Commodities Head for Biggest Quarterly Drop Since 2008 on Economy’s Woes (Source: Bloomberg)
Commodities fell, heading for the biggest quarterly slump since 2008, as Europe’s sovereign-debt crisis threatened to derail the global economy, slashing raw- material demand. The Standard & Poor’s GSCI index of 24 raw materials slid 2.7 percent to settle at 603.55 at 3:46 p.m. New York time. Since June 30, the gauge has slumped 9.8 percent, the most since the last quarter of 2008 during the most-severe recession since the 1930s. Copper closed at the lowest price in 13 months, and crude oil fell almost 4 percent. The MSCI World (MXWO) Index of equities fell for the first time in four sessions amid increasing concern that European leaders are divided on handling the region’s debt woes. A report tomorrow may confirm European consumer confidence dropped to a two-year low in September. Last week, an index of purchasing managers in China indicated that manufacturing contracted.
Corn (Source: CME)
US corn futures finish sharply lower as renewed economic concerns fuel fresh liquidation by commodity funds. Traders estimate funds sold an estimated 17,000 contracts, a hefty amount. Prices have pulled back almost 18% since late August, with the slide expected to attract grain users to the market. They see the decline as a buying opportunity amid lingering concerns about low corn inventories. "We've certainly got commodity values down to where I think they're undervalued," says Mike Krueger of The Money Farm. CBOT December corn loses 21 1/2c to $6.30 3/4 a bushel.
Wheat (Source: CME)
US wheat futures close lower as fund selling and weakness in external markets pressure prices. The selloff "had to be more fund liquidation" because supply-and-demand factors didn't shift dramatically today, says Mike Krueger of The Money Farm. Funds sold an estimated 4,000 contracts at the CBOT, a moderate amount. Traders will see Thursday whether the decline was enough to win business from Egypt, the world's top wheat importer. It has been buying low-cost Russian wheat recently. CBOT December wheat sinks 19 1/2c to $6.38 3/4 a bushel, KCBT December loses 26 1/4c to $7.26 3/4 and MGEX December drops 8c to $8.61 1/4.
Rice (Source: CME)
US rice futures slump as renewed concerns about the global economy sink a range of commodities. Rice prices tumble with metals and other grains, including wheat, corn and soybeans. Yet, rice still trades within Tuesday's range, avoiding a steep fall after approaching a two-month low Monday. CBOT November rice ends down 7c at $16.28/hundredweight.
U.S. grains decline on slow growth, dollar's gain
SINGAPORE, Sept 28 (Reuters) - U.S. grain futures fell, giving back gains from the previous day, as concern that global economic growth will slow and doubts over Europe's commitment to its debt plan prompted investors to shift to the U.S. dollar.
"There are expectations that the USDA may report a larger-than-expected supply on corn," said Lynette Tan, a grains analyst at Phillip Futures in Singapore.
Philippines puts typhoon crop damage at $13 mln
MANILA, Sept 28 (Reuters) - The Philippine Agriculture Department said on Wednesday its initial estimate was that rice and corn crops valued at 569.4 million pesos ($13 million) were lost due to damage from Typhoon Nesat.
Estimated crop damage included 33,890 tonnes of rice from 56,421 hectares affected in five regions, including the key rice growing regions of Cagayan Valley and Central Luzon, the department said.
Punjab, Haryana's 2011 paddy procurement seen up 7.7 pct
CHANDIGARH, India, Sept 28 (Reuters) - Paddy procurement by Punjab and Haryana in 2011 is likely to rise 7.7 percent over last year, government officials said, as the country is expected to harvest a record crop.
The two northern states, which are India's major paddy producers, are expected to buy 16.8 million tonnes from domestic farmers, against 15.6 million tonnes a year ago, officials said.
Philippines counts cost as Typhoon Nesat departs
MANILA, Sept 28 (Reuters) - The Philippines began on Wednesday the clean-up of flooded areas and assessments of damage, including to the key rice crop, a day after Typhoon Nesat left behind at least 18 dead.
