Corn (Source: CME)
US corn futures finish higher on concerns about poor weather disrupting planting. Corn planting will stay "very slow" due to cool, wet conditions in the US Midwest and northern Plains this week, according to MDA EarthSat Weather. A weekly government crop-progress report next Monday should confirm expectations seeding will not advance much this week, traders predict. Today's report will likely show planting is 6%-10% complete, up from 3% last week, traders say. CBOT May corn ends up 9 3/4c at $7.51 3/4 a bushel.
Wheat (Source: CME)
US wheat futures finish higher as dry weather threatens global output. Dryness persists in the US Plains, fueling talk it may be too late for rain to revitalize the crop if it arrives. Hard red winter wheat in the region has been too dry since it was sown last fall. In China, "dryness remains a significant concern," according to MDA EarthSat Weather, which notes drought-busting rainfall is not expected. Western Europe also needs more moisture. CBOT May wheat climbs 30 3/4c to $7.75 a bushel, KCBT May gains 30 1/2c to $8.96, MGE May jumps 25c to $9.14.
Rice (Source: CME)
US rice futures finish stronger with the neighboring grain markets. A 4.5% rally in wheat futures helped lift rice as both are global food staples, traders say. Corn and soybean futures also strengthened, adding to the positive tone. Yet, large global rice supplies kept a lid on advances, an analyst notes. CBOT May rice edges up 1c to $13.64 1/2 per hundredweight.
Russian Wheat Ban Won't Be Lifted Before July - SovEcon (Source: CME)
Russia will definitely not lift its ban on grain exports before July 2011, the managing director of SovEcon, a Russian agriculture research and consulting body said, quashing rumors the Kremlin could move sooner as "completely false". The Kremlin banned grain exports last summer after the worst drought in more than a century slashed the harvest by around a third to 63 million metric tons. However, speculation has been building that the government may soon lift the embargo due to falling internal prices and hopes for a 90-million-ton harvest this year. But Andrey Sizov Jr. said at the sidelines of a conference here that the harvest will still not be large enough to warrant allowing exports before the Russian summer. He pegged the upcoming harvest at 75-80 million tons, below the government's estimate, and only 5-10 million tons above domestic consumption of an estimated 70 million tons.
"Although we see a higher crop being forecasted, its still doesn't help Russia to lift its ban as it's an average crop," he said, adding that "even if Russia lifts the ban, it's not a case of a ban or no ban. The government could even bring in quotas afterwards." However, he estimated that once exports are allowed, Russia could ship between 5 to 10 million tons of wheat in the upcoming 2011-12 season to hungry world markets. Russia's domestic grain prices have slumped in recent weeks due to a growing consensus the market may have more supplies than previously thought. The Russian Grain Union estimates the country may have up to eight million tons more grain than originally thought as farmers have stockpiled supplies, and several million tons sitting in elevators in the south has not been sold. Sizov said grain prices have been falling due to lower domestic feed grain consumption by an increasingly-efficient livestock sector.
He also said grain supplies in Russia are not as abundant as some observers believe and the country has still resorted to 10,000-20,000 tons of corn imports in recent months. "Yes its true that stocks in the south are high, but we must remember the total figure includes two million tons of state grain," he said.
Tunisia sees 2011 wheat harvest of nearly 2 mln T
TUNIS, April 18 (Reuters) - Tunisia will have a wheat harvest of almost 2 million tonnes this year due to more rain than in 2010, Agriculture Minister Mokhtar Jallali said on Wednesday."The wheat harvest will be good this year," he told a news conference.
China's Cabinet Calls For Stronger Seed Industry (Source: CME)
China's State Council, the country's cabinet, issued guidelines calling for faster development of a modern seed industry to help raise domestic grain production. The fragmented and relatively undeveloped seed sector is hindering the sustainable development of the agriculture industry, it said. The government plans to promote independent research and development of high-quality seeds, ensuring sufficient supplies of grain seeds by 2020, the council said in a statement published on the central government's website. National seed reserves are planned for hybrid corn and rice to ensure market supply and keep prices stable, and to build provincial seed reserves for other agricultural commodities, the council said. The government will sharply increase the threshold for access to the seed market, encourage mergers and acquisitions in the sector to boost competitiveness, and give tax breaks to qualified seed firms.
