Thursday, June 7, 2012

20120607 1042 Global Commodities Related News.

Pro Farmer: After the Bell Wheat Recap (Source: CME)
By Pro Farmer - Wed 06 Jun 2012 15:15:15 CT
Chicago wheat ended 7 1/2 to 11 cents higher, Kansas City wheat was 9 3/4 to 19 1/2 cents higher and Minneapolis wheat closed 8 to 15 1/4 cents higher. Price action in after-hours trade was choppy, as some contracts gained and others softened from the settlement levels. Sharp weakness on the U.S. dollar index due to expectations the Federal Reserve would announce some kind of stimulus sooner rather than later resulted in a risk-on attitude in commodities.

Wheat Market Recap Report (Source: CME)
July Wheat finished up 11 at 624 1/4, 4 1/2 off the high and 11 1/2 up from the low. December Wheat closed up 8 at 665. This was 7 1/2 up from the low and 3 3/4 off the high. July wheat was trading near 9 cents higher on the session late in the day which was about 5 cents off of the early highs which were posted near the pit opening. Short-covering emerged after the surge in the US stock market and a sharp break in the US dollar. Gold, energy and other commodity markets such as sugar and cotton where fund traders were pressing the short-side of the market helped to support the buying. A private forecast that winter wheat production could come in near 18 million bushels below last month's USDA forecast as compared with trade expectations which suggest a larger cut may have limited the advance. Cash dealers, however, see harvest yields coming in a bit higher than expected. News from the USDA attache in Russia of a drop in production of just 2 million tonnes as compared with expectations for a 4-6 million tonne drop was also seen as a factor which may have slowed the buying. Talk of the oversold condition and a shift in trader's attitude to "risk on" were seen as supportive forces. Some rain in the forecast for the plains may help to slow the harvest but harvest is still running 2-3 weeks ahead of normal and on a record fast pace. July Oats closed up 5 1/4 at 294 1/4. This was 6 1/4 up from the low and 4 off the high.

Pro Farmer: After the Bell Corn Recap (Source: CME)
By Pro Farmer - Wed 06 Jun 2012 15:14:02 CT
Corn futures rallied into the close of pit trade to finish at or near session highs, with gains of 18 3/4 cents in July contract while other contracts were around 11 to 13 cents higher. Futures mildly trimmed gains in after-hours trade. A sharply lower dollar thanks to speculation another round of quantitative easing may lie ahead gave traders reason to cover short positions today.

Corn Market Recap for 6/6/2012 (Source: CME)
July Corn finished up 18 3/4 at 586 1/4, 1/4 off the high and 17 1/4 up from the low. December Corn closed up 11 3/4 at 519 1/2. This was 9 3/4 up from the low and 1 off the high. July corn was trading near 17 cents higher late in the session with December up 11 cents. The weather forecast has a bit of news for all traders with dry weather and increasing temperatures for the next 4-5 days, cooler and wetter weather in the 6-10 day forecast and hot weather emerging in the 11-15 day models. This increases the importance of good rains next week to avoid stress on crops; especially for southern Iowa, Illinois and Indiana, Missouri and the northern delta. Talk that the market is oversold after the poor close yesterday for December corn and short-covering from fund traders helped to support. Ethanol production for the week ending June 1st averaged 904,000 barrels per day. This is up 0.22% vs. last week and down 1.2% vs. last year. Corn used in last week's production is estimated at 96.3 million bushels as compared with 93.3 million bushels necessary each week to reach the USDA forecast for the year. Stocks were 21.188 million barrels, down 1.5% vs. last week and up 7.8% vs. last year. Rumors of sharply higher basis for central Illinois corn trades from yesterday and a lack of producer selling continues to support the July contract. Brazil's Agricultural ministry indicated that the country should soon secure clearance to ship corn to China. July Rice finished up 0.265 at 14.065, 0.035 off the high and 0.045 up from the low.