Financial markets, government offices and some schools reopened after being closed by the typhoon, and train services resumed after power supplies were restored in the capital.
USDA seen lowering US spring, all-wheat production
CHICAGO, Sept. 27 (Reuters) - Poor yields in the northern U.S. spring wheat belt should prompt the U.S. Department of Agriculture to cut its estimate of overall 2011 U.S. wheat production to the lowest level since 2006, analysts said.
Spring wheat production could drop to its lowest level since 2007, and if it does, ending stocks of the high quality wheat could tumble to the second-lowest on record.
Corn supply at 8-year low, down less than expected
CHICAGO, Sept 27 (Reuters) - U.S. corn stockpiles likely declined over the summer but by slightly less than the government has estimated, giving the tight market marginally more breathing room before consumers enter an even leaner year.
Inventories at the end of the 2010/11 marketing year are expected to fall to 964 million bushels, down 44 percent from 1.708 billion a year ago and the smallest supply in eight years, according to analysts polled by Reuters ahead of the U.S. Agriculture Department's quarterly stock report on Friday.
S.Africa cuts maize output forecast, wheat seen up
JOHANNESBURG, Sept 27 (Reuters) - South Africa slightly cut its May 2010-April 2011 season maize output forecast on Tuesday, citing a lower pace of deliveries to silos, while the 2011 wheat output is seen up on the back of better yields.
In its final forecast, the government's Crop Estimates Committee (CEC) said Africa's largest maize producer is expected to harvest 10.608 million tonnes of the crop, compared with 10.679 million tonnes in the previous forecast.
ICE sugar extends rebound, cocoa slips
LONDON, Sept 28 (Reuters) - ICE sugar futures extended their correction higher in early trade, bouncing after the commodity sell-off, while cocoa eased, under pressure from ample supplies.
Raw sugar futures on ICE climbed, supported by bullish market technicals based on historical price charts, after dealers said the market had become oversold.
India sugar producers' body foresees surplus
NEW DELHI, Sept 27 (Reuters) - India is heading for a sugar surplus in 2011/12, and the government should help producers by allowing 4 million tonnes of exports -- more than double this year's overseas sales, the head of a producers' body said on Tuesday.
Output for the world's second-biggest producer after Brazil could rise to 26.5 million tonnes in 2011/12, Jayantilal B. Patel, president of the National Federation of Cooperative Sugar Factories Ltd (NFCSF), told an industry meeting.
Colombia's top coffee region output lags -farmers
BOGOTA, Sept 27 (Reuters) - Leading Colombian coffee-growing province Antioquia is seen producing fewer beans during its main harvest than in the same period a year ago after torrential rains hit plantations, growers said.
Coffee growers in the northwestern province that accounts for 16 percent of Colombia's total output said progress was slower than normal.
Brazil coffee area seen dry until mid-Ocober
BRASILIA, Sept 27 (Reuters) - Brazil's key coffee zones could stay dry until mid October, delaying the start of crop-fixing flowering, but the long dry spell does not yet spell disaster for the next crop, agronomists said on Tuesday.
The coffee market is relying on a good on-year harvest next year from the world's top grower to pump supplies into a market facing chronic shortages of some bean types. The shortages have sustained high prices since mid 2010.
Brazil CS sugar output down 8 pct - Unica
SAO PAULO, Sept 27 (Reuters) - Sugar production from Brazil's center-south cane crop this season is lagging last year by 8 percent, but output was up in recent weeks, the cane industry association Unica said on Tuesday.
From the beginning of the season in April through Sept. 16, sugar output totaled 23.1 million tonnes, 2 million tonnes less than the same period in 2010.
ICoast 2011/12 cocoa output seen 1.4 mln T -finmin source
ABIDJAN, Sept 27 (Reuters) - Ivory Coast's finance ministry expects the world's top grower to produce 1.4 million tonnes of cocoa next season, slightly down on this year's record of around 1.5 million tonnes, a ministry source told Reuters on Tuesday.
"The weather is still favourable and the plantations have been treated much more than in past years. All of that will maintain production at 1.4 million tonnes for 2012," the source said, citing an internal ministry forecast.
