Thursday, October 13, 2011

20111013 0949 Global Commodities Related News.

Corn (Source: CME)
US corn futures finished weaker as U.S. federal forecasters increase their inventory projection more than expected. Profit-taking adds pressure after a limit-up session Tuesday. Yet, the market could feel longer-term support from the USDA's report because it cut the output forecast for the third month in a row, says Brian Hoops of Midwest Market Solutions. "I think from a longer-term standpoint, there are some positives out of this report." CBOT December corn slips 4 1/4c to $6.40 3/4 a bushel.

Wheat (Source: CME)
US wheat futures closed sharply lower after USDA raised its supply outlook 10% from last month. The increase was a surprise as traders had predicted inventories would decline due to a reduced production estimate issued two weeks ago. Yet, weakened demand for the crop expanded supplies. USDA cut its outlook for US exports and feed use as foreign buyers look to other countries for grain. CBOT December wheat drops 34c to $6.26 3/4 a bushel; KCBT December falls 18 3/4c to $7.11; MGEX December sinks 34 3/4c to $9.03 3/4.

Rice (Source: CME)
US rice futures closed higher as federal forecasters lower their output forecast 2.1% from last month to a 3-year low. The crop suffered damage from hot, dry weather in the South this summer. "The decline is entirely due to a decrease in yield," the USDA says in its monthly report. Projected season-ending supplies are lowered 5%. CBOT November rice jumps 37 1/2c to $16.36 1/2 per hundredweight.

Wheat, Corn Futures Decline as USDA Forecasts Rising World Inventories (Source: Bloomberg)
Wheat futures tumbled the most this month and corn fell after the U.S. government boosted its estimates for global stockpiles, signaling increased supplies for makers of food, animal feed and ethanol. World inventories of wheat before next year’s Northern Hemisphere harvests may total 202.37 million metric tons, the most since 2002, the U.S. Department of Agriculture said today in a report. Global corn reserves were pegged at 123.19 million tons, 4.9 percent higher than a September forecast. Both projections exceeded analysts’ expectations. The USDA also cut its estimates for exports of both commodities. Corn and wheat prices this year reached the highest since touching records in 2008, as rising demand for meat boosted consumption of grain used in livestock feed, and as refining of grain-based fuels increased. While production of both crops will decline this year in the U.S., the world’s largest exporter, output is growing elsewhere.

Wheat Extends Biggest Decline This Month as USDA Raises Global Stockpiles (Source: Bloomberg)
Wheat futures dropped, extending their biggest decline this month after the U.S. government boosted its estimate for global stockpiles. Soybeans fell and corn was little changed. World inventories of wheat before next year’s Northern Hemisphere harvests may total 202.37 million metric tons, the most since 2002, the U.S. Department of Agriculture said yesterday in a report. Global corn reserves were pegged at 123.19 million tons, 4.9 percent higher than a September forecast. Both projections exceeded analysts’ expectations. The USDA also cut its estimates for exports of both commodities. Corn and wheat prices this year reached the highest since touching records in 2008, as rising demand for meat boosted consumption of grain used in livestock feed, and as refining of grain-based fuels increased. While production of both crops will decline this year in the U.S., the world’s largest exporter, output is growing elsewhere.