Corn Set to Recapture Feed Demand From Wheat as Output Gains (Source: Bloomberg)
Corn may recapture demand from the livestock industry after losing out to wheat because of slumping prices spurred by record world production, according to the International Grains Council. July-delivery corn was as much as $1.015 a bushel cheaper than wheat last month on the Chicago Board of Trade, the biggest discount since March 2011, Bloomberg data show. In June 2011, hot, dry weather sent corn to a 40.5-cent premium over wheat, the highest for a most-active contract since 1959. The two grains averaged near parity for the eight months through the end of April, before corn resumed a discount in May and closer to the price relationship it’s had with wheat in the past 10 years. Cheaper corn costs in the 2012-13 crop year may spur livestock producers worldwide to feed 515.4 million metric tons of the grain, the most on record and 5.3 percent more than a year earlier, according to the IGC, which hosts its annual outlook conference tomorrow in London.
The group expects wheat feed use to be 128.8 million tons in  the upcoming crop, down 9.2 percent from a record this year. The 2012-13 crop starts July 1. “There will be a lot more corn in the world in the coming year, so corn may recapture some of the demand wheat has taken,” Amy Reynolds, an IGC senior economist, said by phone from London last week. “We’re assuming a fall in feed wheat use and a relatively large increase in use of corn as feed.”

GRAINS-Soy up for 2nd day on tight supply; wheat rebounds
SINGAPORE, June 6 (Reuters) - Chicago soybeans gained more than 1 percent, rising for a second straight session, with support from tightening South American supplies and a lower-than-expected rating for the U.S. crop.
"Soybeans are up as USDA's first crop condition ratings were lower and I think there are some adjustments being made in South American crop," said Brett Cooper, senior manager of markets at FCStone Australia. "For wheat, it is a bit of bargain hunting after the selloff last night and the U.S. dollar weakness is supportive for all commodities."

Algeria to halt durum, barley imports until year-end
ALGIERS, June 6 (Reuters) - Algeria will import no more durum wheat or barley for the rest of 2012 because of a strong harvest and stock-building earlier in the year, the head of the state grain agency said on Wednesday.
"We can say we now have enough quantities of durum wheat and barley to meet our needs, so we will import only soft wheat for the rest of this year," Nouredine Kahel, head of the OAIC state grain agency, told Algerian radio.

Argentine grain farmers call national sales freeze
BUENOS AIRES, June 5 (Reuters) - Argentine farmers announced a one-week nationwide halt to grain sales o n T uesday to protest higher taxes in key farming province Buenos Aires, a move that lifted U.S. soy futures as traders braced for tight supplies.
Already upset about the national government's policy of wheat and corn export curbs that hurt profits, growers say the tax increase will force some of them to sell their fields.

Russia 2012 grain output seen 88 mln tonnes-attache
June 5 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Russia:
"FAS/Moscow forecasts grain production in Russia in 2012 at 88 million tonnes. This includes a forecast of 54 million tonnes for wheat, 16 million tonnes for barley and 6.5 million tonnes for corn. Wheat production is expected to fall from last year as a result of spring dryness in key producing regions.

Bulgaria wheat crop to drop 10 pct in 2012
SOFIA, June 5 (Reuters) - Bulgaria will reap about 10 percent less wheat this year compared with a year ago, mainly due to a dry autumn and winter frosts, Agriculture Minister Miroslav Naidenov said on Tuesday, while farmers brace for bigger crop fall.
"The wheat harvest will be around 3.8-3.9 million tonnes," Naidenov said in a statement.

Cotton market ripe for a good short squeeze
(Gavin Maguire is a Reuters market analyst. The views expressed are his own)
CHICAGO, June 5 (Reuters) - Bloated inventories and waning demand amid fresh global economic concerns have helped steer cotton prices to multi-year lows lately, and encourage traders to rack up hefty short-sided exposure to cotton futures and options.
But the fact that most trader positions in the U.S. market are now more skewed to the short side than to the long leaves the market vulnerable to a short squeeze on any hints of either an upturn in demand or potential production problems.

