20120323 0945 Global Commodities Related News.

Better Water Use Crucial To Feed Globe's Growing Population -UN (Source: CME)
Producing enough food to feed the globe's rapidly growing population requires the international community to ensure the sustainable use of water, which is the "most critical finite resource," United Nations Secretary-General Ban Ki-moon said. "Unless we increase our capacity to use water wisely in agriculture, we will fail to end hunger and we will open the door to a range of other ills--including drought, famine and political instability," Ban said during ceremonies at the U.N.'s Food and Agriculture Organization in Rome to mark World Water Day 2012. He added that water scarcity is increasing in many parts of the world with growth in agricultural production slowing, while climate change is exacerbating risk and unpredictability for the sector, "especially poor farmers in low-income countries who are the most vulnerable and the least able to adapt."
Guaranteeing sustainable food and water security will require transferring appropriate water technologies, empowering small food producers and conserving essential ecosystem services, Ban said, while also calling for policies that promote stronger regulatory capacity and gender equality.

Stocks, Commodities, Euro Drop on Economic Growth Concern (Source: Bloomberg)
Stocks and commodities dropped while Treasuries rose for a third day after European and Chinese manufacturing contracted and FedEx (FDX) Corp. predicted slower growth, undermining confidence in the global economy. The Standard & Poor’s 500 Index slipped 0.7 percent, the most in two weeks, to 1,392.78 at 4 p.m. in New York and the Stoxx Europe 600 Index (SXXP) fell for a fourth straight day, tumbling 1.2 percent. The euro depreciated 0.2 percent to $1.3188. Ten- year Treasury yields declined two basis points to 2.28 percent and the rate on the German bund decreased seven basis points to 1.91 percent. Copper and oil sank at least 1.8 percent and nickel slid to the lowest price this year.
A gauge of European manufacturing fell to 47.7 as factory output unexpectedly shrank in Germany and France, according to London-based Markit Economics. A preliminary measure of Chinese manufacturing slipped to 48.1 in March, the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics. FedEx, operator of the world’s largest cargo airline, predicted “below-trend” growth in coming quarters. “Most people recognize that China growth has slowed,” said Mark Bronzo, who helps manage about $125 billion at Guggenheim Investments, in Irvington, New York. “It’s a question of: is it going to be a sharp or a mild slowdown? The data in Europe shouldn’t be a big surprise to anyone. Yet there’s enough of a reason there after the sharp run-up in stocks for the market to pull back or go sideways in the short term.”

Texas Drought Losses Were $7.62 Billion In 2011 - USDA Extension (Source: CME)
The state of Texas's agriculture industries lost $7.62 billion in 2011 due to the worst drought on record in that region, according to estimates from economists at Texas A&M University's Agrilife Extension division, part of the U.S. Department of Agriculture's extension service. Last year "was the driest year on record and certainly an infamous year of distinction for the state's farmers and ranchers," Dr. David Anderson, livestock economist, said in a statement. The more than $7 billion in losses were roughly double the damages in 2006, the most costly drought on record until last year. Livestock owners and managers in the Lone Star State suffered the worst losses, at $3.23 billion, the economists said. Cotton farmers lost $2.2 billion. Producers of corn, wheat, hay and sorghum also faced hundreds of millions of dollars in losses. Drought last year ravaged cotton production in Texas, which produced its smallest crop since 1998.
Nearly 70% of Texas--the largest cattle-producing state in the nation--remains in severe drought or worse, according to federal data. The parched conditions in the southern Plains over the past 18 months have forced ranchers in states such as Texas and Oklahoma to sell hundreds of thousands of beef cattle.

Corn (Source: CME)
US corn futures end higher, managing to stabilize after declining for the past three days. Corn drew support from a bounce in wheat futures, with solid weekly export sales and traders consolidating positions ahead of next week's crop reports attracting buyers, analysts say. The market had corrected lower all week and was due to stabilize, analysts add. Tight near-term US supplies of corn supported prices as well, with expectations for a disappointing South American crop due to drought underpinning futures. CBOT May corn ended up 2 1/2c to $6.44 1/2/bushel.

Wheat (Source: CME)
US wheat futures end higher, boosted by market participants exiting short positions to profit from lower prices earlier in the day, traders say. Domestic wheat consumers such as bakers may also have bought on the lower prices, and decent export sales reported by USDA added support, traders say. Expectations for tighter supply due to Eastern Europe's frost-damaged winter wheat crop, plus concerns about dry European weather, also boosted prices, traders say. CBOT May wheat rises 10c or 1.6% to $6.46 1/4 a bushel, while KCBT May wheat rises 9c to $6.84 a bushel and MGEX May wheat rises 8 1/4c to $8.07 a bushel.

