Corn (Source: CME)
US corn futures ended lower, retreating from early gains as sentiment on Europe's fiscal health shifts. A drop in the euro during the session helped drive commodity prices lower, serving as a reminder that the optimism about Europe ahead of a Friday debt summit was purely speculative. "We only have hopes going into the summit," Allendale's Rich Nelson says. "We don't have facts yet." Traders add that early gains had more to do with short-covering than any shift in supply and demand fundamentals, which are considered weak due to poor exports. Dec. CBOT corn ends down 6 1/4c to $5.80 1/4.
Wheat (Source: CME)
US wheat futures closed lower, sinking on poor demand and pressure from Europe. Optimism about Europe supported wheat and other commodities early, but after the euro fell in afternoon trading amid the potential for credit-rating downgrades, most commodities slipped. Meanwhile, disappointing weekly export inspections highlighted poor demand and ample world supplies. And traders noted a lack of fundamental news, waiting for the week-end USDA supply-and-demand report. CBOT December wheat ends down 13 1/2c at $5.98 3/4 while KCBT December falls 9 1/2c to $6.66 1/2 and MGEX December drops 7 3/4c to $8.48 1/4.
Rice (Source: CME)
US rice futures ended slightly lower amid lackluster demand. Poor demand sent the market down sharply all autumn, but prices have rebounded recently, building ideas that a market bottom is in place. World supplies are considered ample. Rice among several commodities that fell amid worries about Europe's debt. Jan. CBOT rice ends down 7c to $14.38 1/2 per hundredweight, down 3% since Wednesday.
Rain-soaked Australian wheat to corner Asia's corn market
SINGAPORE/SYDNEY, Dec 5 (Reuters) - An abundance of rain-soaked Australian wheat is set to further dampen U.S. and South American corn prices in 2012, as key corn importers switch to the cheaper, damaged grain for animal feed.
Japan, the world's biggest corn buyer, and corn-hungry South Korea and China are scooping up Australian wheat, as they seek to reduce costs -- and food inflation -- in the face of the global economic uncertainty.
Canada canola, wheat swelled in good weather
Canada's canola harvest jumped 6 percent from the government's last projection, as favorable late-summer and autumn weather boosted yields on the Prairies, grain traders and analysts say.
A Reuters trade survey ahead of Statistics Canada's final crop production report of 2011, due on Tuesday, estimated on average that the canola crop jumped to 13.7 million tonnes, nearly 1 million tonnes greater than last year's harvest.
U.S. soybeans rise on dry weather, European summit hopes
KUALA LUMPUR, Dec 5 (Reuters) - U.S. soybeans rose for a second day as dry weather fuelled supply concerns and this week's summit of European leaders buoyed expectations that the region will find new steps to stem the debt crisis, halting a global economic slowdown.
"There's been a drying trend in South America and we have seen that in the last couple of weeks in Brazil but it's not expected to be sustained," said Luke Mathews, an agricultural commodity strategist at Commonwealth Bank of Australia in Sydney.
Vietnam rice export prices need to be cut-top exporter
HANOI, Dec 5 (Reuters) - Vietnam's rice industry should cut export prices to attract buyers and avoid a fall in domestic prices when the largest rice crop is harvested early next year, a senior official at the country's top rice export firm said on Monday.
Exporters have signed contracts to load a record low 220,000 tonnes of rice in early 2012, following competition from cheaper Indian and Pakistani rice, Deputy General Director Cao Thi Ngoc Hoa of Vinafood 2 said.
Ukraine may import wheat as winter sowings suffer
KIEV, Dec 2 (Reuters) - A fall in the 2012 winter wheat harvest after large exports in the 2011/12 season, could force Ukraine to import wheat in 2012/13, about 1.3 million tonnes, for the first time since 2004, according to the Farm Ministry data, published on Friday.
The data, published on the web site of Ukraine's grain traders union UZA www.uga-port.org.ua showed the former Soviet republic and net-exporter of wheat was likely to harvest 8.5 million tonnes of wheat in 2012 compared to 22.2 million in 2011.