SOFTS-ICE sugar, coffee rise, weaker dollar supports
LONDON, June 6 (Reuters) - Raw sugar and arabica coffee futures on ICE rose slightly, trading above 22-month lows earlier in the week, as a weak dollar supported dollar-priced commodities, while investors awaited the results of a European Central Bank meeting.
Cocoa futures on Liffe were higher after ICE cocoa moved higher on Monday and Tuesday, when London markets were closed.

Global 2012 rubber output forecast revised up -ANRPC
SINGAPORE, June 6 (Reuters) - Global natural rubber output is seen at 10.475 million tonnes in 2012, nearly 2 percent above an April estimate of 10.297 million tonnes, on higher first-quarter Thai production, the Association of Natural Rubber Producing Countries said on Wednesday.
While total consumption by members of the ANRPC was likely to rise this year, the debt crisis in Europe and its possible impact on Asia cast a shadow over the demand prospect for natural rubber, the group said in a statement.  

Indonesia coffee output seen up 17 pct-attache
June 5 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Indonesia:
"Indonesian coffee production will grow by 17 percent to 9.7 million 60-kg bags green bean equivalent in marketing year 2012/2013 due to more supportive weather conditions.

Ghana cocoa purchases hit 775,761 T by May 24
ACCRA, June 5 (Reuters) - Official cocoa purchases in Ghana reached 775,761 tonnes by May 24 since the start of the season in October, down 11.3 percent from the 874,291 tonnes recorded in the same period a year ago, according to data from regulator Cocobod seen by Reuters on Tuesday.
The purchase figures - the best indication of output from the world's second-largest cocoa grower  - covered the first 32 weeks of the 33-week main crop. Ghana grew a record over 1 million tonnes of cocoa last season, but is expected to fall well-short of that this year.

Mauritius 2012 sugar output seen down 6 pct
PORT LOUIS, June 5 (Reuters) - Sugar output from Mauritius is expected to fall 5.8 percent to 410,000 tonnes this year from 435,309 tonnes in 2011 due to lower rainfall, the Chamber of Agriculture said on Tuesday.
Sugar, a centuries-old pillar of the island's $10 billion-a-year economy, accounts for roughly 1.2 percent of gross domestic product.

Oil Gains a Fourth Day Amid Economic Stimulus Speculation (Source: Bloomberg)
Oil advanced for a fourth day in New York amid speculation policy makers in the U.S. and Europe will take steps to revive the slowing economy, boosting fuel demand. Futures increased as much as 0.7 percent for the longest run of gains since April. Federal Reserve Bank of Atlanta President Dennis Lockhart said yesterday a fragile recovery may require more stimulus while European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s expansion outlook worsens. U.S. crude stockpiles fell for the first time in eleven weeks, a government report showed. Oil for July delivery increased as much as 62 cents to $85.64 a barrel in electronic trading on the New York Mercantile Exchange and was at $85.46 at 9 a.m. Sydney time. The contract yesterday rose 0.9 percent to $85.02, the highest close since May 31. Prices are 14 percent lower this year.
Brent oil for July settlement climbed $1.80, or 1.8 percent, to $100.64 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $15.62. U.S. crude inventories dropped by a less-than-expected 111,000 barrels last week, a report from the Energy Department showed yesterday. They were forecast to decline 500,000 barrels, according to the median of 12 analyst estimates in a Bloomberg News survey.

Saudi Arabia Achieving $100 Oil Signals Output Reversal (Source: Bloomberg)
Saudi Arabia is poised to rein in oil sales after it achieved a $100-a-barrel target by cutting the price of its crude and pumping at the highest rate in at least three decades. The world’s biggest crude exporter started to scale back shipments this month, Vienna-based researcher JBC Energy GmbH said, citing tanker fixtures. Three days ago the desert kingdom raised the July official selling price to Asia of its main crude grade, Arab Light, for the first time in three months, another sign that it is reducing production, according to the Centre for Global Energy Studies in London.
Saudi Arabia has been trying to lower the international price of oil to about $100 as slowing global economic growth counters concern of a supply shortage following a ban by western nations on imports from Iran. Brent crude, used to price more than half the world’s oil, fell to a low of $95.63 a barrel on June 4 amid Europe’s debt crisis, brimming supplies and weaker- than-expected Chinese manufacturing. Prices were as high as $128.40 in March. “The downward pressure on prices will continue until they reduce supply,” said Manouchehr Takin, an analyst at CGES, which predicted last month that the Saudis would attain their $100 target. “OPEC’s doves have said $100 is their target, so they have to defend it.”

