Funds Increase Bullish Agriculture Bets on ‘Explosive’ Supply Constraints (Source: Bloomberg)
Funds increased bullish bets on agricultural commodities by the most in more than a year on signs of tightening supplies amid adverse weather conditions. In the week ended Aug. 30, speculators raised their net- long positions in 11 commodities by 18 percent to 915,341 futures and options contracts, government data compiled by Bloomberg show. That was the biggest gain since Aug. 3, 2010. Holdings in wheat more than tripled, bullish corn bets reached an 11-week high, and soybean positions jumped to the highest since November 2010. Corn prices have jumped 70 percent in the past year and soybeans have gained 43 percent. The hottest July since 1955 means that U.S. production of both crops may miss government estimates, according to researcher and broker INTL FCStone Inc. The costliest drought in Texas history has hampered U.S. supplies of cotton, while dry weather in the U.S. Great Plains may curb planting of winter wheat.
Corn (Source: CME)
US corn futures finish sharply higher on talk crop-forecaster Lanworth slashed its yield estimate to nearly 143 bushels/acre. That is 6% below the USDA's latest estimate and well below most traders' projections. Lanworth declined to comment on the chatter. Word of the cut sparked buying as traders are nervous about tight inventories and damage from hot, dry weather this summer. Farmers won't know the full impact of the poor weather until harvest picks up speed in the coming weeks. CBOT December corn climbs 21 1/2c to $7.60 a bushel.
Wheat (Source: CME)
US wheat futures close higher on spillover support from the surging corn market. Corn climbed on increasing concerns about low supplies, dragging up wheat because both grains are used for livestock feed. Livestock producers are increasingly feeding wheat to their animals because corn prices have soared. Yet, wheat would struggle to advance without a rally in corn because world wheat supplies are ample, analysts say. CBOT December wheat ends up 14 1/2c to $7.75 1/2 a bushel, while KCBT December wheat gains 8c to $8.80 and MGEX December advances 10 3/4c to $9.42 3/4.
Rice (Source: CME)
US rice futures climbed with other grain markets on supply concerns. Spillover strength from climbing prices for wheat and corn help lift rice, with wheat and rice linked because both are global food staples. Traders are worried about poor US grain harvests this fall due to hot, dry weather this summer. Farmers say high night time temperatures in the southern US stressed the rice crop. CBOT November rice rises 26c to $18.22 1/2/hundredweight.
Wheat Climbs Most in Week as Dry U.S. Great Plains May Cut Winter Crops (Source: Bloomberg)
Wheat futures rose the most in more than a week on speculation that persistent dry weather in the U.S. Great Plains will curb winter-crop planting. Parts of southern Kansas and western Oklahoma have had less than half of the normal rainfall this year, while areas of Texas had 25 percent or less, according to the National Weather Service. Farmers usually plant hard, red winter wheat, the variety grown in the Plains that’s used to make bread, in September and October. Crops sown in dry soil may not emerge from the ground before the winter dormancy period. “In a lot of areas of Oklahoma and Texas, and some areas in southwest Kansas, they probably couldn’t get any wheat up at this time,” Larry Glenn, an analyst at Frontier Ag, said by telephone from Quinter, Kansas. “There’s been talk about some moisture for the Plains states. Some will help, but they really need a lot.”
Corn, Soy Rise on Speculation Bad Weather Hurt Crop More Than Estimated (Source: Bloomberg)
Corn futures rose the most in a week and soybeans extended their rally on speculation that hot, dry weather in the U.S., the world’s largest grower and exporter, damaged crops more than forecast by the government. Production of corn will drop to a three-year low of 12.35 billion bushels, researcher and broker INTL FCStone Inc. said yesterday. That’s below last month’s U.S. Department of Agriculture estimate of 12.914 billion. FCStone forecast a soy crop of 3.03 billion bushels, less than the USDA’s estimate of 3.056 billion and last year’s harvest of 3.329 billion. “U.S. crop forecasts are falling, and that will continue to support the markets,” Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin, said in a telephone interview. “Until we hear actual farmer harvest results, the uncertainly about supplies keeps end-users and speculators buying on price dips.”
China Aims To Boost Grain, Meat Output By 2015 (Source: CME)
China is targeting an 8% rise in grain production capacity by 2015 from 2010 levels and has kept unchanged its 95% grain self-sufficiency rate target, the Ministry of Agriculture said Friday. The world's largest grain consumer is facing challenges in stabilizing grain production amid rising demand and declining arable area due to rapid urbanization. Grain output reached 546.4 million metric tons in 2010, rising for the seventh year in a row, and China is now aiming at an annual capacity of more than 540 million tons in the 12th Five-Year Plan [2011-2015], from around 500 million tons in 2010, the ministry said in a statement on its website. "Guaranteeing supply of grain and other major agricultural products will remain top priority [between 2011 and 2015]," it said. The government also aims to maintain grain acreage above 1.07 billion hectares by 2015, compared with actual acreage of 1.1 billion hectares last year.
