Friday, October 7, 2011

20111007 1007 Global Commodities Related News.

World Food Prices Drop for Third Month on Slumping Grains, UN Agency Says (Bloomberg)
World food prices fell for a third month in September, the longest stretch of declines in more than two years, after grain prices slumped amid concern demand will be hurt by an economic slowdown. An index of 55 food commodities fell to 225 points last month from 229.5 points in August, the United Nation’s Rome- based Food and Agriculture Organization said. The gauge reached a record 237.7 points in February. Corn futures in Chicago had the biggest monthly slide in at least 50 years last month, dragging down other grains and taking pressure off rising living costs across the world. China’s fourth-quarter consumer price index probably rose 4.5 percent, down from 5 percent in the third quarter, according to the median of nine estimates compiled by Bloomberg News.

Corn (CME)
US corn futures end steady, pulling back from early session gains on late profit-taking and technical selling. Prices were higher most of the day, fueled by solid weekly export sales, a recovery from oversold conditions and signs of stability in external financial markets. However, traders remain cautious of extending risk in the face of an expanding harvest, particularly without a dominant fundamental feature ahead of next week's government crop forecast, says Shawn McCambridge of Jefferies Bache. Traders unwilling to push prices until a clearer sense of supply/demand is established. CBOT Dec corn end unchanged at $6.05 1/2/bushel, well off $6.17 session high.

Wheat (CME)
US wheat futures end lower, retreating from solid early gains amid harvest pressure. Grains in general unable to sustain early rally, which traders say was fueled by short-covering. "A disappointing performance given strength in crude and euro," RJ O'Brien's Rich Feltes says. Expected rains in southern Plains, expected to breathe life into a struggling early crop, limiting upside, analysts say. Export demand lackluster, they add. CBOT Dec wheat ends down 9 1/4c, or 1.5%, at $6.16 a bushel; Dec. KCBT wheat down 2c to $6.97 3/4; MGEX Dec wheat climbs 18 1/2c to $8.95 on supply worries and slow farmer selling, which is driving up cash prices, but deferred months end lower.

Rice (CME)
US rice futures end lower, retreating from early gains along with other grains. Lackluster demand limited the market's upside, although analysts note weather problems in Asia are threatening global supplies. Grains also pressured by the ongoing harvest, which is pushing more supplies into the pipeline. CBOT November rice ends down 8 1/2c at $15.93/hundredweight.

US corn steady after 3 pct rally, harvest caps gains
SINGAPORE, Oct 6 (Reuters) - U.S. corn futures steadied, after their biggest rally in two months a day earlier, as investors scooped up the grain, optimistic that European leaders will succeed in averting a financial crisis that could trigger a global recession.
"Yesterday we saw a sharp rally in corn and wheat but there is still uncertainty in the market as one day of recovery doesn't change the situation much," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore.

Manila considers raising 2012 rice import goal post typhoons
MANILA, Oct 6 (Reuters) - The Philippines may consider buying more than its targeted 500,000 tonnes of rice next year and weigh corn imports after  typhoons damaged crops, but it is unlikely to purchase more rice for 2011, government and industry officials said on Thursday.
Proceso Alcala said strong double-digit growth in rice production for most of the January-to-September period should help ensure sufficient supply this year.

Ukraine plans new grain export rules - lobby
KIEV, Oct 6 (Reuters) - Ukraine's government has promised grain traders it will come up with measures to boost exports that have been hit by customs duties, Ukraine's grain lobby UAC said on Thursday.
"The decision should be made next week and the new export regime should come into force as soon as possible", Serhiy Stoyanov, the director of Ukrainian Agrarian Confederation (UAC), told Reuters.

Indonesia must do more to boost rice yields -IRRI
JAKARTA, Oct 6 (Reuters) - Indonesia must take more aggressive action to boost yields on its rice paddy fields rather than expand planting areas, if it is serious about being self-sufficient in the staple diet, the International Rice Research Institute (IRRI) said.
The world's most populous Muslim nation was self-sufficient in rice in the early 1980s but then farmland was turned into housing for a booming population, while rampant smuggling put pressure on local growers.