Resource giants turn up the heat on regulation
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
KUALA LUMPUR, June 6 (Reuters) - The world's resource companies have a message for governments, and they are starting to deliver it more forcibly: regulation, taxes and subsidies are placing at risk the projects needed to fuel global growth.
Exxon Mobil  Chief Executive Rex Tillerson become the latest head of a major resource company to fire a broadside, telling the World Gas Conference on Tuesday that if the situation persists, governments will find their economies "walking backwards."

Indonesia 2012 crude output to fall 20,000 bpd on yr
KUALA LUMPUR, June 6 (Reuters) - Indonesia's crude output in 2012 will fall 20,000 barrels per day (bpd) on the year to 910,000 bpd, a senior energy official said on Wednesday.
The country is aiming to boost oil output to around 1 million bpd over the next two years, R Priyono, chairman of Indonesia's oil and gas regulator BPMigas told reporters on the sidelines of an industry event in Malaysia.

Time running out for Asian buyers of Iran oil
BEIJING/TOKYO, June 6 (Reuters) - Iran's top crude oil buyers in Asia have just weeks to come up with ways to keep imports flowing without falling foul of the toughest Western sanctions to date against Tehran's oil trade. Solutions have proved elusive so far.
A year ago, Iran was selling around two-thirds of its crude exports, or roughly 1.45 million barrels per day, to China, Japan, India and South Korea, securing vital flows of foreign exchange for a government many Western nations accuse of running a secret nuclear weapons programme.

OIL-Oil rises toward $100 on US data, eyes ECB
LONDON, June 6 (Reuters) - Oil rose toward $100 a barrel as supportive economic and crude stocks data from the United States outweighed pressure from Europe's lingering debt crisis.
"We probably need to see a more significant rally out of this level to be more confident we have a corrective rally going on," said Ric Spooner, chief market analyst at CMC Markets.

Coal share of U.S. generation lowest since 1973-EIA
June 5 (Reuters) - Coal's share of U.S. power generation dropped to 34 percent in March 2012, the lowest level since at least January 1973, due to low natural gas prices and the warmest March ever recorded in much of the country, according to federal energy data.
Despite the low demand for power due to the unseasonably warm weather, the U.S. Energy Information Administration (EIA) said natural gas generation jumped to 30 percent of overall generation in March.

Asia coal prices fall close to output costs
NUSA DUA, Indonesia, June 5 (Reuters) - Asian coal prices have fallen close to the production costs of some miners and prolonged weakness will force some high-cost producers in Indonesia, the world's top exporter of thermal coal, to shut and reduce supplies about 10 percent, industry experts said on Tuesday.
A supply glut in Asia, along with weaker demand from China, has dragged coal prices to their lowest in nearly two years, squeezing producer margins.

Indonesia eyes coal export curbs, tax
NUSA DUA, Indonesia, June 4 (Reuters) - Indonesia plans to curb coal exports and is considering a tax on shipments of the mineral, government officials said on Monday, pushing shares in the country's leading coal miners down by more than 13 percent.
The world's top thermal coal exporter has introduced a series of regulations aimed at squeezing extra state revenue from the mining industry, including limiting foreign ownership and a 20 percent tax on exports of unprocessed minerals.

