Commodity ‘Super Cycle’ May Be Coming to End, Citigroup Says (Source: Bloomberg)
The “super cycle” of gains across commodity prices may be coming to an end as raw material production rises in response to higher prices and as China’s dominance in demand recedes, according to Citigroup Inc. Commodity markets are reflecting “increased differentiation as a group,” the bank said in a report e-mailed today. While China’s demand for raw materials continues to dominate the outlook for individual commodities, it is “no longer the monolithic force” it was in the past decade, the bank said. “China’s increasingly differentiated impact across commodities is providing abundant evidence that the coordinated commodity super cycle of the last decade may be coming to an end,” New York-based Edward L. Morse, the global head of commodities research, said in a report today.
The Standard & Poor’s GSCI index of 24 raw materials has increased fourfold since 2001, gaining every year except for a 43 percent drop in 2008. Copper and oil rose more than fivefold since 2001 and corn almost tripled. The gauge is up 4.9 percent this year. “Precious metals are slowing down from their rapid appreciation of 2009 and 2010,” the bank said, adding that industrial metals are entering “what may be a more supply abundant phase.” The shift is eroding the appeal of “long-only” investment strategies, according to the bank. The investment cycle has been completed for North American natural gas, bringing “an explosion of supply and lower prices,” with similar cyclical investment trends under way across base metals, Citigroup said.
Hedge Funds Cut Commodity Bets on Slowing China Growth (Source: Bloomberg)
Speculators cut bullish wagers on commodities by the most in 2012 on mounting concern that the slowest Chinese growth in almost three years will curb gains in demand for everything from copper to cotton. Money managers lowered net-long positions across 18 U.S. futures and options by 9.3 percent to 1.01 million contracts in the week ended April 10, the biggest reduction since Dec. 20, data from the Commodity Futures Trading Commission show. Copper holdings tumbled 84 percent, the most since November. Hedge funds are now betting on lower cotton prices. China’s economy, the biggest consumer of energy and metals, expanded 8.1 percent last quarter, less than the 8.4 percent anticipated by economists surveyed by Bloomberg, government data showed April 13. The World Bank cut its growth estimate for the Asian nation to a 13-year low a day earlier. Commodities will “drift lower” this quarter as central banks refrain from adding further stimulus, UBS AG said in a report last week.
“Many areas of the world that have been big sources of demand for commodities are slowing,” said Bill Greiner, who helps manage $13 billion of assets as chief investment officer at Mariner Wealth Advisors in Kansas City, Missouri. “If anything, we expect growth worldwide to be a little softer than people are looking for.”
GRAINS-Corn, wheat at 2-week low on economic woes, US weather
SINGAPORE, April 16 (Reuters) - Chicago corn and wheat slid more than 1 percent to their lowest in two weeks, falling for a second straight session on renewed concerns over global economic growth and rains boosting U.S. crop prospects.
"There is concern over China's economic growth after last week's GDP data which is not just weighing on corn and wheat but it's adding pressure on the whole commodity complex," said Ker Chung Yang, commodities analyst at Phillip Futures in Singapore.
West EU rain relieves grains as crop damage mounts
PARIS, April 16 (Reuters) - Rain in the past week has brought some relief to grain crops in western Europe stressed by winter frost and a long dry spell, but damage already suffered by plants is set to tighten grain supply, with a durum deficit looming in drought-hit Spain.
The combined impact of severe frost in February and persisting dryness led analyst Strategie Grains to slash its forecast for this year's European Union soft wheat crop, putting it below a drought-affected 2011 harvest and raising the prospect of tight supply next season.
French wheat crop ratings down on year-FranceAgriMer
PARIS, April 13 (Reuters) - French grain crops are in worse condition than at this time last year as lack of rain exacerbates stress on plants that had already endured winter frost, farm office FranceAgriMer said on Friday in its first-ever crop ratings report.
An estimated 62 percent of French soft wheat crops were in good or excellent condition by April 9, down from 75 percent a year earlier.
Russia 2011/12 grain export may reach 27.5 mln t
MOSCOW, April 13 (Reuters) - (Opinions in this report represent the views of SovEcon Ltd, an independent research organisation specialising in agricultural production and trade in the former Soviet Union. They should not be seen as reflecting the views of Reuters)
Russian grain exports could exceed official estimates by 0.5 million tonnes and reach 27.5 million tonnes in 2011/12, as thawing ice allows shipments from shallow-water ports to resume and sales from state stocks boost market supplies.
