Commodities Head for Biggest 2012 Decline (Source: Bloomberg)
Commodity prices posted their biggest drop this year on signs that slowing global economies will erode demand for raw materials. The Standard & Poor’s GSCI Spot Index of 24 commodities dropped 1.5 percent to close at 692.61 in New York, the biggest loss since Dec. 14. Declines were paced by arabica coffee, which dropped to the lowest since October 2010. Lead tumbled as much as 4.1 percent, and gold touched a five-week low. European economies shrunk in the fourth quarter and U.K. retail sales slid for a second month in February, separate reports showed today. China, the world’s biggest consumer of everything from aluminum to cotton to soybeans, yesterday lowered its economic-growth target. Commodities may face a “sizable” correction as the global expansion cools, INTL FCStone Inc. said yesterday.
“Across the board, it’s just a panic,” Harry Denny, a broker at Hoboken, New Jersey-based PVM Futures Inc., said in a telephone interview. “China is just so important for commodities. We knew there was a slowdown coming, but we just hadn’t heard it, and when we heard it, a lot of guys went running.”
USDA seen lowering S.America crop forecasts
CHICAGO, March 6 (Reuters) - Hot and dry weather should prompt the U.S. Department of Agriculture to lower its forecasts of the corn and soybean crops in Brazil and Argentina, moves that would signal increased export demand for U.S. supplies, analysts said.
"I'm expecting increasing old-crop (U.S.) export demand because of these past few months of deteriorating South American corn and soybeans prospects," said Jerry Gidel, grains analyst with Rice Dairy, a Chicago-based brokerage house.
Australia set for another year of bumper grains harvest
CANBERRA, March 6 (Reuters) - Australia is on track for another year of bumper grains and oilseed harvests with ideal growing condition forecast to boost production this year, which could add pressure on global prices.
Even though Australian farmers will reduce wheat plantings in 2012/13 in response to lower global prices, the world's fourth-largest exporter is expected to produce an above average crop after two straight years of record output, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
Corn (Source: CME)
US corn futures end lower, falling along with other commodities on a stronger dollar and concerns about Chinese economic growth and Greek fiscal woes. Corn is also pressured by the head of China's State Grain Administration saying overnight that corn imports are unlikely to rise sharply in the next two years. "Corn took a bit of general selling as the entire market basket of commodities got whacked good and proper today," said Charlie Sernatinger, analyst at brokerage ABN Amro. CBOT May corn, the most actively traded month, falls 6 3/4c, or 1.0%, to $6.54. March corn falls 8 1/4c to $6.58.
Wheat (Source: CME)
US wheat futures end down amid a broader commodities selloff, falling on macroeconomic concerns and a stronger US dollar. Markets are concerned about slower Chinese economic growth and Greece's fiscal woes. "That pressured everything...and so that spilled over into our grain markets, especially our wheat," says Larry Glenn, broker for Frontier Ag. Wheat fundamentals also remain weak, with large global supplies. CBOT May wheat, the most heavily traded month, fell 14 1/4c to $6.57 3/4 a bushel, while KCBT May wheat dropped 18c to $6.98 and MGEX May fell 16c to $8.18 3/4
Rice (Source: CME)
US rice futures end lower, following other commodities down on a stronger dollar and concerns about Chinese and European economic growth. Poor export demand still weighs as well, though losses are limited by a need for high enough prices to prevent farmers from planting other crops in place of rice. CBOT May rice, the most active month, ends down 9c at $14.25 1/2 per hundredweight.
Soy, corn drop, but still near multi-month peaks
SINGAPORE, March 6 (Reuters) - U.S. grains futures pulled back on Tuesday, hurt by a firmer dollar, although corn and soybeans stayed near multi-month highs on expectations of strong export demand and tight supplies.
"Fundamentally soy and corn tend to be well supported. Demand is certainly still there for soybeans and you've also got the supply side shocks from the weather in Brazil," said Victor Thianpiriya, agricultural analyst at Australia and New Zealand Bank.