USDA Cuts Forecasts For Corn, Soy Output (Source: CME)
Federal forecasters cut their estimate for the U.S. corn crop for the third straight month but still increased their supply outlook because more grain than expected was left over from last year's harvest. The U.S. Department of Agriculture, in a monthly crop report released, said farmers will produce 12.433 billion bushels of corn this year, down from the 12.497 billion bushels the government predicted a month ago. The harvest will still be large by historical standards but down slightly from last year. The forecast for inventories left over at the end of August 2012, the end of the crop's marketing year, increased more than anticipated to 866 million bushels from 672 million last month. A smaller increase was expected after the government said two weeks ago that farmers and grain elevators had more grain than expected in storage. Still, supplies will remain at their lowest level since the mid 1990s, keeping grain users on edge.
"At the end of the day, 866 million bushels isn't blowing anybody's socks off," said Jack Scoville, vice president of Price Futures Group in Chicago. The USDA in the monthly report also had a dimmer outlook for the soybean crop. Forecasters surprised traders by lowering the prediction for the upcoming crop to 3.06 billion bushels from 3.085 billion in September. The USDA increased its outlook for domestic wheat supplies, bucking expectations for a slight cut in inventories. Farm commodities tumbled as the increased outlooks for corn and wheat supplies weighed on prices. Corn for December delivery recently traded down 6 cents, or 0.9%, to $6.39 a bushel on the Chicago Board of Trade. Soft red winter wheat for December delivery sank 36 3/4 cents, or 5.6%, to $6.24 a bushel. The losses dragged down soybeans, with the November contract slipping 3 1/2 cents, or 0.3%, to $12.32 a bushel.
"It's like breathing a sigh of relief that the stocks outlook is not getting tighter," said Dan Manternach, agriculture services director for Doane Advisory Services, an agricultural advisory firm in St. Louis. Traders had expected the corn crop would continue to shrink because flooding last spring washed out acres, preventing farmers from harvesting all the acres they intended. The USDA cut its forecast for harvested acres by 500,000 acres from last month, to 83.9 million acres. The USDA also lowered its forecast for harvested soybeans, to 73.7 million acres from 73.8 million. The government left unchanged its estimate for the average number of bushels of corn that will be produced per acre, surprising traders who were expecting an increase due to reports of better-than-expected harvest results. The steady yield outlook sustained concerns about crop damage due to hot, dry weather this summer. "The corn yields started out good but have been tailing off as we get later on into the harvest," Scoville said.
Market watchers generally expected yield boosts to offset the loss of harvestable acres. They didn't get it. The USDA lowered its estimate for the average soybean yield to 41.5 bushels per acre, down from 41.8 bushels per acre. As for wheat, the USDA raised its forecast for wheat ending stocks to 837 million bushels, up from 761 million bushels a month ago. Cotton was another surprise. The USDA raised its forecast for U.S. cotton production by 0.3% to 16.61 million bales. Most analysts had debated not whether the crop forecast would be reduced but by how much, mainly due to the record drought in top producing state Texas. But the USDA said higher production out of Georgia offset a reduction from Texas. Cargill 1Q Income Sinks On Volatile Markets.

China Buys 1.5 Million Tons Of U.S. Corn (Source: CME)
China bought about 1.5 million metric tons of corn Tuesday, likely mostly from the U.S., two executives familiar with the matter said separately. China had been widely expected to re-enter the corn market as U.S. corn prices, reeling due higher-than-expected supply estimates, fell 20% since early September. Soaring feed demand and depleted corn reserves have brought China back to the global grain market after a 15-year hiatus, with corn imports to the world's second-largest corn consumer in August reaching the highest monthly volume in 10 months. China Grain Reserves Corp., or Sinograin, China's official grain stockpiling agency, made the purchases, the executives with a state grain processing and trading company said. The sharp erosion in global corn prices last month came amid sharply higher Chinese spot prices. Corn prices in the major processing province of Shandong have risen more than 30% since the start of the year.
China bought 1.6 million tons of corn last year, mostly from the U.S., setting a pattern of aggressive buying on dips in prices in order to replenish stockpiles. China is projecting a record grain harvest this year of likely above 550 million tons, but analysts say China's import appetite could rise even more sharply in coming years, to around 9 million tons a year. The China Feed Industry Association said last month that by 2015, China will likely face a 15 million-ton shortfall in corn output. Sinograin spokesman Cheng Bingzhou said he was unaware of Tuesday's deal and declined to comment further. The exact amount of the purchase from the U.S. wasn't clear. One executive said the deal was for at least 900,000 tons. Sinograin is also in the market for soybeans and soyoil. The company bought about 100,000 tons of soyoil and 700,000 tons of soybeans from either U.S. or South American suppliers, one of the executives said.
China is targeting 2 million tons of soybean purchases, the second executive said. U.S. soybean prices tumbled about 18% last month, weighed by optimistic supply forecasts and a gloomy global growth outlook. China may have bought its latest soyoil imports from Argentina. About 200,000 tons of Argentinian soyoil was slated for export to China this year, Agriculture Minister Julian Dominguez has said. The South American nation hopes to step up corn exports to China in early 2012 after finalizing a market access agreement by the end of this year, Dominguez said.

