Monday, June 11, 2012

20120611 1032 Global Commodities Related News.

Speculators Fail to Reap Rally in Crops After Wager Cut (Source: Bloomberg)
Speculators reduced wagers on a rally in agricultural prices to a five-month low just as returns from crops and livestock beat most other commodities on concern that parched fields from Iowa to Russia will curb supply. Hedge funds and other money managers cut net-long positions across 11 U.S. farm goods by 20 percent to 312,099 futures and options in the week ended June 5, the lowest since Dec. 27, Commodity Futures Trading Commission data show. Corn holdings tumbled to the lowest since June 2010 and traders switched to betting on a decline in wheat prices. Agricultural commodities accounted for nine of the 10 best performers in the Standard & Poor’s GSCI Spot Index of 24 raw materials last week.
Speculators cut combined bullish bets across the S&P GSCI by 13 percent to the lowest this year on mounting concern that Europe’s widening debt crisis will derail global growth and curb demand for commodities. Agricultural prices rallied as dry weather harmed the corn crop in Iowa and Illinois, the biggest U.S. growers, and Russia’s government declared a state of emergency in some areas because of drought. “People don’t look at fundamentals when the crisis overshadows everything,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York- based Aegis Capital Corp. “The tug of war gets tough when the correlation between the economy and agricultural commodities is very high.”

DTN Closing Grain Comments 06/08 14:23 DTN Closing Grain Comments 06/08 14:23 (Source: CME)
Corn Closes Week Strong on Weather Concerns
The corn market, led higher by new-crop issues on dry weather concerns finished with solid gains. Old-crop beans tried to follow but to no avail, joining the rest of the bean and wheat contracts lower, unable to overcome pressure from the stronger U.S. Dollar Index.

Wheat Market Recap Report (Source: CME)
July Wheat finished down 12 3/4 at 629, 9 3/4 off the high and 1 1/4 up from the low. December Wheat closed down 10 3/4 at 671 1/2. This was 2 1/4 up from the low and 9 off the high. The market saw an inside trading day with a fairly tight range and gave back part of yesterday's strong gains. There are some weather concerns for the Black Sea region and China but weakness in soybeans and a firm trade for the US dollar was enough to hold the market lower for the session. The market seemed to react to talk of the overbought condition after the surge higher yesterday and concerns that the surge in the US dollar is helping to discourage buyers of US wheat. Weekly export sales were slow this past week as the surge in wheat prices in May plus the dollar appreciation helped to limit export activity. Europe still has exportable wheat and the collapse in the euro may have attracted buyers. The market was down as much as 14 cents overnight but a recovery in the stock market and a jump in corn prices helped to support. The ongoing wheat harvest was seen as a limiting factor on the rally but talk that the production report and the supply/demand updates for next week could carry a positive tilt helped to support. July Oats closed up 4 at 304. This was 9 up from the low and 5 off the high.

Black Sea wheat - full of promise and pitfalls
--Gavin Maguire is a Reuters market analyst. The views expressed are his own--
CHICAGO, June 7 (Reuters) - The new Black Sea wheat futures contract launched this week on the CME certainly sounds like a good idea, given that the region accounts for roughly a quarter of world wheat trade and is located on the doorstep of Europe, the Middle East, and Africa -- all major importers of wheat and other grains.
But uptake and use of the contract may prove slow going since two of the region's top wheat exporters -- Russia and Ukraine -- have a track record of reneging on trade contracts whenever domestic supplies threaten to fall short, and risk-management practices featuring the use of futures and options contracts remain in their infancy among the area's producers and commercial users.

Corn Market Recap for 6/8/2012 (Source: CME)
July Corn finished up 3 3/4 at 597 3/4, 7 3/4 off the high and 12 1/2 up from the low. December Corn closed up 5 3/4 at 542 1/4. This was 15 3/4 up from the low and 2 1/4 off the high. The market worked through questionable outside market forces and the outlook for cooler and wetter weather across the Midwest for Monday through Wednesday and still pushed higher. Talk of a hot and dry extended forecast into the pollination period helped provide underlying support. In addition, reports that a major satellite forecasting firm sees corn production down about 1.2 billion bushels from the USDA forecast may have also sparked some buying support. December pushed to the highest level since May 22nd as the market followed the weather concerns and not the macro-economic concerns from Europe as a guide today. The short-term forecast is clashing with the longer-term forecast to keep the trade choppy. Bearish forces from outside markets (higher US dollar, weakness in energy, weakness in the stock market) had December corn down as much as 10 cents on the day overnight before the recovery rally into the mid-session. Concerns for areas which receive less rain coverage for the Monday to Wednesday rain event plus news that "much above" normal temperatures could return to the Midwest in the 11-15 day forecast models helped to support. Traders see 60-70% coverage of 3/4 of an inch or so for the Midwest in the mid-day models which helped to pressure the market off of the highs late. Traders see further deterioration in corn crop conditions for the Monday afternoon update with little rain this week. Old crop ending stocks are expected to decline by 25-30 million bushels for the supply/demand update next week as compared with 851 million bushels posted last month. New crop ending stocks are expected near 1.75 billion bushels from 1.881 billion last month. July Rice finished down 0.175 at 14.05, 0.06 off the high and equal to the low.