Australia's GrainCorp sees exports at 9 mln T in 2011/12
CANBERRA, March 6 (Reuters) - Australia's GrainCorp expects to export around 9 million tonnes of grain in the year to September 2012, up from 8 million tonnes last year and about double its annual exports in a normal year.
Alison Watkins, chief executive at GrainCorp, said she was optimistic about the country's 2012/13 wheat crop thanks to favourable growing conditions.
China says won't import large corn volumes
BEIJING, March 6 (Reuters) - China will not need to import large volumes of corn as domestic supply is sufficient to meet demand, the head of the State Grain Administration (SGA) told reporters on Tuesday.
"We will not import corn by a large volume. Corn is not an agriculture product which China is short of," SGA director Nie Zhengbang told reporters on the sidelines of China's annual parliamentary session.
Brazil corn to hit record despite drought -Celeres
SAO PAULO, March 5 (Reuters) - Brazil's 2011/12 corn harvest should turn out 60.4 million tonnes, local analyst Celeres said on Monday, trimming its view slightly from the 60.58 million tonnes it forecast in February.
Analyst estimates for corn had been slashed recently after a harsh dry spell destroyed some of the corn in top producer Parana state. Many forecasts then swung higher on expectations the winter crop, one of two annual harvests, would be bigger than previously thought.
Record US corn crop to cool red-hot prices-FAPRI
WASHINGTON, March 5 (Reuters) - U.S. farmers will harvest a record corn crop this year, which will rebuild stockpiles and bring down prices, a University of Missouri think tank projected in a report on Monday that came in 2.5 percent lower than the most recent U.S. government projection.
The Food and Agricultural Policy Research Center, or FAPRI, projected a corn crop of 13.916 billion bushels, 6 percent larger than the record set in 2009, based on the second-largest plantings since World War Two.
Vietnam Q1 rice exports may fall 44.4 pct y/y - govt
HANOI, March 5 (Reuters) - Rice exports from Vietnam, the world's second-largest exporter of the grain after Thailand, could fall 44.4 percent in the three months ending March from a year earlier to 1 million tonnes, a government report said on Monday.
The decline was alarming as many importers had no plans to buy, Vietnam Food Association Deputy Chairman Pham Van Bay was quoted as saying in the report in the government's online newspaper
Official: China Grain Output Can Increase Gradually In Medium, Long Term (Source: CME)
China will be able to realize gradual medium- and long-term grain output increases, as yields are expected to rise in tandem with improving technologies, a senior agricultural official said. Nevertheless, an output decline in 2012 can't be ruled out after China's grain production increased for an eighth consecutive year in 2011, Chen Xiwen, general director of the Office of the Central Rural Work Leading Group, told a press conference. Chen also said China's government is encouraging the research and development of genetically modified organisms, but will be very prudent in the application of GMO technologies in key grains, which include rice and wheat.
Wheat Falls Most in Two Weeks on ‘Significant’ U.S. Rainfall; Corn Drops (Source: Bloomberg)
Wheat dropped the most in two weeks in Chicago on speculation precipitation in the U.S. southern Plains and “significant” rains in the northern Plains will boost crop prospects. Corn declined. Rain this week will help plants in Kansas, the second- biggest U.S. wheat grower, and in Oklahoma, Commodity Weather Group said in an e-mailed report today. About six times the normal amount of precipitation fell in parts of North Dakota, the biggest U.S. producer, and in South Dakota and Minnesota last week, National Weather Service data show. “Our forecast includes the chance for a significant storm in much of Texas, Oklahoma and parts of southern Kansas,” the group said. “This would aid spring growth of winter wheat. The 11- to 15-day period includes another chance for a few showers in the southwestern Plains, as well as a better opportunity for needed moisture in Iowa and Minnesota.”
Wheat for May delivery slid 1.7 percent to $6.6075 a bushel by 1:39 p.m. London time on the Chicago Board of Trade. A close at that price would be the biggest decline since Feb. 21. Milling wheat for May delivery traded on NYSE Liffe in Paris fell 1.3 percent to 195.25 euros ($256.64) a metric ton.