EU Proposal Would Cap Subsidies At EUR300K Per Farm (Source: CME)
The European Commission presented plans to limit payments to big farms and set aside more land, as part of changes to its $75-billion-per-year farm subsidy program. The aid makes up two-fifths of the European Union's annual budget and is hotly debated when the EU writes its budget every seven years. Officials now face more than a year of wrangling to shape the final proposals into reforms that will be implemented after 2013, with the Commission's new proposal forming the basis for discussions. The priorities in the plan are "food security, sustainable use of natural resources and growth," said Dacian Ciolos, the EU's agriculture commissioner. A key proposal is the capping of payments at EUR300,000 per year per farm, which would save EUR2.5 billion on direct subsidies per year. The EU has come under criticism over the large amount of subsidizies allocated to corporate mega-farms. Currently, a quarter of the largest farms receive 74% of the money.
The Commission also wants to make a third of direct payments contingent on farmers following new rules on protecting the environment. The most controversial condition: the obligation to set aside at least 7% of arable land to "ecological focus areas," such as forests or buffer strips. Sugar quotas, long a staple of EU agriculture policy, "will not be extended beyond 2015," the Commission said. During the debate farmers and countries who rely on the money will be fighting to keep as much of it as possible. For example, France, the biggest recipient of aid, tracks the EU's rules as a vital policy issue. The EU's biggest farm lobby, Copa, lashed out at the Commission's plan as anti-farmer. "It is essential that direct payments to farmers are maintained if the agricultural sector is to continue to assure these benefits," said Gerd Sonnleitner, the lobby's president. "EU farmers' income is on average only half that of average earnings.
This is why currently, many young farmers are not willing to take over the farm and older farmers are leaving the sector in view of the drastic economic situation." The Commission's plan will now be debated in the European Parliament and by the EU's 27 member governments. It is they, not the Commission, that manages the final payouts, but they are legally obliged to follow the same rules.

US grain harvest speeds up but still lags
CHICAGO, Oct 11 (Reuters) - The U.S. corn and soybean harvests advanced rapidly last week under nearly perfect weather conditions in the U.S. Corn Belt, but each still lagged last year's pace, traders and analysts said early on Tuesday.
The U.S. Agriculture Department's weekly crop progress report on Tuesday afternoon is expected to show the corn harvest at 35 percent complete, compared with 21 percent a week ago and 51 percent in the same week last year, a Reuters Poll of 10 analysts and traders found.

US soy, wheat dip after rally, corn extends gains
SINGAPORE, Oct 12 (Reuters) - U.S. soybeans fell 0.7 percent , while wheat slipped 0.5 percent, trimming gains after last session's biggest rally in more than a year amid concerns over the euro zone debt crisis.
"It looks like profit-taking after gains last night or just rebalancing prior to the USDA report as no one wants to take a new position ahead of a report that could result in a limit down or limit up," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne.

Vietnam rice export defaults to hit 520,000 T-newspaper
HANOI, Oct 12 (Reuters) - Vietnam, the world's second-largest rice exporter, could default on deliveries of 520,000 tonnes of the grain this year as exporters failed to buy on domestic markets for loading due to a price surge, a state-run newspaper reported on Wednesday.
The projected defaults would account for 7 percent of Vietnam's annual export volume forecast at 7.5 million tonnes this year, breaking the record high of 6.83 million tonnes in 2010.

Philippines says typhoon damage climbs to 1 mln T rice
MANILA, Oct 12 (Reuters) - Unmilled rice damaged by two recent typhoons in the Philipppines has climbed to about 1 million tonnes, a senior agriculture official said on Wednesday.
The latest estimate was higher than a previous damage report of 760,000 tonnes unmilled rice.

Philippines' Aquino: No need for more rice imports in 2011
MANILA, Oct 12 (Reuters) - Philippine President Benigno Aquino said on Wednesday the country does not need to import more rice for this year's supply given ample stocks despite crop losses from recent typhoons.
The Southeast Asian country bought 860,000 tonnes of rice this year, just a third of the record purchases of 2.45 million tonnes bought for 2010 needs.

Russia mulls export duty to keep grain in country
MOSCOW, Oct 11 (Reuters) - Russia is looking at a protective export duty to keep grain in the country if exports exceed 23-24 million tonnes in the current crop year, First Deputy Prime Minister Viktor Zubkov told reporters on Tuesday.
"This year the crop is going to be 90, maybe 92 million tonnes," Zubkov said.

French wheat sales to N.Africa seen lower in 11/12
ALGIERS, Oct 11 (Reuters) - France will almost halve soft wheat sales to Morocco in the 2011/2012 season because of lower output in France, the French grain export body said on Tuesday.
Jean-Pierre Langlois-Berthelot, chairman of France Export Cereales, also told Reuters that French soft wheat exports to Morocco's north African neighbour Algeria would slightly decline during the 2011/12 campaign.

