Hedge Funds Cut Commodity Bets on Fed’s Stimulus Signals (Source: Bloomberg)
Hedge funds reduced bullish bets on commodities for a second consecutive week as the Federal Reserve signaled it may refrain from more monetary stimulus, increasing concern that growth will slow and curb demand for raw materials. Money managers lowered net-long positions across 18 U.S. futures and options by 2.8 percent to 1.1 million contracts in the week ended April 3, data from the Commodity Futures Trading Commission show. Bets on higher corn prices fell to the lowest since February, while those on hogs dropped by the most since May. Speculators cut wagers on costlier crude oil for a third week, and are now the least bullish in two months. Minutes from the March 13 Fed policy meeting released April 3 showed policy makers will probably hold off on increasing monetary accommodation unless the U.S. economic expansion falters.
The Standard & Poor’s GSCI gauge of 24 commodities rose more than 80 percent from December 2008 to June 2011 as the central bank set rates at a record low and bought $2.3 trillion of debt in two rounds of quantitative easing. The U.S. economy will accelerate this quarter and the next, economist estimates compiled by Bloomberg show. “The market is addicted to stimulus,” said Jeffrey Sica, the Morristown, New Jersey-based president of SICA Wealth Management who helps oversee $1 billion of assets. “This market has risen because of the liquidity push and the market will decline when it’s deprived of liquidity.”
GRAINS-US soy at 7-month top on exports; corn, wheat rise (Source: CME)
By Thomson Reuters - Mon 09 Apr 2012 11:36:10 CT
Chicago soy climbed to its highest in more than seven months rising for a third straight session as strong U.S. exports and shrinking South American supplies buoyed the market. "U.S. export sales report showed that there is strong demand for not just soybeans but also grains," said Ker Chung Yang, an analyst at Phillip Futures in Singapore.
GRAINS-US soy at 7-month top on exports; corn, wheat rise
SINGAPORE, April 9 (Reuters) - Chicago soy climbed to its highest in more than seven months rising for a third straight session as strong U.S. exports and shrinking South American supplies buoyed the market.
"U.S. export sales report showed that there is strong demand for not just soybeans but also grains," said Ker Chung Yang, an analyst at Phillip Futures in Singapore.
Bulgaria expects lower 2012 grains crop
SOFIA, April 6 (Reuters) - Bulgaria's wheat and barley crops are likely to be lower than a year ago after dry weather in autumn and cold snaps in the winter hit sowings, a senior agriculture official said on Friday.
The Balkan country reaped 4.3 million tonnes of wheat in 2011 and 670,000 tonnes of barley, a huge part of which was exported, mainly to Spain.
Iran set to buy more grain; poor crop fuels stockpiling
LONDON/HAMBURG, April 5 (Reuters) - Iran is at risk of a poor grain crop which could force it to look for more wheat imports in coming months as Western sanctions already disrupt its food imports, traders said on Thursday.
Iran bought wheat on international markets at a frantic pace in March, ordering a large part of its expected yearly requirement in a little over one month.
Drought hits 4 mln ha of China's crops -Xinhua
BEIJING, April 5 (Reuters) - About 4 million hectares of crops are suffering from a severe drought in China that has hit 13 provinces including the major farming province of Sichuan in southwest China, state news agency Xinhua said.
The drought has left 7.8 million people and 4.6 million livestock without adequate drinking water in provinces including Yunnan, Hebei, Shanxi and Gansu as of Thursday, Xinhua said.
Corn - Old-crop corn futures settled low-range with losses of 9 1/4 and 11 cents in the May and July contracts, respectively. Deferred futures were steady to 3 1/2 cents lower which was a mid-range close. Focus today was on readying positions for tomorrow’s Supply & Demand Report, with the predominant action being bull spread unwinding. Traders expect the report to show tight old-crop supplies of 717 million bu., but recent USDA report surprises have made them unwilling to "bet" heavily on pre-report expectations. (Source: CME)
Corn Market Recap for 4/9/2012 (Source: CME)
Mon 09 Apr 2012 14:18:00 CT
May Corn finished down 9 1/4 at 649, 15 1/4 off the high and 1/2 up from the low. July Corn closed down 11 at 641 1/4. This was equal to the low and 16 1/4 off the high. May corn opened 1/4 cent lower from the close posted last Thursday but eventually corn managed a sharp range down move on the charts. It is possible that the reversal in November soybeans provided some additive pressure to corn today. Many traders think that corn was seeing fresh pressure from changing views toward the upcoming report, while others think the lack of a distinct frost impact might have caused some of the selling today, as the market at times last week was pricing in the prospect of some frost damage. With a hard range down move in US equities today and with US grain inspections for corn this morning of only 22.364 million bushels this morning (off expectations of 28 to 32 million bushels) the inspections news might have been considered a little bearish toward corn prices today. While some analysts think that US corn stocks might be reduced in the USDA report Tuesday, that theory might have been mostly factored into corn prices with the rallies between March 29th and April 3rd. It is also possible that the corn trade was factoring in a record pace of US corn plantings as that report was due out after the Tuesday US trade window. May Rice finished down 0.17 at 14.875, 0.025 off the high and 0.075 up from the low.