Corn, wheat at 2-week low on economic woes, US weather (Source: CME)
By Thomson Reuters - Mon 16 Apr 2012 10:06:17 CT
Chicago corn and wheat slid more than 1 percent to their lowest in two weeks, falling for a second straight session on renewed concerns over global economic growth and rains boosting U.S. crop prospects. "There is concern over China's economic growth after last week's GDP data which is not just weighing on corn and wheat but it's adding pressure on the whole commodity complex," said Ker Chung Yang, commodities analyst at Phillip Futures in Singapore.
Recap: Wheat Futures (Source: CME)
By Pro Farmer - Mon 16 Apr 2012 14:51:58 CT
Wheat futures closed 7 1/4 to 10 1/2 cents lower in Chicago, 10 3/4 to 12 1/2 cents lower in Kansas City and mixed in Minneapolis. Chicago and Kansas City futures ended on or near session lows, while Minneapolis wheat finished off session lows with new-crop contracts ending mid-range. Futures were pressured overnight and early this morning by outside markets as traders adopted a risk-off attitude amid Chinese economic growth concerns and euro-zone debt issues, primarily in Spain.
Wheat Market Recap Report (Source: CME)
Mon 16 Apr 2012 14:33:01 CT
May Wheat finished down 7 1/4 at 616 1/4, 9 1/4 off the high and 1 1/4 up from the low. July Wheat closed down 9 at 621 1/4. This was 1 up from the low and 9 1/4 off the high. May wheat closed moderately lower on the session and experienced the lowest close since March 29th and the second lowest close since January 18th. July KC wheat closed sharply lower on the day and moved to the lowest level since July of 2010. The early selling pushed the market lower and futures saw choppy to higher trade for much of the day until late selling drove July wheat sharply lower and to new lows of the day late in the session. More good rains over the weekend for the central plains and ideas that US and European wheat conditions are improving helped to support. A fire in the USDA building caused weekly export inspection data, winter wheat progress and condition reports and spring wheat planting progress reports to be cancelled until tomorrow. Slower China growth was seen as a negative force for commodity markets in general and funds were noted as sellers again for the weekend COT report. More talk of high yield potential for the winter wheat crops was seen as the primary bearish force. May Oats closed down 4 3/4 at 323. This was 3/4 up from the low and 4 1/4 off the high.
Recap: Corn Futures (Source: CME)
By Pro Farmer - Mon 16 Apr 2012 14:51:04 CT
Corn futures settled in the lower end of today's range with losses ranging from 6 to 14 3/4 cents. Corn futures faced pressure today from improved crop prospects. This weekend, rains fell across a wide area of the Corn Belt, recharging dry soils. Improved soil moisture and an early start to planting gives traders hopes of record crop potential this year.
Corn Market Recap for 4/16/2012 (Source: CME)
Mon 16 Apr 2012 14:33:00 CT
May Corn finished down 6 at 623 1/4, 5 3/4 off the high and 2 1/4 up from the low. July Corn closed down 7 1/4 at 613 1/2. This was 2 1/2 up from the low and 5 1/4 off the high. May corn closed moderately lower on the day as the mid-session bounce failed to attract new buying support and the market pushed down for new lows on the day late in the session. The market saw more long liquidation selling pressures today to push futures to the lowest level since March 30th. A good rain event for the western Corn Belt was seen as the primary negative force. Ideas that corn weather is still favorable to a good start to the growing season and a long liquidation selling trend noted in the Commitment-of-Traders report helped to pressure. Traders thought that planting progress this week would be near 17% complete from 7% last week. Some estimates were over 20%. Traders see a slowdown in planting early this week but with a warm and dry 6-10 day forecast for much of the Midwest, traders see corn plantings at or near a record pace by the end of the month. In addition, dry western and northern Corn Belt areas received good rain over the weekend. China demand concerns and weakness in the other grains added to the negative tone. A fire in the USDA building caused weekly export inspection data and corn progress and condition reports to be cancelled until tomorrow. May Rice finished up 0.12 at 15.43, equal to the high and 0.13 up from the low.