Rice (Source: CME)
US rice futures end higher, supported by strong export sales and acreage concerns. Futures were buoyed by USDA's weekly export report showing a pick-up in export demand, analysts say. USDA reported net weekly export sales of 108,600 metric tons, up 44% from the previous week and up noticeably from the prior four-week average. Investors were also encouraged by a rebound in corn and wheat futures as well as worries US rice acreage will decline at the expense of other crops in 2012, analysts say. CBOT May rive ended up 6c at $14.40 1/2/hundredweight.

GRAINS-Wheat, corn climbs on Chinese demand; soy falls
NEW DELHI, March 22 (Reuters) - U.S. wheat and corn futures rose recovering after three straight sessions of losses due to expectations that China will import more grains after buying 350,000 tonnes of feed wheat from Australia.
"Wheat imports by China are definitely big, bullish news and traders anticipate China's demand to be very strong in the days to come as it tries to cool higher grain prices," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Argentine farmers keen on insurance plan, fear cost
BUENOS AIRES, March 21 (Reuters) - Argentine grains farmers like the sound of a government plan for affordable drought insurance after crops were hit by a December-January dry spell as long as they do not get saddled with too much of the cost.
Agriculture Minister Norberto Yauhar in February said he planned to create a "mandatory farm insurance" system over the  months ahead that could be subsidized by the government.

Stubborn drought expected to tax Mexico for years
CHIHUAHUA, Mexico, March 21 (Reuters) - A severe drought in Mexico that has cost farmers more than a billion dollars in crop losses alone and set back the national cattle herd for years, is just a foretaste of the drier future facing Latin America's second largest economy.
As water tankers race across northern Mexico to reach far-flung towns, and crops wither in the fields, the government has allotted 34 billion pesos ($2.65 billion) in emergency aid to confront the worst drought ever recorded in the country.

Food aid graft worsened Kenya drought impact -report
NAIROBI, March 21 (AlertNet) - Rampant corruption in food aid worsened the suffering of Kenyans hit by drought last year, Transparency International said on Wednesday, with some politicians sabotaging food distribution and giving it out where it was not needed to win support.
Nearly 4 million Kenyans required food assistance in a "triangle of death" drought that struck 13 million people across the Horn of Africa last year. Most of the Kenyans who suffered were livestock herders living in its arid, marginalised north.

German farmers lobby fears winter damage to grains
HAMBURG, March 21 (Reuters) - Arctic-style weather earlier this winter in Germany has damaged German grain plants in some regions but the country was still on course for a good to average cereals harvest, the German Farming Association said on Wednesday.
German farmers have suffered crop losses because of frosts and some areas will have to be reseeded, the association said in a statement.

Kenya sees wheat production almost tripling
NAIROBI, March 21 (Reuters) - Kenya expects its 2012 wheat output to almost triple compared with the previous year buoyed by increased planting and  favourable weather forecasts, the Agriculture ministry said on Wednesday.  
It expected to harvest 6.3 million 90-kg bags of wheat in 2012 up from the 2.2 million realised last year when prolonged drought slashed production in its main crop season.

Dry weather now main concern for EU grain farmers
PARIS, March 21 (Reuters) - Grain farmers in western Europe are keeping their eyes on rain forecasts as concerns mount that persistent dryness could further cut yields following damage linked to the cold snap earlier this year.
In recent weeks, analysts repeatedly cut their 2012 forecasts for north European winter grain crops including wheat, barley and durum to take account of frost damage and these reductions are now mostly priced into the markets.