Demand for corn is growing faster than domestic supply of the most popular animal feed, amid a rise in meat consumption. China has reportedly bought more than 3 million tons of corn from the U.S. so far this year to replenish reserves, more than twice the total imports in 2010. Its annual corn output is around 180 million tons. It is also aiming to boost cotton output to more than 7 million tons in 2015 compared with actual output of 5.96 million tons in 2010, the ministry said. China is the world's largest cotton importer. The ministry said the country's 2015 oilseed output target would be 35 million tons compared with 32.3 million tons in 2010, in its attempt to stabilize edible oil self-sufficiency rate at about 40%. China's edible oil self-sufficiency is only 37%, industry data showed. Output of sugar crops, which include sugar cane and sugar beets, is expected to reach 140 million tons compared with actual output of 120 million tons in 2010.
The ministry said it aims to raise meat output--including pork, beef and poultry--to 85 million tons in 2015 from 79.3 million tons in 2010.
NE Australian Wheat Crops Remain Of Concern (Source: CME)
Wheat crops in dry soils in northern New South Wales and Queensland states remain a matter of concern despite rainfall in some areas over the past week or so, Michael Southan, general manager of grower development at lobby and services concern Grain Growers Ltd., said Friday. "It's really northern New South Wales and parts of Queensland that are getting quite desperate" for rain, he said in a telephone interview. Other factors to watch include how quickly the weather warms up during the spring growth period and the amount of damage that mice inflict on crops, he said. Crops in the northern wheat belt of Western Australia are in pretty good shape, though crop quality in that state deteriorates to the east and the south, while crops in South Australia and Victoria states are generally in good condition, Southan said. "We're still going to need some good rains through spring to get the crops home," he said. "The potential is still there for a good harvest, but there's still so much variability."
As for national production, the spring rains will determine whether output will reach the 21.8 million metric tons forecast this week by National Australia Bank Ltd. (NAB.AU), the 23.5 million tons estimated by Commonwealth Bank of Australia (CBA.AU) or a 26.2 million tons projection by the Australian Bureau of Agricultural and Resource Economics and Sciences. Actual output last crop year ended March 31 was a was a record 26.3 million tons, and production from the new crop will help determine export availability in Australia, usually one of the world's top five wheat exporters after domestic demand of 6 million tons is met.
Indian Panel May Consider Wheat, Rice Exports (Source: CME)
An Indian ministerial panel may consider allowing wheat exports as well increasing shipments of common-grade rice by private traders on Sept. 6, Food Minister K.V. Thomas said Friday. "We are open to allowing 1.0 million tons of parboiled rice as well as 1.0 million tons of ordinary rice," Thomas told Dow Jones Newswires, adding that small quantities of premium rice exports may also be permitted. He said the food ministry is also in favor of allowing 2.0 million tons of wheat exports.
Ukraine Wheat Crop Quality Questioned (Source: CME)
Ukraine's 2011-12 wheat crop may be more than half feed wheat due to poor weather during the harvest, local analyst UkrAgroConsult said in a report Friday. UkrAgroConsult expects milling wheat to make up 40% to 45% of the crop, down from 55% a year earlier. Traders say even that could be optimistic, with some predicting feed wheat will account for 70% of the harvest. In August, the country's farm ministry forecast the share of milling wheat in this year's bumper harvest would be 70%, up from its estimate of 60% a month earlier.
India Cautious About High Food Inflation (Source: CME)
The Indian government is "cautious" about high food inflation but that won't weigh on grain export prospects, Food Minister K.V. Thomas said Friday. The comments come a day after government data showed that wholesale price index-based food inflation in the week ended Aug. 20 accelerated to 10.05% from a year earlier. That compares with a 9.80% rise in the previous week and is the highest level in more than four months. Thomas told Dow Jones Newswires that inflation was being driven by problems in supplies of vegetables including onions in some regions, but added that it wasn't worrying. The long-term solution to curbing food prices is to improve storage and processing capacities, he said. Analysts say food prices are high mainly because of poor management as the government's grain stocks have piled up to nearly double its requirement and state-run warehouses have run out of space.