Iran buys Indian soymeal at record prices
SINGAPORE/NEW DELHI, April 13 (Reuters) - Iran has stepped up soymeal purchases from India, taking up to 275,000 tonnes in recent deals at record prices as the nation fights Western sanctions that have reduced its ability to source food from other origins.
Global soymeal prices have also been driven up by tightening supplies following a drought in South America and expectations of lower soybean plantings in the United States. The benchmark U.S. soymeal futures this week climbed to highest since August 2009, to around $396.6 a short tonne.
SOFTS-Sugar eases as Brazil crop nears, coffee dips
LONDON, April 16 (Reuters) - Raw sugar futures eased early, after Brazil's sugar industry group gave a higher-than-expected 2012/13 output forecast, while arabica coffee futures edged lower pressured by a stronger dollar. Raw sugar futures were slightly lower in early trading, continuing Friday's selloff and close at its lowest level in three months, as dealers digested last week's early crop estimates for Brazil's coming harvest.
El Salvador coffee exports drop 49.6 pct in March
SAN SALVADOR, April 13 (Reuters) - Coffee exports from El Salvador slumped 49.6 percent in March compared to the same month a year earlier, to 140,372 60-kg bags.
El Salvador's national coffee council said on Friday that exports through the first six months of the 2011/2012 harvesting season, which began in October, totaled 567,668 bags.
Brazil coffee getting by despite erratic rain
BRASILIA, April 13 (Reuters) - Erratic weather is showing no mercy to Brazil's coffee crop as conditions turn dry again, depriving beans of a last moisture boost that would help them swell out more before harvesting begins in about a month, forecasters and agronomists said.
The southern Minas Gerais state coffee belt has seen barely a drop of rain so far in April but the crop can at least rely on the decent top-up of rain it had in March, one of the few months to have regular rainfall since the crop's outset last October.
India to see record sugar export in 2 seasons-Czarnikow
LONDON, April 13 (Reuters) - India is on track to achieve all-time high sugar exports over two straight seasons, 2011/12 (October-September) and 2010/11, commodities house Czarnikow said on Friday.
"Following the excellent harvest this season, Indian exports will exceed 2.5 million tonnes for the second year in succession, which is a new record," London-based Czarnikow said in a statement.
Russia 2011/12 grain export may reach 27.5 mln t
MOSCOW, April 13 (Reuters) - (Opinions in this report represent the views of SovEcon Ltd, an independent research organisation specialising in agricultural production and trade in the former Soviet Union. They should not be seen as reflecting the views of Reuters)
Russian grain exports could exceed official estimates by 0.5 million tonnes and reach 27.5 million tonnes in 2011/12, as thawing ice allows shipments from shallow-water ports to resume and sales from state stocks boost market supplies.
Colombia's coffee output, exports fall in March-growers
BOGOTA, April 13 (Reuters) - Colombia's coffee production in March fell 26 percent from a year earlier to 576,000 60-kg bags, the 12th consecutive monthly decline, due to the continued effects of heavy rains, the country's coffee federation said on Friday.
The world's top producer of high-quality Arabica beans in 2011 posted a third consecutive year of lower-than-expected coffee output as bad weather, fungus and a tree renovation program keep output below historic averages of 11 million bags.
Recap: Cotton Futures (Source: CME)
By Pro Farmer - Mon 16 Apr 2012 14:55:10 CT
Cotton futures closed sharply lower, with the front-month May contract ending down the daily 400 point limit. Cotton futures initially held up fairly well despite pressure from outside markets. But as the U.S. dollar index softened, the cotton market illogically followed it lower as profit-taking and chart-based selling weighed heavily on futures despite the reversal in many outside markets.
Brent falls below $120 on China data, Euro zone worries
SINGAPORE, April 16 (Reuters) - Brent crude fell below $120 on Monday as growing worries about the global economy from Europe to China, the world's No. 2 oil consumer, reinforced concerns about slowing demand for petroleum.
"The weaker-than-expected Chinese data appears to be the key driver of the market right now," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.
