Hedge Funds Trim Bullish Bets Before Prices Rally on Economy: Commodities (Source: Bloomberg)
Hedge funds reduced bets on higher commodity prices for the first time in seven weeks after China cut its growth target, just as prices rallied on signs the U.S. economy is improving and Greece is containing its debt crisis. Money managers reduced combined bullish positions across 18 U.S. futures and options by 1.1 percent to 1.17 million contracts in the week ended March 6, Commodity Futures Trading Commission data show. Investors cut bets on copper by the most in two months and those on oil by the most since December. China uses more copper and energy than any other nation. Commodities fell 1.5 percent in the week ended March 6, a day after China cut its economic-growth target to 7.5 percent, from 8 percent, the lowest since 2004. Prices rebounded 2.1 percent in the following three days, extending this year’s advance to 9.7 percent, as Greece and bond investors agreed to the biggest sovereign restructuring in history and the U.S. added more jobs than economists were expecting.
EU Governments Still At Odds On Approval Process For GMOs (Source: CME)
European Union environment ministers were deadlocked once more, as they failed to reach agreement on a proposal that would give national governments the power to restrict or ban cultivation of genetically modified crops. "It has been a long discussion, it has been a hard discussion, it has been a heated discussion," Ida Auken, the Danish environment minister who chaired the talks, said in a news conference. "I am of course disappointed...the status quo is something that nobody could prefer." Ministers were discussing a proposal by the European Commission--the EU's executive body--that would give member states the power to restrict or ban GMO crops, even after an EU approval procedure based on health and environment risk assessment has given a green light.
But ministers weren't able to agree as some, like Germany, questioned the compatibility of the plan with rules regulating the EU single market, while others voiced concern that the proposal wouldn't provide a sound enough legal basis for the bans, exposing them to potential challenges. The EU stance on GMOs has been highly controversial. Under current regulations, which have exasperated the EU's major trading partners such as the U.S. and caused friction with the World Trade Organization, any modified crop must undergo a strenuous approval process that often varies significantly between countries. A decade-long opposition by some member countries--who have to back the authorization by qualified majority--has been slowing approvals, with decisions ultimately falling on the commission because of continued disagreements in national governments.
This has led to the approval of only two genetically modified products, an anti-pest strain of corn developed by Monsanto Co. (MON), called Monsanto 810, and a starch potato, called Amflora, developed by Germany's BASF SE (BAS.XE). European public opinion is also sharply divided on the issue and nongovernmental organizations have been campaigning to oppose use of GMOs. The proposed new rules will have to get the green light from the EU Parliament and a large majority of member countries to become law.
Corn (Source: CME)
Corn futures rise amid speculation China is buying US product, though any large purchase during the ongoing annual meeting of China's congress would be unusual. Corn also get a boost from tight cash markets. "When you've got March corn over May corn and May corn over July corn, your spreads are screaming that we've got a little tighter cash market out there," says Jason Britt at Central States Commodities. Friday's USDA report had limited impact on corn. CBOT May futures ends up 9 1/2c at $6.45/bushel.
Wheat (Source: CME)
US wheat futures climb as the USDA lowered its outlook for domestic year-end supplies by 2.4% on increased exports. Larger global demand for wheat, with the largest increase in need coming from Iran, aided the advances. The market managed to ward off pressure from sharp gains in the US dollar as traders focused on corn in anticipation of increased feed usage of wheat caused by high-priced corn, analysts say. CBOT May wheat ended up 8 1/4c at $6.43/bushel, May KCBT rose 1/4c to $6.84 and May MGEX climbed 1 1/2c to $8.05.
Rice (Source: CME)
US rice futures end higher, rebounding after recent setbacks, with concerns about 2012 acreage generating modest support in a thinly traded market. CBOT May rice ends up 22 1/2c or 1.6% at $14.15 1/2 a hundredweight.
Soy at 5-month top on Chinese buying, wheat rebounds
SYDNEY, March 9 (Reuters) - Chicago soy futures rose to their highest in more than 5 months, on track for a fourth straight week of gains as the market was supported by strong U.S. export sales led by demand from China.
"The focus is on the USDA report and according to most forecasters, we are likely to see a contraction in oilseed numbers," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.
