Wednesday, October 12, 2011

20111012 0944 Global Commodities Related News.

Corn (Source: CME)
US corn futures finish limit up as traders cover short positions ahead of USDA crop reports tomorrow. Traders are nervous the government will surprise the markets with unexpected adjustments to its output or demand estimates. That encouraged shorts to take some profits off the table. "More than anything else, I think it's people covering," says Sid love of Kropf & Love Consulting. CBOT December corn rises 40c to $6.45 a bushel.

Wheat (Source: CME)
US wheat futures close sharply higher on spillover support from limit-up corn prices. The grains are linked as both are used for animal feed. Additional strength for wheat came from Russia's plans to limit grain exports, says Tim Hannagan of PFG Best. The restrictions could send more business to the US, which has not been able to compete recently with low-priced wheat available from the Black Sea region. CBOT December wheat soars 49 1/4c to $6.60 3/4 a bushel while KCBT December gains 43 3/4c to $7.29 3/4. However, after a big recent rally, MGEX December rose just 2 1/4c to $9.36 1/2.

UPDATE: US Grain, Soy Futures Soar Ahead Of USDA Crop Reports (Source: CME)
U.S. grain and soybean futures surged Tuesday as traders waited for highly anticipated federal crop data. Corn futures climbed the maximum amount allowed on the Chicago Board of Trade, with the most actively traded December contract jumping 40 cents, or 6.6%, to $6.45 a bushel. Soybeans for November delivery climbed 61 cents, or 5.2%, to $12.38 1/2 a bushel. Soft red winter wheat for December delivery was up 45 cents, or 7.4%, to $6.56 1/2 a bushel. Driving prices higher were traders buying back previously sold positions before the U.S Department of Agriculture issues monthly reports Wednesday. Traders had made money on the positions and wanted to book profits due to uncertainty about how the government will adjust its output and supply estimates.
Money managers had been increasing their sold, or short, positions in corn and soybeans lately as prices dropped amid fears about a global economic slowdown. They increased short positions by 3,151 contracts in corn in the week ended Oct. 4 and by 2,976 contracts in soybeans, according to data from the U.S. Commodity Futures Trading Commission. "You had a seat change of funds getting out of longs and starting to get short the market," said John Kleist, analyst for, an agricultural brokerage firm. Uncertainty about the USDA reports encouraged market participants to buy back some of the previously sold positions. Analysts generally expect the USDA will make only modest changes to its forecasts for the corn and soybean harvests, predicting a reduction in the number of harvested acres will offset an increase in the number of bushels produced per acre. Yet, traders evened up positions in the markets, as the department has built a reputation for surprising markets with unexpected forecasts.
"There is a little nervousness," said Jason Britt, president of Central States Commodities, a brokerage in Kansas City. Uncertainty about the reports has kept the markets on edge for the past several sessions. Gains on Tuesday were a turnaround from last week, when corn and soybean prices dropped to fresh lows for the year. Traders said the recent setback in prices increased foreign demand for U.S. farm products, helping to fuel Tuesday's recovery. They said China has been buying soybeans, and the USDA confirmed exporters struck deals to sell 261,200 metric tons of corn to Mexico. Some buyers stepped in to the markets because they suspect last week's slide in prices represented the lowest level the markets will reach this autumn, said Alan Brugler, president of Brugler Marketing & Management in Nebraska. Market participants feel it is the right time to "lighten up the shorts or nibble the long side," he said. Short positions are bets that prices will fall, and long positions are bets that prices will rise.
Additional support for the markets came from Russia's plans to restrict grain exports, noted Mike Zuzolo, president of Global Commodity Analytics & Consulting, a brokerage firm in Indiana. The export limit of 24 million metric tons for the current marketing year could send buyers to other countries, such as the U.S., he said. Increased foreign demand for U.S. wheat would be a turnaround as foreign buyers have been looking to Russia for low-priced grain.

Russia To Limit 2011-2012 Grain Export To 24 Mln Tons (Source: CME)
The Russian government will impose a grain export limit of 24 million metric tons in the current marketing year, the government press service said, citing Deputy Prime Minister Viktor Zubkov. The aim of imposing such a limit is to maintain stable domestic grain prices, the service quoted Zubkov as saying. Zubkov said that since the beginning of the current marketing year to date, Russia has exported 10.7 million tons of grain. If they continue at the same rate, exports will total 18 million-19 million by the end of the calendar year. The limit would most likely be imposed through a floating export duty, Zubkov was quoted as saying. He added that the decision had already been agreed with all the relevant government agencies. Russia's grain harvest this year should be 90 million-92 million tons, with domestic consumption at 72 million tons, meaning the maximum amount of exports the country can afford without disrupting the domestic market is 23 million-24 million tons, Zubkov said.

