Monday, September 26, 2011

20110926 1108 Global Commodities Related News.

Commodities Fall to Nine-Month Low in ‘Downward Spiral’ on Economic Woes (Source: Bloomberg)
Commodities fell to a nine-month low, led by routs in metals, on deepening concern that governments are running out of tools to avert a global recession, eroding prospects for raw-material demand. European officials may accelerate the setup of a permanent rescue fund as the sovereign-debt crisis mounts. On Sept. 21, the Federal Reserve said the U.S. economy faces “significant downside risks.” In the next two days, gold plunged the most since 1983, and copper had the biggest slide in almost three years. Today, silver posted the largest drop in 32 years. “We’re in a downward spiral, and no one knows when it’s going to end,” said Robin Bhar, an analyst at Credit Agricole SA in London. “There is a lot of uncertainty at this time as to how demand will develop.”

Corn (Source: CME)
US corn futures closed down near session lows on worries about the global economy and harvest pressure. Corn fell along with soybeans and most other commodities as speculators are fleeing amid worries about the world economy and downward technical momentum. A weakening economy could hurt demand, though traders say end users will likely use the break in corn prices to bargain hunt, particularly with supplies expected to remain tight. Traders note seasonal pressure from the ongoing harvest. December CBOT corn ends down 11 1/2c at $6.38 1/2 a bushel, down 7.7% for the week. Front-month corn has slid 16% since Aug. 30.

Wheat (Source: CME)
US wheat futures finished higher, supported by concerns that dry weather will reduce global output. Crops in Argentina and Ukraine are suffering from "notable stress" due to the lack of significant rain, according to meteorologists at Cropcast Ag Services. Meanwhile, the southern US Plains remains too dry as farmers attempt to plant the next crop. CBOT December wheat jumps 7c to $6.40 3/4 a bushel, KCBT December wheat rises 10 1/4c to $7.31 1/4 and MGEX December surges 31c to $8.51.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 closed down as economic jitters and losses in external markets continue to weigh on prices. The nearby contract is down nearly 10% from the 3-year high set last week. Traders next week will wait for the USDA to issue grain inventory-and-output estimates. It may be difficult for the data to knock down prices, given the steep recent losses, traders say. CBOT November rice drops 18c to $16.48 1/2 per hundredweight.

China's corn imports to surge, self-sufficiency policy hit
CHANGCHUN, China, Sept 22 (Reuters) - China's much-vaunted policy of self-sufficiency in corn production is under threat from scarce water supplies and shrinking farmlands, making imports inevitable in the face of rapidly growing demand, traders and officials said on Thursday.
China is the world's second largest corn consumer and producer, and it uses the grain largely for animal feed.

China corn demand set for a dip? Gavin Maguire (Source: Reuters)
--Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum. -- CHICAGO, Sep 23 (Reuters) - One of the defining features of the corn market's bullish narrative in 2011 was that China was on the prowl for additional corn supplies after domestic production struggled to keep pace with soaring demand from livestock feeders and processors.
But with Chinese domestic corn prices trading at a record premium to Chinese wheat values, it is likely that the feeding industry in China will ramp up wheat consumption at corn's expense going forward, to potentially redraw the country's grain demand landscape into 2012 and beyond.

US wheat rebounds, corn firm on bargain hunting
SINGAPORE, Sept 23 (Reuters) - U.S. wheat rose more than 1 percent, while corn firmed as bargain hunting by end-users supported grains, which slid in the previous session to their lowest in more than two months amid recession fears.
"It is certainly going to start interest among consumers -- last night we saw Egyptians back in the market taking a big chunk of the Russian wheat once again," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia in Sydney.

Australia govt to further deregulate wheat exports
CANBERRA, Sept 23 (Reuters) - Australia will abolish its wheat export regulator and a levy on all wheat exports from September 30, 2012, Agriculture Minister Joe Ludwig said on Friday, as the country moves to further deregulate its wheat exports market.
However, the changes will be 12 months later than recommended by a major report into wheat exports, which had wanted the export regulator Wheat Exports Australia (WEA) and a 22 cents a tonne export levy abolished from September 30 of this year.