Oil Trades Near Two-Day High in New York on Retail Sales (Source: Bloomberg)
Oil traded near the highest close in two days in New York after a bigger-than-expected increase in retail sales boosted speculation that a recovering U.S. economy may bolster fuel demand in the world’s biggest crude consumer. Futures were little changed after rising for the third day in four yesterday. Retail sales climbed 0.8 percent in March, Commerce Department data showed, compared with a median projection of 0.3 percent in a Bloomberg News survey. The spread between the Brent oil contract and New York prices narrowed to the lowest in seven weeks after Enbridge Inc. (ENB) and Enterprise Products Partners LP (EPD) said they would reverse the flow of the Seaway pipeline earlier than previously planned. Crude for May delivery was at $103.16 a barrel, up 23 cents, in electronic trading on the New York Mercantile Exchange at 9:42 a.m. Sydney time. The contract yesterday gained 10 cents to $102.93, the highest close since April 12. Prices are 4.4 percent higher this year.
Brent oil for June settlement plunged $2.53, or 2.1 percent, to $118.68 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s front-month premium to West Texas Intermediate closed at $15.31, the lowest since Feb. 28
Russia's May crude export fee to decline to $448.6/T
MOSCOW, April 16 (Reuters) - Russia's duty on crude oil exports for May will decline to $448.6 per tonne from $460.7 in April after oil prices weakened, calculations by the finance ministry and Reuters showed on Monday.
This was in line with preliminary estimates.
India oil refining capacity to surge 46 pct by March 2017
NEW DELHI, April 16 (Reuters) - India's oil refining capacity will exceed 6.2 million barrels per day (bpd) by March 2017 from about 4.26 million bpd now, Oil Secretary G.C. Chaturvedi said in a speech delivered to an industry function on Monday.
India and other emerging markets are boosting refining capacity to feed rising regional demand, while their counterparts in the United States and Europe restructure or shut plants as fuel sales slow.
S.Korea urges G20 to be ready to act on oil prices
SEOUL, April 16 (Reuters) - South Korean Finance Minister Bahk Jae-wan has urged fellow G20 nations to send a strong message at this week's meeting in Washington that they are ready to take action on high oil prices, including releasing strategic oil reserves if necessary.
A government source in the world's fifth-largest crude oil importer has previously said South Korea would be prepared to join a possible coordinated release of strategic reserves although Bahk told reporters on Monday that it had not received a request.
Gold Sales Drop in March on Signs of Stability, Perth Mint Says (Source: Bloomberg)
Gold sales from Australia’s Perth Mint, which processes all of the country’s bullion, declined 9.6 percent last month as signs of an accelerating economic recovery in the U.S. curbed demand for haven investments. Sales of gold coins and bars dropped to 38,123 ounces from 42,161 ounces a year earlier, according to data e-mailed by the mint after an April 13 interview with Neil Vance, wholesale manager at the facility in Western Australia that was founded in 1899. Silver sales slumped 39 percent to 698,559 ounces, it said. Bullion prices dropped in February and March as U.S. non- farm payrolls climbed, boosting signs that the world’s largest economy is recovering as the Federal Reserve holds interest rates at a record low. Sales from the mint may rebound later this year following a pattern seen in 2011, Vance said.
“What’s happened is a little bit more stability in world markets at the moment, and some of the interest has leveled off,” Vance said by phone from Perth. “Since the global financial crisis hit, we’ve experienced peaks and troughs, and we believe at the moment we’re just in a trough.” Immediate-delivery gold, which dropped 2.4 percent in February and a further 1.7 percent in March, traded at $1,651.22 an ounce at 8:01 a.m. in Singapore. Spot silver was at $31.48 an ounce after declining 7 percent last month.
Gold Sales Drop in March on Signs of Stability, Perth Mint Says (Source: Bloomberg)
Gold sales from Australia’s Perth Mint, which processes all of the country’s bullion, declined 9.6 percent last month as signs of an accelerating economic recovery in the U.S. curbed demand for haven investments. Sales of gold coins and bars dropped to 38,123 ounces from 42,161 ounces a year earlier, according to data e-mailed by the mint after an April 13 interview with Neil Vance, wholesale manager at the facility in Western Australia that was founded in 1899. Silver sales slumped 39 percent to 698,559 ounces, it said. Bullion prices dropped in February and March as U.S. non- farm payrolls climbed, boosting signs that the world’s largest economy is recovering as the Federal Reserve holds interest rates at a record low. Sales from the mint may rebound later this year following a pattern seen in 2011, Vance said.
“What’s happened is a little bit more stability in world markets at the moment, and some of the interest has leveled off,” Vance said by phone from Perth. “Since the global financial crisis hit, we’ve experienced peaks and troughs, and we believe at the moment we’re just in a trough.”
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