Floods in Pakistan damage 3.7 pct of total crop area- FAO
MILAN, Oct 11 (Reuters) - Floods in Pakistan have damaged at least 880,000 hectares of standing crops, including rice, maize, cotton, sugar cane, fruit orchards and vegetables, which represent about 3.7 percent of total national crop area, the United Nations' food agency said on Tuesday, citing preliminary official estimates.
"Damage to the current paddy crop is moderate and is estimated by FAO and Pakistan's space agency (SUPARCO), as of 20 September, at about 252,700 tonnes, or 2.5 percent of the normal national production," the UN's Food and Agriculture Organisation (FAO) said in an update on the flood situation in Pakistan.

Dryness returns to U.S. Plains wheat belt
CHICAGO, Oct 11 (Reuters) - Dry weather will return to the U.S. Plains hard red winter wheat region after weekend rains gave crop prospects a lift, an agricultural meteorologist said on Tuesday.
"There will be a few light rains in eastern Oklahoma and eastern Texas on Wednesday, but mostly dry weather for at least the next week to 10 days," said John Dee, meteorologist for Global Weather Monitoring.

French July-Aug wheat exports up 4 pct - customs
PARIS, Oct 11 (Reuters) - France exported 1.55 million tonnes of soft wheat in August, bringing the total since the start of the 2011/12 season on July 1 to 2.8 million tonnes, customs data showed on Tuesday.
The total so far this season was 4 percent higher than in the same period in 2010/11, the data showed.

Sugar, coffee extend gains as dollar weakens
LONDON, Oct 12 (Reuters) - ICE sugar, coffee and cocoa futures extended gains in early trade, underpinned by a weakening dollar with a focus on steps to resolve the euro zone crisis.
Raw sugar futures extended gains as the dollar slid to a 3-week low against the euro, and were underpinned by tight supplies of Brazilian raw sugar, although expectations of big northern hemisphere crops will limit gains.

Pakistan may import 400,000 T sugar next year
ISLAMABAD, Oct 12 (Reuters) - Pakistan may import up to 400,000 tonnes of refined sugar next year to bolster reserves despite expectations of a bumper crop, officials of the Ministry of Industries said on Wednesday.
The Economic Coordination Committee (ECC), the highest economic decision-making body, is expected to discuss the stock position and prospects for the next crop in a meeting on Thursday, the officials said.

India to decide 2011/12 sugar exports in Nov
NEW DELHI, Oct 12 (Reuters) - India will decide in early November how much sugar it could export in the new season that began this month, the food minister said on Wednesday, as the country weighs managing bulging stocks with fighting persistently high inflation.
Any Indian exports will put pressure on benchmark London white sugar futures  that have lost about 12 percent since January. Domestic prices, which have fallen about 4-5 percent this year on improved supplies, could rise.

Brazil 11/12 CS sugar output down 4 pct - Unica
SAO PAULO, Oct 11 (Reuters) - Sugar output from Brazil's center-south cane crop from the start of the season through the end of September was down 4 percent from a year earlier at 26 million tonnes, cane industry association Unica said on Tuesday.
But dry weather in the last two weeks of September allowed mills to boost production. Sugar output jumped 44 percent from the same period in 2010 when excess rains slowed harvest.

Good harvest profits not aplenty for India's farmers
MUMBAI, Oct 12 (Reuters) - Cotton farmer Ravindra Krishna Patil in India's Maharashtra state should be feeling flush after strong monsoon rains and a good crop, but high costs have cast a pall over his preparations for the festive season.
Instead of splashing out on gold jewellery, appliances or maybe even a car during the biggest shopping season of the year, 28-year-old Patil must count his rupees after costs of everything from fuel to labour soared while cotton prices have fallen by nearly half.

Firm price boosts Brazil cotton output, exports
BRASILIA, Oct 11 (Reuters) - Brazil will play a bigger role in the global cotton supply in the coming years with a dramatic surge in output and rising exports of the fiber to its top trade partner China, a sector official told Reuters.
The Latin American country's production of the fiber shot up to 1.96 million tonnes in 2011 from 1.2 million tonnes the year before, according to official data. Recent heavy capital investments signal these higher levels could be here to stay.

Euro Coal-Prices stable, China, S.Korea buy capes
LONDON, Oct 11 (Reuters) - Prompt physical coal prices were barely changed on Tuesday, with     volatility in other markets, due to worries over the health of Europe's economy, having no impact on coal prices.
Coal has largely been immune to the sharp movements seen in other markets although prices have drifted lower by around $15 a tonne during the past two months.