China corn processors, hit by tight supply, look for options
CHANGCHUN, Sept 23 (Reuters) - China's Dacheng Industry Group, the parent of Global Bio-Chem , said it would invest in Russia to expand its business while the world's second-largest corn consumer adjusts to tight supplies of the grain at home, a company executive told Reuters.
The company, Asia's largest corn processor, together with other major domestic players, have been ordered to halt corn purchases temporarily early in the year in order to make way for state purchases to replenish government reserves.

Argentina dryness seen hurting wheat; corn better
BUENOS AIRES, Sept 22 (Reuters) - Dry weather in Argentina has dimmed the outlook for 2011/12 wheat output although rains in recent days have allowed progress on delayed corn sowing, the government and a grains exchange said on Thursday.
Farmers in the South American country, a leading global wheat exporter and the No. 2 corn supplier, have dedicated almost 3 percent more land to wheat this season, according to Agriculture Ministry estimates.

Argentine gov't sees new wheat crop at 11-13 mln T
BUENOS AIRES, Sept 22 (Reuters) - Argentina's 2011/12 wheat crop is seen at between 11 million and 13 million tonnes, down from 14.7 million tonnes in the prior season, the Agriculture Ministry said in a monthly report on Thursday.
The government raised its forecast for 2010/11 corn output to a record 22.9 million tonnes from 21.9 million tonnes previously. It did not give an estimate for 2011/12 corn, which farmers are already seeding.

EU cleared 213,000 tonnes wheat exports this week
PARIS, Sept 22 (Reuters) - The European Union this week granted export licences for 213,000 tonnes of soft wheat, taking the total since the beginning of the 2011/12 (July-June) season to 3.1 million tonnes, official data showed on Thursday.
The export volume remained well below the level seen last season when 5.3 million tonnes of export licences were cleared by the same stage.

Bangladesh to buy wheat from Ukraine at $320/T
DHAKA, Sept 22 (Reuters) - Bangladesh will import 100,000 tonnes of wheat from Ukraine at $320 a tonne, including CIF, in its first government-to-government wheat deal with Kiev, a top procurement official said on Thursday.
"We have already signed the deal and shipment will start soon," Ahmed Hossain Khan, director general of the state grain buyer, told Reuters.

US wheat farmers on edge as Plains drought threatens
CHICAGO, Sept 22 (Reuters) - Winter wheat growers in the U.S. Plains hard red winter wheat growing region remain on edge as they seed the 2012 crop amid a devastating drought, an agricultural meteorologist said Thursday.
"There has been some rain over the last week that may get the crop out of the ground, but it will wither unless they get some more significant rains in October," said Andy Karst, meteorologist for World Weather Inc.

Kazakh grain crop could hit 25 mln T-AgMin official
ASTANA, Sept 22 (Reuters) - Kazakhstan's 2011 grain harvest could approach 25 million tonnes by bunker weight as good weather and better yields promise a record crop for the Central Asian state, an Agriculture Ministry official said on Thursday.
Kazakhstan, the world's seventh or eighth-largest wheat exporter in a typical season, will subsidise exports this season to regain a foothold in Black Sea markets and help clear a potential grain glut at home.

Algeria grain harvest is 4.2 mln T --official figure
ALGIERS, Sept 22 (Reuters) - Algeria's grain harvest this year was 4.2 million tonnes, Agriculture Minister Rachid Benaissa said on Thursday, in line with an estimate given last month.
Asked by Reuters to give a final figure for the harvest, Benaissa said it was 42 million quintals, or 4.2 million tonnes. The crop is down from last year's harvest of 4.5 million tonnes because of drought in some growing areas.

India rains pick up in past week, monsoon withdrawal eyed
NEW DELHI, Sept 22 (Reuters) - India's monsoon rains were 29 percent above normal in the week to Sept. 21, strengthening from 1 percent above average in the previous week, the weather office said on Thursday, adding the rains may start their withdrawal after a couple of days.
The monsoon rains were 4 percent above average since the start of the June-September season, in line with the weather office's latest forecast of a normal monsoon in 2011, which means rains of 96 to 104 percent of a long-term average.

Bangladesh rain-fed rice output seen at record high; imports seen lower
DHAKA, Sept 22 (Reuters) - Bangladesh's rain-fed rice output is expected to rise 4 percent to hit a record 13.3 million tonnes, farm officials said, indicating the country won't need to increase costly imports.
The government may need to import at most 500,000 tonnes of rice in the year to June 2012 on higher domestic stocks and good crops, compared with 1.3 million tonnes the previous year.