Philippine group reviewing need to buy feedwheat,corn
MANILA, Oct 6 (Reuters) - A Philippine feed millers group said on Thursday it was assessing the quality of corn harvests and the need to import both feedwheat and corn after two strong typhoons last week.
The Southeast Asian country did not import corn this year but bought around 1 million tonnes of feed wheat mainly from Australia.

Philippines to review 2012 rice imports post typhoons
MANILA, Oct 6 (Reuters) - The Philippines will review its plan to cut rice imports to 500,000 tonnes next year after strong typhoons damaged crops in major rice-producing provinces, but it is unlikely to buy more  for this year, the Agriculture Secretary said on Thursday.
Proceso Alcala said strong double-digit growth in rice production for most of the January to September period should help ensure sufficient supply this year.

Vietnam 2012 rice for export may reach 7.2 mln T-report
HANOI, Oct 6 (Reuters) - Vietnam, the world's second-largest rice exporter after Thailand, could have 7.2 million tonnes of the grain available for export next year after deducting domestic consumption, up from 7 million in 2011, a state-run newspaper said on Thursday.
Output in 2012 could drop to 41.52 million tonnes of unmilled rice from 41.57 million this year, but consumption could fall to 27.33 million tonnes from 27.52 million in 2011, the Nhan Dan daily cited Agriculture Ministry projections as showing.

Informa lowers US 2011 corn yield forecast
CHICAGO, Oct 5 (Reuters) - Analytical firm Informa Economics on Wednesday cut its estimate of the U.S. 2011 corn yield to 149.5 bushels per acre (bpa), from 151.0 previously, and projected U.S. corn production at 12.519 billion bushels, trade sources said.
Informa raised its U.S. 2011 soybean yield forecast. The firm also cut its corn and soybean production forecasts for Argentina, citing adverse crop weather associated with the La Nina phenomenon.

Russia to harvest 95 mln t grain this year-Putin
MOSCOW, Oct 5 (Reuters) - Russia will harvest 95 million tonnes of grain this year, Prime Minister Vladimir Putin said on Wednesday, giving a figure above the official forecast of 90 million tonnes.
"As of today, or Oct. 5, 90 million tonnes of grain have been harvested," Putin told a government meeting.

Duties to quash Ukrainian hopes of record exports
KIEV, Oct 5 (Reuters) - Ukrainian grain exports in the 2011/12 season may reach just half the previously expected record volume of 24-25 million tonnes if export duties on grains remain in place, Agriculture Minister Mykola Prysyazhnyuk told Reuters on Wednesday.
"We need to export 25 million tonnes but if export duties remain in place, we will export about 13 million tonnes, maybe a little bit more," he said.

Coceral Raises EU Soft Wheat 2011-12 Output View To 128.39 Mln Tons (CME)
European Union farmers are expected to harvest 128.39 million metric tons of soft wheat in 2011-12, Coceral said, raising its July estimate by 1.86 million tons. The EU grain lobby body also raised its estimate for the 2011 corn harvest across the EU27 to 62.95 million tons, from the 54.77 million tons harvested last year and its previous forecast of 57.24 million tons. Total grain output is now seen at 279.03 million tons in 2011 from a planted area of 55.5 million hectares, compared with a revised estimate for 2010 of 273.99 million tons from 55.98 million hectares, Coceral said. Coceral's upward revision follows on the heels of a raft of analysts who have raised their EU grain output forecasts in recent weeks as more favorable weather has improved prospects for the region's drought-hit harvest. The lobby group now pegs soft wheat yields in 2011-12 at 55.3 tons a hectare, up from its earlier prediction of 54.6 tons/hectare and just above the 55.2 tons/hectare it estimated was harvested last year.
Still, the outlook for the region's barley crop is looking less optimistic. Coceral cut its production forecast for the grain to 50.94 million tons, down from 51.76 million tons expected in July and 52.67 million tons last year. The total oilseed crop in 2011 was pegged at 27.90 million tons, up from 26.52 million tons in July.

