Tuesday, September 27, 2011

20110927 1019 Global Commodities Related News.

Corn (Source: CME)
US corn futures finished higher as the market recovered from an 8% slide last week. It seems the market may already have seen "the biggest share of the selling" it faces after December corn approached a fresh three-month low overnight, says Brian Hoops of Midwest Market Solutions. The sell-off renewed chatter about potential sales of US corn to China that helped support prices. "It's very possible that we'll see China step in and finalize some purchases," Hoops says. CBOT December corn rises 9 1/2c to $6.48/bushel.

Wheat (Source: CME)
US wheat futures end stronger, with prices on the Minneapolis Grain Exchange leading the rally on expectations the government will reduce its output forecast. Analysts predict the USDA will lower its spring-wheat harvest estimate in a crop report Friday because yields have come in lower than anticipated. Private firm Informa helped ignited concerns about a smaller crop by pegging output on Friday at 444M bushels, 6.5% below the USDA's last estimate. MGEX December wheat surged 19c to $8.70/bushel while CBOT December rose 7 1/2c to $6.48 1/4 and KCBT December gains 12 3/4c to $7.44.

Rice (Source: CME)
US rice futures extend losses from the three-year high reached earlier this month. Prices continue to pull back as traders take profits and worry about the global economy. Rice was unable to stabilize and recover from losses last week as corn, soybeans and wheat did. The nearby contract has lost nearly 12% since reaching an intraday high above $18.25/hundredweight two weeks ago. CBOT November rice drops 36c to $16.12 1/2/hundredweight.

Commodities Rise on Speculation Europe’s Debt Crisis May Ease (Source: Bloomberg)
Commodities rose from the lowest since December as European officials considered plans to curb the region’s sovereign-debt woes. The Standard & Poor’s GSCI index of 24 raw materials climbed 0.2 percent to settle at 600.37 at 3:46 p.m. in New York, snapping a three-session slump. Earlier, the gauge slumped as much as 2.6 percent to the lowest since Dec. 1. Next week, European Central Bank policy makers may discuss restarting covered-bond purchases and other measures to ease monetary conditions. The S&P 500 Index of equities climbed as much as 2.4 percent. Cattle, natural gas and coffee led the commodity rebound.

U.S. coal consumption off 5 pct last week -Genscape
HOUSTON, Sept 23 (Reuters) - U.S. coal consumption fell 5 percent last week and 7 percent from the same week a year ago, according to power industry data monitor Genscape.
There was cooler weather in the populous East and Midwest, WSI Corp weather service said. Cheaper natural gas also drove the changes.
Euro Coal-Prompt steady but Calendar swaps tumble
LONDON, Sept 23 (Reuters) - Prompt physical coal prices were steady to slightly lower on Friday but Calendar 2012 and 2013 coal swaps dropped by over $2.00 in line with the meltdown in world stocks, oil and base metals, triggered by global economic concerns.
Hedge funds have been sellers of coal API2, API4 and Newcastle swaps during the past two days and banks with exposure to options have continued to sell.

Crude Oil Advances in New York on Optimism Europe Debt Crisis Will Ease (Source: Bloomberg)
Oil advanced for a second day in New York on speculation steps by Europe to tame its sovereign debt crisis will temper a slowdown in the region's economy and demand for raw materials. Futures climbed as much as 1.6 percent as equities rallied. The European Central Bank may debate covered-bond purchases and interest rate cuts, a euro-region central bank official said. The European Union accounted for 16 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy. U.S. crude stockpiles rose last week, an Energy Department report tomorrow may show. “If there’s a credible plan that is good enough and certain enough to restore reasonable confidence to the world then a lot of things are going to look cheap at current prices and that probably includes oil,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

Tin Rallies as Indonesia Plans Export Halt Next Month to Try to End Rout (Source: Bloomberg)
Indonesia, the biggest exporter of tin, plans to halt overseas shipments from Oct. 1 to in a bid to support prices, according to Johan Murod, director at PT Bangka Belitung Timah Sejahtera, a group of smelters. Futures rallied. PT Timah, the biggest producer, and Malaysia Smelting Corp. unit PT Koba Tin were among 28 companies that agreed to the halt after meeting yesterday with Bangka Belitung Governor Eko Maulana Ali, Murod said by phone. Overseas shipments will be resumed if the price goes to $25,000 per metric ton, Murod said. Reduced supplies from Indonesia may help to stem a slump in prices that’s been driven by concerns that the world economy may slip into another recession as U.S. growth falters and Europe battles a sovereign-debt crisis. Tin producers faced bankruptcy if prices continued their slump, Murod said on Sept. 24.