It will also regulate foreign companies' seed collection, research and development, production and trade activities in China, and strengthen security reviews of their acquisitions of domestic seed companies, the council said. "The guidelines will be good news for foreign companies," Ma Shuping, deputy director of plantation management department under the Ministry of Agriculture, said during a press conference. "The launch of the guidelines is good for all seed companies," she said. "There is no exception for foreign seed firms." However, she said, "foreign seed companies do put us under pressure." China's Ministry of Agriculture last December ordered producers to stop producing and selling 27 varieties of corn seeds on the domestic market, including two of Monsanto Co.'s, without elaborating the reasons for the ban. Analysts said some of these corn seeds were genetically modified varieties that aren't approved for use in China.
China currently has more than 8,700 approved seed companies, but only 100 of them have research and development capacity, Ma said. The 35 foreign-funded companies operating in the country comprise five in corn seeds, two in cotton and 28 in vegetable and flower seeds, she said.
Low Freight Costs To Boost Odd Grain Trades In '11-12-Agency (Source: CME)
An oversupply of vessels in the global shipping market means grain buyers will be able to source from unusual suppliers well into next season, a director at Clarksons shipping agency said. Earlier this month, U.K. grain trade house Gleadell said it shipped 7,200 metric tons of milling wheat to Turkey in the first ever milling wheat shipment there from U.K. shores. Speculation of other unusual buys, such as large imports of U.S. corn by China, have also been rife this year after a succession of weather problems have slashed harvests in many producers and left importing countries scrambling to secure supplies. "This shipment to Turkey is a pointer to the future and shows that there are markets out there that we can find if the quality and price is right," said Gleadell trading manager Marc Rogerson. Clarksons director Essem Bella said the oversupply of vessels in the dry bulk market makes unorthodox grain trades feasible, a situation not likely to change anytime soon.
The cost of shipping corn from the U.S. to the German port of Hamburg is pegged at $30/ton, down by 25% compared to the same period last year. "Basically, in a grains market that is now tight, countries can experiment with their portfolios and source from varying countries more than ever before," Bella said on the sidelines of a conference here. The BDI, the daily barometer of shipping prices from London's Baltic Exchange, fell 60% from October to its lowest level in two years in January due to a glut of available ships in the world market. The earthquake in Japan has caused further uncertainty as shipping suppliers have tried to guage when the country's metals and energy imports will return to normal after the disaster crippled ports and other infrastructure.
U.S. corn falls half pct on Goldman view, wheat steady
U.S. corn futures slid around half a percent , losing more ground after last week's selloff as downbeat outlook from Goldman Sachs and substitution of corn in favour of wheat weighed on the market. Soybeans fell 0.2 percent, while wheat was steady as a strengthening dollar added pressure on the commodity markets, including oil. "In the corn market, we expect profit-taking to go on and also there is speculation that animal feed makers are using feed wheat as a substitute for corn," Ker Chung Yang, an analyst at Phillip Futures in Singapore.
S.Africa's maize crop f'cast seen at 10.8 mln T
JOHANNESBURG, April 18 (Reuters) - South Africa's third maize output traders' forecast for the 2010/11 season is seen at 10.8 million tonnes compared with 10.97 million tonnes in the previous forecast, a Reuters survey showed on Monday.The government Crop Estimates Committee's (CEC) third survey of output for the season would maintain
last month's estimate of 10.831 million tonnes, according to the average estimates of eight trading houses polled by Reuters.
Rains help US wheat but halt corn planting
CHICAGO, April 15 (Reuters) - The turn to wetter conditions across the central United States this week brought much-need rains to western wheat fields but halted spring corn planting in the upper Midwest, a forecaster said on Friday."This is just a classic wet pattern that has developed very quickly," said Telvent DTN forecaster Mike Palmerino.
Arabica coffee climbs, bullish technicals support
Arabica coffee prices rose on Monday, edging towards the 34-year high hit in March, as bullish technicals supported the market. The rainy season will arrive in Vietnam's Central Highlands coffee belt and in the southern region that includes the Mekong Delta food basket later this month, which is earlier than usual, a state-run newspaper reported.
S.Asia monsoon seen normal in 2011-weather forum
PUNE, India, April 15 (Reuters) - South Asia is likely to receive normal monsoon rains in 2011, a gathering of global weather forecasters said on Friday, good news for countries such as India whose massive demand for farm goods impact international markets.The quality of monsoon rains will be critical not just for India's economic growth but also for reining in food-led inflation, which rose by nearly 9 percent in March.