Also, nearly a third of the country's fruit and vegetable produce goes waste due to lack of cold chains and efficient transport linkages between producing and consuming centers. Some relief from high food prices is expected in coming months with the country expected to receive normal monsoon rain this year, after a pick up in the second half of the June-September rainfall season that is the main source of irrigation for most farm land. "Food inflation should come down, but the point is to what level. I don't see it coming below 7%-8%," said D.H. Pai Panandikar, an economist and president of the RPG Foundation, a think tank. "The worry is that the frequency of price hikes in fruits and vegetable is increasing," he said, attributing it to both supply shortages as well as huge gaps between retail and wholesale prices.
Food Minister Thomas said that inflation worries won't derail prospects of grain exports as there were ample stocks, and that a ministerial panel may consider allowing wheat and rice exports on Sept. 6. "We are open to allowing 1.0 million tons of parboiled rice as well as 1.0 million tons of ordinary rice," Thomas said. He added that permission for export of small quantities of premium rice as well as 2.0 million tons of wheat may also be considered. In July, the government permitted shipments of common-grade rice for the first time in three years after setting a minimum export price of $400/ton and imposing a cap of 12,500 tons for each applicant, but the exports got locked up in a legal dispute over rules.
Coffee, sugar down, inline with commodity complex
LONDON, Sept 2 (Reuters) - Arabica coffee and raw sugar futures on ICE edged lower, as commodities eased ahead of U.S. jobs data
due later in the session.
Harvest of top producer Brazil's crop is near completion and output is expected to come in at the low end of expectations, which is
helping support the market, dealers said.
US Grain Exports-Soy sales dip as S.America competes
CHICAGO, Sept 1 (Reuters) - U.S. soybean export sales last week fell about 10 percent from the prior week due to competition from South American suppliers, analysts said after Thursday's weekly U.S. Agriculture Department export sales report.
The sales were within trade expectations, but the pace of new-crop sales, which typically accelerate in late summer remained behind last year, they said.
China sugar deficit seen at 2.3 mln T in 2011/12
BEIJING/SINGAPORE, Sept 2 (Reuters) - China's sugar demand could outpace output by more than 2 million tonnes in the year to
September 2012 after a prolonged drought hit the growing region, triggered a supply shortage and forced Beijing to release stocks to cool
record high prices.
China's appetite may ease worries about a global surplus in the new crop year starting in October as the country rebuilds inventory after
selling 1.68 million tonnes of sugar from state reserves, according to a median forecast of 10 dealers and analysts.
Honduras, Costa Rica coffee exports fall in Aug
TEGUCIGALPA, Sept 1 (Reuters) - Coffee exports from Honduras, Central America's top producer, fell 25 percent in August compared
to the same month last year, while shipments from the region's No. 2 grower Guatemala rose slightly.
Costa Rica, another regional producer, saw exports fall in August as well.
Mexico producers see bigger coffee crop in 2011/12
MEXICO CITY, Sept 1 (Reuters) - Mexico, a top 10 producer of high-quality arabica coffee, should harvest a larger coffee crop next
season as prices, which are at a four-month high, will likely motivate more production, a producer group said.
A larger crop could help ease global supply worries.
Cotton use to return to growth as output rises-ICAC
WASHINGTON, Sept 1 (Reuters) - Global cotton mill use should return to slow growth in 2011/12 after high prices caused consumption
to decline the previous year, an international farm group said on Thursday.
The International Cotton Advisory Committee secretariat said an 8 percent boost in world cotton production to the largest crop since
2004/05 would facilitate the rise in use.
Costa Rica sees 2011/12 coffee output down slightly y/y
SAN JOSE, Sept 1 (Reuters) - Costa Rica's national coffee institute revised down on Thursday its forecast for the 2011/12 coffee harvest,
which begins in October, due to a calculation error and now sees production just below the 2010/11 season.
The institute, known as Icafe, said the Central American country, famed for its high-quality arabica coffee exports, will produce 1.58
million 60-kg bags of coffee in the upcoming season, lower than the 1.65 million previously estimated.
ISO sees jump in global sugar surplus in 2011/12
LONDON, Sept 1 (Reuters) - The International Sugar Organization (ISO) forecast a sharp jump in the global sugar surplus to 4.2 million
tonnes in 2011/12 from 843,000 tonnes a year earlier as output surges to a record high.
In its latest quarterly report on Thursday, the ISO projected global sugar production would rise 4.0 percent year-on-year to 172.4 million
tonnes in 2011/12.