IGC Ups Australia 2011-12 Wheat Output Forecast (Source: CME)
The International Grains Council raised Australia's 2011-12 wheat output forecast to 25.5 million metric tons from a previous estimate of 24.5 million tons, on the back of good weather and higher acreage. It is still lower than an estimated production of 26.3 million tons in the marketing year ending Sept. 30. The council raised the forecast for ending stocks on Sept. 30, 2012 by 12% to 7.4 million tons compared with 6.8 million tons this year. The council's wheat export estimate is also higher at 18 million tons. Australia's wheat stocks have been rising due to cheaper exports by Pakistan, India, Ukraine and Russia and a bumper domestic crop.

Informa Predicts 2.2% Rise In US Corn Plantings (Source: CME)
Informa Economics, a closely watched crop forecaster, predicted that U.S. farmers will increase corn plantings 2.2% next year after prices reached record highs this summer, according to traders. The firm estimated corn plantings will rise to 94.3 million acres from the 92.3 million acres planted this year, traders said. It projected soybean plantings will jump 1.1% to 75.8 million acres and wheat plantings will rise 2.5% at 56.6 million acres. Farmers are expected to plant more of the crops to take advantage of high prices. Prices for U.S. corn remain at historic highs after hitting a record in June, fueled by concerns production won't keep pace with strong demand. Corn for December delivery recently traded down 0.4% at $6.47 1/2 a bushel at the Chicago Board of Trade.
Informa also issued estimates for U.S. wheat production, pegging the 2011 harvest at 2.044 billion bushels, traders said. That is down from 2.208 billion bushels last year and slightly below the U.S. Department of Agriculture's forecast for a harvest of 2.077 billion bushels this year. Informa estimated output of hard red spring wheat in 2011 at 444 million bushels and output of hard red winter wheat at 782 million bushels, traders said. The USDA recently pegged hard spring wheat output at 475 million bushels and hard red winter wheat output at 794 million bushels. Informa estimated the 2011 soft red winter wheat crop at 460 million bushels, above the USDA's latest estimate for 452 million bushels, traders said. The USDA is slated to update its wheat output estimates on Sept. 29.

China May Sharply Hike Corn Imports (Source: CME)
Domestic and global grain organizations are citing increasing pressure on China's corn inventories and a widening production shortfall as evidence of potentially sharply higher corn imports in the coming years, despite Beijing's self-sufficiency goals. China turned net corn importer last year for the first time in 15 years amid soaring demand for meat and eggs, and analysts increasingly see few options for the government but to sharply raise corn imports. China limits annual corn imports to 7.2 million metric tons to protect what it perceives to be a strategic need to feed its population using domestic resources. However, a senior official with the state-backed China Feed Industry Association told an industry conference Thursday that China will likely face a shortfall in domestic corn output versus consumption of around 15 million tons by 2015.
In four years, output is expected to reach 205 million tons, compared with 180 million tons estimated in 2011, but overall demand would likely reach 220 million tons by then, association Executive Deputy President Li Xirong said in a transcript published by the Dalian Commodity Exchange. "It's very hard to produce 205 million tons by 2015," Li said, citing challenges to increasing acreage and yields. The U.S. Grains Council estimated China could absorb 8 million tons of corn imports even at the government's current self-sufficiency rate of 95%. The council projected that China could allow for as much as 16 million tons of corn imports if it lowers its self-sufficiency rate to 90%. "There is occasional talk in China about what level of self-sufficiency they can accept, and 95% is often mentioned, along with the idea that maybe they can settle for 90%," the council noted.
Such a volume would be a sharp rise from China's total corn imports last year of 1.57 million tons, which in turn rose from from just 83,582 tons in 2009. China imported 452,799 tons in the first eight months this year, though analysts say another 2 million tons may have been booked for shipment after October. Inflation and tight supplies have taken China spot prices up 33% in the year to date, while U.S. futures prices rose just 0.8%.