FAO Warns Of Tight World Grain Markets As Food Prices Fall (CME)
World grain markets are expected to remain tight this crop year, the United Nations' food body said, even as growing economic gloom and improving harvest prospects pushed food prices lower in September. The Food and Agriculture Organization's food price index, which measures the monthly change in international prices of a basket of food commodities, averaged 225 points last month, down 2% from August. Although that's still only 13 points below the record peak reached in February and higher than at the same time last year, that marks the third consecutive month of declines from this year's heady heights. The fall, particularly in grain, sugar and oils prices, was triggered by both fears of a global economic slowdown and the strength of the greenback, as well as improving supply prospects for many agricultural markets, the FAO said.
"Large [grain and oilseed] supplies from the Black Sea put downward pressure on prices from other origins," the FAO said. "A stronger U.S. dollar further contributed to the price decline." The body raised its forecast for 2011-12 world cereal production by 3 million metric tons to 2.31 billion tons, up 3% compared to the last crop year, thanks to a 4.6% increase in wheat output and a higher rice harvest. And it forecast a 2% decrease in cereal use, largely due to a sharp fall in the growth of ethanol production from wheat and corn, which is now only expected to grow 2% in 2011-12, compared to 5% the previous crop year. But it warned that even with improving prospects for the global harvest, the outlook remains "uncertain" for the world's most food insecure countries given the worsening economic climate and low world food stocks.
"Despite this positive production outlook, the impact on global food security remains uncertain given the current international economic slowdown," it said in a report. International grain prices as measured by the FAO's cereal index fell 3% to 245 points in September, continuing the downward trend seen since April, the FAO said. Still, it noted that with prices still at historically high levels, "the crop should remain an attractive option for producers." The FAO's oil index also fell 2.3% last month, while the sugar index fell 3.8% as improving production prospects in Europe, India, and Thailand helped prices to ease from their July peaks.

Mexican Agriculture Producers, Companies Urged To Hedge More (CME)
A Mexican government program that partially subsidizes price hedging for agricultural producers and companies is stretching its budget by shifting more of the risk to the participants. The Agriculture Ministry's trade service Aserca helps purchase hundreds of thousands of options for corn, coffee, wheat, orange juice, cotton and other commodities on the New York Board of Trade or the Chicago Mercantile Exchange. For corn, which represented more than half of the program last year, the government has subsidized 95% of the price of the options for producers and 70% for companies that use corn, meaning producers have been responsible for just 5% of the options' risk while the companies assume 30% of the risk. Aserca is lowering the government's share to 90% for producers and 50% for companies, effective Wednesday for corn.
Aserca Director Juan Fernandez del Valle said the changes were the result of dwindling resources. He said the program stopped operating for seven weeks this summer as funds ran low. On Wednesday, it relaunched operations for corn's spring-summer harvest, with the lower government subsidies. The program hasn't yet re-started for other products. "[Participation] can't be tied to whether we have a budget or not," he said. The government has allocated 10.4 million pesos ($767,000) for the program this year, up from MXN7.66 million in 2010. But increased market volatility has put pressure on government resources by increasing the cost of options, reducing the volume of produce that can be hedged. The annual volume covered under the program averaged about 15 million metric tons a year in the past three years; for January-August 2011, it was 12 million tons.
Fernandez del Valle said the aim is to change the culture of the Mexican agriculture sector, encouraging producers and companies to rely less on government resources and to participate more directly in the futures market. As Mexico increases its production of basic grains, producers and companies will need to assume more of the risk of hedging, because government budgets won't be able to match the demand, Fernandez del Valle said. And as more hedging is done, producers will benefit from lower interest rates on loans because of the security provided by the options, Fernandez del Valle said. This financial impact could be even greater than the government subsidy itself, leading to more income and potential for increased productivity, he said. Freeze and drought wreaked havoc on Mexico's corn harvests this year, and officials expect climate problems to persist. Corporate interest in the hedging program has increased as a result, so that they can secure supplies in the face of natural disasters.
Producers have become more interested because of the volatility of prices. Aserca's price-hedging program was created in 1994 after the North American Free Trade Agreement went into effect in order to help Mexicans prepare for agricultural trade openings written into the treaty.