Global Wheat Harvest Seen Declining From Record as Yields Drop to Average (Source: Bloomberg)
Wheat crops worldwide will probably decline 2 percent in the year starting July 1 as yields return to average after record production, said Australia’s government commodity forecaster. Harvests may drop to 682 million metric tons from 693 million tons as consumption gains 0.3 percent to 681 million tons, the Canberra-based Australian Bureau of Agricultural and Resource Economics and Sciences said today. The world wheat indicator price will drop 7 percent to average about $275 a ton. Wheat futures have tumbled 17 percent in the past year as global production and inventories headed for all-time highs and world trade surged to the second-highest level in at least in five decades. Global stockpiles may reach 220 million tons in 2012-2013 from 213 million tons a year earlier, Mike O’Dea, a senior risk manager at INTL FCStone Inc., said Feb. 22.
“If we see supply increasing more strongly than what it has and stocks continue to rise, that will put pressure on prices,” said Paul Morris, bureau executive director, in an interview yesterday. Abares joins the International Grains Council in predicting a decline in harvests in the coming year because of lower yields. The council expects global production to drop by 15 million tons to 680 million tons, it said Feb. 23.
Raw Sugar Declines Most in Three Weeks on Surplus Concerns; Cocoa Steady (Source: Bloomberg)
Sugar futures fell the most in three weeks on mounting concern that supplies will outpace demand amid faltering global economies. Cocoa was unchanged. Sugar supplies will exceed demand by 7.7 million metric tons in the 12 months ending Sept. 30, up 1.6 million tons from a November forecast, according to London-based Czarnikow Group Ltd., which traded the sweetener in more than 90 countries last year. Equities and commodities fell after a report showed that the European Union’s economy contracted in the fourth quarter. “The surplus is the big story going into the summer,” Jeff Dobrydney, a vice president at Wilton, Connecticut-based Jenkins Sugar Group, said in a telephone interview. Raw-sugar futures for May delivery slid 2.6 percent to settle at 24.05 cents a pound at 2 p.m. on ICE Futures U.S. in New York, marking the biggest drop for a most-active contract since Feb. 9. Still, the price is up 3.2 percent this year.
India’s Ban on Cotton Exports May Unravel Deals After 2011 Disputes Surge (Source: Bloomberg)
A halt in cotton exports by India, the world’s second-biggest shipper, may boost contract disputes after arbitration cases surged to a record in 2011 following the slump in prices from the all-time high, analysts said. Yesterday, India effectively revoked export certificates for as much as 2.6 million bales. The nation banned shipments after sales reached 9.4 million bales in the year that began Oct. 1, 12 percent more than an estimated surplus. Cotton surged by the most in nine months on ICE Futures U.S. in New York, and the exchange boosted margins by 76 percent. In 2011, the U.K.-based International Cotton Association got 242 requests for technical arbitration, more than five times the yearly average and double the record in 2008. From Jan. 1 to mid-February, the group received 41 cases, Nicky Simon, a spokeswoman, said last month in an e-mail.
More defaults probably will involve “Indian merchants to mills outside of India,” Jordan Lea, the chairman of Greenville, South Carolina-based Eastern Trading Co., said in an e-mail. “I understand that most of the Indian cotton that was sold, but yet unshipped, is owed to China.”
India To Review Ban On Cotton Exports Friday (Source: CME)
An Indian ministerial panel will on Friday review a cotton export ban that the government imposed Monday, after the farm minister raised objections against the move saying it would harm farmers. The trade ministry banned cotton exports for the second time in nearly two years, citing concerns that lower stocks could put upward pressure on local prices. Farm Minister Sharad Pawar said he had asked the ban to be revoked because local cotton prices had plunged. "I have raised it with the prime minister," Pawar told reporters on the sidelines of an industry conference. "It is highly objectionable and it's up to the prime minister now to take a view." Later in the day, Textiles Secretary Kiran Dhingra said the ministerial panel will discuss the cotton-demand supply situation afresh Friday. State-run Cotton Corporation of India has been advised to procure from farmers, if cotton prices fall below the state support price, she added.