Japan Moves Into Argentina's 2012 Corn Crop (Source: CME)
Japan, the world's biggest corn importer, has made its first purchases of the grain from Argentina's next crop, to be harvested early next year, and is also simultaneously buying sorghum to cut costs, trading executives said. Japan has bought at least three split or combination cargoes from Argentina, they said. All cargoes contain around 27,500 metric tons each of corn and sorghum for shipment between March 15 and April 15, they said on the sidelines of an agriculture conference. A total of 82,500 tons each of corn and sorghum were purchased. More purchase deals are likely for Argentina's corn because it is up to $5/ton cheaper than U.S. corn, said an executive with a global commodities trading company. U.S. corn is currently offered around $315/ton, cost and freight, for shipment to Japanese ports in March. Traders said costs can be cut while importing corn by also buying sorghum for shipment in the same cargo. Both are ingredients for making animal feed.
Western Australia Grain Harvest Reaches 60% (Source: CME)
An annual harvest of winter grains, including wheat, in Western Australia state is more than 60% complete, with Cooperative Bulk Handling Ltd. reporting mostly favorably on grain quality in a weekly harvest report issued. Receivals of winter grains into CBH's network of 200 upcountry storage sites and four coastal export terminals total 8.2 million metric tons of an expected 12.5 million-13.0 million tons in the crop year ending March 31, CBH said. If realized, this will be the second-largest volume after the 14.7 million-ton record delivered in 2003-04 and about double last year's total drought-reduced intake of 6.5 million tons, the company said. CBH dominates storage and handling in the state. CBH's Geraldton Zone manager, Duncan Gray, said receivals have reached 2.5 million tons, making an expected 3.2 million-ton total in the zone "very achievable" given 30% of the crop in the zone remains to be harvested.
"The grain quality has again held very firm across the zone, which is very pleasing and hopefully this trend can continue until the end of harvest," Gray said. CBH previously reported some grain quality issues as a result of high moisture levels earlier in the harvest. Central Kwinana zone manager Brett Jeffrey said wheat yields and quality are generally holding up well, with most sites achieving high percentages of milling grades. Southeast Esperance zone manager Mick Daw said that while CBH sites are receiving grain across all grades, the quality has generally been improving. Industry estimates suggest deliveries to CBH account for about 90% of state grain production, with the rest stored on farm or sold directly to users. WA delivered mostly milling grade in last year's drought-reduced crop. Earlier this year, there was some concern that increased moisture late in the season may lead to the downgrading of some of the crop to feed grade.
Faulty Forecasts Roil Corn Market (Source: CME)
Government reports about the U.S. corn crop have become increasingly unreliable of late, contributing to wild swings in corn prices, a Wall Street Journal analysis shows. Over the past two years, the Department of Agriculture's monthly forecasts of how much farmers will harvest have been off the mark to a greater degree than any other two consecutive years in the last 15, according to a Journal analysis of government data. This year's early-season forecasts also appear to have been way off. The next monthly report is due on Friday. At the same time, periodic stockpile reports -- government estimates of how much corn is stored in farm silos and other storage facilities -- have generated big surprises. The average monthly swings in stockpile estimates between May and October, the heart of the growing season, have been greater this year than in any year since 1996, according to the Journal analysis. The stockpile reports have had a big effect on markets.
On Sept. 30, the USDA said a quarterly survey showed corn stockpiles were 23% higher than it had estimated earlier that month. Corn prices fell 6.3% in the futures market that day, shaving $5 billion off the value of corn in the fields. "There is very much a lack of confidence right now among farmers" in the government data, says Bill Christ, who harvests roughly 100,000 bushels of corn a year in Metamora, Ill. "Can't they get it right?" USDA officials blame unpredictable weather for recent errant production forecasts. They say the figures are snapshots that change based on fresh information, such as damage caused by heat waves or changes in consumption patterns. "If somebody's going to be in these commodity markets, they better understand these things are subject to change," says Gerald Bange, chairman of the USDA's World Agricultural Outlook Board, which is involved in producing the data. The U.S. grew 38% of the world's corn in 2010, when the domestic crop was worth $67 billion.
