Thursday, May 24, 2012

20120524 1104 Global Commodities Related News.

Heat Wave Forecast From Midwest to East for Memorial Day Weekend (Source: Bloomberg)
Heat will spread from the U.S. Midwest to the Northeast in time for the Memorial Day holiday weekend, sending temperatures into the 90s in Chicago, St. Louis and Washington and boosting electricity demand. The high in St. Louis is expected to reach 97 degrees Fahrenheit (36 Celsius) this weekend, according to the National Weather Service. The normal high is 80 degrees, according to AccuWeather Inc. Highs may reach 92 in Chicago and Washington. “It looks like we’re going to have some building heat across the middle of the country,” said Paul Walker, senior meteorologist at AccuWeather in State College, Pennsylvania. Low natural gas prices, brought about by record production and low demand during the past winter, have led many utilities to use switch to the fuel from coal to produce electricity. Hot weather increases power demand to meet air conditioning needs.
Natural gas for June delivery rose 2.6 cents, or 1 percent, to $2.733 per million British thermal units at 11:33 a.m. on the New York Mercantile Exchange. The futures have rebounded 44 percent from a 10-year intraday low of $1.902 on April 19. Four of seven peaking power plants operated by Wisconsin Public Service, a unit of Chicago-based Integrys Energy Group Inc. (TEG), are set to run on natural gas, according to the company’s website. The plants are used during hot weather, when electricity demand is highest, according to the company.

Commodities Drop to Five-Month Low on Greece Concern (Source: Bloomberg)
Commodities dropped to a five-month low, extending this year’s decline, on mounting concern that Greece will leave the euro, roiling financial markets and eroding the outlook for raw-material demand. The Standard & Poor’s GSCI gauge of 24 raw materials fell 1.6 percent to 617.96 at 3:15 p.m. in New York, after touching 613.95, the lowest since Dec. 19. The index is down 4.2 percent this year, heading for the first annual decline since the recession of 2008. Equity markets fell from Asia to the Americas and the euro dropped to its weakest level against the dollar since July 2010 on speculation that European Union leaders meeting today will provide no new measures to stem the sovereign-debt crisis. Greece is preparing for elections on June 17, after winners in a vote this month failed to create a government.
“The market is being driven by a lot of fear right now,” Claudio Oliveira, the head of trading at Castlestone Management LLC in New York, which manages about $300 million, said in a telephone interview. The commodity selloff “has the potential to go further if this uncertainty remains, and that depends on what European leaders are willing to do,” he said. “The Greek issue needs to be resolved.”

World wheat bounty at risk as dry spell spooks market
May 23 (Reuters) - A damaging global dry spell is wilting wheat crops in Kansas, threatening exports from Russia and slowing sowing in Australia, serving a timely reminder to hedge funds that a new era of surplus grain is far from assured.
In their biggest surge since 1996, Chicago wheat prices  jumped by more than 17 percent last week and reached a nearly 9-month high of more than $7 a bushel on Monday, a rally stoked by short-covering among big speculators -- a group that had amassed a near-record short position betting on falling prices.

Wheat Fields Parched by Drought From U.S. to Russia: Commodities (Source: Bloomberg)
Droughts withering wheat crops from the U.S. to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year. Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state’s climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg. Wheat traded in Chicago rose as much as 18 percent in the 10 days through May 21 on concern that the market is returning to the droughts of 2010. Russia and Ukraine curbed exports that year and prices more than doubled to $9.1675 a bushel by February 2011, the month in which world food costs tracked by the United Nations reached a record.
Analysts surveyed by Bloomberg expect futures to rise 13 percent to $7.51 by mid- July.

Market Recap: Wheat Futures (Source: CME)
Chicago and Kansas City wheat futures posted double-digit loses today in most contracts, with Minneapolis seeing lighter losses. Most contracts trimmed losses in "after-hours" trade. Focus in the market was on profit-taking, as strength in the U.S. dollar index led to a "risk-off" atmosphere in the commodity markets. The U.S. dollar index moved to its highest level since September 2010 on concerns Greece was working on a plan to leave the euro-zone.