India trying for consensus on 2011/12 sugar output forecast
NEW DELHI, Sept 27 (Reuters) - India's government is trying to reach a consensus over how much sugar the country is likely to produce in 2011/12, Food Minister K.V. Thomas said on Tuesday after his forecast varied from that of the farm minister.
"I am aware there is some difference on preliminary estimates of sugar production, and efforts are on to reconcile the figures," Thomas told a conference.
India should allow 4 mln T sugar exports in 2011/12-industry body
NEW DELHI, Sept 27 (Reuters) - India should allow 4 million tonnes of unrestricted sugar exports in the new season from October to help trim bulging stocks and arrest slipping local prices, the chief of a producers' body said on Tuesday.
The federal government should also buy 2 million tonnes of sugar from the local market to help cut stocks with mills as 2011/12 output is expected to be 26.5 million tonnes, Jayantilal B. Patel, president of the National Federation of Cooperative Sugar Factories Ltd (NFCSF), told an industry meeting.
Ivorian cocoa arrivals up 22 pct yr/yr
ABIDJAN, Sept 27 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast reached a fresh record 1,449,320 tonnes by Sept. 18 since the start of the season in October, up from 1,184,195 tonnes in the same period a year ago, according to data from the Bourse du Cafe et Cacao (BCC) obtained by Reuters on Tuesday.
The West African state is on track to register nearly 1.5 million tonnes of cocoa, a record tally driven by ideal weather conditions and achieved despite a brief civil war earlier in the year that forced many planters into hiding.
Russia Starts Sugar Exports For First Time In 12 Years-Industry (Source: CME)
Russia is exporting sugar to the world market for the first time in more than a decade, industry sources said, marking a sea change for one of the world's largest sugar importers of recent decades. An official at the sugar producers' association Soyuzrossakhar said the first contracts to export to Tajikistan and Kyrgyzstan were signed at the end of August, and with prices at their current levels Russian sugar could also find its way to Ukraine, Moldova and other Central Asian countries. "This is the first time in 12 years that Russia has produced sugar cheaply enough to sell to the world market," said the official, adding that the government has put together a working group to help support exporters. Good weather and a rise in plantings have swung Russia from the major importer it has become since the Soviet Union's collapse in the early 1990s.
Soyuzrossakhar now expects producers to harvest a record 5.3 million metric tons of sugar in 2011-12, as average yields this season have reached as high as 40 tons a hectare. "Russia, the world's undisputed leading importer until the middle of the last decade, is not expected to be even among the 10 largest importers in 2011-12," said the International Sugar Organization. For refiners, however, the influx of sugar has caused headaches. Domestic white sugar prices slumped 26% during August reaching $710 a ton by mid-September--making Russian supplies competitive compared with $784.60/ton offered in London--and forecasters say they may fall further in October and November as the local market struggles to absorb the supplies. A person in major sugar producer Rusagro said the government may even be forced to resort to intervention purchases to stabilize the market.
Yet poor infrastructure could still hinder Russia's exporting prospects. Russia hasn't built a new sugar-processing plant in the last 25 years, and 60% of the processing equipment is worn out, according to the U.S. Department of Agriculture's Moscow attache. Already refiners are struggling to process the huge harvest. The person at Rusagro said the company's seven refineries are producing 45,000-50,000 a month but still can't cope with the excess sugar from the fields. Meanwhile, ongoing reforms of the state-run railway authority RZhD had led to a severe shortage of specialized railway cars to move the sugar to sea ports and land border crossings. The Raevsky sugar refinery has already been forced to stop processing the new harvest due to a backlog of supplies. And although Soyuzrossakhar has appealed to the federal anti-monopoly authority to help combat the shortage, so far nothing has been done.