Wheat - Futures closed mostly 3 to 4 cents higher in Chicago, narrowly mixed in Kansas City and fractionally to 2 cents higher in most Minneapolis contracts. That was good for a mid-range close in Chicago and Minneapolis, while Kansas City futures ended low-range. Wheat futures were lightly supported by mild short-covering ahead of USDA's Supply & Demand Report Tuesday morning. Traders are anticipating a downtick in the old-crop carryover projection, but supplies are abundant domestically and globally, which will keep the wheat market from leading a price rally even if USDA lowers its carryover peg. (Source: CME)
Wheat Market Recap Report (Source: CME)
Mon 09 Apr 2012 14:18:01 CT
May Wheat finished up 4 1/2 at 643, 6 off the high and 6 1/2 up from the low. July Wheat closed up 2 3/4 at 649. This was 4 3/4 up from the low and 6 1/4 off the high. May wheat opened higher on the session and generally managed to remain in positive ground throughout the US trade. The market seemed to get an early bounce on short covering off ongoing fears of cold weather and perhaps from position squaring ahead of the Tuesday USDA report. However, the wheat market quickly traded back toward the near the lows of the day, as the fear of cold declined and outside market forces stepped and weighed on a number of physical commodity markets like wheat. Weekly USDA wheat export inspections, released 1/2 hour after the open, came in at 17.605 million bushels, which was about as expected. Inspections for the previous week were revised up from 15.391 million to 15.835 million. May Oats closed up 1 1/4 at 338 1/4. This was 2 up from the low and 3 3/4 off the high.
Indonesia 11/12 cotton imports seen down
April 5 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Indonesia:
"International cotton price volatility throughout calendar year 2011 severely impacted Indonesian cotton spinners' capacity to import. For marketing year 2011/12, Post expects that Indonesian cotton imports will decline to 1.8 million bales, compared to 2.1 million bales in MY 2010/11. In MY 2011/12, the market share for U.S. cotton in Indonesia is also estimated to decline, primarily due to strong competition from Australia."
Egypt cotton area seen down 30 pct
"Post forecasts total area planted in 2012/2013 to decrease by 30 percent to 154,000 hectares versus 220,000 hectares in 2011/2012. Farmers are reluctant to grow cotton after many were unable to sell their 2011/2012 production in a timely manner and at a high enough price. Production of lint cotton is forecast to decrease by 27 percent at 550,000 bales versus 745,000 bales in 2011/2012.
Total domestic consumption is forecast at 630,000 bales compared to 535,000 bales in 2011/2012. Imports are forecast to increase to 560,000 bales versus 200,000 bales in 2011/2012 season. Imports in 2011/12 were impacted by the ban on cotton imports from October 2011 through March 2012. Exports are forecast to increase to 440,000 bales versus 400,000 bales during the 2011/2012 season."
Thailand 11/12 cotton imports seen down
"MY2011/12 cotton imports will likely decline 20-30 percent from the previous year to 1.3 million bales in anticipation of a global economic slowdown. In addition, the widespread flooding in the last quarter of 2011 affected the textile industry, particularly spinners, as many companies closed down their facilities. However, a recovery is expected in MY2012/13 which will increase import demand by 20-30 percent to 1.6 million bales from MY2011/12."
Cotton - Futures staged an upside day of trade and settled mid-range with gains ranging from 62 to 144 points. Cotton futures received a boost from news India’s trade minister said the country will not issue new cotton export permits, at least until the completion of an examination of last month’s export permits to see if cotton was being stockpiled elsewhere -- namely China. As India is the world’s second largest cotton producer, this opens the door to more export demand for U.S. cotton. (Source: CME)
Uganda coffee exports below target in March - UCDA
KAMPALA, April 5 (Reuters) - Uganda exported a below-target 187,595 60-kg bags of coffee in March compared with 223,099 bags a year earlier as the harvest drew to an end, a source at the state-run Uganda Coffee Development Authority (UCDA) said on Thursday.
"We had anticipated this decline. The main reason is that the major harvest in east and central regions is tailing off so yields are low," the industry source said.
Brent slips below $123 on Iran talks, US jobs data
SINGAPORE, April 9 (Reuters) - Brent crude futures slipped $1 after Iran agreed to resume talks on its nuclear programme, easing fears of a supply disruption in the Middle East.
"The impending talks on Iran's nuclear programme are a step in the right direction, but this issue will continue to set a high floor on oil prices," said Victor Shum, senior partner at oil consultancy Purvin & Gertz.
Iraq says OPEC seeking world oil price balance
BAGHDAD, April 9 (Reuters) - OPEC is seeking a balance in world oil prices, but political instability rather than production issues are affecting the market price, Iraqi Oil Minister Abdul Kareem Luaibi said on Monday.
Brent crude slipped around $1 on Monday after Iran agreed to resume talks on its disputed nuclear programme, easing fears over a supply disruption, and prices were under pressure on demand growth concerns.