GRAINS-Wheat drops 1.2 pct, corn down on US stimulus uncertainty
SINGAPORE, June 8 (Reuters) - Chicago wheat slid 1.2 percent, while corn fell around 1 percent, weighed down by economic uncertainty as Federal Reserve Chairman Ben Bernanke gave no clues on whether a U.S. easing was in the offer.
"Fundamentals are quite supportive for oilseeds but I think the global economic situation is more important so it is more of repositioning by hedge funds," said Andrew Woodhouse, a Sydney-based analyst at Advance Trading Australasia.

Argentina wheat area seen shrinking further
BUENOS AIRES, June 7 (Reuters) - Argentina's new season wheat plantings are set to fall 17 percent from last year because of weather problems and farmers' pessimism over potential profits, Buenos Aires Grains Exchange said on Thursday.
Argentina is the world's sixth-biggest wheat exporter and the key supplier to neighboring Brazil, but growers have been planting less of the crop in recent years. They say a government system of export quotas depresses prices in the local market.
Russia's grain market debates impact of drought
GELENDZHIK, Russia, June 7 (Reuters) - Russia's Agriculture Ministry sought to assuage market concerns about potential drought damage to the grain harvest, putting it at odds with leading grain market players who see a smaller crop and reduced exports for the 2012/13 marketing campaign.
The Agriculture Ministry insists that concerns about damage from the drought have eased and is retaining its forecast for a grain harvest of 94 million tonnes in the new season, flat year-on-year, a deputy agriculture minister said on Thursday.
Rains restore yields in key Russian wheat regions
UST-LABINSK, Russia, June 7 (Reuters) - Farmers in Russia's southern breadbasket region of Krasnodar are facing a decline in wheat yields after nine months of inclement weather which will make it difficult for Russia to match last year's record exports.
Fyodor Druzhinin, chief executive of Kuban Agro, operator of an 84,000 hectare farm in one of Russia's key grain export regions, said he had feared his yields could be reduced by half before rains finally came to Russia's parched south.
Argentine grains sale freeze cuts Rosario traffic
BUENOS AIRES, June 7 (Reuters) - A sales freeze by farmers angry over government policies sharply cut the flow of corn and soy into Argentina's main export hub on Thursday, boosting global prices as traders factored in the risk of supply interruptions.
Growers in Argentina, the world's largest exporter of soymeal and soyoil, began a one-week strike on Wednesday after a recent land tax hike in the biggest farming province revived long-standing tensions with the government.
EU votes Jun 14 on extending zero grain import duties
PARIS, June 7 (Reuters) - The European Commission will ask member states to vote on June 14 on a proposal to extend the suspension of the bloc's import duties on feed wheat and barley until the end of the year, a source close to the matter said on Thursday.
"The proposal was discussed today. It will be put to vote on June 14 so that it can be published in the Official Journal by July 1," the source said.
China grain imports to rise, India eyes more exports
LONDON, June 7 (Reuters) - China will import more corn and soybeans next season to keep pace with growing domestic demand, while fellow emerging giant India is trying to export more of its record wheat and rice crops to reduce its surplus, officials said on Thursday.
China, already the world's largest soybean importer, is expected to increase its imports of the oilseed to 57.5 million tonnes in 2012/13 from 55 million in the current season, the state-owned China Grain Reserves Corporation (Sinograin) said.
Saudi Arabia considers adding soft wheat imports
LONDON, June 7 (Reuters) - Saudi Arabia may import soft wheat, in addition to the hard wheat it currently imports, to meet local food demand, opening it up to a wider range of wheat exporters, the kingdom's Grain Silos & Flour Mills Organization (GSFMO) said on Thursday.
The country has increased imports sharply since abandoning plans for self-sufficiency in wheat in 2008 and now aims to be completely reliant on imports by 2016 in order to save water.

India's grains stocks at record high, exposed to rot
NEW DELHI, June 7 (Reuters) - India's wheat inventory at government warehouses surged to a record 50.2 million tonnes on June 1, exposing more stocks to rot as unattractive global prices have hobbled government efforts to export from its overflowing grain bins.
India's entry into the global market could further dent benchmark U.S. wheat prices , which dropped 10 percent last week after much-needed rains hit drought-hit parts of Russia and on higher-than-expected yields from the U.S. winter harvest.
IKAR sees Russia 2012/13 grain crop, exports down
GELENDZHIK, Russia, June 7 (Reuters) - Russia's Institute for Agriculture Market Studies (IKAR) expects Russia's grain crop and exports to fall in the 2012/13 season, IKAR general director Dmitry Rylko said on Thursday.
IKAR sees the 2012/13 grain crop at 88.4 million tonnes, down from this season's 94.2 million tonnes, while exports could amount to 19.3 million tonnes, down from 27.4 million tonnes in the current season, Rylko said at the Russian Grain Union's XIII International Grain Round in a Black Sea resort town.