Coffee Falls in Robusta Rout While Starbucks Cup Costs $1.50: Commodities (Source: Bloomberg)
Farmers from Vietnam to Brazil will supply a record robusta crop in the marketing year that begins next month, extending a slump in coffee futures that spurred Kraft Foods Inc. (KFT) and J.M. Smucker Co. to cut prices. Production will rise 5.4 percent to 3.29 million metric tons (54.9 million 60-kilogram bags) in the 2011-12 season, the U.S. Department of Agriculture estimates. Vietnam and Brazil, the biggest producers, will reap the most beans ever. Robusta traded on the NYSE Liffe exchange in London fell 26 percent since March, and will drop another 5 percent to $1,884 a metric ton by Dec. 31, according to the mean in a Bloomberg survey of 16 brokers, traders and analysts.
Robusta, the second most-consumed coffee after arabica, is reversing a rally that more than doubled prices in the 12 months ended in March as shortages emerged. That was part of a global surge in food prices that the United Nations estimates reached a record in February. U.S. food-price inflation will be as much as 3.5 percent next year, compared with as much as 4 percent this year, the USDA estimates.
US Ethanol Plants Invest In Corn Oil As Industry Matures (Source: CME)
U.S. ethanol producers faced with slowing growth in demand are turning to a fledgling market for corn oil to help boost revenues. Several of the nation's largest ethanol companies, including Green Plains Renewable Energy and Valero Energy Corp., have invested in equipment to produce the oil. Extracted during the production of ethanol, corn oil is mainly used to make animal feed and biodiesel, but also can be produced for cooking. The volumes ethanol producers plan to make are expected to be small compared to the 2-billion-gallon U.S. market for soybean oil, which is nearly interchangeable. Still, the new product adds an important revenue stream for ethanol makers who face flattening demand, historically high corn prices and volatile energy markets.
Ethanol production has been profitable throughout 2011, with the Renewable Fuels Association projecting production at a record 13.7 billion gallons. Still, the rapid gains in demand are seen slowing. The industry is nearing 15 billion gallons, the amount federal law requires refiners to blend into gasoline by 2015. Further gains past the federal mandate are hampered by weakening support in Congress, concerns over the effects that increased ethanol use would have on older engines, and changes that gas stations would have to make to their pumps. Ethanol producers are "going to have to be creative in ways to generate more profit," said Jason Ward, an analyst with Northstar Commodity in Minneapolis. Demand "really can't go much higher," Ward said. Green Plains Renewable, after making a $20 million investment in 2010 to produce corn oil, projects between $30 million and $40 million in new, annual revenue from the liquid. Producing corn oil is "low-hanging fruit," the company's Chief Executive Todd Becker said.
In the quarter ended June 30, corn oil accounted for $6.4 million in operating income, up from zero the prior year. Operating profit was $11.6 million for ethanol production. Other large companies, including Iowa-based Poet, the world's largest ethanol producer, and Valero are adding similar equipment to their existing plants. The investments are a natural progression for the industry, said Jeff Lautt, Poet's president, whose company is in the midst of an effort to diversify revenue. "You look at any other industry that's developed over the last 100 years, once they mature they start to broaden out, and ways to create new revenue or bottom-line margin," Lautt said. The new supply of corn oil from ethanol plants is not food grade, although Lautt said Poet may try making food-grade corn oil eventually.
A spokesman for Valero, which entered the ethanol business in 2009 after buying plants from bankrupt Verasun Energy Corp., said the decisions to invest in corn oil reflects the relative health of the industry as it puts money back into the business. Ethanol plants have a ready buyer in the biodiesel industry, which can use either corn oil or soybean oil in production. And corn oil right now sells at a discount to soybean oil, said Sander Cohan, an analyst at ESAI Inc. Although increased corn oil production provides added competition for soybean oil makers, it isn't likely to saturate the market, industry officials said. Even if all producers adopted the technology this year, total output would be under 270 million gallons, said Becker of Green Plains. Corn oil is a byproduct of the ethanol production, a fermentation process in which the starch is separated from the kernel and turned into sugar. The technology employed by most ethanol plants extracts corn oil in fermentation process.