Wheat Market Recap Report (Source: CME)
July Wheat finished down 17 1/4 at 668 1/4, 16 3/4 off the high and 4 3/4 up from the low. December Wheat closed down 12 3/4 at 703 3/4. This was 7 1/2 up from the low and 12 1/4 off the high. July wheat traded moderately lower on the session early and stayed in the early range for much of the day. Ideas that the rally in the past week was too aggressive, weakness in outside markets and further talk of at least some rain in Russia to ease drought concerns helped to pressure. New highs for the move for the US dollar and a sharp break in most other commodity markets helped to pressure. Traders see good weather for the spring wheat crops as an offset to hot and dry weather for western Nebraska/eastern Colorado hard red winter wheat areas for this weekend. The heat could further reduce crop condition ratings. More talk of adequate world supply and the overbought short-term condition of the market helped to pressure. For weekly export sales in the morning, traders see wheat sales near 450,000 tonnes as compared with 711,400 tonnes last week. July Oats closed down 8 1/2 at 325. This was 2 up from the low and 9 3/4 off the high.

Nervous shorts fueling U.S. wheat rally
(Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum.)
CHICAGO, May 22 (Reuters) - Wheat prices have surged nearly 20 percent over the past week, with buying attributed to market chatter about how dry field conditions across global growing areas could curb 2012 production totals.
But the urgent tone of the market action more closely resembles short covering rather than long accumulation. This suggests that this market has considerable additional upside potential given that large speculators continue to sit on record-large short exposure to the wheat market.

Market Recap: Corn Futures (Source: CME)
Corn futures settled fractionally to 6 1/2 cents higher, with the July contract leading gains following a very choppy session. Futures slightly built on those gains in "after- hours" trade. Funds were buyers of an estimated 9,000 contracts (45 million bu.) of corn. Corn futures were pressured at times by strong gains in the U.S. dollar index that triggered widespread selling across the commodity sector.

Corn Market Recap for 5/23/2012 (Source: CME)
July Corn finished up 7 3/4 at 604 3/4, 6 1/4 off the high and 16 1/4 up from the low. December Corn closed up 2 3/4 at 524 3/4. This was 11 up from the low and 2 1/4 off the high. Mixed views on the extended weather outlook and firm cash markets helped provide some support for corn on a day when most commodity markets were under heavy selling pressure. July corn traded moderately higher on the day and gained on December. Talk that the bull spread liquidation trend from yesterday was overdone and ideas that the cash market remains very tight helped to support the market. Corn is one of the few commodity markets higher on the day today as outside market forces remain negative. Traders see rains for the Midwest for next week but there are some concerns for too much dryness in May; especially for areas which miss out on rains next week after a hot and dry trend into early next week. Ethanol production for the week ending May 18th averaged 919,000 barrels per day. This is up 1.66% vs. last week and up 1.88% vs. last year. Total Ethanol production for the week was 6.433 million barrels which is the highest since February 17th. Corn used in last week's production is estimated at 97.89 million bushels. Corn use needs to average 93.7 million bushels per week to meet the USDA production. Stocks were 21.4 million barrels, up 3.7% vs. last week and up 2.89% vs. last year. For weekly export sales in the morning, traders see corn sales near 1.125 million tonnes as compared with 865,100 tonnes last week. July Rice finished down 0.175 at 15.07, 0.21 off the high and equal to the low.

GRAINS-US soy at 1-1/2 month low, wheat falls for 2nd day
SINGAPORE, May 23 (Reuters) - Chicago soy lost more ground , sliding to its lowest since March 30, while wheat dropped for a second straight session on forecasts of rain in parts of Russian and U.S. grain producing regions.
"There are concerns over slowing growth in China, which is putting pressure across the commodities complex, including soybeans, and there are forecasts of rains in some dry areas of the United States and Russia," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Australia farmers hope rain to help wheat yields
SYDNEY, May 23 (Reuters) - Australia, one of the world's top four exporters of wheat, is forecast to receive much needed rain in eastern areas this week, helping planting conditions after concerns that dry conditions could damage crop yields.
The east coast has seen less than 20 percent of average rainfall in May, but Australia's weather bureau is forecasting Queensland and New South Wales -- leading wheat growing states - will see 25-50 mm of rain on both Thursday and Friday, with light showers expected on Saturday.