German farmers see 2012 wheat crop up 6.3 percent
HAMBURG, March 8 (Reuters) - Germany's 2012 wheat crop of all types will rise 6.3 percent on the year to 24.2 million tonnes from 22.7 million tonnes in 2011, the German Farm Cooperatives Association said on Thursday in its first harvest forecast.
Germany's 2012 winter rapeseed crop will to rise 25.6 percent to 4.8 million tonnes from 3.8 million tonnes in 2011, the cooperatives forecast.
Spain imports Brazil wheat under quota, US seen next
MADRID, March 8 (Reuters) - Spain has imported wheat from Brazil under a special quota to help fill its grain deficit, trade sources said Thursday, and shipments of U.S. wheat are expected in the coming weeks.
Spanish dealers usually use so-called tariff-rate quota (TRQ) permits to import from Black Sea countries such as Ukraine and Russia, but reported hold-ups due to cold weather and competitive pricing in recent weeks diverted interest to across the Atlantic.
USDA Cuts Outlook For S American Soybean Crop, US Wheat Supplies (Source: CME)
Federal forecasters cut their outlook for the South American soybean crop, predicting prices to rise and demand to slow as global supplies shrink. Soybean prices have been at six-month highs as dry weather curbs production in Brazil and Argentina, respectively the second and third largest exporters of crop after the U.S. The latest U.S. Department of Agriculture forecast provided little fuel for the market rally, confirming widespread expectations of crop damage from drought conditions. The USDA said Brazil, the world's second largest soybean-producing nation behind the U.S., is now expected to produce 68.5 million metric tons of soybeans this year, a 4.9% drop from the February forecast. Argentina's production was lowered by 3.1% to 46.5 million metric tons. "The lower numbers were in the ballpark of trade estimates, but more aggressive," said Bill Nelson, an analyst with Doane Advisory Services in St. Louis.
Still, the USDA left its forecast for U.S. supplies unchanged, not expecting export demand to pick up even as South America has less soybeans to ship to major buyers like China. Federal forecasters said smaller soybean supplies in South America are boosting prices, and those higher prices will tamp down global demand for imports. The USDA now expects soybean prices for the current crop year ending Aug. 31 to average $11.40 to $12.60 a bushel, up 30 cents from a month ago. Although leaving U.S. supplies the same, the agency did lower its outlook for world soybean supplies. The USDA now expects global inventories at 57.3 million metric tons, down from last month's forecast for 60.3 million metric tons. As for corn and wheat, the report gave a boost to both markets. Wheat for May delivery recently traded up 14 1/4 cents, or 2.2%, to $6.49 a bushel, while corn for May delivery climbed 13 1/2 cents, or 2.1%, to $6.49 a bushel.
The USDA lowered its outlook for U.S. wheat supplies by 2.4% to 825 million bushels, seeing exports of the grain picking up. Global demand for wheat imports is up, forecasters said, with the largest increase in need coming from Iran. Still, the agency sees domestic demand for wheat weakening, pointing to recent flour production data. The USDA changed little in its forecast for corn, leaving U.S. supplies the same, while slightly lowering world supplies. Analysts said some of the strength in market Friday came from traders buying contracts to exit positions speculating corn prices would fall on the crop report.
Global Wheat, Soy and Corn Reserves Decline as Demand Grows, Crops Falter (Source: Bloomberg)
Global inventories of wheat and soybeans are falling more than forecast, while U.S. corn reserves head to a 16-year low, as farmers fail to keep pace with rising demand for food, livestock feed and biofuel. The U.S. Department of Agriculture today cut its forecast of world wheat stockpiles on May 31 by 1.7 percent to 209.6 million metric tons, less than all 21 estimates collected in a Bloomberg survey. Soybean reserves on Aug. 31 will drop to a three-year low of 57.3 million tons, while the amount of corn held in the U.S., the world’s top grower and exporter, will slip to the lowest since at least since 1996, the agency said. U.S. farm exports rose to a record $136.3 billion in 2011 on surging demand for grain and meat in Asia. The government today boosted its forecast of U.S. wheat exports by 2.6 percent from February, which will send domestic stockpiles to a three- year low.