Strong demand from foreign buyers, and from the growing ethanol industry, has added to market volatility. Jerry Norton, who tracks corn for the USDA, says because corn supplies are tight, "the market is much more sensitive" to changes in the department's reports. The Chicago Board of Trade has long had limits on single-day price moves on corn and other commodities in the futures market. Corn prices have hit the basic limit 20 times since the start of 2009, with eight of those instances, or 40% of them, coming on the day of a USDA report, according to a Journal analysis of price data. Between 1996 and 2008, only 20% of such limit moves came on reports days. Like many farmers, Mike Yost, a former USDA official who is now a partner in a Murdock, Minn., dairy farm, pays close attention to the reports. In January 2010, the USDA forecast a record crop, causing corn prices to plummet. Mr. Yost figured a record crop would keep corn prices low, so he didn't lock in his feed prices.
Six months later, the department said corn stockpiles were smaller than he and many others had expected, despite the bountiful crop. Prices shot up, and Mr. Yost's dairy operation had to pay an extra $200,000 to buy feed. "We just got too comfortable going on the government numbers," he says. "There's something not quite right in their formula." Critics of the reports contend that weather alone doesn't explain the erratic numbers, especially in the stockpile reports. Darrel Good, a professor at the University of Illinois who has written extensively about USDA data, says that a number of recent quarterly stockpile reports have been simply incorrect -- the numbers have been higher or lower than the actual amounts in storage. "Things went haywire in June and September," he says. "The cumulative numbers just don't make sense." A USDA spokesman says the agency stands by the numbers.
The USDA data drive all sorts of decisions in the agricultural economy and beyond. Farmers use the information to help decide how much their corn is worth and when they should try to sell it. Ranchers, ethanol producers and food companies all pay attention when making their own corn purchases. Many other nations rely on U.S. corn for feed, and some foreign buyers key on the reports. China, for example, swooped in to buy U.S. corn when prices fell after this year's June 30 stockpile report. For all their shortcomings, USDA production figures are considered the best domestic agricultural estimates available. Corn buyers and sellers say the department's task has gotten harder in recent years. With global demand for corn on the rise and prices soaring, U.S. farmers have been planting more. Production has grown by 30% over the past decade. The growth of the ethanol fuel industry, which has become a massive consumer of corn, has further complicated matters.
Accurate information about agriculture has been a national priority since the Civil War. Today, two measures of the corn harvest that the USDA focuses on are how big the next one will be and how much is in storage. In eight of the 11 years from 1998 to 2008, the difference between monthly production estimates made between May to October -- when the size of the crop is less certain than late in the year -- and final U.S. production totals averaged less than 3%, according to the Journal analysis. Last year, the USDA overestimated the size of the harvest in its monthly forecasts by an average of 6%, the widest average overestimation since 1995. That means the final harvest was about 750 million bushels smaller than what was forecast -- equal to about 20 days of consumption. In 2009, the department underestimated the crop by an average of 4.5%, the biggest underestimation since 2004. Current USDA figures for this year suggest that the department overestimated the total crop by nearly 10% early in the season.
The USDA is trying to improve its production estimates, which it provides each month starting in May. In May, June and July, the estimates are produced by Mr. Bange's Outlook Board, and typically are based on recent yield trends, weather conditions and surveys of farmers by the department's National Agricultural Statistics Service, which asks them how many acres they plan to fill with corn. The USDA's statistics service takes over each August. As the crop begins to take shape, it asks tens of thousands of farmers how many bushels per acre they expect to produce. To fill out the picture, the statistics service sends corn counters into hundreds of fields in corn-growing states. They stake out 15-foot sections, then count stalks and measure the length and diameter of cobs. Their goal is to extrapolate total production. Joseph Prusacki, a top official at the USDA's statistics service, says the department is trying to figure out a more reliable guide to what developing corn will weigh when it is mature.
The stockpile reports pose different challenges. The statistics service produces the quarterly reports, using surveys of farmers and commercial grain facilities to determine how much corn the nation has in storage. The Outlook Board issues monthly estimates of the stockpile size at the beginning and end of the marketing year, which starts with the fall harvest. Quarterly surveys can lead to changes in monthly estimates. Frustration over the data has mounted in recent years. After the June 2010 stockpile report that caught Mr. Yost off guard, the statistics service that August increased the Outlook Board's July production forecast by 1%, even as analysts were raising concerns about the threat from a heat wave. The service then slashed its production estimates in September and October. By the time the harvest was in, the August forecast turned out to be more than 900 million bushels too high. This year, the stockpile figures released June 30 were higher than analysts expected.