Soybean Meal Exports From India to Climb 25% on Bigger Crop, Adani Says (Source: Bloomberg)
Soybean meal exports from India, Asia’s largest supplier of animal feed, may climb 25 percent next year as domestic oilseed output surges, according to Adani Wilmar Ltd., a processor and exporter. Shipments may surge to 5 million metric tons in the year beginning Nov. 1, from an estimated 4 million tons this year, Atul Chaturvedi, chief executive officer, told reporters in Mumbai today. Traders likely sold 250,000 tons to 300,000 tons of soybean meal from the new crop, less than the 700,000 tons contracted to export a year earlier, he said. Crude palm oil imports by India have “dried up” in recent days after Indonesia announced a cut in tax on exports of refined palm oil products, Chaturvedi said. The country may import 8.5 million tons to 8.8 million tons of edible oils in the year beginning Nov. 1, he said.

Argentina Sees 2011-12 Corn Area At 4.9M Hecs (Source: CME)
Argentina's 2011-12 corn area is expected to jump to 4.9 million hectares, up from 4.6 million hectares last season, the Agriculture Ministry said. The forecast is the first from the government for this season's corn crop. So far 10% of the fields expected to go to corn have been seeded, the Ministry said in its weekly crop report. Argentina is the world's second largest corn exporter. The ministry also made its first forecast of sunflower seed area, pegging area at 1.7 million hectares, virtually unchanged from last season. So far, 17% of the expected sunflower seed area has been seeded. Argentina is a leading exporter of wheat and sunflower seed oil.

ICE sugar, cocoa, coffee up in commodity bounce
LONDON, Sept 23 (Reuters) - ICE raw sugar, cocoa and arabica coffee futures bounced in early trade, as commodity markets rebounded following the previous session's sharp sell off, with the worsening global economic outlook weighing on investor sentiment.
Fresh inquires emerged after New York sugar futures dropped to their weakest since June on fears of a global recession, while Indian whites weakened as competition from Brazil intensified, dealers said.

India cotton exports seen up 17 pct over govt f'cast
MUMBAI, Sept 21 (Reuters) - India's cotton exports could rise 17 percent over an official forecast in the year to September 2012 to 1.4 million tonnes, spurred by a record harvest, a weaker domestic currency and a freer trade policy, the top exporter of the fibre said.
India contributes 22 percent of global output and is expected to have a bumper harvest of 6.14 million tonnes, pushing it into competition with suppliers from Latin America, Australia and Africa, that will squeeze world prices.

German WVZ to stop publishing first beet sugar content
HAMBURG, Sept 22 (Reuters) - Initial national sugar content of the German sugar beet crop will no longer be published, the association of German sugar producers WVZ said on Thursday.
The association traditionally starts the sugar harvest season in September by announcing national sugar content of tests from plantings which are broken down according to the German regional states involved.

Ivory Coast Aims to Boost World Cocoa Market Share to 50%, President Says (Source: Bloomberg)
Ivory Coast, the world’s largest- producer of cocoa, aims to increase its share of the world market to 50 percent as the West African country recovers from a civil war. Reform of the cocoa industry “will be implemented in the next month or two,” President Alassane Ouattara said in an interview today in New York. “We will liberalize the whole chain” and attract investment so that cocoa is processed in the country, he said. The country produces about one-third of global cocoa output. World prices for the commodity shot up to a 32-year high during the four months of violence between Ouattara and those loyal to his predecessor, Laurent Gbagbo. Gbagbo ruled Ivory Coast for a decade and refused to cede power after losing the presidency in a November election.

CN Rail says coal exports steady, no recession signs
Sept 22 (Reuters) - Canadian National Railway Co  sees no drop in coal exports nor signs of a double-dip recession even though it expects years of sluggish economic growth ahead, its CEO said on Thursday.
Coal shares slid on Wednesday after U.S. coal miner Alpha Natural Resources Inc  cut its 2011 shipment forecast, citing reduced demand in the Asian steel market, among other things. The news came as the U.S. Federal Reserve shook global markets with pessimistic language about the economic outlook.

Euro Coal-Prices stable despite general slump
LONDON, Sept 22 (Reuters) - Prompt physical coal prices were little changed on Thursday although swaps fell by over $1 in line with the slump in world stocks by more than 4 percent.
A grim economic outlook from the U.S. Federal Reserve and signs of slowing growth in China and Germany triggered the stocks plunge.

Brent crude rises to $106, investors buy on dips
SINGAPORE, Sept 23 (Reuters) - Brent crude rose to $106 on Friday as investors stocked up, taking advantage of a plunge in the previous session that pushed prices to their lowest since early August.
"It is just a short-covering rally that we are seeing today," said Jonathan Barratt, managing director for Commodity Broking Services in Sydney.