USDA Says 261,200 Tons Of Corn Sold To Mexico In 11-12 (Source: CME)
Private exporters reported to the U.S. Department of Agriculture export sales of 261,200 metric tons of corn for delivery to Mexico during the 2011-2012 marketing year. The marketing year for corn began Sept. 1. The USDA issues both daily and weekly export sales reports to the public. Exporters are required to report to the USDA any export sales activity of 100,000 metric tons or more of one commodity, made in one day to one destination, by 3 p.m. Eastern time on the next business day following the sale. Export sales of less than these quantities must be reported to the USDA on a weekly basis.

Brazil Revenue From Top Produce Items Seen Rising 12% In 2011 (Source: CME)
Gross revenues from Brazil's top 20 agricultural products should rise 12% this year from 2010, reaching a total 205 billion reais ($116.7 billion), the Agriculture Ministry said Tuesday. Expected to lead the gain is cotton, sales of which should more than double in value this year, thanks to high prices and increased planting. Revenues from grapes, coffee, corn, soy and oranges are also expected to increase substantially. Brazilian farmers' income from onions, potatoes and wheat is seen declining in 2011 from last year, on the other hand. The ministry noted that coffee, sugarcane, oranges, corn and soy are expected to account for 72% of Brazil's produce revenues this year.

Grains Surge Most in Year as September Slump May Spur U.S. Export Rebound (Source: Bloomberg)
Corn, soybean and wheat futures posted their biggest gains in more than a year on signs that a plunge in prices last month is increasing demand for supplies from the U.S., the world’s largest exporter of the crops. Mexico, the biggest corn importer after Japan, bought 261,200 metric tons from U.S. exporters, the government said today. Soybeans inspected for export more than doubled to 23.4 million bushels in the week ended Oct. 6, with two-thirds destined for China, the U.S. Department of Agriculture said. Russia said today it may impose export duties on grain just three months after lifting a ban on shipments.
Grain futures that plunged in September on concern that Europe’s debt crisis would slow global growth led a jump today in the Standard & Poor’s GSCI Index of 24 raw materials. The commodity gauge reached the highest since Sept. 22 and extended a five-session rally that is the longest since August. Treasuries fell, pushing yields to a one-month high, and the S&P 500 equity index advanced for a second day.

Soybean Slump Ending as Record Global Demand Overwhelms Farms: Commodities (Source: Bloomberg)
The biggest rout in soybean prices in more than two years may be ending as farmers from Iowa to Brazil fail to keep pace with record demand for cooking oil and livestock feed. The U.S., the world’s largest grower and exporter, will harvest 7.3 percent less this year, leading the first decline in global output since 2009, the U.S. Department of Agriculture estimates. Morgan Stanley expects soybeans to average $14.25 a bushel in the 12 months ending Aug. 31, the most ever and 21 percent more than yesterday’s closing price of $11.775. The use of soybeans expanded at almost four times the pace of the world population in the past decade, led by China, government data show. While prices began tumbling last month on investors’ mounting concern that slowing growth will weaken demand for raw materials, global consumption of cooking oils hasn’t fallen during a recession in the past three decades, USDA data show.

US soy near one-week top; corn, wheat rise on EU hopes
SINGAPORE, Oct 11 (Reuters) - U.S. soy gained more ground, rising almost 1 percent, while corn and wheat firmed for a second straight day as a pledge by European leaders continued to shore up hopes for the resolution of the euro zone debt crisis.
"A part of the action has to do with a correction because the slide in September was quite aggressive and it's a bit of a risk appetite in the market," said Abah Ofon, an analyst with Standard Chartered Bank in Singapore.

Hungary sees 8.1 mln T 2011 maize crop -AgMin
BUDAPEST, Oct 11 (Reuters) - Hungary's maize crop could reach 8.1 million tonnes this year, slightly higher than previous indications for 8 million, the Agriculture Ministry said on Tuesday.
The ministry told Reuters in an emailed response to questions that with 40-45 percent of the harvest completed, the average yield was 6.8 tonnes per hectare, projecting the final yield at above 6.68 t/ha.