Global food prices tracked by the United Nations rose for a second consecutive month in February on higher costs for cereals, cooking oils and sugar. “This was probably one of the best reports we’ve seen in wheat in six or seven months,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana, said in a telephone interview. “Corn is getting replaced by wheat in the feed rations and some of the food rations even, because of the price discount.”
Argentina grains exchange trims corn estimate
BUENOS AIRES, March 8 (Reuters) - The Buenos Aires Grains Exchange on Thursday cut its estimate for Argentina's 2011/12 corn harvest to 20.8 million tonnes from 21.3 million tonnes previously due to the impact of a drought.
Recent showers have delayed corn and soy gathering after a long dry spell raised questions about how much corn would be available for export from the No. 2 global supplier.
ICE cocoa surges, arabicas drop to 16-month low
NEW YORK/LONDON, March 8 (Reuters) - Cocoa futures on ICE rose more than 5.5 percent on Thursday in a largely technical rally while arabica coffee slid to a 16-month low after an initial advance sputtered.
"There's no (fundamental) scare," said Nick Gentile, chief trader at commodity fund Atlantic Capital Advisors in New Jersey. "It's a technical move."
Thailand should free sugar prices for single market -millers
BANGKOK, March 9 (Reuters) - The Thai government should start to liberalise the domestic sugar trade by floating retail prices to avoid possible shortages when Southeast Asian countries launch their single market, scheduled for 2015, millers said on Friday.
The Association of Southeast Asian Nations (ASEAN), combining 10 countries and 583 million consumers, is working to form the ASEAN Economic Community (AEC), in which goods, services and labour are supposed to move freely across borders.
Indonesia exchange halts trading in cocoa producer Davomas
JAKARTA, March 9 (Reuters) - Indonesia's stock exchange halted trading in shares of cocoa producer PT Davomas Abadi on Friday because of a "failure of debt coupon payment", the exchange said in a statement and requested an explanation from the company.
The company is one of the main cocoa grinders in Southeast Asia's largest economy.
China association blasts Indian cotton export ban
BEIJING, March 9 (Reuters) - China's cotton industry association has criticised India's decision to ban cotton exports, saying it was "irresponsible" and would disrupt the global market.
India, the world's second largest cotton producer, said on Monday 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.
India allows cotton exports approved up to March 4
NEW DELHI, March 9 (Reuters) - India will allow cotton exporters to ship out cargoes that had been cleared by customs for overseas sales before March 4, a commerce ministry statement said on Friday.
The world's second-largest cotton producer banned exports unexpectedly on Monday as domestic demand threatened to outstrip availability, boosting global prices.
India Decides to End Cotton-Export Ban After Protests From Growers, China (Source: Bloomberg)
India, the world’s second-biggest cotton producer, scrapped a one-week-old ban on exports of the fiber after protests from growers, traders and China, the nation’s biggest buyer. “Keeping in view the interests of the farmers, industry, trade, a balanced view has been considered by the Group of Ministers to roll back the ban,” Trade Minister Anand Sharma said in an e-mailed statement yesterday. The ministry will publish details for repealing the March 5 ban today, Sharma said. India barred exports to secure domestic supplies after sales exceeded the government’s estimate of the country’s exportable surplus. The resumption of international sales may add to global supplies and pressure futures, which have fallen 55 percent in New York in the past year.
“This will help farmers get a higher price immediately, at least 10 percent more, and encourage cotton planting for next year,” Dhiren Sheth, president of the Cotton Association of India, said in a phone interview yesterday. “The government decision will help avoid disputes and arbitration in international markets.”
India Allows Exceptions To Ban On Cotton Exports (Source: CME)
India's ban on cotton exports imposed earlier this week will continue, as a ministerial panel's meeting to review the move remained inconclusive. However, the government eased the freeze on shipments by allowing some exceptions via an order earlier in the day. "As of now discussion were held, but they are inconclusive and the final decision will be taken later [by the panel]," Textiles Secretary Kiran Dhingra told reporters. "Further discussions will be needed." She said a decision on the issue is likely to be taken shortly. The trade ministry banned cotton exports Monday for a second time in nearly two years, citing concerns that lower stocks could put upward pressure on local prices. The government decided to review the ban after Farm Minister Sharad Pawar raised objections against the move, saying it would harm farmers. Earlier in the day, the government issued a notification allowing shipments of the consignments for which paperwork had been completed by March 4, the day before the ban was imposed.