USDA Pays Out $80 Million To Biofuels Companies (Source: CME)
The U.S. Department of Agriculture announced Tuesday it is giving out about $80 million this year to 163 companies that produce biofuel from alternative sources like animal fats and wood chips. The payments this year go to companies like Ever Cat Fuels in Isanti, Minn., which makes biodiesel from plant oils and animal fat. Ever Cat will get a check for $98,507, but other companies will get a lot more, according to the USDA. The amount is based on how much biofuel the company produces from sources other than corn. Pennsylvania-based Smarter Fuel, Inc., will get about $4.8 million because it produces fuel from waste products and Kansas-based Ese Alcohol will get about $81,000 because it uses leftover seed to make ethanol.
"The payments I am announcing today represent the continuing commitment of the Obama administration to work with producers to provide the biofuel necessary to reduce our nation's dependence on foreign energy sources," said U.S. Department of Agriculture Secretary Tom Vilsack. "The payments support America's growing advanced biofuel industry." The $80 million worth of payments announced Tuesday are the fiscal year 2010 installment for the "Advanced Biofuel Producer Payments" program and the USDA is already evaluating companies for FY 2011 payments, a spokesman said. The payments are authorized in the 2008 farm bill by Congress, according to the National Biodiesel Board, and meant to "ensure an expanding supply of domestic energy." "These payments will create jobs and economic activity while helping the biodiesel industry advance new technologies and improve efficiency," said Anne Steckel, a vice president for the biodiesel group.
Most of the biofuel produced in the U.S. now is corn-based ethanol, a heavily subsidized fuel that consumes about 40% of the corn grown in the U.S. Ethanol producers are expected to use about 5 billion bushels of corn this year to make the fuel. The U.S. spends about $6 billion per year subsidizing ethanol-blended gasoline with a tax credit of 45 cents per gallon. There is also a tax of 54 cents per gallon on imported ethanol
Euro Coal-Oct S.Africa prices dip, Indians delay
LONDON, Sept 27 (Reuters) - Prompt physical coal prices for October South African cargoes dipped again on Tuesday as suppliers scrambled to find homes for shipments soon due to load, but further forward prices saw slight gains."Apart from the very prompt month, prices are generally a little stronger in line with everything else," one trader said.
Stocks on the world's major exchanges were headed on Tuesday for their largest daily gain in 16 months and commodities jumped. Oil rose 2 percent as euro zone efforts to solve the region's debt crisis lifted markets.
India 2011/12 coal import needs may jump to 114 mln T
NEW DELHI, Sept 27 (Reuters) - India could import about 114 million tonnes of coal in 2011/12, up by over a third from the previous year, mainly from Indonesia and South Africa to help prevent power stations and factories in Asia's third-largest economy from slowing down.
Coal Minister Sriprakash Jaiswal said on Tuesday India's coal demand was seen at 696 million tonnes in 2011/12 against an expected local output of 554 million tonnes. State-run Coal India , the world's largest coal miner, has stocks of about 28 million tonnes, reducing the overall shortfall.
India 2011/12 coal demand seen at 696 mln T
NEW DELHI, Sept 27 (Reuters) - India's coal demand is seen at 696 million tonnes in 2011/12 against an expected local production of 554 million tonnes, Coal Secretary Alok Perti said on Tuesday, widening the gap by 5.2 percent from a previous estimate.
Earlier estimates have suggested Asia's third-largest economy is likely to import about 135 million tonnes in the year ending March 31, 2012.
Brent slips as euro zone doubts resurface
LONDON, Sept 28 (Reuters) - Brent crude fell below $107 per barrel on Wednesday as worries about details of a euro zone debt bailout fund prompted investor caution after a sharp gain the previous session.
"The headline-reading trading machines cannot understand the complexity of Europe, so big up moves (are) followed by big down moves as they are unable to have a proper trading read on Europe," he said.
Shell says fire at Singapore refining complex
SINGAPORE, Sept 28 (Reuters) - A fire broke out at Royal Dutch Shell's petroleum complex offshore Singapore on Wednesday, the company said.
"We confirm that a fire in the Pulau Bukom Manufacturing Site occurred today at approximately 1.15pm. Emergency responders are on the scene and the fire is contained. No injuries have been reported and the rest of the site's operations are unaffected," a spokesman said.