Maize harvesting confirms bumper yields in west EU
PARIS, Oct 10 (Reuters) - Maize harvesting in major producers France and Italy has confirmed expectations of high yields after the crop enjoyed more favourable weather than other grains in western Europe, analysts and growers said.
Strong results from well-advanced harvesting in the two countries have reinforced the prospect of bumper maize production in the European Union this year, providing comfort for livestock farmers reliant on the feed grain and opening an export window for the EU amid tight global supply of maize.

Weekend rains boost U.S. Plains soil moisture
CHICAGO, Oct 10 (Reuters) - Heavy rains in the parts of the southern U.S. Plains during the weekend gave a good boost of moisture to parched soils in hard red winter wheat-growing areas, a forecaster said Monday.
"That rain was much needed, almost drought breaking for parts of Texas and Oklahoma," said Joel Burgio, agriculture meteorologist at Telvent DTN. "I'm sure they (farmers) appreciate it."

India's 2012 wheat output seen at record 86 mln T
NEW DELHI, Oct 10 (Reuters) - India expects a record wheat harvest of 86 million tonnes in 2012, the farm secretary said on Monday, raising hopes of exports for a second straight year from the world's second-biggest producer and consumer of the grain after China.
India, which consumes about 76 million tonnes of wheat a year, harvested a record 85.93 million tonnes of the grain in 2011 and allowed exports of 2 million tonnes.

Philippines says sells 113,000 T sugar to US, Asia buyers
MANILA, Oct 11 (Reuters) - The Philippines sold 113,000 tonnes raw sugar to the United States and some Asian countries for shipment between September and December, about 17 percent of planned exports for the current crop year, the sugar regulator said on Tuesday.
The volume is more than 82 percent of the Southeast Asian country's non-U.S. quota sugar exports in the previous 2010/11 crop year totalling 137,000 tonnes.

Vietnam Coffee-Oct loading seen low, more rain ahead
HANOI, Oct 11 (Reuters) - Coffee exports from Vietnam this month could fall to between 40,000 tonnes and 50,000 tonnes, or 670,000 to 833,000 bags, from 57,300 tonnes loaded in the same month last year, traders said on Tuesday.
The October export volume is an indicator of the size of Vietnam's previous 2010/2011 crop, which traders have estimated at up to 22 million bags, as harvesting has been delayed by rain in the Central Highlands coffee belt.

Flowering to follow rains in Brazil's coffee belt
BRASILIA, Oct 10 (Reuters) - Brazil's southeastern coffee belt should bloom within days, marking the start of the 2012 crop after heavy rain ended a withering dry spell, agronomists and forecasters told Reuters on Monday.
The expected larger coffee crop in 2012 from the world's top grower is of pivotal importance to the global market as it faces recurrent shortages of high grade arabica beans. Output growth has lagged the brisk increase in consumption.

Ukraine white sugar output at 707,000 T so far
KIEV, Oct 10 (Reuters) - Ukrainian sugar refineries produced 707,000 tonnes of white sugar from sugar beet as of Oct. 10 or 39 percent more than at the same date in 2010, Ukraine's sugar union Ukrtsukor said on Monday.
The union said in a report that more than 70 refineries had received about 7.4 million tonnes of sugar beet and processed 5.8 million tonnes.
Thailand to assess damage to sugar cane crop from flooding
BANGKOK, Oct 10 (Reuters) - Thailand's government is assessing the damage to the sugar cane crop from recent flooding and may have information by the end of the month, a Ministry of Industry official said on Monday.
"Cane is different in nature to other crops," said Prasert Tapaneeyangkul, secretary-general of office of cane and sugar at the Ministry of Industry.

Record Coal Price Risk Gaining as Australia Prepares for Rain: Commodities (Source: Bloomberg)
The record rains that flooded Australia and led to surging coking coal prices last year are brewing again. The chances of above-average rainfall in parts of Northern Queensland in the rest of the year are 65 percent to 70 percent, Australia’s Bureau of Meteorology said Sept. 19. One contributor is the returning La Nina weather event that cooling ocean temperatures and stronger trade winds are indicating may return this quarter. The prospect of disrupted supply from the world’s biggest exporter led Citigroup Inc. analyst Daniel Hynes to say coal may “spike” more than 20 percent to about $350 a metric ton, if the disruption is as severe as last summer. The previous La Nina, Australia’s most expensive natural disaster, shut mines and sent coal to a record $330 a ton in the June quarter.

Brent stays near $109 on Europe optimism, Kuwait strike
SINGAPORE, Oct 11 (Reuters) - Brent crude held near $109 on cautious optimism that European banks may avert a financial crisis after leaders promised a plan to resolve the region's debt woes while a strike in OPEC member Kuwait threatened exports.
"The market is a little bit optimistic over the European banking issue, but we still need to watch the situation carefully," said Ken Hasegawa, a commodity sales manager at Newedge Japan.