SOFTS-Sugar eases, arabicas near 23-month low
LONDON, June 8 (Reuters) - Raw sugar futures on ICE dipped, consolidating after a selloff in the prior session, and were underpinned by concerns over harvest delays in top producer Brazil due to rains.
“New York July sugar  will seek support at 19.46 cents per lb, and rise from this level towards 20.43 cents, according to Reuters market analyst Wang Tao.”

Fortuitous easing of Iran crude worries
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
SINGAPORE, June 8 (Reuters) - Through a combination of somewhat fortuitous factors, the imminent imposition of Western sanctions on Iran is shaping up as a bit of a non-event for Asian crude buyers.
The U.S. and European measures that start late this month and next aim to halt Iranian shipments of oil to Europe and impact those to the rest of the world by limiting the ability to pay or insure cargoes.
But far from being a major worry for Asia, replacing much of the about 1.5 million barrels day that the region used to buy from Tehran has been fairly easy.

OIL-Brent crude falls below $99 on US stimulus uncertainty
SINGAPORE, June 8 (Reuters) - Brent crude prices fell below $99 , pressured by uncertainty about the fragile economic recovery in top oil consumer the United States after its central bank chief offered few clues about more stimulus measures.
"Comments by Bernanke poured cold water on market expectations that central banks would offer more to revive their economies," said Victor Shum, senior partner at oil consultancy Purvin & Gertz. "The focus of the market has shifted since worries about Greece and Europe have returned."

China to cut fuel prices by 6 pct from Saturday
BEIJING, June 8 (Reuters) - China will cut fuel prices by nearly 6 percent from Saturday in the second reduction this year and the largest since late 2008, an official with a state-owned oil company said, as crude prices fell further since the last fuel cut in May.  
The government will lower the ceiling for gasoline retail prices by 530 yuan ($83.30) a tonne and diesel by 510 yuan, the official said, confirming an earlier industry report.

Top oil executives say market coping with Iran exit
KUALA LUMPUR, June 8 (Reuters) - The global oil market is well supplied and can cope with the loss of Iranian crude to Western sanctions, oil officials and executives, including the heads of Total  and Royal Dutch Shell , said this week.
An increase in global crude supplies and falling crude prices have helped cushion the impact of sanctions targeting Iran's controversial nuclear programme.

Petronas to decide on $20 bln refinery project mid-2013
KUALA LUMPUR, June 8 (Reuters) - Malaysia's state energy firm Petronas is expected to make a final investment decision on its $20 billion refinery project in Johor by the middle of next year, a senior executive told Reuters on Friday.
The refinery could start commissioning activities at the end of 2016, Wan Zulkiflee Wan Ariffin, Petronas's chief operating officer and executive vice president of downstream, said.

Oil Gains Most in Five Months on Spain Bailout, China (Source: Bloomberg)
Oil rose the most in more than five months in New York on speculation fuel demand will increase after Spain requested a European bailout to shore up its banks and China’s imports of crude climbed to a record. Futures increased as much as 3 percent, the biggest gain since Jan. 3. Spain will seek $125 billion from euro-area nations, Economy Minister Luis de Guindos told a press conference in Madrid yesterday after a conference call with the region’s finance ministers. China, the world’s second-biggest oil consumer, increased crude imports in May as prices declined, according to data from the Beijing-based General Administration of Customs. “European Union stabilization is always a positive factor,” Giyas Gokkent, group chief economist at National Bank of Abu Dhabi PJSC (NBAD), said by e-mail yesterday. “A significant chunk of extra annual demand for oil has been coming from China. Record oil imports will definitely have a positive impact on prices.”
Crude for July delivery increased as much as $2.54 to $86.64 a barrel in electronic trading on the New York Mercantile Exchange, and was at $86.27 at 9:43 a.m. Singapore time. The contract rose 1.1 percent last week to $84.10, the first weekly gain in six. Prices have fallen 13 percent this year.

Gold-Investment Demand in China to Advance 10%, ICBC Says (Source: Bloomberg)
Gold-investment demand in China may gain more than 10 percent this year as buyers seek a haven from Europe’s debt crisis and the prospect of weakening currencies, according to the country’s largest bullion bank. “Investors here want to hold part of their assets in gold to hedge for the risks, especially now that the financial crisis has evolved into a sovereign crisis,” Zheng Zhiguang, general manager of the precious-metals department at Industrial and Commercial Bank of China Ltd., said in an interview in Shanghai. China will topple India this year as the largest bullion market as rising incomes bolster demand, the World Gold Council forecasts. Gold may gain for a 12th year in 2012 as European policy makers strive to avoid a breakup of the euro zone and the U.S. Federal Reserve weighs more stimulus to aid the recovery. Investors in China, facing lackluster equity markets and property curbs, are looking more to the metal, Zheng said June 6.
“It’s necessary for individual, institutional or even government investors to hold gold when the value of money is decreasing at a time of possible quantitative easing or excessive money-printing practices,” said Zheng. Investment demand in China was a record 98.6 metric tons in the first quarter, 13 percent higher the same period in 2011, according to figures from the producer-funded council. Last year, it climbed 38 percent to 258.9 tons compared with 2010, as overall demand gained 20 percent to 769.8 tons. China’s total gold demand may reach 1,000 tons this year, the WGC has said.

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