China buys Nov coal cape at $129/T CIF
LONDON, Oct 11 (Reuters) - A Chinese coal importer on Monday bought a November arrival capesize standard coal cargo at $129.00 a tonne CIF, the seller, a trader said on Tuesday.
Chinese buyers are quietly booking numerous and varied coal cargoes, low- to high-grade, at prices of $129-$131, suppliers said.

Oil Declines a Second Day on Outlook for Fuel Demand; Brent Spread Widens (Source: Bloomberg)
Oil dropped for a second day in New York as investors speculated that fuel consumption will falter on signs of a weakening global economy. Brent’s premium to U.S. prices widened. Futures slipped as much as 1.1 percent after American Petroleum Institute data showed U.S. implied gasoline demand fell the most in more than five years. Reports today may Chinese exports and imports slowed, while U.S. jobless claims rose. Brent oil in London was at the highest premium to New York crude in five weeks. “The economy is showing moderate, sub-trend growth,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “There’s an expectation that the rate of Chinese export growth is declining, reflecting weaker demand internationally. The market will also be focusing closely on the import side of things to get a bearing on Chinese domestic demand.”

Zinc Bear Market Seen Ending as Chinese Steel Gobbles Up Glut: Commodities (Source: Bloomberg)
The 28 percent plunge in zinc that drove the metal into a bear market may be ending as record demand from steelmakers erodes stockpiles and the price slump spurs producers to curb output. About 50 percent of zinc is used to rust-proof steel and production of the alloy reached an all-time high of 31.7 million metric tons in the second quarter, according to Macquarie Group Ltd. Global stockpiles monitored by exchanges in London and Shanghai are the lowest since April. Prices may climb as much as 25 percent to $2,450 a ton next year, according to the median in a Bloomberg survey of 10 producers, analysts and traders.
Prices plunged 57 percent since reaching a record $4,580 in 2006 as increased production created a five-year glut. The surplus is narrowing as consumption expands to a record, and will shrink next year to its smallest since 2007, according to Morgan Stanley. China expanding at more than twice the speed of the global economy and using more steel than ever may mean shortages as early as 2014, the bank estimates.

China daily crude steel output at 1.93 mln T in late Sept - CISA data
SHANGHAI, Oct 12 (Reuters) - China's average daily crude steel output stood at 1.930 million tonnes in the last 10 days of September, up 0.6 percent from the preceding 10 days, data from the China Iron & Steel Association showed on Wednesday.
Average daily output of the medium- and large-sized steelmakers also rose 0.6 percent to 1.64 million tonnes during the same period.

Europe's steel appetite to slow next year
PARIS, Oct 11 (Reuters) - European steel consumption growth will slow down in 2012 due a decline in manufacturing, Gordon Moffat, director general of the European steel producers association Eurofer said on Tuesday.
"We anticipate a consumption levels to grow by 6 percent this year and by less next year, probably 2 or 2.5 percent because of the decline in manufacturing," Moffat told Reuters in an interview.

Rio Tinto CEO sees little change in China ore demand
SEOUL, Oct 11 (Reuters) - Rio Tinto's   chief executive said on Tuesday he did not foresee a significant change in China's demand for iron ore despite investor concerns about slowing steel demand in the country and weak developed economies.  
Index-based spot prices slid to more than six-month troughs on Monday, after dropping about 5 percent in September, spurred by signs of slowing Chinese steel demand and uncertainty about the fate of the global economy.

Iron Ore-Shanghai rebar hits contract low, ore extends losses
SINGAPORE, Oct 12 (Reuters) - Benchmark China steel futures fell to their lowest ever on Wednesday as weaker demand put further pressure on prices and will likely curb output in the world's top consumer and producer.
Baoshan Iron and Steel , China's biggest listed steelmaker, said it will keep prices of its main products unchanged next month after raising them in September and October, reflecting caution amid slower domestic appetite.

Baltic index at 10-month high, China coal sales eyed
LONDON, Oct 11 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose to its highest in ten months on Tuesday helped by firm iron ore and coal cargo interest from China, with further near-term gains eyed.
Brokers said growing vessel supply, which was outpacing commodity demand, was set to cap dry bulk freight rate gains in the coming months with economic uncertainty adding to headwinds.

India shipping firms eye expansion in dire market
MUMBAI, Oct 11 (Reuters) - Indian shipping firms are planning to expand their fleet to take advantage of falling vessel prices and a sharp downturn in the global freight markets, industry executives said on Tuesday.
India's shipping firms view the difficult economic environment as a buying opportunity, as they expect to see a huge boom in seaborne trade in Asia's third largest economy over the next decade.

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