Kazakhstan to subsidise record grain exports
ASTANA, May 23 (Reuters) - Kazakhstan will pay nearly $30 toward the cost of every tonne of grain delivered to the Black Sea for the rest of this season to help push exports toward a record 13 million tonnes, the country's agriculture minister told Reuters in an interview.
Wary of limited export capacity, Kazakhstan is investing in new elevators, ports and railroads to supply Iran and its Central Asian neighbours, but will also encourage farmers to cultivate more feed grains, maize and oilseeds to avoid an oversupply of wheat in future, Asylzhan Mamytbekov said.

EU considers ordering France to lift GMO maize ban
BRUSSELS, May 22 (Reuters) - The European Union's executive said on Tuesday it was considering ordering France to lift its ban on growing a strain of genetically modified maize, after EU science experts said there was no justification for it.
In March France reimposed a ban on Monsanto's  MON810 maize, an insect-resistant variety to protect chiefly against the European corn borer, after a previous prohibition was annulled by the country's top court late last year.

Russia wheat exports to fall to 14 mln t in 12/13-analyst
MOSCOW, May 22 (Reuters) - Russia is expected to harvest 53 million tonnes of wheat in the 2012/2013 agricultural year, down from 56 million tonnes in the current year, but exports will decline even more because stocks have been decimated, top Russian grain analysts said on Tuesday.
In the year to June 30, 2012, a period of record grain exports, SovEcon analysts said Russia would export a total of 20.5 million tonnes of wheat, but exports could be only 14 million tonnes in the coming year because of lower overall availability.

SOFTS-Raw sugar hits 21-month low, coffee eases
LONDON, May 23 (Reuters) - Raw sugar futures on ICE hit a fresh 21-month low , after breaking below key support level of 20 cents the previous session, with dealers noting weak demand on the physical market.  Rainfall is delaying the start of harvesting in Brazil's coffee belt, the country's biggest cooperative, Cooxupe, said on Tuesday, but a forecast for drier weather should enable pickers to start gathering the world's biggest crop within days.

Indonesia group downgrades 2012 rubber output forecast on rains
SINGAPORE, May 23 (Reuters) - Rubber output this year in Indonesia, the world's second-biggest producer, is likely to be around 5 percent below a forecast in January to stand flat with 2011 after heavy rains, a senior official at the Indonesian Rubber Association said on Wednesday.
In January, the group forecast Indonesia's rubber output would rise 6 percent this year to 3.27 million tonnes as production kicked in from areas replanted around five years ago.

Global rubber demand seen up 5 pct to 28.2 mln T in 2013-IRSG
SINGAPORE, May 23 (Reuters) - Global demand for natural and synthetic rubber is forecast to rise just over 5 percent year-on-year in 2013 to 28.2 million tonnes, the International Rubber Study Group (IRSG) said on Wednesday.
The IRSG had forecast rubber demand at 26.8 million tonnes for 2012.

Rubber industry hopes China demand will offset Europe woes
SINGAPORE, May 22 (Reuters) - China's strong appetite for rubber could help the market stave off pressure from a worsening debt crisis in Europe that threatens commodities demand while Thailand's move to prop up prices will aid the tyre industry, industry officials said.
Policymakers, traders and industry officials gathering at the World Rubber Summit 2012 in Singapore this week will focus on global demand outlook and key issues such as weather-related supply disruptions and macroeconomic changes.

Brazil's coffee crop seen 52.2 mln bags -Reuters poll
SAO PAULO, May 22 (Reuters) - World top coffee grower Brazil will produce 52.2 million bags in the 2012/13 crop, a Thomson Reuters survey of participants at a Sao Paulo coffee seminar showed on Tuesday, below most analyst estimates but higher than the government's official estimate.
The 2012/13 crop is now ripening and most producers should start harvesting in the next few weeks. This year's crop will be a larger 'on year' harvest in the coffee trees' biennial cycle of higher output one year followed by less the next.

