Commodities Erase Gain for Year in Worst Run Since 2008 (Source: Bloomberg)
Commodities fell for an eighth straight session, wiping out gains for the year, after data from Asia showed a further slowdown in industrial output and JPMorgan Chase & Co. (JPM) said that it had a $2 billion trading loss. The Standard & Poor’s GSCI Spot Index of 24 commodities posted its longest slump since December 2008 and dropped to 640.46, the lowest since Dec. 22. The measure fell 0.8 percent to settle at 642.58 at 3:53 p.m., down 0.4 percent since Dec. 31. The last annual decline was in 2008, before a rally that saw the gauge double over the next three years. Twenty-one of the raw materials tracked by the GSCI fell, led by cotton, soybeans and lead. Crude oil and copper capped their second straight weekly losses after industrial output slowed in China and shrank in India, adding to concerns that economic growth is stalling as Europe struggles with a debt crisis. Jamie Dimon, JPMorgan Chase’s chief executive officer, said that the bank made egregious mistakes trading derivatives.
“The optimism we had at the end of 2011 that created a firm footing for a lot of commodities has slowly eroded,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “The outlook remains mixed to negative.”
Bullish Wagers Plunge Most in 2012 on Greek Impasse: Commodities (Source: Bloomberg)
Speculators cut bets on a rally in commodities by the most since November as Greece’s struggle to form a new government and weaker-than-expected industrial output in China erased this year’s gains in raw materials. Money managers reduced net-long positions across 18 U.S. futures and options by 19 percent to 723,239 contracts in the week ended May 8, the biggest decline since Nov. 22, Commodity Futures Trading Commission data show. The Standard & Poor’s GSCI Spot Index of 24 raw materials dropped 6.5 percent in eight sessions, the longest slide since December 2008.
The euro plunged to a three-month low on May 11 after inconclusive May 6 elections left Greece at a political impasse, threatening the implementation of austerity pledges and reigniting concerns that the country will have to leave the currency union. More than $1 trillion was wiped from the value of global equities last week as JPMorgan Chase & Co. reported a $2 billion trading loss, adding to speculation that global growth will falter and company earnings will slow. “The market isn’t believing the global growth story,” said Jeffrey Sherman, who helps manage about $30 billion of assets for DoubleLine Capital in Los Angeles. “You have this struggle in Europe, and most economists are forecasting a recession, and that’s dominating headlines.”
Wheat Market Recap Report (Source: CME)
July Wheat finished down 4 1/4 at 597, 7 off the high and 4 3/4 up from the low. December Wheat closed down 5 1/4 at 635 1/2. This was 4 1/2 up from the low and 7 1/2 off the high. July wheat closed 4 1/4 cents lower on the session and down 12 1/2 cents on the week. The market pushed to a new contract low and a new contract low close as the steep sell-off in the other grains, especially soybeans, helped to pressure. The market opened lower due to a bearish tone to outside market forces with a weaker tone for energy and metal markets and further weakness in global equity markets. However, talk of the oversold condition of the market and some end of the week short-covering pushed the market higher on the day shortly after the day session opening. Excellent weather for advancing the winter wheat crop to maturity and an excellent start to the spring wheat crop helped to pressure the market to new lows for the day into the mid-session. July KC wheat pushed to new lows for the move and closed 7 1/2 lower and right near the lows. July Minneapolis wheat closed lower for the ninth session in a row and also pushed to a new low for the move. July Oats closed down 4 at 332. This was 1 3/4 up from the low and 6 off the high.
New Argentine wheat plantings seen down 13 percent
BUENOS AIRES, May 10 (Reuters) - Argentina's 2012/13 wheat area is expected to shrink 13 percent from last season, a leading grains exchange said on Th ursday while analysts warned that the harvest will come in well under the previous season's crop.
The South American country is an important global wheat exporter and the main supplier to neighboring Brazil, but growers say low prices in the local market have discouraged them from sowing the grain. They blame the depressed prices on export quotas imposed by the government to help guarantee plentiful domestic supplies, and say reforms this year have failed to improve the situation.
India eyes govt deals to shift wheat surplus
NEW DELHI, May 10 (Reuters) - India is considering selling wheat to states in Africa, the Middle East and neighbours such as Afghanistan and Pakistan, its food minister said, to cut its huge stocks as lower global prices deter exports and keep the domestic market in surplus.
India, the world's second-biggest wheat and rice producer, lifted a ban on exports in September, as bumper harvests filled warehouses to overflowing.