Thai 2010/11 sugar output to hit record 9.0 mln tonnes
BANGKOK, April 18 (Reuters) - Thailand, the world's second-biggest sugar exporter, expects record production of 9.0 million tonnes in its current 2010/11 crop, up 30 percent from the previous year and 32 percent above a December forecast, senior officials said on Monday.The Office of Cane and Sugar Board (OCSB), the industry's regulator, said heavy rainfall in late 2010 and an increase in planting areas led to higher-than-expected cane production that will leave Thailand with a record 6.2 million tonnes for export.
La Nina to bring rains to Vietnam early this year
HANOI, April 18 (Reuters) - The rainy season will arrive in Vietnam's Central Highlands coffee belt and in the southern region that includes the Mekong Delta food basket later this month, which is earlier than usual, a state-run newspaper reported on Monday.Early rains could help ease extensive dry conditions now facing the Central Highlands, which produces 80 percent of the coffee output in the world's second-largest producer of the commodity after Brazil.
Vietnam 2011/2012 coffee output to rise 10 pct
HANOI, April 18 (Reuters) - Vietnam's new 2011/2012 coffee crop is forecast to produce 22 million bags, up 10 percent from the current crop, thanks to higher prices, an analyst at CoffeeNetwork said."The suggestion is that Vietnam's 2011/12 crop will rise from 2010/11 due to improved prices -- even though production costs are higher due to fuel costs/wages etc.," analyst Andrea Thompson at the coffee information firm wrote in an email to Reuters.
China to import sugar aggressively on weak Brazil prices- ANZ
BEIJING, April 18 (Reuters) - China is likely to buy sugar aggressively over the next half a year and could import up to 1.8 million tonnes in three to four months, to capitalise on weak prices especially from Brazil, said a report by Australia and New Zealand Banking Group Ltd. "With China in strong need to replenish domestic supplies and ease the rise of further inflationary pressure from higher domestic sugar prices, China's pent-up demand for sugar imports is strong," Paul Deane and Victor Thianpiriya wrote in the report.
Peru 2011 sugar output seen up 13 pct-attache
WASHINGTON, April 15 (Reuters) - "Cane sugar production for CY2011 is estimated at 1.145 million tonnes, up from 1.016 million tonnes in CY2010. During the first four months of CY2010, several factors contributed to the significant reduction of Peru's sugar production, reducing stocks to 30 percent of the Peruvian monthly requirements which pushed prices in the local market up to $750 per tonne. Peruvian sugar exports in CY 2011 are estimated at 100,000 tonnes. Post expects that Peru will become self sufficient in the next three years."
Despite Global Hiccups, Biodiesel Industry Booms In Argentina (Source: CME)
While high costs have shuttered biodiesel plants in many parts of the world, output of the fuel in Argentina is soaring thanks to government incentives, strong export demand and readily available supplies of soybeans that carpet the country's vast farming belt. According to Argentina's Rosario Grain Exchange, the country's biodiesel production is expected to rise 24% on the year to 3.1 million metric tons in 2011. The exchange has forecast sales of more than $2.8 billion this year, divided equally between exports and the domestic market. Last year, 1.3 million metric tons were sold overseas, virtually all to Europe, making Argentina the world's top biodiesel exporter and the No. 4 producer. Local biodiesel makers are betting that mandatory fuel blending requirements in many countries will underpin demand. Global production of biofuels like ethanol and biodiesel has surged in recent years thanks to subsidies and blending requirements in the U.S. and Europe.
However, high costs have put the industry under pressure in several countries, including Spain, where producers complain they can't compete with cheap Argentine imports. According to Hart Energy Consulting, global biofuels demand will grow 133% by 2020, but supplies will fall short by more than 32 billion liters (8.5 billion gallons) over the same period. Argentina's 12 leading biodiesel producers, including grain exporters like Cargill and Bunge Ltd., have spent $700 million to build plants and have earmarked another $200 million to expand capacity. But the industry seems to be close to its saturation point and few newcomers are expected on the production side, said Fernando Pelaez, chief executive of biodiesel producer Unitecbio and president of the Argentine biofuels chamber, Carbio. That hasn't stopped investors from seeking opportunities in other aspects of the business.