China oil refiners lost $751 mln in July - NDRC
BEIJING, Sept 23 (Reuters) - China's oil refining industry recorded a loss of 4.8 billion yuan ($751 million) in July because of high crude prices and rising selling costs, the National Development and Reform Commission said on Friday.
The industry posted a profit of just 2.4 billion yuan for the first seven months, down 93.5 percent from a year earlier, the commission said in a report on its website.

Oil Rebounds From Six-Week Low in New York Trading; Brent Premium Narrows (Source: Bloomberg)
Oil rose from a six-week low in New York as investors speculated European policy makers will step up measures to ease a sovereign debt crisis that has disrupted financial markets and slowed the economy, curbing fuel demand. Futures increased as much as 1.3 percent, climbing for the first day in four. European policy makers were pressured at the annual meeting of the International Monetary Fund in Washington to boost their regional rescue fund. U.S. Treasury Secretary Timothy F. Geithner said that governments must unite with the European Central Bank to “create a firewall against further contagion” and defuse the “most serious risk now confronting the world economy.” Brent oil’s premium to U.S. prices narrowed for a second day. “I think everyone now fully understands the implications of Greece defaulting,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “The key is whether or not the market believes that this sort of support will actually work.”

Iron Ore-Shanghai rebar hits fresh contract low, ore falls
SHANGHAI, Sept 23 (Reuters) - Shanghai rebar futures fell more than 1.5 percent on Friday, with the most-active January contract hitting a fresh low, as an overnight slump in world stocks and commodities prices added to investors' jitters about the state of the global economy.
January benchmark rebar on the Shanghai Futures Exchange  fell to 4,465 yuan ($699) a tonne, the contract's lowest ever, tracking losses in the equities and commodities markets.

China steel futures sag to contract low on weak econ view
MANILA, Sept 22 (Reuters) - Shanghai rebar steel futures slid as much as 1.7 percent on Thursday, sending the most active January contract to its weakest ever level, in line with losses in other commodities driven by a deteriorating outlook for the global economy.
The Federal Reserve on Wednesday warned of significant risks to the already weak U.S. economy and launched a new plan to lower long-term borrowing costs and bolster the battered housing market.

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.

METALS-LME copper falls to 1-yr low as sell-off grows
MANILA, Sept 23 (Reuters) - London copper extended losses to hit its lowest in a year and is on course for its steepest weekly loss since December 2008 as a lethargic global economy fueled another round of selling.
"At this stage it's very sentiment driven, and sentiment right now is bearish. The market is focusing on the macroeconomic environment, which is not very positive," said Natalie Robertson, an analyst at Australia and New Zealand Bank.

PRECIOUS-Gold heads for third weekly drop on firm dollar
SINGAPORE, Sept 23 (Reuters) - Gold edged up 0.4 percent after the previous day's drop, but remains on track for a third straight week of decline as investors worried about grim global growth outlook piled into the dollar, which weighs on bullion prices.  
"The dollar has strengthened in all of this and everyone is de-risking and putting money into the dollar because of the deteriorating economic outlook," said Soozhana Choi, head of commodity research in Asia at Deutsche Bank in Singapore.

Gold Plunges More Than $100 as Investors Sell (Source: Bloomberg)
Gold fell, capping the biggest two- day plunge since 1983, on investor sales following routs in global equity and commodity markets. More than $3.4 trillion has been erased from equity values this week, sending a global measure of shares into a bear market, on concern that governments are running out of tools to avert a recession. The Standard & Poor’s GSCI Index of 24 commodities fell to a nine-month low today. Gold has dropped 15 percent since reaching a record $1,923.70 an ounce on Sept. 6. “Gold has become the source of liquidity for global margin calls,” said Michael A. Gayed, the chief investment strategist at Pension Partners LLC. “Also, deflationary pressures are acting on gold.”

Baltic index rises, world economy woes watched
LONDON, Sept 22 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose for a third session on Thursday helped by firm cargo demand from Asia.  
Brokers said growing vessel supply, which was outpacing commodity demand, was set to cap dry bulk freight rate gains in the coming months with growing challenges to the world economy adding to headwinds.    

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