Corn in Chicago Climbs 0.3% to $6.0725 a Bushel; Wheat, Soybeans Advance (Bloomberg)
Corn for December delivery rose 0.3 percent to $6.0725 a bushel on the Chicago Board of Trade at 10:24 a.m. in Melbourne. Soybeans for November delivery gained 0.3 percent to $11.6675 a bushel. December-delivery wheat advanced 0.2 percent to $6.2625 a bushel.

Thai rice plan: well-intentioned but hazardous
SUPHANBURI, Thailand, Oct 6 (Reuters) - On paper, it's populism at its best: the world's biggest rice exporter paying farmers a hefty premium to better their lives.
But Thailand's rice policy will cost it customers and fiscal peace of mind, as well as make Asia's staple food costlier as the region tries to cope with rising inflation.

Argentina may sign deal soon to sell corn to China
BUENOS AIRES, Oct 5 (Reuters) - Argentina hopes to sign a deal with China in November that would clear the way for corn exports to the Asian country -- the world's No. 2 corn consumer, Agriculture Secretary Lorenzo Basso said on Wednesday.
China does not currently buy Argentine corn due to curbs on the genetically modified varieties that account for about 80 percent of the South American country's corn production.

Ghana's Cocobod recommends small cocoa price hike
ACCRA, Oct 5 (Reuters) - Ghanaian cocoa sector regulator Cocobod has recommended a "very marginal" increase in the prices paid to farmers, partly because international market prices are down, its chief executive told Reuters on Wednesday.
The recommendation is for a price of 3,216 cedis ($1,991) per tonne in 2011/2012, up from 3,200 cedis for the season just ending, Tony Fofie said in an interview.

Armajaro expands into Colombian, Costa Rican coffee
LONDON, Oct 5 (Reuters) - Armajaro Trading Limited is expanding its global coffee operations into Colombia and Costa Rica, where it has opened a Latin American regional head office, its chief executive, Richard Ryan, said. Armajaro Trading started out as a cocoa trading company in 1998 and expanded into coffee around seven years ago, originally focussed on the world's top robusta coffee producer Vietnam.

Crop Death Seen Boosting Sugar as Stockpiles at 37-Year Low: Commodities (Bloomberg)
U.S. sugar stockpiles are shrinking to the lowest in 37 years after rain and freezing weather damaged the beet crop, potentially reversing a price slump and forcing the government to ease import limits. Farmers in Minnesota, the biggest beet grower, will reap 19 percent less than last year and output will drop in four more of the 10 biggest producing states, the U.S. Department of Agriculture estimates. Domestic prices may rise 10 percent to 41 cents a pound by year end, said Frank Jenkins, the president of Jenkins Sugar Group Inc., the largest U.S. raw-sugar broker. Sugar is the only major agricultural commodity produced in the U.S. that is subject to import quotas, and the USDA increased the limit by 45 percent this year as futures surged 21 percent in the three months through August. Retail prices have gained 9 percent since the start of January, twice the rate of food inflation. Rising costs are squeezing margins for Kraft Foods Inc. and Hormel Foods Corp.

Sugar, coffee, cocoa bounce with shares
LONDON, Oct 6 (Reuters) - ICE sugar, coffee and cocoa futures bounced early, in line with global stocks which rose for a second day as expectations grew policymakers would take steps to support European banks.
Raw sugar futures rose, tracking gains in other markets, underpinned by tight supplies of Brazilian raw sugar.

Indonesia coffee roasters buy Vietnam beans, supply tightens
SINGAPORE, Oct 6 (Reuters) - Coffee roasters in Indonesia, the world's No.2 robusta producer, have started to buy beans from rival Vietnam earlier than usual this year at $40-50 premiums to London futures, including freight, due to falling output and rising consumption, dealers said on Thursday.
Indonesia's annual domestic coffee consumption was growing at about 10 percent in the last five years, said Singapore-listed Olam International , the world's largest shipper of robusta. Olam estimated Indonesia's consumption at up to 180,000 tonnes this year.