Dhingra said carry-over stocks at the end of this season have come down to 3.6 million bales due to exports of 9.4 million bales, leading to the ban. The government wants to maintain carry-over stocks of 5 million bales. Each bale equals 170 kg. The trade ministry said Monday it imposed the ban as exporters had already shipped out 9.4 million bales of cotton against the previous expectations for 8.4 million bales for the current marketing year. The export ban sent cotton prices on the ICE Futures U.S. exchange higher, while local prices have started falling. The South Asian nation is the world's second-largest cotton exporter, after the U.S, and sends more than 70% of its shipments to China. Pakistan, Bangladesh and Thailand are the next-largest markets, according to trade executives and textile ministry officials. Pawar said after the ban on exports, traders have stopped buying cotton from farmers in Gujarat, Maharashtra, Madhya Pradesh and Karnataka states in anticipation of a further fall in prices.
Gujarat and Maharashtra are the country's top two cotton-producing states. Local cotton prices have fallen 6% since Monday to INR33,000 per 356 kilograms for the widely traded Shankar-6 variety. Over the past year, prices have fallen 40% on expectation of a record crop. Cotton production in India is expected to reach 34.5 million bales in the marketing year that started Oct. 1, from 33.9 million bales the previous year.
Vietnam Coffee-March loading to fall, trade slow
HANOI, March 6 (Reuters) - Vietnam's coffee exports this month could ease to between 120,000 and 130,000 tonnes, or 2 million to 2.2 million bags, after an estimated 180,000 tonnes shipped in February, traders said on Tuesday.
Falling supplies from Vietnam, the world's largest producer of robusta coffee, could prompt buyers to switch to other origins, as rival producer Indonesia has started harvesting, but prices remain at premiums to London futures.
India cotton curbs jolt market, but gains limited
CANBERRA/SINGAPORE, March 6 (Reuters) - India's surprise decision to ban cotton exports will benefit other key exporters such as Australia and the United States, but the global market is unlikely to see a repeat of last year's rally to all-time highs as more production comes on stream.
U.S. cotton futures raced to end limit up on Monday after India said it had stopped exports with immediate effect to ensure supplies for domestic mills, fuelling speculation that main consumer China would have to turn to other sources.
Ivorian cocoa arrivals down 1.5 pct by March 4
ABIDJAN, March 5 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast were 1.5 percent lower at around 1,005,000 tonnes by March 4, compared with 1,020,489 tonnes in the same period of the previous season, exporters estimated on Monday.
Exporters estimated around 10,000 tonnes of beans were delivered to the West African state's two ports between Feb. 27 and March 4, up from 8,208 tonnes in the same week a year ago.
Russia to build sugar refineries with 2 mln t capacity-AgMin
MOSCOW, March 5 (Reuters) - Russia plans to build two new sugar refineries in the Stavropol region, each capable of processing 1 million tonnes of sugar beet per year, Russia's Agriculture Ministry said on its website on Monday.
The two new refineries will increase annual production of beet sugar in the Stavropol region to 4 million tonnes. The statement didn't specify the owner of the project.
Thai rubber intervention stretches populism thin
SINGAPORE/BANGKOK, March 5 (Reuters) - A populist gesture by Thailand's government to prop up rubber prices could backfire by scaring off buyers and causing a buildup of stocks as rubber output rises this year.
Not content with a multi-billion dollar rice intervention scheme, the government of the world's largest rubber producer told farmers it would also buy nearly 7 percent of the country's annual output this quarter.
Brazil CS cane crop seen at 521 mln T -consultant
BRASILIA, March 5 (Reuters) - Brazil's center-south 2012/13 cane harvest should reach 521 million tonnes, consultancy Archer said in its second estimate for the crop due to begin harvesting next month.
That would yield 32.56 million tons of sugar and 22.29 billion liters of ethanol, Sao Paulo-based Archer which specializes in risk management, said in a weekly market update.