Last month, German chemical makers Evonik Industries AG and BASF SE said they would each build a plant to produce catalysts used to make biodiesel. "With the global market growing at double digits, new capacity is needed," and Brazil and Argentina will be the focus in the future, Evonik spokeswoman Edda Schulze said in an emailed statement.
Food Prices Pushing Poor To 'One Shock Away' From Crisis - World Bank Chief (Source: CME)
Spiking food prices have pushed the world's poor countries to "one shock away from a full-blown crisis," the head of the World Bank warned. "This is the biggest threat today to the world's poor, where we risk losing a generation," bank president Robert Zoellick said at a press conference on encouraging global development. The World Bank and the International Monetary Fund say the skyrocketing food and fuel prices are the most serious near-term risk to developing economies. "I'm concerned that commodity stocks are relatively low and if you have one other weather event in some of these areas, you really take a danger zone and start to push people over the edge," Zoellick said. "That's why we need also need measures on the volatility side," he said at a press conference at the end of the World Bank and IMF spring meetings.
The bank earlier this week said that its index of food prices showed the cost of basic food was up 36% on the year in March, and since June of last year 44 million people had fallen below the poverty line around the world as a result of higher food prices. If prices rise further, tens of millions more could also be pushed into poverty, the World Bank warned. Zoellick said the bank is working to get agriculture ministers from the Group of 20 largest industrialized and emerging countries to approve a list of polices, which could help fend off a full-blown crisis, at their meeting in late June. Specifically, the president said the G-20 should agree to exempt export bans for humanitarian purchasers such as the World Food Program. "Export programs are a bad idea anyway, I think some of that will get tied up in trade policy, but at least with prices going up and as countries take steps like export bans, we need the humanitarian purchasers to at least get access," he said.
Although the G-20 is already supporting the proposal, he said the World Bank wants to help the U.N.'s Food and Agriculture Organization improve information about the quality and quantity of grain stocks around the world. Also, in high-conflict areas such as in the Horn of Africa where there is a high probability of food shortages, organizations such as the U.N.'s global food program could build stocks. "This wouldn't be buffer stocks to manage prices, but humanitarian aid," Zoellick said. The World Bank could also help developing countries that don't have the capability to tap advanced commodity and futures markets to help hedge against unforeseen food shortages, working with U.S. and European banks. "We could provide them intermediary service," he said.
Playing With Your Food: Investors Are Pouring Money Into Crop-Focused ETFs (Source: CME)
Corn costs more than twice what it did last June. Wheat futures have shot up by three-quarters. Soybeans have soared by nearly half. For lots of investors, those are mouth-watering numbers -- and they're snapping up exchange-traded products that specialize in agriculture. But moving into this market can mean risks and complications. The returns of crop-focused funds can vary significantly from the prices in news headlines, due to the quirks of futures investing. And some funds hold shares in agriculture and food companies, which can be hurt as well as helped by rising commodity prices. Of course, there's an even more basic worry -- that commodity prices will fall instead of rise. Cotton shot up over 50% from early January to early March, and then dropped nearly 15% within two weeks. In the first two months of this year, buyers poured $1 billion into one of the largest agriculture-related ETFs, Market Vectors Agribusiness, according to National Stock Exchange, a data provider.
What's more, new investment products are coming to market to meet investor demand. Teucrium Trading LLC, for instance, launched a corn-futures fund last June and is talking to regulators about opening similar funds for wheat, soybeans and sugar. Behind all the activity is a simple assumption: Food is a basic human need, and people in the developing world will want more of it as their living standards rise. But just because food prices are soaring doesn't mean a commodity ETF will. The returns of funds that track just one crop are sensitive to supply-and-demand fundamentals for that crop. Corn stockpiles are at a 15-year low, for instance, a major force driving prices higher. That's unlikely to last forever, though. "You'll see farmers pulling out their wives' rose bushes to plant more corn," says Nicholas Johnson, co-manager of the $27 billion Pimco CommodityRealReturn Strategy mutual fund.
It might take a season or two, or more, to replenish supplies, but prices are likely to fall, perhaps significantly, as that happens. (Mr. Johnson says his fund has a short position in corn, meaning a bet that will pay off if prices fall. The fund is hedged by betting on a rise in soybean prices, he adds.) Alternatively, investors can pick a fund that tracks a range of crops. The upside is that the fund won't necessarily tumble if one or more holdings takes a fall. But investors may not see outsize returns if one commodity goes through the roof.
