Tuesday, May 22, 2012

20120522 1019 Global Commodities Related News.

Investors Least Bullish in 2012 as Crisis Escalates: Commodities (Source: Bloomberg)
Hedge funds reduced wagers on a rally in commodities to the lowest this year on mounting speculation that Greece will leave the euro, slowing global growth and curbing demand for everything from copper to soybeans. Money managers reduced net-long positions across 18 U.S. futures and options by 15 percent to 616,841 contracts in the week ended May 15, the lowest since Dec. 27, Commodity Futures Trading Commission data show. Gold bets fell for a second week and to the lowest since December 2008, while copper holdings tumbled 69 percent, the most in five weeks. Cotton wagers dropped to the lowest in five years.
About $4 trillion was erased from the value of global equity markets this month as Europe’s debt crisis escalated. Moody’s Investors Service lowered debt ratings on 16 Spanish banks on May 17, while Fitch Ratings cut Greece’s credit rating on concern that the country may be the first to exit the 17- nation currency bloc. Home prices in China, the biggest metals consumer, fell in a record number of cities last month, government data showed. “The outlook for commodities is not good,” said Eric Sprott, who runs Toronto-based Sprott Asset Management LP, which manages $9 billion of assets. “The world economies are slowing down. China’s growth rate is softening, and it’s not even debatable whether there will be a recession in Europe.”

Grain-Pit Traders Squeezed Out as CME Expands to Match ICE Hours (Source: Bloomberg)
CME Group Inc. (CME), the world’s largest futures exchange, extended grain-trading hours today in response to the threat of competitors seeking a share of the electronic transactions that now dominate the market. Access to the CME’s Chicago Board of Trade, which first offered corn futures in 1877, is rising to 21 hours a day from 17, a week after the 12-year-old IntercontinentalExchange Inc. (ICE), or ICE, introduced a 22-hour session and its first-ever grain contracts. The Kansas City Board of Trade and Minneapolis Grain Exchange also start expanded hours today. While CBOT corn, wheat and soybean trading rose more than 15 percent to 182.8 million contracts last year, 93 percent of the volume was electronic rather than through open outcry in its Chicago trading pits, exchange data show. That compares with 63 percent in 2007. ICE had sought to lure speculators by allowing transactions to continue when market-moving U.S. government crop reports are issued and CBOT markets were closed.
“The electronic platform is a big, giant liquidity pool that is sometimes an inch deep and other times a mile deep,” said Douglas Carper, the principal of Omaha, Nebraska-based DEC Capital Inc., a commodity trading adviser and hedge-fund consultant. “Grains will become more or less an institutional and professional market, just like it is already in stocks, foreign exchange and global bond markets.”

Wheat Slips as Rainfall May East Concerns Over Drought (Source: Bloomberg)
Wheat futures fell for the first time in six sessions in Chicago after climbing to the highest price in more than eight months in earlier trading, as rain in Ukraine and Russia may relieve drought concerns. July-delivery wheat fell as much as 1.8 percent to $6.8275 a bushel on the Chicago Board of Trade and was at $6.8725 at 12:40 p.m. Paris time. The contract earlier rose as high as $7.22 a bushel, the highest level for the most active contract since Sept. 13. Wheat futures jumped 16 percent last week, the most since the five days ended June 15, 2007, as dry weather threatened to damage crops in the U.S. and Russia, two of the world’s three biggest shippers this year. Russia and Ukraine will get showers today and tomorrow, AccuWeather forecast.
“In the past days, numerous regions in Ukraine benefited from scattered showers,” Paris-based farm adviser Agritel wrote in a market report today. “These rains should continue in the coming days and even reach the regions of southwest Russia, where the production potential so worries the operators.”

Market Recap: Wheat Futures (Source: CME)
Wheat futures posted slight gains at all three exchanges today. Futures finished mid-range as intra-day profit-taking pulled futures well off session highs. Funds bought 8,000 contracts (40 million bu.) of Chicago wheat today. Wheat futures were supported today by concerns hot and dry conditions are taking a toll on winter wheat in the Plains and southern Midwest.

Wheat Market Recap Report (Source: CME)
July Wheat finished up 4 at 699 1/4, 22 3/4 off the high and 16 1/2 up from the low. December Wheat closed up 5 1/4 at 725 1/4. This was 21 1/2 up from the low and 20 1/4 off the high. July wheat closed higher for the sixth session in a row but well off of the early peak at 722. July KC wheat also closed sharply higher on the session and has gained as much as $1.20 1/2 off of last Monday's lows. A continued threatening weather forecast for Russia plus a hot and dry trend for Kansas for the next week or more has helped to support the solid gains. Traders see the weekly crop updates this afternoon to show a drop of 2-3% in the good to excellent ratings for the winter wheat crop from 60% last week. Weekly export inspections came in at 24.89 million bushels which was right on expectations and compares with 18.3 million necessary each week to reach the USDA forecast. Paris milling wheat pushed to the highest level since June of 2011 and this added to the positive tone. Private exporters reported a sale of 100,000 tonnes of US hard red winter wheat to Iraq for the new marketing year. July Oats closed up 2 1/2 at 342 1/2. This was 3 3/4 up from the low and 1 1/4 off the high.

