billion per year for the private insurance companies to administer and underwrite the program and $5.7 billion per year in premium subsidies to the farmers." The plan would take most of the proposed cut to crop insurance--$3.7 billion over 10 years--by capping payments to crop insurance companies for their administrative expenses.

Ivory Coast Pres: Oil, Gas Revenue To Top Cocoa In 3-4 Years (Source: CME)
Ivory Coast's President Alassane Ouattara said that he expects revenue from the oil and gas sector to surpass income from cocoa over the next three to four years. The West African nation is the world's largest producer of cocoa, a raw ingredient in chocolate. "I think in three or four years, cocoa will not be the most important revenue," and oil and gas revenue will likely exceed that from cocoa, Ouattara told Dow Jones Newswires after a question-and-answer session at the Council on Foreign Relations in New York. Ouattara, a former International Monetary Fund official, took office in May after a violent half-year electoral stalemate with Laurent Gbagbo in which some 3,000 people were killed, according to the United Nations. Since assuming the presidency, Ouattara has said he is eager to increase investment in the country's small hydrocarbons sector. Last October, France's Total SA, signed an agreement with Ivory Coast's government to acquire a majority stake in an oil exploration license there.

Cotton Extends Longest Slump Since July as Debt Woes Erode Demand Outlook (Source: Bloomberg)
Cotton futures fell for the fifth straight session, heading for the longest slump since July, on signs that slowing economic growth will curb demand for supplies from the U.S., the world’s largest exporter. The debt crisis in Europe and political squabbling over how to prevent contagion are raising concern that the risk of defaults by governments is increasing, the International Monetary Fund said today. The MSCI World Index of equities fell as much as 1 percent. Before today, cotton futures plunged 52 percent from a record in March. “A lot of people are worried about demand destruction” as the economic crisis worsens in Europe, Fain Shaffer, the president of Infinity Trading Corp., in Medford, Oregon, said in a telephone interview. “There won’t be as much need for as much cotton.”

ICE sugar, cocoa little changed, coffee lower
LONDON, Sept 21 (Reuters) - ICE raw sugar and cocoa futures were little changed in early trade with both markets consolidating after recent setbacks while arabica coffee prices eased.
Raw sugar futures on ICE were little changed in early trade with the market still consolidating after a steep setback late last week.

Pakistan not to import sugar despite floods-officials
ISLAMABAD, Sept 21 (Reuters) - Pakistan does not need to import sugar this year despite minor losses to sugarcane crop by floods in the country's south, officials and traders said on Wednesday, with sufficient stocks available to meet domestic demands.
"There is no need to import sugar this year, import is out of question," Javed Kayani, chairman Pakistan Sugar Mills Association, told Reuters.

South Asia floods spare crops but Pakistan cotton hit
NEW DELHI/ISLAMABAD, Sept 20 (Reuters) - Seasonal floods across South Asia have largely spared summer crops this year, helping meet output targets for key rice and cane harvests, but Pakistan could import more cotton after losing about two million bales of the fibre to rains.
Shipments from a region that is among the world's top producers of grain, sugar and oilseeds will reduce price volatility and bring relief to several Asian governments trying to combat food-led inflation.

Indonesia Sulawesi Aug cocoa exports drop 76.7 pct y/y
JAKARTA, Sept 21 (Reuters) - Indonesia's cocoa bean exports from the main growing island of Sulawesi continued to drop in August to 8,421.50 tonnes from 36,167.56 tonnes a year ago, or 76.7 percent, industry data showed on Wednesday.
Indonesia is the world's third largest cocoa producer after Ivory Coast and Ghana.

Centam, Mexico, Colombia coffee exports rise in Aug
MEXICO CITY, Sept 20 (Reuters) - Coffee exports from Central America, Mexico, Colombia, Peru and the Dominican Republic rose 12 percent to 24.7 million 60-kg bags in October through August from the prior harvest, Guatemalan growers' group Anacafe said Tuesday.
The 2010/11 coffee harvesting season will come to a close next month.

Indonesia says Cargill to invest in cocoa grinding
JAKARTA, Sept 20 (Reuters) - U.S. agribusiness giant Cargill [CARG.UL] plans to invest 1 trillion rupiah ($113 million) to set up a cocoa grinding plant in Indonesia, a local government official said on Tuesday.
Cargill, which has said it is looking to expand its cocoa operations in emerging markets, plans to start operating a 65-70,000 tonnes a year plant in June 2103 in cocoa-producing southern Sulawesi, the official said.