Germany sees higher sugar output in 2011/12
HAMBURG, Sept 1 (Reuters) - German output of refined sugar in the new 2011/12 season is likely to rise to 4.47 million tonnes against
3.6 million tonnes in the previous season, the country's Agriculture ministry said on Thursday.
This was the same as forecast by the German sugar industry association WVZ on Aug. 19.
Philippines sees more sugar exports to non-U.S. mrkts
MANILA, Sept 2 (Reuters) - The Philippines expects sugar output in crop year ending August 2012 of around 2.4 million tonnes, nearly flat from the previous year, and may sell the sweetener to other countries on top of its U.S. quota for a second year in a row, a senior official said.
The Southeast Asian country closed the 2010/11 crop year on Aug. 31 with total raw sugar output of 2.39 million tonnes, the highest in three years and up 21 percent from 2009/10.
Malaysia imports LNG in struggle to eliminate subsidies
KUALA LUMPUR/PERTH, Sept 2 (Reuters) - Malaysia, one of the world's top liquefied natural gas exporters, is making plans to import LNG to meet its growing domestic needs as it struggles to push through gas pricing reform and brace for its own declining gas production.
The Southeast Asian nation, the world's third largest LNG exporter, will begin importing the super-cooled fuel next year into its Melaka LNG terminal, a move that will help it protect the large amount of revenue it receives from its LNG exports.
Oil falls, awaits US jobs data, storm
LONDON, Sept 2 (Reuters) - Oil futures fell as the market nervously awaited U.S. jobs data for new evidence on whether the world's largest crude consumer can avoid recession.
"It's wait and see at the moment," said Rob Montefusco, oil trader at Sucden Financial.
Russia may boost oil exports via Baltic in 2012
MOSCOW, Sept 2 (Reuters) - Russia is likely to increase its crude oil exports via the Baltic Sea ports in 2012 by 40 percent to around 100 million tonnes, an official at Russian oil pipeline monopoly Transneft told reporters on Friday.
"There is potential to increase exports in the Baltic to 100 million tonnes in 2012," Transneft Vice President Mikhail Barkov said.
Oil Drops on Signs of Economic Slowdown; Gulf Workers Return After Storm (Source: Bloomberg)
Oil declined for a second day in New York as investors speculated that signs the Chinese and U.S. economies are weakening indicate fuel demand will falter in the world’s biggest crude-consuming nations. Futures slipped as much as 1.3 percent after a Chinese services index fell to a record low in August. Prices slumped 2.8 percent on Sept. 2 after a report showed U.S. employment stagnated. Crude also declined as Exxon Mobil Corp. and Royal Dutch Shell Plc returned workers to some oil and natural gas platforms after Tropical Depression Lee moved out of the Gulf of Mexico. London-traded Brent widened its premium to U.S. prices for a second day. “The sentiment is negative as a result of the employment data and people are starting to think the economy is kaput,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “Equity prices are under pressure, crude is under pressure. Confidence will have to be rebuilt.”
Bolivia plans to hike mining royalties
LA PAZ, Sept 1 (Reuters) - Bolivia's leftist government plans to raise mining royalties to take advantage of high global metals prices and bolster the state's role in the industry, Deputy Mining Minister Hector Cordova told Reuters.
President Evo Morales, a close ally of Venezuelan President Hugo Chavez, has steadily increased state control over natural resources in the mineral- and natural gas-rich country, which is home to one of the world's largest silver mines, San Cristobal.
Iron Ore-Spot prices firm on healthy outlook
SHANGHAI, Sept 2 (Reuters) - Spot iron ore prices were steady on Friday, as miners held offers firm amid an anticipated pick-up in Chinese steel demand as well as the continued tightness in supply from India, pushing up global indexes to nearly four-month highs. The persistent shortage of iron ore exports from India's southern Karnataka state as well as the approaching peak consumption season in China have sustained the strength in iron ore offers.
China imported iron ore stocks hit record in wk to Sept 2
BEIJING, Sept 2 (Reuters) - Inventories of imported iron ore at major Chinese ports rose 0.5 percent to a record 95.59 million tonnes by the end of this week, according to data from industry consultancy Mysteel on Friday.
Inventories originating in Brazil fell slightly from last Friday, but that was offset by increases in deliveries from India and Australia.
China cuts aluminium output due to power shortage
SHANGHAI, Sept 1 (Reuters) - Aluminium producers in China's Guangxi province will start cutting production in September due to power shortages there, a move that is expected to support prices in the fourth quarter, industry sources said.
Around 15 percent, or over 120,000 tonnes per year, of Guangxi's 810,000-tonne annual production capacity of aluminium may be affected by the power shortages.