Market Recap: Corn Futures (Source: CME)
Corn futures were choppy with a slight upside bias for much of the day. Most contracts except July corn posted slight gains, but finished in the lower end of today's range. Dryness concerns in the Corn Belt underpinned strength in the corn market today as last week was warm and dry and more of the same is expected this week. While these conditions are favorable for planting, they are a concern for crop development. But softer Gulf basis levels and expectations for a big 2012-13 crop led to a mixed finish.

Corn Market Recap for 5/21/2012 (Source: CME)
July Corn finished down 6 at 629 1/2, 15 off the high and 3/4 up from the low. December Corn closed up 2 at 539. This was 4 1/4 up from the low and 10 1/2 off the high. December corn has closed higher for six sessions in a row and traded as high as 549 1/2 after a low of 499 on May 11th. Much warmer and drier than normal conditions of the past week plus a continued dry and warm pattern for much of the next two weeks for parts of the Midwest has helped to support active buying from funds and speculators. For this afternoon's 1st crop conditions weekly update of the year, traders see corn rated near 70% good to excellent from 63% last year. Weekly export inspections came in at 23.3 million bushels which was a bit below expectations and compares with 35.3 million necessary each week to reach the USDA forecast. July corn was trading lower on the session into the pit close after first trading to the highest level since April 10th. July Rice finished up 0.255 at 15.43, equal to the high and equal to the low.

GRAINS-US wheat hits near 9-month top on supply concerns
SYDNEY/SINGAPORE, May 21 (Reuters) - U.S. wheat rose as much as 3.8 percent  to its highest in nearly nine months, adding to last week's steep gains, as dry weather stoked fears about production losses in top exporters the United States and Russia.
"Today's gains are a continuation of last week, and the theme remains consistent, that is, significant speculative short covering, which appears to be induced by a series of less than ideal weather," said Luke Mathews, commodity strategist at Commonwealth Bank of Australia.

Ukraine sees a sharp fall in 2012 wheat harvest
KIEV, May 21 (Reuters) - Poor weather is likely to slash Ukraine's 2012 winter grain harvest to 14 million tonnes, including no more than 12 million tonnes of wheat, from 23 million in 2011, a senior weather forecaster said on Monday.
"We see the harvest of 10 to 12 million tonnes of wheat in 2012 and this figure will not be revised significantly," Tetyana Adamenko, head of the agricultural department of Ukraine's meteorological service, told Reuters.

German wheat sowings for 2012 crop cut by frost
HAMBURG, May 21 (Reuters) - Germany will harvest 2.870 million hectares of winter wheat in summer 2012, down 9.5 percent on the year after heavy frosts damaged sowings, Germany's statistics office said on Monday.
Its plantings estimate for the 2012 harvest also reduced rapeseed sowings by 0.5 percent on the year to 1.321 million hectares.

Fast planting prompts corn sales by funds
May 18 (Reuters) - Large speculators cut their net long position in Chicago Board of Trade corn futures and options to the smallest level since July 2010 as timely planting of the U.S. crop this spring raised prospects for a large harvest in the autumn, regulatory data released on Friday showed.
The Commodities Futures Trading Commission's weekly commitments-of-traders report also showed that noncommercial traders, a category that includes hedge funds, cut their bullish bet on soybeans for the second straight week in the five trading days ended May 15.

US agriculture companies set millions for Africa
May 18 (Reuters) - A group of U.S. seed, chemical and equipment companies will invest at least $150 million over the next few years into African agricultural projects and products, the companies said on Fri day.
The investments pledged by DuPont , Monsanto , Cargill and others are part of an overall $3 billion effort by companies around the world announced by President Barack Obama.

India considers wheat exports to Iran - govt source
NEW DELHI, May 18 (Reuters) - India is considering wheat exports to Iran, a government source said on Friday, as New Delhi hopes to boost exports to the sanctions-hit nation to help settle part of its oil imports bill through a bilateral mechanism.
An Iranian trade delegation will come to India next week to discuss wheat exports, the source added, without elaborating on the likely payment mechanism for sales to Iran.