Major market developments in March
LONDON, April 15 (Reuters) - Aluminium prices made some headway in March from the previous month, and some analysts anticipate further gains as demand outpaces supply, but others expect downward pressure to hold sway.
"There's a bit more upside in prices," said Barclays Capital analyst Gayle Berry.
"We're not going to seen an explosion, but there's a very strong recovery in demand globally, and production is growing at a slower pace relative to demand," she added.
U.S. March aluminum output rises 10.5 pct yr/yr
NEW YORK, April 15 (Reuters) - The annual rate of primary U.S. aluminum production rose 10.5 percent to 1,906,619 tonnes in March from 1,725,567 tonnes in March 2010, and grew 4.8 percent from February's annual production rate of 1,819,290 tonnes, the Aluminum Association said in its latest report.
For the first quarter, the annual rate of production rose to 1,837,507 tonnes, up 8.3 percent over the 1,697,205 tonnes produced in the comparable 2010 period.
Major market developments in March
LONDON, April 15 (Reuters) - Copper prices lost some ground and momentum in March and may have further to fall on near term worries about China demand prospects.
"A lot of the good news is already in the price. There's room for some pull back in prices, mainly because China is not coming back to the table," said Fastmarkets analyst Will Adams.
Global apparent steel use to rise to record in 2012
LONDON, April 18 (Reuters) - Global apparent steel use will rise to a record 1.441 billion tonnes next year, driven by overall economic recovery, the World Steel Association said on Monday.
"In 2010 we saw a steady recovery of steel demand, which began in the second half of 2009, driven by stimulus packages globally, the resilience of emerging economies and overall markets recovery," Daniel Novegil, chairman of World Steel's economics committee.
China steel output growth lower over next 5 years-Xinhua
SHANGHAI, April 16 (Reuters) - China's steel output growth is expected to average 6 percent per year over the next five years, the chief analyst for the China Iron and Steel Association (CISA) was quoted as saying on Saturday.
The state-run Xinhua news agency cited CISA's Li Shijun as saying this compared with steel output growth of 12 percent a year from 2006 to 2010 and nearly 23 percent output growth in the five years prior to that.
Italy 3-months steel output up 8 pct -Federacciai
MILAN, April 18 (Reuters) - Steel output in Italy, the European Union's No. 2 producer after Germany, rose 8 percent year-on-year to 6.962 million tonnes in the first three months of 2011, industry body Federacciai said on Monday.
In 2010, the output figure had jumped nearly 30 percent to 25.75 million tonnes as the sector started recovering from the economic crisis, which hit it hard in 2009.
METALS-Copper falls as dollar, China move dent sentiment
LONDON, April 18 (Reuters) - Copper fell on Monday, on track for its sixth straight session of losses, after equities dropped, the dollar rose and top world metals consumer China raised banks' required reserves.
Copper for three-months delivery on the London Metal Exchange traded at $9,364.75 a tonne at 1116 GMT, from a close of $9,405 a tonne on Friday.
PRECIOUS-Gold retreats from record as euro slides 1 percent
LONDON, April 18 (Reuters) - Gold eased from record highs on Monday as the dollar rose 1 percent versus the euro, but prices took support from worries over euro zone debt and inflation in Asia after China opted to raise reserve requirements again.
Spot gold rose as high as $1,488.50 and was bid at $1,481.10 an ounce at 1123 GMT, against $1,483.75 late in New York on Friday. U.S. gold futures for June delivery eased $4.30 an ounce to $1,481.70, off a record $1,489.70.
Oil Near Three-Day Low After China Bank Move Prompts Fuel-Demand Concerns (Source: Bloomberg)
Oil traded near a three-day low in New York after China, the world’s second biggest crude-consuming nation, increased banks’ reserve requirements to cool inflation, signaling fuel demand growth may slow.
Gold Futures Climb to Record After S&P Revises U.S. Outlook to Negative (Source: Bloomberg)
Gold futures rose to a record $1,498.60 an ounce after Standard & Poor’s revised its U.S. credit outlook to negative, boosting the appeal of the precious metal as an alternative to the dollar. S&P changed its long-term rating from stable, citing “material risk” that policy makers won’t reach an accord on “medium- and long-term budgetary challenges.” Gold has gained 31 percent in the past year, and silver has more than doubled, partly on concern that Europe’s sovereign-debt crisis would escalate.