China Recently Bought 350,000 Tons Australia Feed Wheat -Xinhua (Source: CME)
Chinese trading houses bought 350,000 metric tons of feed wheat from Australia, a financial news arm of the state-controlled Xinhua news agency reported. The imports were booked "in recent days," Xinhua said, without elaborating. Analysts said the estimated price of $280/ton was well below domestic prices, which likely spurred the imports that are slated for delivery around mid-year. China's domestic feed wheat prices are around CNY2,000/ton, while the Australian imports translate to around CNY1,760/ton, cost and freight, a wheat analyst with Zhengzhou Esunny Information & Technology Co. said. Global wheat prices are now roughly on par with corn, making them more attractive. The Chicago Board of Trade's May corn contract traded at $6.42 a bushel Wednesday compared with $6.75/ton for wheat. Six months ago, wheat traded at a premium of about $3 to corn. Feed wheat trades at a further discount to food wheat, depending on the grade.
"Wheat prices are now more competitive than corn going into our compound feed," a senior Beijing-based executive of a major U.S. meat processing company said. "Wheat is a substitute for corn at current prices." Market participants said it's no longer unusual for corn to trade at a premium to wheat. "It's been trending that way in the last few months and it's been a long-term trend," he said. Late last year, traders projected that buyers were likely to turn to feed wheat amid cheaper availability as a substitute to corn, with many U.S. corn buyers already making the shift toward cheaper Australian and Black Sea wheat. Corn prices have fallen about 20% from a record set last June. An official at the state-owned China National Grain and Oils Information Center declined to comment. Customs data released Wednesday showed China imported 584,853 tons of wheat in the first two months this year compared with 175,178 tons in the same period last year.
Chinese stockpilers have also been sucking in corn, chalking up 1.3 million tons of mostly U.S. imports in the first two months this year. Still, China is expected to only be a dip buyer as a sizable wheat harvest looks likely. State Grain Administration director Nie Zhenbang told reporters in March that there is a surplus of domestic wheat and China's output this year is unlikely to fall as the weather has been favorable.

European Crops Damaged by Winter Freeze Now Face Drought (Source: Bloomberg)
European wheat and rapeseed crops are at risk of drought that may further hurt yields after freezing weather last month destroyed some fields, analysts and forecasters said. France, Spain, England and northern Italy got less rain than normal since the start of January, European Union weather data show. They will probably stay drier and warmer than usual in the next 30 days, said Joel Burgio, an agricultural meteorologist at Telvent DTN. The 27-nation EU typically grows about 20 percent of the world’s soft wheat. A cold wave in February may have lopped 5 million metric tons off this year’s harvest, and a lack of rain might further harm EU output, according to Alexandre Marie, an analyst at French farm adviser Offre et Demande Agricole. “The situation in Europe is alarming,” Marie said by phone yesterday from Bourges, west of Paris. “That will remain a factor of support for the market in coming weeks.”
Paris-traded milling wheat for November delivery was priced above the grain for December delivery in Chicago for the first time in the contracts’ lifetime on Feb. 7. Buyers now need to pay $261.86 a ton for French wheat, $12.77 a ton more than for soft red winter wheat.

Brazil Bahia cocoa mid crop may be biggest in years-analyst
SAO PAULO, March 21 (Reuters) - Brazil's main cocoa state Bahia could turn out its biggest May-September mid crop in seven years with initial forecasts for 1.3 million 60-kg bags or 78,000 tonnes, Bahia-based cocoa analyst Thomas Hartmann said.
Government-sponsored planting of new cocoa plantations in the northern state of Para is also set to boost coming crops, Hartmann said, as trees reach a productive age and the state was also responsible for the surge in arrivals in the last week.

Global coffee market tight despite price slump
GUAXUPE, Brazil, March 21 (Reuters) - The latest retreat in arabica coffee prices signals the tightly supplied coffee market is not running out of beans yet, but the outlook for sub-optimal harvests and faster consumption indicate that by next season it could come close.
A tour of coffee areas in the world's top arabica grower, Brazil, showed a good but sub-optimal crop on the way. But in Colombia, output has dropped sharply and poor harvests have become almost a chronic problem.

Crude Oil Rises in New York Trading, Paring Second Weekly Drop (Source: Bloomberg)
Oil for May delivery rose as much 39 cents, or 0.4 percent, to $105.74 a barrel in electronic trading on the New York Mercantile Exchange and was at $105.69 at 9:42 a.m. Tokyo time. Futures slid $1.92 yesterday to $105.35 and are down 1.3 percent this week.

Oil Trades Near One-Week Low on Economy; Set for Weekly Decline (Source: Bloomberg)
Oil traded near the lowest price in a week and headed for a second weekly decline on concern that fuel demand will falter as industrial activity slows in Europe and China. Futures were little changed after falling 1.8 percent yesterday. A euro-area composite index based on a survey of purchasing managers indicated a manufacturing contraction, data from Markit Economics showed yesterday. A preliminary measure of Chinese industrial activity also decreased. Oil for May delivery was at $105.61 a barrel, up 26 cents, in electronic trading on the New York Mercantile Exchange at 8 a.m. Tokyo time. It slid $1.92 yesterday to $105.35. Prices are down 1.4 percent this week and 6.9 percent higher this year. Brent oil for May settlement closed at $123.14 a barrel, down $1.06, on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $17.79.