Italy wheat, maize imports fell in Jan-Feb - Anacer
MILAN, May 18 (Reuters) - Imports of wheat and maize into Italy, a major grain buyer in Europe, fell sharply in the first two months of this year compared to the same period of 2011 when they jumped, Italian cereals body Anacer said on Friday.
Imports of soft wheat rose 17 percent to 689,270 tonnes in the January-February period of 2012 while maize imports dropped 29 percent to 387,632 tonnes and imports of durum wheat used for making pasta fell to 196,165 tonnes from 366,024 tonnes, Anacer said in a statement.

SOFTS-Robusta coffee hits 8-1/2 month high, sugar up
LONDON, May 21 (Reuters) - Robusta coffee futures on Liffe hit an 8-1/2 month high in early trade  while arabica coffee and raw sugar on ICE also advanced, tracking a broad-based rise in crude oil and many other commodity markets.
Kraft Foods  said on Friday it lowered prices on many of its U.S. coffees, including its flagship brand Maxwell House, citing lower green coffee costs since prices peaked last year, making it the second major U.S. roaster to lower its coffee prices this week.

India coffee rises on strong demand
MUMBAI, May 18 (Reuters) - Coffee prices in India rose in the auction held on Thursday on strong demand from exporters and local traders, while a few varieties saw selective trade, auctioneer J Thomas & Co said in a statement on Friday.
Robusta parchment coffee was in much demand from exporters while robusta cherry variety was bought by roasters, the statement said.      

Brazil sugar output gap filled by other origins
LONDON, May 18 (Reuters) - Brazil's faltering sugar output has created a supply gap that is being filled by alternative origins, triggering uncertainty for refiners who would normally use the Brazilian sweetener, commodities house Czarnikow said on Friday.
Brazil's center-south 2012/13 sugarcane harvest is struggling to expand this year after disappointing output in the 2011/12 season, which was caused by a mixture of bad weather and overdue replanting of ageing cane plants.

Fonterra Cuts Milk Payout Forecast on Global Price Slump (Source: Bloomberg)
Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, expects to pay its farmer suppliers 9 percent less next year as prices fall to the lowest in more than two years on surging global production. The company will pay its 11,000 farmer shareholders NZ$5.50 ($4.22) a kilogram of milk solids in the year ending May 31, 2013, Auckland-based Fonterra said in a statement. That compares with the current year’s payout, which was today cut by 30 cents to NZ$6.05 a kilogram. Whole-milk powder slumped 30 percent this year at the company’s GlobalDairyTrade auctions after mild weather and record prices spurred farmers to boost output. That helped push global food costs lower for the first time this year in April, with dairy prices dropping to the cheapest since October 2009, according to the United Nations’ Food & Agriculture Organization. New Zealand’s dollar weakened to a five-month low in May as powder prices fell to the lowest since August 2009.
“There’s a lot of milk out there and prices have softened,” Chairman Henry van der Heyden said in the statement. “Supply and demand should move more into balance later in 2012 which may help ease the downward pressure on prices.”

New facilities spotlight next-generation biofuels
May 18 (Reuters) - After a decade of promise, advanced biofuels makers are entering a crucial make-or-break period with the first of a new generation of production facilities about to come on line.  
The new facilities are designed to take biofuels beyond corn-based ethanol and begin to shift the industry to "advanced" fuels made with a lower carbon footprint derived from products that will not compete with demand for food.

U.S. Won’t Ease Oil Sanctions at Iran Nuclear Talks (Source: Bloomberg)
Negotiators headed to Baghdad for a second round of talks on Iran’s nuclear program won’t be giving Iran the relief it’s seeking from oil and financial sanctions, according to Obama administration officials and Western diplomats. At the same time, the U.S. and the five other major powers that will participate in talks with Iran on May 23 -- the U.K., France, Germany, China and Russia -- have agreed on confidence- building measures they may offer in response to Iranian concessions, said several U.S. officials and Western diplomats who spoke on condition of anonymity because of the sensitivity of the issue. U.S. and European Union sanctions aimed at the No. 2 producer in the Organization of Petroleum Exporting Countries are crippling Iran’s ability to export and get paid for crude oil, its leading revenue source. The U.S. and EU are in no hurry to ease the pressure before a deal is done, Obama administration officials and Western diplomats said.
The six nations are willing to offer something: assistance to Iran’s civilian nuclear program and an easing of restrictions that have blocked Iran from getting spare parts for civilian aircraft, four U.S. officials said.

OIL-Brent rises toward $108, China stimulus hopes aid
SINGAPORE, May 21 (Reuters) - Brent crude rose towards $108 per barrel, recovering from a 2012 low, on hopes China could take steps to stimulate growth and lift fuel demand at the world's second largest oil user, although concerns about the euro zone crisis capped gains.
"We believe that the extent of recent sell-off was largely unwarranted," Goldman Sachs analysts said in a May 18 note, pointing to better oil demand and tighter crude supply.