Iron Ore-Spot prices at 2-month lows as buyers thin out
SINGAPORE, Sept 26 (Reuters) - Price offers for imported iron ore to top buyer China dropped further on Monday as weaker interest dragged down spot rates to their lowest level in more than two months.
The recent drop in steel prices in China, which pointed to leaner demand in the world's biggest consumer and producer, has thinned appetite for iron ore, a key steel raw material. Shanghai steel futures fell for a third day in a row on Monday.

Vale says new pig iron technology to cut steel costs
LONDON, Sept 23 (Reuters) - Rio de Janeiro-based miner Vale  is developing a new pig iron production technology which will cut steel production costs by up to 30 percent, increase productivity and cut carbon and particulate matter emission, a Vale executive said.
Vale started up the first pig iron demonstration plant in Pindamonhangaba, in Sao Paulo state, on Sept. 12. The new technology allows the use of lower quality, cheaper, raw materials to produce pig iron, a key steelmaking ingredient and it also cuts processing costs, Vale said.

Underlying China iron ore demand strong -ArcelorMittal
LONDON, Sept 23 (Reuters) - Underlying Chinese demand for iron ore is still strong despite evidence of more cautious behaviour from some buyers, ArcelorMittal told investors on Friday, adding it expects buying activity to restart in the fourth quarter.
"There has certainly been a longer period of stockholding in China at the mills this summer than the last couple of summers. What we are seeing is people taking a wait-and see approach in China, but the underlying demand is still very strong," Simon Wandke, chief commercial officer of ArcelorMittal's mining operations, said during an investor meeting.

Gold Futures Recover From Biggest 3-Day Decline Since 1983; Silver Gains (Source: Bloomberg)
Gold futures advanced for the first time in five days as the biggest three-day drop since 1983 encouraged purchases by investors seeking a store of value amid turmoil in global financial markets. Silver futures climbed for the first day in four, trading back above $30 an ounce. December-delivery bullion rose as much as 2.4 percent to $1,633.30 an ounce in New York before trading at $1,630.50. Futures tumbled 11.8 percent in the previous three days, the largest such drop in 28 years. Immediate-delivery gold was little changed at $1,628.72 an ounce after slumping 9.8 percent in the last four days on optimism European officials will come up with a plan to stem the region’s debt crisis. “The facts haven’t changed,” said Gijsbert Groenewegen, a partner at Silver Arrow Capital Management.
“The only thing that changes over time is the perception that the Europeans are doing something about it, that they might come up with some solutions, but they’re not solving the problem. They’re just postponing what will happen in three months or six months or whatever but we will get default.”

Ship Owner Losses Persisting With Glut While Mining Profits Boom: Freight (Source: Bloomberg)
Ship owners may face losses until 2015 even with mining companies poised to increase global iron- ore supplies by almost as much as China imports in a year. Rio Tinto Group, Fortescue Metals Group and Vale SA will lead a 59 percent expansion in seaborne supply to 1.69 billion metric tons over the next four years, Morgan Stanley estimates. The capesize fleet grew 73 percent since 2007 and will gain 25 percent more by 2015, according to Drewry Shipping Consultants Ltd. Daily rates may not exceed the $20,000 needed to break even until then, said Andreas Vergottis, who helps manage the world’s largest shipping hedge fund at Tufton Oceanic Ltd. in Hong Kong.
The three mining companies will make the most profit ever this year as combined earnings across the 14-member Bloomberg Pure Play Dry Bulk Shipping Index slump 55 percent, analysts’ estimates compiled by Bloomberg show. As the shipping industry grapples with a glut, miners are making money from shortages. Iron-ore prices more than doubled since the end of 2008 as suppliers failed to keep pace with demand from China, where steel production rose more than threefold since 2002.

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