Rain slows start of new Brazil coffee harvest
SAO PAULO, May 22 (Reuters) - Rainfall is delaying the start of harvesting in Brazil's coffee belt, the country's biggest cooperative, Cooxupe, said on Tuesday, but a forecast for drier weather should enable pickers to start gathering the world's biggest crop within days.
An abundant but sub-record coffee crop is now ripening in Brazil's undulating southeastern coffee region, promising a boost in supply for a market whose price has been comparatively high since mid-2010 as consumption grows and supply struggles to keep up.

Ivorian cotton forecast lowered ahead of new season
May 22 (Reuters) - Ivory Coast has slightly lowered its cotton production forecast for the 2012/13 season to 300,000-315,000 tonnes, the executive secretary of the Ivorian ginners association said on Tuesday.
The forecast is down from the 334,500 tonnes forecast last month but up from about 260,000 tonnes reached in the 2011/12 harvest, Christophe N'Dri told Reuters.

Coffee Falls to 21-Month Low in N.Y.; Sugar, Cocoa Drop (Source: Bloomberg)
Coffee futures sank to a 21-month low on mounting concern that Europe’s debt crisis is eroding demand prospects as exporters boost sales in Brazil, the world’s largest grower. Sugar and cocoa also slid. Global coffee output may outpace demand by 5.3 million bags in the year that starts in October, Rabobank International said May 21. The crop in Colombia, the largest producer of arabica beans after Brazil, will improve in the second half of the year and will rise in 2013 from this season, the head of the National Federation of Coffee Growers said yesterday. The Brazilian real extended losses to a three-year low. Global equities fell on signs the European crisis is worsening. “There’s too much coffee,” Maria Lopez-Calleja, a broker with INTL FCStone in Miami, said in a telephone interview. “There’s also much uncertainty surrounding Greece’s possible exit from the euro and who would follow after that.”
Arabica coffee for July delivery plunged 4.4 percent to settle at $1.669 a pound at 2 p.m. on ICE Futures U.S. in New York, after reaching $1.651, the lowest for a most-active contract since July 28, 2010.

Oil Advances From Seven-Month Low as Drop May Be Overdone (Source: Bloomberg)
Oil rebounded after closing below $90 a barrel for the first time in seven months, amid speculation the drop was exaggerated and signs China will accelerate efforts to spur economic growth. Futures rose as much as 1 percent in New York after reaching long-term technical support. China, the world’s second- biggest oil consumer, will intensify “fine-tuning” of policies, according to the second government statement in four days signaling a commitment to growth as domestic demand slows. Talks with Iran aimed at averting military action against OPEC’s second-biggest crude producer will resume today, according to a Western official. “Fundamentally, the market is not so strong, but still the world economy is growing,” said Ken Hasegawa, a commodity- derivative sales manager at Newedge Group in Tokyo who forecasts prices will trade as low as $90 a barrel through June. “The downside might be limited.”
Crude for July delivery gained as much as 91 cents to $90.81 a barrel in electronic trading on the New York Mercantile Exchange and was at $90.63 at 12:21 p.m. Sydney time. The contract yesterday slid 2.1 percent to $89.90, the lowest close since Oct. 21. Prices are 8.3 percent lower this year.

OIL-Oil falls on potential Iran deal, economy concerns
LONDON, May 23 (Reuters) - Oil fell on growing hopes of a deal between Iran and the U.N. nuclear watchdog, which eased fears of oil supply disruption, while concerns over the debt crisis in the euro zone and a slowing Chinese economy weighed on demand.
"The Iranians seem to be softening their position and that could lead to an easing of sanctions," said Christopher Bellew at Jefferies Bache.

Japan April LNG imports climb over year after Fukushima
TOKYO, May 23 (Reuters) - Japan, the world's top importer of liquefied natural gas, imported 6.9 million tonnes of LNG in April, up 14.9 p e rcent from the previous year, reflecting a rise in gas-fired power generation after the Fukushima nuclear crisis.
Customs-cleared crude oil imports rose 12.9 percent from the same month a year earlier to 19.2 million kilolitres (4.0 million bpd), preliminary data from the Ministry of Finance showed on Wednesday.