"We welcome the move," said Dhiren Seth, president of the Cotton Association of India, adding that the quantities shipped under the exception would be small. In India, an exporter must register the shipment quantity with the government and obtain customs clearance before shipping cargo. The country is the world's second-largest cotton exporter after the U.S. The ban sent cotton prices on ICE Futures in the U.S. higher earlier this week. But the prices have eased due to the move to review the ban. The ban on cotton exports announced Monday, aimed at ensuring sufficient domestic supplies and stable prices, was the second in less than two years. In addition to domestic opponents of the ban, the China Cotton Association this week strongly protested it, describing it as a "no-win" decision that will seriously disrupt international trade. China is the largest importer of Indian cotton, taking 1 million metric tons in 2011.
The Trade Ministry said this week that the ban was imposed because exporters had already shipped 9.4 million bales of cotton, more than the 8.4 million bales of exports projected for the marketing year that started Oct. 1. One bale is equal to 170 kilograms.
Cotton Imports by China May Jump Amid State Stockpiling, Association Says (Source: Bloomberg)
Cotton (CCUIIQTL) imports by China, the largest consumer, will increase this year as government buying absorbs domestic production, according to the China Cotton Textile Association. “We’ve got a shortfall,” Sun Yingan, deputy president of the association, said in an interview with Bloomberg News today in Beijing. Shipments may gain to as much as 4 million metric tons as state stockpiling has shrunk the amount available on the domestic market, Sun said. The group has more than 700 members whose yarn and cloth account for 60 percent of China’s output, according to its website. Increased buying by China may help curb a 57 percent tumble in prices over the past year after farmers boosted output to a record. Imports may jump by 54 percent to 18.5 million 480-pound bales (4 million tons) this year, according to a March estimate by the U.S. Department of Agriculture. China may turn to the U.S. and Australia to secure supplies amid an Indian ban on exports, according to Yong An Futures Co.
Rains shaky as Brazil coffee crop heads for finish line
BRASILIA, March 8 (Reuters) - Overly-dry weather in Brazil's main coffee areas will give way to helpful regular showers in the final weeks of the crop's development, forecasters said on Thursday, but a renewed dry spell in the last six weeks may hold yields down.
The world's top coffee grower should begin harvesting from May a good-sized crop that has battled through a rare frost, then alternating dryness and heavy rain that briefly enabled bacterial disease to take hold in important regions.
Oil Drops From Highest Settlement in More Than a Week in New York Trading (Source: Bloomberg)
Oil for April delivery slid as much as 45 cents, or 0.4 percent, to $106.95 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.03 at 9:23 a.m. Tokyo time. The contract climbed 82 cents to settle at $107.40 a barrel on March 9, the highest close since March 1. Brent oil for April settlement dropped 37 cents to $125.61 a barrel on the London-based ICE Futures Europe exchange.
Brent rises above $125 on Greece debt hopes, China data
SINGAPORE, March 9 (Reuters) - Brent crude rose above $125 a barrel, posting its sixth weekly gain in seven, as Greece successfully closed its bond swap offer for creditors, a key step towards securing an international bailout to avoid a messy default.
"Europe has a big impact on Brent prices and the market has been pricing in a more positive outcome and is also closely watching sentiment data out of the United States," said Natalie Robertson, an analyst at ANZ Bank.
Gold for April Delivery in New York Advance for a Fourth Day, Gaining 0.3% (Source: Bloomberg)
Gold for April delivery climbed for a fourth day on the Comex in New York, gaining as much as 0.3 percent to $1,717.40 an ounce. It traded at $1,716.90 an ounce at 6:05 a.m. Singapore time. Cash gold was little changed at $1,714.68 an ounce. May-delivery silver rose for a fourth day, adding as much as 0.5 percent to $34.375 an ounce, before trading at $34.37 an ounce on Comex. Spot metal also increased for a fourth day, advancing 0.2 percent to $34.3725 an ounce.
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