China’s $23 Billion Steel Push Seen Igniting Iron Ore (Source: Bloomberg)
China is set to jolt iron ore off a six-month low after approving an estimated $23 billion of steel projects that will use the raw material produced by mining companies such as Rio Tinto Group (RIO) and BHP Billiton (BHP) Ltd. The commodity will climb to $152 a metric ton in the second half, according to the average of five analyst estimates compiled by Bloomberg. The price advanced to $135 on June 1 from a six-month low of $129.90 set on May 23, according to The Steel Index Ltd. Coking coal, another key ingredient in making steel, may gain 7 percent to about $220 a ton, analysts forecast. “Commodity prices are already close to the bottom and are set to rebound,” Henry Liu, an analyst at Mirae Assets Securities Co., said by telephone from Seoul. “Prices will get a boost in the short term on speculation China will stimulate the economy. Real demand for steel depends on what incentives the government gives to drive investments.”
China approved new steel mills in the past two weeks as it tries to sustain economic growth after April industrial output rose the least since 2009. New plants of Baosteel Group Corp. and Wuhan Iron & Steel Group were among the 228 billion yuan of projects approved by China’s main planning agency, of which 65 percent are in the steel industry, worth the equivalent of $23 billion, Bank of America Merrill Lynch said in a May 30 report. Iron ore generates the most revenue for both London-based Rio Tinto and BHP of Melbourne. China is the largest customer for both companies, providing 31 percent of sales to Rio and 28 percent to BHP in their most recent financial years, according to data compiled by Bloomberg.

Iron Ore-Chinese buyers in no rush, seek cheap cargoes
SINGAPORE, June 6 (Reuters) - Spot iron ore and steel prices in main market China steadied on Wednesday as demand stayed largely weak, although some steel producers were keen on buying iron ore cargoes to replenish supplies but were seeking low prices.
Chinese steel mills are not rushing to purchase iron ore given a blurry outlook for steel demand, but are not shutting their doors as well for bargains as miners, led by top producer Vale , continued to push cargoes into the spot market.

Codelco Opens Door to Settlement in Anglo Copper Feud (Source: Bloomberg)
Codelco, the world’s largest copper producer, said buyers are delaying metal purchases amid concern that Europe’s debt crisis will slow global growth. Declining prices, including a 12 percent slump last month, reflect global demand that is falling short of Codelco’s estimated 3 to 3.5 percent annual growth rate, said Thomas Keller, the state-owned company’s chief executive officer. “Everybody is more cautious about making decisions both on the demand and supply side,” Keller said in an interview in Santiago yesterday. “The somewhat lower copper price these days is a reflection of that situation.” Copper traded at an almost six-month low on June 5 as signs of faltering growth in countries using the euro adds to concern that the region’s fiscal woes will hamper global metals demand. The benchmark futures contract rallied 2.7 percent yesterday after European Central Bank President Mario Draghi said officials stand ready to add economic stimulus.
Keller, who took over this month as CEO of Chile’s state- owned copper company, said a continuing supply shortage will help mitigate the price decline.

METALS-Copper edges up, ECB meeting eyed
SHANGHAI, June 6 (Reuters) - London copper rose slightly on Wednesday on a weaker dollar in its first trading session this week with investors playing it safe ahead of a European Central Bank meeting that may offer a solution to the euro zone debt crisis.
The ECB meeting comes a day after finance ministers from the world's seven major economies discussed financial and fiscal union in Europe and agreed to work together to deal with the problems in Spain and Greece, but took no joint action.

PRECIOUS-Gold rises as investors await ECB action
SINGAPORE, June 6 (Reuters) - Gold firmed on Wednesday, rising in tandem with the euro and risky assets ahead of a European Central Bank policy meeting as investors watch for more action from policymakers to contain the euro zone debt crisis.
The ECB is expected to indicate a readiness to cut interest rates as soon as next month but hold back from policy moves, after a Group of Seven emergency conference call on Tuesday failed to produce any concrete solution.

FOREX-Euro gains on short-covering as Australia GDP boosts sentiment
TOKYO, June 6 (Reuters) - The euro gained on short-covering on Wednesday after riskier assets rose on strong growth data from Australia, recouping some of the losses sustained on Spain's warning it was losing access to credit markets.
G7 finance ministers took no immediate steps to soothe fears over Europe's debt woes on Tuesday, while European Union leaders appeared to be working towards a plan for deeper political integration to underpin the future of the euro.

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