UK North Sea oil, gas exploration interest sets record
LONDON, May 23 (Reuters) - Britain has seen unprecedented interest in developing North Sea oil and gas fields, with companies applying for a record 224 licences covering 418 blocks in its latest exploration round, the government said on Wednesday.
Britain's 27th licensing round was launched in February and breaks the record for applications set in the previous round by 37.

U.S. refining capacity offline set to fall-IIR
May 23 (Reuters) - U.S. oil refiners expect to have 697,000 barrels per day (bpd) of capacity offline in the week ending May 25, down from 769,000 bpd the week before, data from research company IIR showed on Wednesday.
The firm expects offline capacity to fall to 489,000 bpd in the week ending June 1.

Iran Nuclear Talks to Resume Tomorrrow, Official Says (Source: Bloomberg)
Western powers and Iran will resume nuclear talks today in Baghdad after a first day of discussions yielded no agreement, according to a Western official. Chinese, French, German, Russian, British and U.S. negotiators -- the so-called P5+1 group -- and Iran’s representatives didn’t issue a public statement as daylong talks recessed yesterday at almost midnight. Talks will resume at 8 a.m. Baghdad time, according to the Western official, who spoke on condition of anonymity because the deliberations are being conducted privately. The meeting was convened in an effort to forestall a military strike against Iran, a prospect Israel hasn’t ruled out. While the Persian Gulf nation, target of a probe by the United Nations International Atomic Energy Agency since 2003, denies it wants to make nuclear weapons, it has refused to cooperate with inspectors and is under multiple international sanctions.
The negotiators met a day after IAEA inspectors bridged an impasse with Iranian authorities over wider access to suspected nuclear sites, including the Parchin military complex. IAEA Director General Yukiya Amano said he expected the accord to be signed “quite soon.”

JPMorgan Copper ETF Plan Seen Creating Havoc by Merchant Groups (Source: Bloomberg)
JPMorgan Chase & Co. (JPM)’s plan to introduce an exchange-traded fund linked to copper will “severely disrupt” the market, a group of industrial copper users told the Securities and Exchange Commission. Funds backed by copper would leave less of the metal available for manufacturers, creating shortages and driving up prices, according to a letter filed to securities regulator by Vandenberg & Feliu, a New York-based law firm representing a major copper-merchant company and several copper fabricators. ETFs trade like stocks, giving investors access to commodities such as copper without taking physical delivery. NYSE Arca Inc., the electronic platform of NYSE Euronext, filed with the SEC to list and trade JPM XF Physical Copper Trust, according to an April 2 document.
JPMorgan’s offering initially calls for the removal from the market of as much as 61,800 metric tons of copper, or the withdrawal of more than 30 percent of the supplies available for immediate delivery worldwide, the merchants group said in its letter. “JPM’s offering will therefore result in a substantial artificially-induced rise in near-term copper prices on the London Metal Exchange, which will severely disrupt the world market for the trading of such copper,” the group said in the letter, dated May 9.

Copper Falls to Four-Month Low on Europe, China Growth Concerns (Source: Bloomberg)
Copper dropped to a four-month low in New York on concern that slowing growth in China and the risk of Greece leaving the euro signal weaker demand for the metal. European leaders meeting in Brussels are seeking to keep Greece within the 17-nation monetary union, a day after the Organization for Economic Cooperation and Development said the crisis could spiral and damage the world economy. Growth in China, the world biggest copper user, will slow to 8.2 percent this year from 9.2 percent in 2011, the World Bank said. “Given this gloomy backdrop, we expect that markets will continue to be on the defensive for much of this week, at least until we see more specifics coming out from the EU policy meeting,” Edward Meir, an analyst at INTL FCStone in New York, said in a report. Copper futures for July delivery slid 2.6 percent to settle at $3.396 a pound at 1:19 p.m. on the Comex in New York. Earlier, the metal touched $3.3865, the lowest since Jan. 9.
The Chinese economy may have the worst growth in more than two decades if Greece abandons the euro, economists at investment bank China International Capital Corp. said in an e- mailed report today.

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