I.Coast intensifies fight against cocoa smuggling
ABIDJAN, Oct 5 (Reuters) - Top world cocoa grower Ivory Coast has ramped up border security and warned cocoa dealers they could be prosecuted if they are caught smuggling beans to neighbouring countries, farmers and a government source said on Wednesday.
The move comes after a 2010-11 cocoa season in which as much as 200,000 tonnes of the West African nation's crop was transported to Ghana, Liberia and elsewhere as dealers sought higher prices and other export outlets than Ivorian ports, which were shut off for months by a post-election civil war and cocoa export ban.

Brazil mid-crop ends above forecast but down on year
BRASILIA, Oct 5 (Reuters) - Brazil's May-September cocoa mid-crop has ended well above initial forecasts but lagged last year's output by nearly 2 percent, data from Bahia Commercial Association showed.
The mid-crop ended having produced 1,680,592 60-kg bags (100,836 tonnes) in both Bahia and outlying cocoa producing states. By comparison, the 2010 mid crop produced 1,711,358 (102,681 tonnes).

Brent above $102; Libyan oilfield may be in ruins
SINGAPORE, Oct 6 (Reuters) - Brent crude neared $103 a barrel, extending its surge in the previous session as pessimism about weaker demand was outweighed by a surprise drawdown of U.S. inventories and concerns that Libya's largest oilfield could be damaged.
"We went from about $76.00 to around $79.70 for WTI (this week) and prices holding on to those highs shows the market is pretty much doing alright," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.

Crude Oil Falls in New York on Renewed Growth Concern After Two-Day Rally (Bloomberg)
Oil fell in New York, trimming the first weekly gain in three, on speculation that U.S. unemployment above 9 percent will slow fuel demand even as Europe takes steps to stimulate its economy. Futures slipped as much as 0.5 percent before a Labor Department report today that may show gains in U.S. September payrolls were too small to reduce joblessness. Oil yesterday capped the biggest two-day rally since February after European Central Bank President Jean-Claude Trichet announced a bond- purchase program to tame the region’s sovereign debt crisis. Crude for November delivery dropped as much as 44 cents to $82.15 a barrel in electronic trading on the New York Mercantile Exchange and was at $82.17 at 10:02 a.m. Sydney time. The contract yesterday climbed $2.91 to $82.59, for a two-day gain of 9.1 percent, the biggest since Feb. 22-23. Prices are up 3.8 percent this week and down 10 percent this year.

Copper Traders Most Bullish in Six Weeks as China May Replenish Stockpiles (Bloomberg)
Copper traders and analysts are the most bullish since August on speculation prices at a one-year low will spur China, the world’s largest buyer, to build stockpiles. Gold, sugar, corn and soybeans may also climb. Ten of 15 respondents surveyed by Bloomberg expect copper to rise next week and 5 predicted a drop, the most bullish reading in six weeks. It’s the first time in four weeks that the separate surveys forecast gains for all five commodities. Copper slumped to a 14-month low on Oct. 3 as commodities slid on concern that demand may wane as economies slow. Diego Hernandez, chief executive officer of Codelco, the world’s largest copper producer, said the next day that China should take advantage of the slump to restock. In 2008, during the worst global recession since World War II, China’s copper demand still jumped 4.9 percent, according to Morgan Stanley.

Gold, Silver Futures Advance in New York as Commodities, Equities Rally (Bloomberg)
Gold futures rose for the second straight day and silver surged as commodities and equities rallied amid optimism that European officials were making progress in taming the region’s sovereign-debt crisis. The Standard & Poor’s GSCI Index of 24 raw materials gained as much as 2.6 percent, led by gains in copper and silver. The European Central Bank will resume covered-bond purchases and reintroduce yearlong loans for banks, President Jean-Claude Trichet said. “Gold is back to behaving like a classic commodity,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Physical demand is providing support to gold.” Gold futures for December delivery gained $11.60, or 0.7 percent, to settle at $1,653.20 an ounce at 1:40 p.m. on the Comex in New York. The precious metal is heading for the first weekly gain in five.

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