India extends sugar stock limits for two months-minister
NEW DELHI, Sept 20 (Reuters) - India has extended for two months the limit up to which traders can stock sugar, a minister said on Tuesday, to avoid any possibility of rise in local prices during the festival season when demand peaks.
Traders can not hold more than 500 tonnes of sugar and that limit was to expire at the end of this month, Science and Technology Minister Vilasrao Deshmukh told reporters.

Colombia's coal industry calls for more coordination
BOGOTA, Sept 20 (Reuters) - Colombia's coal industry on Tuesday called on the new energy and environment ministers to improve their coordination of the fast-growing but increasingly criticized mining industry.
Colombia's oil and mining boom has created an unprecedented number of mining and environmental requests, straining institutions at a time when Latin America's No. 4 oil producer is trying to balance the environment and commodity extraction.

Colombia's Drummond sees 2011 coal output up 14 pct
BOGOTA, Sept 20 (Reuters) - Colombia's second largest coal exporter, Drummond, expects production to shoot up nearly 14 percent to 25 million tonnes in 2011 versus last year, the company's local president said on Tuesday.
Colombia, the world's No. 4 coal exporter, is looking to nearly double production of the material over the coming years, and expansion projects by Drummond, and the country's top producer Cerrejon, are seen as key to achieving that goal.

Australia cuts coal output forecasts as recovery drags
SYDNEY, Sept 20 (Reuters) - Australia cut its forecast for coking coal production in fiscal 2012 as recovery from natural disasters takes longer than expected but lifted its projection for iron ore production a touch.
The world's top coking coal and iron ore exporter lowered its forecast for the production of metallurgical coal, a key steelmaking material, by 6 percent to 161 million tonnes from its June forecast and cut its export forecast by 5 percent to 156 million tonnes.

Euro Coal-Prices dip $1/T with oil
LONDON, Sept 19 (Reuters) -     Prompt physical coal prices fell again on Monday by 50 U.S. cents to $1.00 a tonne in line with oil's drop but overall the market continued to look fairly stable, utilities and traders said.
Oil fell more than 2 percent on Monday as mounting concern over the euro zone debt crisis exacerbated investor fears about the demand outlook for commodities.

S.Korea LNG could surge 40 pct by 2024 - GS Caltex
SINGAPORE, Sept 21 (Reuters) - South Korean demand for liquefied natural gas (LNG) could surge nearly 40 percent in the next decade due to rising consumer and industrial needs in Asia's fourth largest economy, a senior industry official said on Wednesday.
South Korea is the world's second biggest LNG importer after Japan, and its demand for LNG could surge as high as 44 million tonnes within 13 years, surpassing government expectations for imports to remain relatively steady at around 34 million tonnes.

Brent creeps up ahead of Fed, economy weighs
LONDON, Sept 21 (Reuters) - Brent crude futures pushed slightly higher on Wednesday but moves were muted as investors awaited a U.S. Federal Reserve policy meeting in which the bank is expected to announce further steps to stimulate the economy.
"There's set to be weaker growth as shown by the IMF which points to lower oil demand and production in Libya is coming on stream faster than expected," Christophe Barret, analyst at Credit Agricole Corporate & Investment Bank said.

Oil downside risk rises as economic outlook darkens
LONDON, Sept 20 (Reuters) - A series of supply squeezes have helped keep oil strong this year but some of them have been short-term factors and could give way to longer-term weakness as the outlook for the world economy and global fuel demand dims.
The uprising against Muammar Gaddafi in Libya, production problems in the UK and Norwegian North Sea, lower supplies from Russia, central Asia, Nigeria and Angola have all cut supplies, especially of high quality, light, low sulphur crude oil.

Crude Declines for Second Day After Fed Sees Downside Risks to Economy (Source: Bloomberg)
Oil fell for a second day in New York as investors speculated that fuel demand will falter after the Federal Reserve said there are “significant downside risks” to the U.S. economic outlook in the world’s biggest crude-consuming nation. Futures slipped as much as 1.3 percent after dropping 1.2 percent yesterday. The Fed announced plans to buy $400 billion of long-term debt in an attempt to keep the economy from relapsing into a recession. London-traded Brent oil’s premium to U.S. prices widened. Crude for November delivery dropped as much as $1.11 to $84.81 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.90 at 8:50 a.m. Sydney time. The contract yesterday fell $1 to $85.92. Prices are 14 percent higher the past year.