S.Korea LNG inventory seen at near 3.5 mln T by mid-Nov
SEOUL, Oct 11 (Reuters) - South Korea's liquefied natural gas (LNG) inventory stood at over 3 million tonnes as of Tuesday, and the world's second-largest LNG importer plans to build nearly 3.5 million tonnes of inventory by mid-November for winter demand, a government source said.
Earlier, state-run Korea Gas Corp (KOGAS)  said it had sold gas equivalent to 1.95 million tonnes of LNG domestically in September, up 15.8 percent from a year earlier and led by strong demand for power generation. The amount was equivalent to 86.3 billion cubic feet of natural gas.

Kuwait says oil exports moving amid strike
DUBAI/KUWAIT, Oct 11 (Reuters) - Exports of crude oil and oil products out of Kuwait are moving normally and all customer commitments will be met, a Kuwaiti oil industry spokesman said on Tuesday, as the customs union pledged to continue a strike that stranded sea tanker traffic on Monday.
"Kuwait Petroleum Corp (KPC) reassures its customers about securing their crude, oil product needs," Sheikh Talal al-Khaled al-Sabah, spokesman for the OPEC producer's oil sector, said in a statement to Reuters.

China and Russia to hold energy talks while Putin visits
BEIJING/MOSCOW, Oct 10 (Reuters) - China and Russia will discuss an elusive giant gas deal during Prime Minister Vladimir Putin's visit to Beijing, but a Russian official said on Monday that there were no plans to sign an agreement just yet.
Putin's two-day visit from Tuesday will be his first foreign trip since revealing plans to reclaim Russia's presidency. He could seek to narrow price disagreements that have prevented Russia from signing a 30-year deal to supply China with up to 68 billion cubic metres of gas per year.  

Libya to free up oil sector-deputy minister
TRIPOLI, Oct 10 (Reuters) - Libya's oil sector will be freed up under the new government and companies will have more say over exploration, projects and operations, Libya's deputy oil minister told Reuters on Monday.
"We want to remove restrictions on management to provide more opportunity for development and for young people," Omar Shakmak said in an interview.

Oil Drops First Day in Six on Concern Economy to Falter as Stockpiles Rise (Source: Bloomberg)
Oil fell for the first day in six in New York, snapping the longest run of gains this year, on concern that fuel demand will falter after U.S. and European lawmakers rejected plans to bolster their economies. Futures slipped as much as 0.9 percent after Slovak lawmakers voted against an overhaul of Europe’s bailout fund and the Senate blocked President Barack Obama’s $447 billion plan to boost job creation. The Organization of Petroleum Exporting Countries cut its global oil demand growth forecast for this year and 2012, citing a weak economic outlook in industrialized nations. A report tomorrow may show U.S. crude stockpiles increased, according to a Bloomberg News survey. “The market is starting to come to grips with the depth of the issues in Europe,” Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, said by phone today. Investors are “questioning the ongoing demand for crude oil,” he said.

Copper Drops Most in a Week as China’e Exports May Ebb, Europe Woes Mount (Source: Bloomberg)
Copper fell the most in a week on concern that metal demand will slide as the global economy falters, Chinese exports wane and Europe’s debt woes escalate. Chinese export growth probably declined to 20.5 percent in September from 24.5 percent a month earlier, according to economists’ estimates compiled by Bloomberg. European Central Bank President Jean-Claude Trichet said the debt crisis threatens the financial system. “China’s economy is contracting, and we are not seeing any greater demand there,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Europe has real troubles that will drag on the world economy, and it will remain a concern for the next year at least.”

Container Lines Delay Asia-U.S. Rates Target on Struggle to Predict Demand (Source: Bloomberg)
Container-shipping lines delayed announcing targets for next year’s rates on Asia-U.S. routes as they struggle to forecast volumes amid unsteady economic growth and an expanding global fleet. “No one is able to predict even the near-term outlook,” Brian Conrad, executive administrator at the Transpacific Stabilization Agreement, a group of 15 container lines, said yesterday in Shenzhen, China. Publication of the TSA’s annual rates guidelines, which usually happens around this month, may be delayed until early next year, he said. The delay reflects U.S. retailers’ unwillingness to commitment to orders for Asian-made toys, flatscreen TVs and sneakers amid a 9 percent jobless rate and stock-market fluctuations. An increase in the number of container vessels in service this year has also hindered shipping lines’ efforts to secure higher rates.

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