Global miners seen keeping iron ore prices steady in Q4
MANILA, Sept 1 (Reuters) - Global miners are likely to keep iron ore contract prices steady in the fourth quarter, with spot prices stabilising on firm Chinese demand and tight supplies, Reuters calculations showed.
Based on Platts index prices for June to August, which top iron ore miners such as Vale and Rio Tinto use in fixing fourth-quarter contract prices, the 62-percent grade averaged $175.63 a tonne, cost and freight, down marginally from $176.96 in March-May, the basis for third-quarter pricing.
Copper in London Drops for 3rd Day as U.S. Jobs Data Stokes Growth Concern (Source: Bloomberg)
Copper declined for a third day amid stalling U.S. job growth and concern that Europe’s sovereign- debt crisis will worsen, fueling fears that a weaker economy may reduce demand for industrial metals. Three-month delivery copper on the London Metal Exchange fell as much as 0.8 percent to $9,005 a metric ton, the lowest level since Aug. 26, and traded at $9,010 at 3:09 p.m. Tokyo time. The metal earlier gained as much as 0.4 percent. Asian stocks and oil fell for a second day, following the 2.5 percent slump in Standard & Poor’s 500 Index futures on Sept. 2 after the U.S. Labor Department reported the weakest payrolls reading since September 2010. The Dollar Index headed for its longest winning streak in eight months, reducing the appeal of copper as a rise in the greenback makes metals priced in U.S. dollars more expensive to investors holding other currencies.
Copper May See Shortage for Third Year (Source: Bloomberg)
Copper will remain in short supply for a third straight year in 2012 as China-led demand boosts prices, Japan’s top producer said. Demand will likely exceed supply by 495,000 metric tons in 2011, the biggest deficit since 2004, compared with 214,000 tons last year, said Akira Miura, executive officer of the marketing and raw-material department at Pan Pacific Copper Co., Japan’s biggest producer. The shortage may shrink to 31,000 tons in 2012, he said. Copper, used in wires and pipes, has climbed 18 percent in the past year, reaching a record $10,190 a ton in February, as the global economy recovers from its worst recession since World War II. Higher prices benefit major producers such as BHP Billiton Ltd. (BHP) and Freeport-McMoRan Copper & Gold Inc. (FCX) The metal is favored by Goldman Sachs Group Inc. because of its “superb supply-demand fundamentals.”
Gold May Fall as Investors Seek Cash as Equities Slump on Growth Concerns (Source: Bloomberg)
Gold fell as some investors sold the metal for cash to cover losses in other markets after equities slumped on concern that economic growth in the U.S. is slowing and the sovereign-debt crisis in Europe is worsening. Immediate-delivery gold traded 0.3 percent lower at $1,876.65 at 1:02 p.m. Singapore time after swinging between gains and losses of 0.5 percent. The metal reached a record $1,913.50 on Aug. 23. December-delivery futures were little changed at $1,879.30 an ounce, paring a 0.9 percent advance. Bullion priced in euros and sterling jumped to all-time highs. “Given the economic uncertainties in the world, any drop in gold will be limited as it benefits from the risk aversion trade,” said Li Ning, an analyst China International Futures (Shanghai) Co.
Baltic index rallies, capes at near 9-month high
LONDON, Sept 1 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose to its highest in nearly eight months on Thursday as a surge in coal and iron ore bookings on the larger capesizes bolstered sentiment and earnings.
Brokers said a growing ship glut was set to cap dry bulk freight rate gains in the coming months.
The overall index rose 3.89 percent or 63 points to 1,682 points, in a second day of gains and was at its highest since Jan. 4. Before Wednesday's rise it had fallen for three sessions. The index had hit a near seven-month high last month.
Asia Dry Bulk-Panamax rates to rise on China demand
SINGAPORE, Sept 1 (Reuters) - Rates for panamax dry bulk carriers on key Asian freight routes are expected to rise over the next week, supported by increased iron ore and coal shipments to China, shipbrokers said on Thursday.
For larger capesize vessels, rates are seen hovering near nine-month highs as the Pacific basin finds support from tight ship supplies in the Atlantic.
China COSCO to merge freight units to boost bargaining power
SINGAPORE, Sept 1 (Reuters) - China's state-owned COSCO Group will merge its dry bulk freight units to improve its bargaining power with shipowners, as it struggles with a severe market downturn and payment disputes that have tainted its reputation.
The country's top shipping conglomerate hopes to consolidate COSCO Bulk Carrier, COSCO Hong Kong Shipping and Qingdao Ocean Shipping into one firm as soon as possible, a COSCO official said.