Corn Market Recap for 5/11/2012 (Source: CME)
July Corn finished down 6 1/2 at 581, 11 1/2 off the high and 8 3/4 up from the low. December Corn closed down 2 at 505 1/4. This was 6 1/4 up from the low and 5 3/4 off the high. July corn saw a late-day bounce but still closed 6 1/2 cents lower on the session and down 39 1/4 cents for the week. Funds were noted as active sellers for the third day in a row. December corn pushed to 499 and the lowest level since December 17th of 2010 before closing at 505 1/4. Follow-through technical selling from the weak action yesterday plus bearish outside market forces plus good weather for advancing the planting progress were all seen as negative forces this morning to drive the market down to the lowest level since mid-March. Private exporters reported a sale of 300,000 tonnes of US corn to unknown destination split between the 2011/12 season and the 2012/13 season. Strong cash markets and ideas that the market was oversold plus a turn up in the US stock market helped to support higher trade on the day shortly after the opening but the market was lower on the day again into the mid-session. The sharp break in soybeans helped to pressure for much of the day but talk of the oversold condition of the market and ideas that China is still an interested buyer on breaks helped to support. July Rice finished down 0.085 at 15.705, 0.125 off the high and 0.025 up from the low.
SOFTS-Sugar, arabica coffee slip, eyes on harvests
LONDON, May 11 (Reuters) - Raw sugar and arabica coffee futures on ICE eased in early trading , as large crops loomed, weighing on prices. Raw sugar futures on ICE fell towards Wednesday's 20-month low, with prices expected to remain rangebound, as a large Brazilian crop and expected global surplus were bearish, but physical offtake supported prices.
China to issue 1 mln T of cotton import quotas -traders
BEIJING, May 11 (Reuters) - China, the world's top cotton consumer, will soon issue about 1 million tonnes of extra cotton import quotas to help textile mills buy cheaper overseas cotton to cut costs, traders said on Friday.
The extra quotas, which would allow imports at sliding tariffs between 5 and 40 percent, would bring total import quotas issued so far this year to about 2.4 million tonnes, they said.
Brazil coffee crop seen at record 50.45 mln bags-govt
SAO PAULO, May 10 (Reuters) - Brazil's will produce a record 50.45 million 60-kg bags of coffee in the 2012/2013 season as producers in the world's largest coffee exporter planted more trees in response to strong prices, the agriculture ministry said on Thursday.
The forecast is in line with the December forecast of the ministry's crop supply agency Conab, which put the new crop at of 49 million to 52.3 million bags in its first forecast of the season.
Brazil's early 2012/13 sugar output down 34 pct
SAO PAULO, May 10 (Reuters) - Early sugar output from Brazil's main center-south cane belt fell 34 percent from a year ago, as the region struggled to recover from the first drop in output in a decade last season, the sugar milling industry association Unica said Thursday.
The central-south, which accounts for 90 percent of Brazil's cane output, produced 541,500 tonnes of sugar by the end of the first month in the 2012/13 (April-March) season, down from the 817,600 tonnes a year ago, Unica said.
Cotton Extends Slump to 21-Month Low as Supplies Expand (Source: Bloomberg)
Cotton tumbled to a 21-month low, trimming costs for clothing retailers including Gap (GPS) Inc., after the U.S. forecast rising inventories and as industrial output slowed in Asia. World stockpiles will climb 10 percent to 73.75 million bales in the season that starts Aug. 1, the U.S. Department of Agriculture said yesterday. Industrial output slowed in China and shrank in India, adding to concern that the global economy will weaken as the European debt crisis worsens. Rains are improving prospects for crops in Texas that were hurt by drought last year. “If China’s slowing more than expected, then it drives the risk-off attitude in commodity markets,” said Michael Creed, an agribusiness economist at National Australia Bank Ltd. “The market is still trying to come to grips with the weakening global economy and a market that’s looking increasingly comfortable in terms of how well it’s supplied.”
The fiber has plunged 64 percent from a record in March 2011 as higher prices encouraged farmers to plant more and demand fell in China, the biggest user. The commodity was the worst performer today among the 24 raw materials tracked by the Standard & Poor’s GSCI Spot Index, which fell for an eighth straight session, the longest slide since December 2008. Cotton for July delivery sank 3.5 percent to settle at 78.97 cents a pound at 2:34 p.m. on ICE Futures U.S. in New York, after reaching 77.16 cents, the lowest for a most-active contract since July 30, 2010. Futures declined for an eighth session, the longest losing streak since June 4, 2010.