Corn prices, which had been nearly $7 a bushel, plunged to $6.29 in a single day. "The USDA overstated the crop, and we believe that's why we've seen a correction since then," Bill Lovette, chief executive officer of Pilgrim's Pride, one of the nation's largest poultry firms and a major feed buyer, told investors in late July, after prices bounced back. Mr. Yost, the Minnesota farmer, who headed the USDA's Foreign Agricultural Service from 2006 to 2009, says if the USDA numbers were more reliable, "it would serve the whole food chain better."
India issues formal order for 1 mln T sugar exports
NEW DELHI, Dec 5 (Reuters) - India has issued a formal order for 1 million tonnes of sugar exports under open general licence (OGL), a government statement showed on Monday, nearly a fortnight after the world's top sugar consumer allowed such sales as output was seen exceeding demand.
India, the world's top sugar producer after Brazil, is seen producing 25-26 million tonnes of sugar in the current sugar year that began on Oct. 1, and after meeting domestic demand, about 4 million tonnes could be available for staggered exports.
ASEAN rubber group blacklists defaulters
SINGAPORE, Dec 5 (Reuters) - The ASEAN Rubber Business Council has blacklisted buyers who defaulted on shipments and urged members to ignore requests for discounts following a plunge in prices, the group said in a statement seen on Monday.
The ARBC decided in a meeting in Hanoi at the weekend that it would act against defaulters and asked members to stop dealing with them, according to the statement.
No forms halt commodities exports at Indonesia port
BANDAR LAMPUNG, Indonesia Dec 3 (Reuters) - Coffee, rubber and cocoa exports from Indonesia's Lampung port have stopped since Wednesday due to a lack of official forms needed for shipments, traders said on Saturday.
The trade office in the key southern Sumatran port has run out of certificate of origin (COO) forms, part of the documentation required for traders to export commodities.
China state cotton purchase capacity at 4.1 mln T -govt
BEIJING, Dec 5 (Reuters) - China's capacity for state cotton purchases this year is 4.1 million tonnes, 55 percent of the estimated 2011 cotton output, the China National Cotton Reserves Corp said in a statement on Monday.
Selling cotton to the government has been farmers' top priority because processors have refrained from active buying while profit margins are so slim, according to the statement published on the State-owned Assets Supervision and Administration Commission of the State Council's web site.
Brazil 11/12 cotton output seen up 8 pct-attache
Dec 2 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Brazil:
"Brazil's 2011/12 cotton production is now forecast at a record 9.5 million bales, up 8 percent from 2010/11 production now estimated at 8.7 million bales. Favorable potential returns and significant future committed sales mainly destined for export contribute to an expected increase in planted area by 6 percent to 1.5 million hectares. Post now estimates Brazil's 2011/12 cotton exports at 4.1 million bales, based on significant demand from China, more than double the 2 million bales exported in 2010/11.
Ivorian cocoa arrivals hit 368,956 tonnes by Nov 27-BCC
ABIDJAN, Dec 2 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast reached 368,956 tonnes by Nov. 27, up from 348,131 tonnes in the same period a year ago, according to data from the Coffee and Cocoa Bourse (BCC) obtained by Reuters on Friday.
The figures included 21,200 tonnes of late declarations from previous weeks, it said.
Demand, price outlook in focus at Vietnam coffee meet
HANOI/SINGAPORE, Dec 5 (Reuters) - Ample robusta supply, uncertainties over a plan by major producer Vietnam to stockpile to prevent another price fall and demand outlook at a time of global economic slowdown will take centre stage at an industry conference this week.
London robusta has bounced from an 11-month low reached in November, but gains were mostly driven by rallies in New York arabica futures as heavy rains drenched plantations in Colombia, the world's top producer of the high-quality variety.
Euro Coal-Prices rise 50c with oil, stocks, euro
LONDON, Dec 2 (Reuters) - Physical prompt coal prices crept higher by around 50 cents a tonne on Thursday in line with gains made in world stocks, the euro and oil although coal trade was minimal with no fixed price deals reported.