Oil Trades Near Two-Week Low on Fuel-Demand Outlook, Europe’s Iran Offer (Source: Bloomberg)
Oil traded near the lowest price in more than two weeks on concern a weakening global economy will curb fuel demand and after the European Union offered to resume talks with Iran over its nuclear program. Futures were little changed after dropping 1.9 percent yesterday. U.S. crude stockpiles rose 4.6 million barrels last week to the highest level in more than five months, according to the American Petroleum Institute. A government report today may show inventories gained 1.5 million barrels. Australia reported economic growth at half the pace forecast by economists. The EU’s foreign-policy chief Catherine Ashton issued a statement urging Iran’s nuclear envoy to meet to seek an accord. “The U.S. story, although strengthening, still remains grass-shoots and there doesn’t seem to be a real lift in petroleum usage there,” David Lennox, an analyst at Fat Prophets in Sydney, said by telephone today. “The market has taken a more skeptical view of military intervention against Iran and has priced it in accordingly.”
Brent falls towards $123 on slowing economies
SINGAPORE, March 6 (Reuters) - Brent crude slipped towards $123, reversing earlier gains as investors began a sell-off on worries about demand from slowing economies in China and Europe, though losses were capped by risks to supply from Iran.
"Traders seem reluctant to hold positions before this week's spate of important economics data," Ben Taylor, a sales trader with CMC Markets, said in a note on Tuesday.
Oil creeps toward top of Asia's economic worry list
SYDNEY, March 6 (Reuters) - High oil prices are fast replacing Europe as the biggest danger to growth in Asia, threatening to smother consumer demand while taking a knife to exports and reigniting inflation.
Brent crude topping $128 a barrel is also a headache for central banks as it makes it harder to use easy monetary policy to cushion growth.
Blast hits Egypt gas pipeline serving Jordan, Israel
CAIRO, March 5 (Reuters) - An Egyptian pipeline carrying gas to Israel and Jordan was bombed on Monday, the 13th such attack since President Hosni Mubarak was toppled in 2011, witnesses said.
The attack on the installation that crosses the increasingly volatile Sinai region occurred in the Massaeed area west of the Mediterranean coastal town of al-Arish, in north Sinai.
Iran oil substitute search may revive tanker rates
DUBAI, March 5 (Reuters) - A rush to replace Iranian crude with oil from other suppliers due to sanctions against Iran could breathe some life back into a limp very large crude carrier (VLCC) market this year, the head of a Dubai-based tanker owner said on Monday. "If you look from a pure supply and demand dynamics it looks like it will be a very difficult year for ship owners," Atle Sebjornsen, the chief executive of leading listed tanker operator Gulf Navigation Holding , told Reuters.
Japan near deal with US on Iran oil, wary of China on defence
TOKYO, March 5 (Reuters) - Japan and the United States are close to an agreement on cuts in Japanese imports of Iranian oil that will allow Tokyo to avoid U.S. sanctions, and may conclude a deal this month, Japanese Foreign Minister Koichiro Gemba told Reuters on Monday.
But Gemba said the two sides might not make public the size of the cuts because of the possible impact on markets.
India's top Iranian oil buyer plans to cut imports
NEW DELHI, March 5 (Reuters) - India's largest Iranian oil buyer plans almost to halve daily imports, industry sources said on Monday, becoming the latest Asian refiner to cut supplies from Iran as Western sanctions make trade with OPEC's second-largest producer difficult.
India, China and Japan buy almost half of Iran's estimated 2.6 million barrels per day of oil exports, but a raft of U.S. and European sanctions aimed at choking off funding for Iran's nuclear programme are squeezing its oil supply lines.
Biodiesel doubts threaten EU green transport targets
BRUSSELS/AMSTERDAM, March 5 (Reuters) - The European Union will almost certainly miss its 2020 targets for cutting transport fuel emissions if policymakers act on scientific warnings about the climate impact of biofuels.
Several EU studies have questioned the climate benefits of biodiesel made from European rapeseed and imported palm oil and soybeans, and some have warned that it releases as many climate-warming emissions as conventional diesel.
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