Naimi Says Brent Oil Should Drop to $100 as Supply Tops Demand (Source: Bloomberg)
Crude prices should fall because global supply is outweighing demand, according to Saudi Arabia’s oil minister, Ali al-Naimi. “We want a lower price than where it is now,” al-Naimi said in Adelaide today. “We need to get the price to a level of around $100” a barrel for London’s Brent crude, he said. Saudi Arabia is the world’s biggest oil exporter. Brent, a benchmark price for more than half the world’s crude, has dropped 6 percent this month amid concern Europe’s debt crisis will worsen and curb fuel demand. OPEC is working to bring prices down, the group’s Secretary-General, Abdalla el- Badri, said May 3. The producer group, scheduled to meet next month, is pumping 8.3 percent more crude than it considers necessary this quarter, figures from the Vienna-based group show. Brent crude for June settlement dropped 0.8 percent in the week to May 11 to $112.26 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate oil for June delivery slid 2.4 percent to $96.13 a barrel.
OIL-Brent falls below $112, euro zone woes weigh
SINGAPORE, May 11 (Reuters) - Brent crude dropped below $112 a barrel on Friday, tracking losses in the euro amid a political deadlock in Greece that has renewed worries about the fate of the debt-laden euro zone and clouded the outlook for global oil demand.
"Markets are seeing some more of that risk-off sentiment given concerns over Greece and the difficulties in forming a coalition government," said Natalie Robertson, analyst at Australia and New Zealand Bank.
Oil likely to stay high despite good supply - IEA
LONDON, May 11 (Reuters) - Oil prices are likely to stay high due to tension between the West and Iran, despite a dramatic improvement in world supply resulting in a big build in stocks, the International Energy Agency (IEA) said on Friday.
The agency, which advises 28 industrialised nations on energy policy, said soaring global oil supply from OPEC countries and the United States far outpaced global demand, curbed by poor economic activity in developed nations.
China April oil demand shows first on-year decline in 3 yrs
BEIJING, May 11 (Reuters) - China's implied oil demand fell in April to its lowest in six months and showed the first year-on-year decline in at least three years, as refineries scaled back crude runs to undergo maintenance.
Implied oil demand fell 0.5 percent in April from a year earlier to 9.31 million barrels per day (bpd), the lowest since October 2011, Reuters calculations based on preliminary government data showed on Friday.
Oil Drops to 2012 Low on Chinese Output, Europe Debt (Source: Bloomberg)
Oil dropped to a 2012 low after China’s industrial growth unexpectedly slowed in April and concern grew that Europe’s debt crisis will worsen, reducing fuel consumption. Futures fell 1 percent after industrial output increased in China by the least since 2009. Prices also slumped as Spain said it will force lenders to raise provisions against real estate holdings and JPMorgan Chase & Co. (JPM) reported a $2 billion trading loss. Crude declined a second week after U.S. supplies rose to a 21-year high. “There are a combination of factors pushing oil lower,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “There’s a heck of a lot of oil out there, so supply isn’t a problem, and recent economic data along with the problems in Europe point to lower demand.” Crude for June delivery fell 95 cents to $96.13 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 19. Prices slipped 2.4 percent this week and are down 2.7 percent this year.
Oil in New York may extend losses after settling below the 200-day moving average for the first time since Dec. 19. The technical indicator stood at $96.27. Buy and sell orders tend to be clustered near chart-support levels.
Rusal’s First-Quarter Profit Falls 84% on Weaker Aluminum Prices (Source: Bloomberg)
United Co. Rusal (486), the world’s largest aluminum producer, posted a 84 percent slump in first quarter earnings as prices of the lightweight metal declined. Net income was $74 million for the three months ended March 31, the Moscow-based company said in a statement today to the Hong Kong stock exchange. That compares with a restated $451 million a year earlier. Revenue declined 3.7 percent to $2.9 billion. Rusal, locked in shareholder disputes partly over its stake in OAO GMK Norilsk Nickel, suffered from lower aluminum prices. The metal averaged $2,219 a metric ton in the first quarter, down about 12 percent from the same period a year earlier.
“The first quarter of 2012 has proved to be a tough test for the aluminium industry with the global demand for the metal slowing down and the aluminum price weakening,” Chief Executive Officer Oleg Deripaska said today in the statement. The company is considering curtailing between 300,000 tons and 600,000 tons of high-cost smelting capacity in the second half, he said.
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