China's Iran oil imports rebound on month, down on year
BEIJING, May 21 (Reuters) - China's crude oil imports from Iran rebounded more than 50 percent in April from March after resolving pricing disputes over term contracts, but shipments fell nearly a quarter from a year ago, with Saudi Arabian supplies helping to plug the gap.  
China and India are under Western pressure to cut purchases, since the actions of the world's top buyers of Iranian oil will determine the success of a strategy aimed at crimping Iran's oil revenue to halt Tehran's controversial nuclear programme.

China April gasoline exports at 140,000 tonnes - CCS
BEIJING, May 21 (Reuters) - China's gasoline exports stood at 140,000 tonnes in April and outbound shipments in the first four months declined 36.4 percent from a year earlier to 1.15 million tonnes, data from the China Customs Statistics Information Centre (CCS) showed on Monday.
The world's second-largest oil consumer also exported 80,000 tonnes of diesel last month, while importing 40,000 tonnes of the fuel.

Oman sees oil output rising to 915,000 bpd in 2012
BUBAI, May 20 (Reuters) - Small non-OPEC producer Oman expects to raise its average oil and condensate production to 915,000 barrels per day (bpd) in 2012, up from the 885,000 bpd last year, the oil ministry said on Sunday.
Based on an average price of $102.9 per barrel that Oman sold its oil for last year, the additional 30,000 bpd could increase the sultanate's oil revenues by around $1.13 billion this year, assuming all the additional production is exported.

Japan's Fuji Oil sees 2012/13 crude refining up 8 pct
TOKYO, May 21 (Reuters) - Japan's AOC Holdings  said its Fuji Oil unit plans to refine 8 percent more crude oil in the year to end-March 2013 than a year earlier, to meet firm demand for low-sulphur fuel oil for power generation after the March 2011 earthquake.  
The company said it plans to refine 8.228 million kilolitres  (142,000 barrels per day) of crude oil this business year.  Fuji Oil's sole Sodegaura refinery, facing Tokyo Bay, has a capacity of 143,000 barrels per day and supplies fuel oil and crude to quake-hit Tokyo Electric Power Co .

Global LNG-Asian LNG steady above $18, upside may be limited
PERTH, May 21 (Reuters) - Asian liquefied natural gas spot prices for June and July delivery remained over $18 per tonne during the past week, as demand for spot cargoes stayed high because of the nuclear crisis in Japan, the world's largest LNG importer.    
Prices for late June and July cargoes were in the low $18 per million British thermal units (mmBtu)  range, with three to four cargoes from Indonesia's Tangguh selling above $18 per mmBtu, according to market sources.

G8, raising pressure on Iran, puts oil stocks on standby
CAMP DAVID, Md., May 19 (Reuters) - Leaders of the Group of Eight major economies raised the pressure on Iran on Saturday, signaling their readiness to tap into emergency oil stockpiles quickly this summer if tougher new sanctions on Tehran threaten to strain supplies.
"We remain united in our grave concern over Iran's nuclear program," the G8 leaders said in a statement summing up the results of their meeting in Camp David in rural Maryland.

Oil Gains a Second Day as U.S. Opposes Easing of Iran Sanctions (Source: Bloomberg)
Oil rose for a second day in New York as the Obama administration said it will oppose an easing of sanctions on Iran and amid speculation the U.S. economy may improve, boosting fuel consumption. Futures gained as much as 0.5 percent. U.S. negotiators headed to Baghdad for a second round of talks tomorrow on Iran’s nuclear program won’t give the nation relief from sanctions that are hobbling its oil exports, according to officials who spoke on condition of anonymity because of the sensitivity of the issue. Existing U.S. home sales probably climbed last month, a Bloomberg News survey showed. Crude for June delivery, which expires today, advanced as much as 44 cents to $93.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.93 at 9:55 a.m. Sydney time. The more-actively traded July contract climbed 34 cents to $93.20. Front-month futures rose 1.2 percent yesterday, the first gain in seven days, to $92.57 and are down 6 percent this year.
Brent oil for July settlement gained $1.67, or 1.6 percent, to $108.81 a barrel on the London-based ICE Futures Europe exchange yesterday. The front-month price for the European benchmark contract closed at a premium to West Texas Intermediate of $15.95. The U.S., U.K., France, Germany, China and Russia hold talks tomorrow with Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries, as sanctions cripple its ability to export and get paid for crude. The embargo has forced the country back to negotiations and the U.S. is in no hurry to ease the pressure before a deal is done, said the officials.

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