Japan's Iran crude imports may drop 70 pct in April -paper
TOKYO, March 22 (Reuters) - Japan's imports of Iranian crude may drop 70 percent in April from last year's average, the Nikkei business daily said on Thursday, as tight EU sanctions on Tehran make it increasingly difficult for buyers to get insurance for their cargo.
Japan may import less than 100,000 barrels per day (bpd) of crude from Iran next month, the report said, citing unidentified industry sources, down from an average of 313,480 bpd last year, according to trade ministry data.

Japan Feb crude imports up 1.8 pct, LNG jumps 22.5 pct
TOKYO, March 22 (Reuters) - Japan's customs-cleared crude oil imports rose 1.8 percent in February from a year earlier, helped by an extra day due to a leap year, while imports of liquefied natural gas (LNG) jumped 22.5 percent as gas use remained strong after the Fukushima radiation crisis, government data showed on Thursday.
Oil demand in Japan, the world's third-biggest oil user and top LNG importer, has been in a downtrend for years as its population ages, fuel efficiency improves and energy sources diversify from costly oil to cleaner fuels such as gas.

Brent falls below $124 on China demand concerns
SINGAPORE, March 22 (Reuters) - Brent crude dropped below $124 a barrel, after weak Chinese manufacturing data sparked concerns that energy demand growth could slow in the world's second-largest oil consumer.
"It's a surprising reading, and is contrary to improving monetary conditions and stabilising external conditions," said Natalie Robertson, a commodities strategist with ANZ Bank in Melbourne. "It reflects Chinese demand on the ground, which has a significant impact on commodity markets."

Copper Bear Streak Extends as Manufacturing Shrinks: Commodities (Source: Bloomberg)
Copper traders extended a bearish streak into a second week on mounting concern that demand is weakening after manufacturing contracted from China to Europe. Twelve of 29 analysts surveyed by Bloomberg expect the metal to decline next week and seven were neutral. Inventories at bonded warehouses in Shanghai more than doubled since the fourth quarter, a survey of seven traders and analysts showed. Separate stockpiles monitored by the Shanghai Futures Exchange are their highest in at least nine years, bourse data show. China consumes 40 percent of the world’s copper. Factory output in Germany and France unexpectedly shrank in March, adding to signs Europe is sliding into recession, and a measure of China’s manufacturing fell to the weakest since November, reports showed yesterday. Chinese Premier Wen Jiabao cut the country’s annual growth target to 7.5 percent earlier this month, the lowest since 2004. Europe accounts for about 18 percent of global copper demand, Barclays Capital data show.
“A slowdown in Europe and China is not good for the long- term outlook,” said Jeffrey Sherman, who helps manage about $30 billion of assets for DoubleLine Capital in Los Angeles. “It feels that we could repeat 2011, where we had a good first half and then there was a correction.”

Gold Falls on Concern Economy Is Slowing as Dollar Gains (Source: Bloomberg)
Gold futures dropped to the lowest since January as signs of slowing growth from China to Germany sent the dollar higher, curbing demand for the precious metal. Palladium slumped the most this year. The Standard & Poor’s GSCI Index (SPGSCI) of 24 raw materials fell as much as 1.6 percent after Germany’s manufacturing and services industries unexpectedly weakened and a report showed China’s manufacturing may contract for a fifth straight month in March. The dollar rose as much as 0.4 percent against a basket of six currencies. Weaker industrial output “in Asia and Europe lead to a stronger dollar, and lately the dollar has been a strong driver of gold prices,” Bernard Dahdah, a London-based analyst at Natixis Commodity Markets Ltd., said in an e-mail. Gold futures for April delivery fell 0.5 percent to $1,642.50 an ounce at 1:44 p.m. on the Comex in New York, after touching $1,627.50, the lowest since Jan. 13. Still, prices are up 4.8 percent this year.
Jewelers in north and east India, the world’s biggest bullion importer, will continue a shutdown to protest higher taxes, leaving about half the nation’s stores closed, according to a trade group. Jewelers held the first nationwide strike in seven years after the government raised taxes on imports and on non-branded jewelry last week.