Coal fundamentals have been sidelined by volatility across the markets in response to the euro zone crisis and gloomy economic outlooks.
US coal consumption fell 1 pct last week - Genscape
Dec 2, HOUSTON - U.S. coal consumption fell 1 percent last week and was down 15 percent from the same week a year ago, according to power industry data monitor Genscape.
Coal use swings up and down seasonally, and varies from week to week and region to region, depending on electricity demand to run air-conditioners or power heaters.
India aims to award new oil and gas blocks by March-oil min exec
NEW DELHI, Dec 5 (Reuters) - India hopes to award new oil and gas blocks for exploration under its New Exploration and Licensing Policy (NELP) by March, a senior oil ministry official said on Monday.
The blocks will be offered under NELP which was launched in 1999 offering more attractive terms to boost investment in the oil and gas sector of Asia's third-largest oil consumer.
Oman oil minister: market well supplied
DOHA, Dec 5 (Reuters) - Oman's oil minister said on Monday that the oil market was well supplied and that current prices near $100 per barrel were appropriate.
Asked at the World Petroleum Congress whether the market was supplied and whether prices were appropriate near $100 per barrel, Omani Oil Minister Mohamed Bin Hamad Al Rumhi said, "yes".
India's fuel exports likely to touch 70 mln T by 2014
NEW DELHI, Dec 5 (Reuters) - India's fuel exports are likely to touch about 70 million tonnes by 2014, a government statement said on Monday, compared to 50 million tonnes in the financial year ending March 2011.
India's fuel exports will rise as the country has been expanding its refining capacity which is expected to rise 20 percent to about 4.65 million barrels per day at the end of the current fiscal year in March.
OPEC sec gen sees Libya oil supply 950,000 bpd yr-end
DOHA, Dec 4 (Reuters) - Libyan oil production should reach about 950,000 barrels per day by the end of this year and 1.3 million bpd by the first quarter of 2012, OPEC Secretary-General Abdullah al-Badri said on Sunday.
"Libya's coming back very strongly ... I think their production will be around 950 (thousand) by the end of December," he told reporters on the sidelines of the World Petroleum Congress.
Europe fuel oil boosted by Japan, supply cuts
LONDON, Dec 2 (Reuters) - A rise in demand for fuel oil from Japan to replace lost nuclear power post-earthquake and a fall in Russian exports due to tariff changes will give European fuel oil profitability a sustained boost, as improving refinery technology cuts output.
The fuel oil crack or refining margin has narrowed over 2011, buoyed by Asian buying and tighter supplies.
Crude Oil Declines First Day in Three on Possible S&P Credit Downgrades (Source: Bloomberg)
Oil declined from the highest in almost three weeks in New York as investors speculated that fuel demand will falter amid signs Europe is struggling to tame its sovereign debt crisis. Futures slipped as much as 0.6 percent after Standard & Poor’s said it may strip Germany and France of their AAA credit ratings as it put 15 euro nations on review for possible downgrades. A U.S. Energy Department report tomorrow may show gasoline and distillate inventories rose, while crude stockpiles fell, according to a Bloomberg News survey of analysts. Crude for January delivery fell as much as 58 cents to $100.41 a barrel in electronic trading on the New York Mercantile Exchange and was at $100.57 at 10:44 a.m. Sydney time. The contract yesterday gained 3 cents to $100.99, the highest close since Nov. 16. Prices are 13 percent higher the past year.
Iron Ore - Spot seen stabilising this week, steady demand
SINGAPORE, Dec 5 (Reuters) - Iron ore may stabilise this week after rising sharply in the past two sessions with steady steel prices in top market China unlikely to encourage more aggressive restocking by steel producers.
Iron ore with 62 percent iron content jumped nearly 4 percent to $138.80 a tonne on Friday, cost and freight delivered to China, according to Steel Index.
Baltic index stays firm, iron ore trades support
LONDON, Dec 2 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose for a fifth straight session on Friday as firm iron ore activity and rising port congestion supported earnings on the larger capesize vessels.
Nevertheless, the shipping sector was set to see more turmoil in the coming months as a supply glut and growing economic gloom would keep earnings under pressure.
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