Iron Ore-China steel snaps 8-day slide, outlook shaky
MANILA, Sept 21 (Reuters) - Shanghai rebar steel futures rebounded on Wednesday after losing more than 4 percent in the past eight sessions, but the modest gain suggests the outlook for China's steel demand remained shaky, limiting buying interest in iron ore.
Tighter credit in China, the world's biggest steel producer and consumer, is slowing demand for steel and also restraining mills from replenishing stocks of iron ore, a key raw material.

Europe steel production: the boom is over
LONDON, Sept 20 (Reuters) - European steelmakers will be forced to cut crude steel capacity utilisation and may idle some furnaces in the next few months, after producing at high levels in the first half this year, as weaker demand, prices and destocking hit their sales.
Last spring, crude steel production in Europe was accelerating and it seemed that the industry was slowly but surely sailing back towards record levels last hit in 2008.

Global crude steel output hits lowest point in 2011
LONDON, Sept 20 (Reuters) - Daily global crude steel production hit its lowest point in 2011, due to a seasonal slowdown and as steelmakers started to cut production to respond to softer demand for steel.
The world's steel production fell to 124.589 million tonnes in August from 127.512 million in July, its lowest daily production rate since December 2010, according to a Reuters calculation based on the revised data released by the World Steel Association on Tuesday.

Australia lifts iron ore projections, coal lags
SYDNEY, Sept 20 (Reuters) - Australia lifted its projections for iron ore output and exports on Tuesday, defying concerns over the global economy as Asian demand roars along, though it cut its forecast for coal output on a slow recovery from natural disasters.
Exports of iron ore, a key steelmaking ingredient, are seen at 449 million tonnes -- 40 percent of global trade -- in fiscal 2012, a 3 percent increase from an earlier projection and a 10 percent rise on the previous year, as Japanese and Chinese steel output expands rapidly.

Gold Surge Fuels Inflation, Vexes Asia Officials (Source: Bloomberg)
The surging price of gold is fueling inflation from India to Indonesia and forcing statisticians to decide whether jewelry made of the metal still belongs in consumer-price indexes. In South Korea, gold rings will be dropped from the inflation basket for the first time since 1975 as part of a scheduled reweighting in December, Bang Tae Kyoung, deputy director of the statistics agency, said in an phone interview from Daejeon. “People are now buying gold mostly for investment purposes, and so it should be classified as an asset, rather than spending,” Bang said. Gold has climbed 27 percent this year as turbulence in equities and currencies, money printing by central banks, and a decade-long bull market in the metal lure investors to an alternative store of value. Bullion vaults such as the Swiss Precious Metals facility in Singapore are nearing capacity, and Tiberius Asset Management AG warns that gold is in the final, overheated phase of an upswing.

Gold Declines as Dollar Jumps on Fed’s Bond Plan to Bolster U.S. Economy (Source: Bloomberg)
Gold prices fell as the dollar’s rally eroded demand for the metal as an alternative investment after the Federal Reserve said it will increase holdings of longer-maturity Treasuries in a bid to bolster the U.S. economy. Gold for immediate delivery fell $18.40, or 1 percent, to $1,785.23 an ounce at 4:04 p.m. New York time after dropping as much as 1.3 percent. At 2:20 p.m., just before the Fed announcement, the metal traded at $1,805. The greenback rose as much 0.9 percent against a basket of major currencies, erasing earlier losses. The Fed plans to buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less. That “should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” the Federal Open Market Committee said in a statement.

Baltic index rebounds, set to stay volatile
LONDON, Sept 20 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, turned positive on Tuesday, helped by light cargo business with expectations for more volatility ahead.
The overall index rose 1.76 percent or 31 points to 1,795 points after falling for three previous sessions. The index had risen to its highest level in nearly nine months earlier last week.    

Ship insurers backing armed guards as piracy grows
PARIS, Sept 20 (Reuters) - More ship insurers are backing the use of private armed guards on merchant vessels at sea to combat Somali piracy as attacks and the resulting costs are set to rise in coming weeks, industry officials said on Tuesday.
Pirate attacks on oil tankers and other ships are costing the world economy billions of dollars a year and navies have struggled to combat the menace, especially in the vast Indian Ocean. Seaborne gangs are set to ramp up attacks in the area after a monsoon abates.

Dry bulk ship market to stay weak into 2013
PARIS, Sept 20 (Reuters) - The global dry bulk freight market is expected to stay weak throughout 2012 and into 2013 due to an oversupply of ships, a senior executive of major ship brokerage Braemar Seascope said on Tuesday.
The industry has been struggling with a supply glut that has outpaced demand for commodities such as coal and iron ore.
Ship owners went on an ordering spree before economic turmoil in 2008 and have been hit this year by the pace of ship deliveries, which have stepped up in recent months.

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