Oil Declines for Second Day on Concern Over European Debt, U.S. Stockpiles (Source: Bloomberg)
Oil declined for a second day in New York, heading for the biggest quarterly drop since 2008, as investors speculated that fuel demand will falter as U.S. crude stockpiles increase and Europe’s debt crisis lingers. Futures slipped as much as 1.7 percent after German Chancellor Angela Merkel said policy makers may review Greece’s second bailout after inspectors rule on whether the country is meeting the terms of its current package. Crude supplies rose 1.92 million barrels to 341 million last week, the U.S. Energy Department said yesterday. Crude for November delivery dropped as much as $1.35 to $79.86 a barrel in electronic trading on the New York Mercantile Exchange and was at $79.96 at 9 a.m. Sydney time. The contract yesterday fell $3.24, or 3.8 percent, to $81.21. Futures are down 10 percent this month and 13 percent this year. Prices have dropped 16 percent since the end of June, the biggest quarterly loss since the last three months of 2008.
Iron Ore-Spot prices at 2-1/2-month lows as buying thins
SINGAPORE, Sept 28 (Reuters) - Spot iron ore prices fell to their lowest since early July on slow buying from Chinese mills, and more losses may be ahead with Shanghai steel futures falling on Wednesday for the fourth time in the past five sessions.
Steel producers in China, the world's biggest iron ore buyer, continued to step back from the iron ore market, worried about slowing steel demand and the uncertainty facing the global economy.
China steel output, iron ore pricing in focus at summit
SINGAPORE, Sept 27 (Reuters) - Whether China can sustain its rapid pace of steel production while developed economies are on shaky ground and how tight supplies will continue to buoy iron ore prices are questions on the agenda for China's biggest industry gathering this week.
Chinese steel mills are also expected to use the occasion to push for a more favourable iron ore pricing scheme as elevated spot prices cut into profits, ahead of a plan by industry group CISA to launch China's version of a reference index next month to gain more pricing power.
Gold Tumbles as Rout in Stocks, Commodities Forces Some Investors to Sell (Source: Bloomberg)
Gold fell for a second day, paring a 12th quarterly gain, as concern European leaders may not stem the region’s debt crisis hurt stocks and commodities, forcing some investors to sell the metal to cover losses elsewhere. Immediate-delivery gold lost as much as 1.5 percent to $1,584.38 an ounce, and traded at $1,593.35 at 8:27 a.m. in Singapore. December-delivery bullion lost as much as 2 percent to $1,586.20 an ounce in New York. Gold has fallen on “traders needing cash for margin calls on weak equity prices and newfound strength in the U.S. dollar,” Jonathan Barratt, managing director at Commodity Broking Services Pty., wrote in a report. “The turmoil in Europe only seems to be getting worse.”
Tiger Group to bet big on containerships
SINGAPORE, Sept 28 (Reuters) - Maritime investment firm Tiger Group could "very easily" buy as many as 50 large containerships in the next two years, betting that the box ship industry will see the most growth in traditional freight markets, the firm's managing director said.
The Hong Kong-based firm, with assets of more than $10 billion, looks to raise as much as $6 billion to invest in shipping over the next few years through its companies, said Tiger Group's Managing Director Julian Proctor.
Baltic index turns negative, outlook volatile
LONDON, Sept 27 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, turned negative on Tuesday with mounting vessel supply and freight derivatives contract selling knocking sentiment.
Brokers said growing vessel supply, which was outpacing commodity demand, was set to cap dry bulk freight rate gains in the coming months with growing challenges to the world economy adding to headwinds.
Private equity, bonds to drive ship finance amid credit crunch
SINGAPORE, Sept 27 (Reuters) - Global shipping firms must look to private equity funds and corporate bond markets to obtain capital to expand their operations as traditional bank financing dries up in the West, industry executives said on Tuesday.
European banks, traditionally the top lenders to global shipping companies, have tightened credit lines as the region's sovereign debt crisis spills over to financial institutions.