Saudi to supply full May crude to Asia -source
TOKYO, April 9 (Reuters) - Saudi Arabia, the world's top crude exporter, will supply full contracted volumes of crude oil in May to at least one Asian term buyer, unchanged from April, an industry source familiar with the matter said on Monday.
Saudi Arabia made no changes to the operational tolerance in the supply allocation, the source added, meaning buyers have the option of asking for cargoes to be loaded with up to 10 percent more or less crude than contracted.
China ship insurer deals new blow to Iran oil exports
SINGAPORE, April 5 (Reuters) - A major Chinese ship insurer will halt cover for tankers carrying Iranian oil from July amid tightening Western sanctions against OPEC's second largest producer, two officials from the insurance provider told Reuters on Thursday.
This is the first sign that refiners in China, Iran's top crude buyer, may struggle to obtain the shipping and insurance to keep importing from the Middle Eastern country. Iran's other top customers -- India, Japan and South Korea -- are running into similar problems, raising questions on how Tehran will be able to continue to export the bulk of its oil.
In Iraq, oil majors play north versus south
April 5 (Reuters) - In the weeks before Iraqi Kurdistan revealed that Exxon Mobil had signed up to explore for oil there, executives at rival Shell faced a dilemma over whether or not to join the U.S. oil major in its foray north and risk angering Baghdad.
The fields in the autonomous region offered rich potential, an easier working environment, better security and attractive contracts. That seemed a winning combination for smaller oil companies already working there, such as Norway's DNO even though they struggled to collect profits.
Oil Trades Near One-Week Low Amid Forecast Stockpile Gain (Source: Bloomberg)
Oil traded near the lowest price in almost a week in New York on speculation U.S. crude stockpiles rose to the highest level for this time of year since 1990. Futures were little changed after falling 0.8 percent yesterday as U.S. March employment data showed fewer jobs were added than the lowest forecast in a Bloomberg News survey of economists. Crude inventories probably increased 2 million barrels last week, according to a Bloomberg News survey before an Energy Department report tomorrow. Oil has climbed this year on concern that tension with Iran will disrupt global supplies. “There is some risk to the demand-growth scenario at a time when oil prices are high and have quite a large premium built into them,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The outlook could be for some further weakness if we start to see statistics on the demand side confirming these possible early warning signs.”
Oil for May delivery was at $102.55 a barrel, up 9 cents, in electronic trading on the New York Mercantile Exchange at 11:27 a.m. Sydney time. The contract yesterday declined 85 cents to $102.46, the lowest close since April 4. Prices are up 3.8 percent this year.
Alcoa Sees Aluminum Cuts as Production Gains: Commodities (Source: Bloomberg)
Alcoa Inc. (AA) Chief Executive Officer Klaus Kleinfeld said in January China’s aluminum industry would cut 1.1 million metric tons of unprofitable capacity “pretty soon.” So far that prediction isn’t close to coming true. China’s aluminum industry, the world’s largest, saw output rise 18 percent in the first two months of the year, according to International Aluminum Association data. That’s helped to boost global supplies and create a surplus of the metal while curbing prices, which are down 22 percent from a year ago. Declining prices and rising energy costs have eroded smelting margins, prompting New York-based Alcoa and its Norwegian competitor Norsk Hydro ASA (NHY) to announce 771,000 metric tons of capacity cuts this year. China’s smelters are avoiding that fate because they don’t appear to be paying market rates for power, said Ken Hoffman, an analyst at Bloomberg Industries.
Chinese plants owned by local governments are resisting closures in order to preserve jobs, said Lloyd O’Carroll, an analyst at Davenport & Co. “If production is not economic, at some point it will be shut down,” O’Carroll, who is based in Richmond, Virginia, said in an interview. “The question is how long will it take.”
Ship Rates Seen Rising Most Since 2009 as Owners Anchor (Source: Bloomberg)
Ship owners are anchoring the most commodity carriers since at least 2008 after the biggest slump in rates for more than a decade, cutting capacity just as Brazilian farmers prepare for record soybean exports. More than 25 percent of the Panamax fleet was anchored last month, the most in data compiled by Bloomberg since 2008. Daily rates for the 750-foot-long vessels will average $10,000 this quarter, 25 percent more than in the first three months and the biggest increase in more than two years, the median of nine analyst estimates shows. Shares of Athens-based Safe Bulkers (SB) Inc., which owns 18 Panamaxes, will rise 35 percent in 12 months, according to the average of seven predictions.
Rates have been below the $13,000 owners need to break even every day this year, spurring more idling. The slump reflects a glut of capacity rather than less trade, with Clarkson Plc, the biggest shipbroker, forecasting record volume in 2012. Owners with fleets of 20 vessels or more may keep anchoring some ships to boost rates for those still competing for business, said Greg Lewis, an analyst at Credit Suisse Group AG. “Can that strengthen rates? Absolutely,” said the New York-based analyst, whose recommendations on the shares of shipping companies returned 18 percent in the past six months. “With the improvement in crop cargoes, we may see a pick up.”
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