Thursday, June 14, 2012

20120614 1002 Global Commodities Related News.

Rain, Pests Imperil Wheat Crop in India as Warehouses Overflow (Source: Bloomberg)
India, the world’s second-biggest wheat producer, risks losing more than 6 million metric tons of grain to rain and pests as the country lacks warehouses to stockpile crops that have risen to records for six years. Wheat is kept in the open across markets in north India as state granaries are overflowing with about 82 million tons of rice and wheat, Food Minister K.V. Thomas said in an interview in New Delhi. A group of ministers will soon consider the sale of about 13 million tons of wheat and rice to the poor and in the open market at subsidized rates, and discuss steps to boost exports to create room for newly harvested crops, he said.
Efforts to draw down stockpiles may boost shipments from India, adding to global supplies and extending the biggest slide in food prices in two years as measured by the United Nations’ Food & Agriculture Organization. Overflowing granaries may hasten a plan to enact a law to guarantee food grain to 64 percent of India’s 1.2 billion people, where the World Bank says more than 75 percent of the people live on less than $2 a day. “Grains kept unscientifically are susceptible to damage” Thomas said yesterday. “Earlier also, some quantities were under unscientific storage, but not to this extent as seen this year. Experts team has already gone to the states to look into what has to be done so that there is no damage.”

Soros-Backed Farms Ripe for Bid at 36% Discount: Real M&A (Source: Bloomberg)
Adecoagro SA (AGRO), the agricultural company that counts George Soros as its biggest investor, is giving potential buyers the chance to get a hold of farms in Brazil and Argentina at a 36 percent discount to its net assets. The producer of soybeans, sugar and rice slumped 21 percent in the past year, more than three times the average decline of similar-sized farming companies around the world, as investors shunned Argentine assets after the government seized YPF SA. That’s left the $1.1 billion farmland venture trading at 0.64 times its net asset value of about $14.78 a share, based on the average of four analysts’ estimates compiled by Bloomberg. Adecoagro, which is listed on the New York Stock Exchange, is projected to post record revenue and profit next year as the United Nations says global food output must rise 70 percent by 2050 to feed a growing world population.
While ties to Argentina have been a drag on the stock, HSBC Holdings Plc says most of the company’s growth will come from Brazil, potentially luring takeover interest from agriculture traders Bunge Ltd. (BG) and Cargill Inc. Adecoagro could command as much as $15 a share in a takeover, said ING Groep NV, a 57 percent premium.

DTN Closing Grain Comments 06/13 14:08 : July Corn Steals the Show (Source: CME)
July corn was the story in the grain complex Wednesday as rumors circulated once again that China was looking to secure coverage in the cash market. New-crop corn and soybeans were hammered by noncommercial long-liquidation while wheat slept through most of the day.

Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures saw trade on both sides of unchanged today, but bears gained the upper hand heading into the close. Chicago wheat ended steady to 2 1/2 cents lower and Kansas City ended mostly weaker in mixed trade. Minneapolis was steady to pennies lower in all but the front month, which was moderately higher. In after hours action, futures firmed to mixed trade.

Wheat Market Recap Report (Source: CME)
July Wheat finished down 1/2 at 615 1/2, 8 1/4 off the high and 1 1/4 up from the low. December Wheat closed down 1 at 658 1/2. This was 3/4 up from the low and 7 3/4 off the high. July wheat pushed moderately higher on the session early today but set-back to trade near unchanged on weakness in the other grains and bounced back to trade near 4 1/2 cents higher on the day into the mid-session. Talk that the sell-off was a bit overdone yesterday plus news of less than expected production for Australia, Germany and potentially further revisions lower in the Black Sea region helped to support the bounce. Traders see continued mostly drier than normal weather for the black Sea region ahead and Russia wheat estimates seem to be slipping to near 50 million tonnes or below as compared with 53 million from the USDA yesterday. Traders await new export business and the ongoing harvest continues. Traders noted some short-covering from fund traders early today. For the weekly export sales report for tomorrow morning, traders see wheat sales near 250,000 tonnes. July Oats closed up 12 at 307 3/4. This was 13 3/4 up from the low and 1 3/4 off the high.

Pro Farmer: After the Bell Corn Recap (Source: CME)
July corn futures settled 8 1/2 cents higher, while deferred contracts were mostly 10 to 12 cents lower. Aside from the July contract, futures finished near session lows. Most contracts mildly declined from settlement levels in after-hours trade. July corn futures were supported by strength in the cash market. The basis strength triggered rumors of potential Chinese demand, although nothing was confirmed.

Corn Market Recap for 6/13/2012 (Source: CME)
July Corn finished up 6 3/4 at 590 3/4, 11 1/4 off the high and 15 1/4 up from the low. December Corn closed down 13 1/4 at 509 1/4. This was equal to the low and 15 1/4 off the high. July corn pushed moderately higher on the session and traded above $6 briefly into the mid-session. December pushed to new lows late in the session and traded near 11 cents lower late in the session. Improving weather in the forecast into next week with 1-3 inches of rain in the western Corn Belt and 1/4 to 3/4 inches in the eastern Corn Belt continued to pressure with December pushing to the lowest level since June 6th. In addition, traders see less heat in the extended forecast models. Ethanol production for the week ending June 8 averaged 920,000 barrels per day. This is up 1.8% vs. last week and up 4.5% vs. last year. Total Ethanol production for the week was 6.44 million barrels which is the highest weekly total since February 10th. Corn used in last week's production is estimated at 98 million bushels as compared with 97.1 million bushels necessary each week to reach the new USDA projection for the year. Stocks as of June 8th were 20.66 million barrels. This is down 2.5% vs. last week and up 4.7% vs. last year. For the weekly export sales report for tomorrow morning, traders see corn sales near 550,000 tonnes. July Rice finished down 0.205 at 13.895, equal to the high and equal to the low.

Managed Money traders set to switch view on corn
CHICAGO, June 12 (Reuters) - Managed money traders have whittled their net exposure to the corn market back to its lowest level in close to two years lately as a near-record-large corn planted area total weighed on market sentiment as the 2012 growing season got under way. Souring economic confidence stemming from economic and political disarray in Europe also sparked a broad shedding of risk by large speculators in recent weeks.
But managed money traders may soon ramp up long-sided bets once again, especially if the hot and dry growing conditions across most of the Corn Belt cause further crop deterioration and the upcoming U.S. Department of Agriculture crop report reveals a tightening in U.S. and world corn inventories.

Corn falls for 3rd day, wheat up on Australian f'cast
SINGAPORE, June 13 (Reuters) - Chicago corn slid, falling for a third consecutive session on pressure from forecasters of more rain in the U.S. Midwest and a government report which kept the stocks unchanged.
"In the short term there will be pressure on corn prices because of the rain forecast, but if the weather continues to be dry there will be support," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Australia cuts 2012/13 wheat forecast to 24.1 mln/t
SYDNEY, June 13 (Reuters) - Australia on Wednesday downgraded its winter wheat production forecast by more than 7 percent to 24.1 million tonnes, almost one-fifth smaller than last year's record crop, citing average-to-dry growing conditions so far this year.
The forecast by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is lower than its forecast in March for a 26 million tonne crop. Last year's crop was a record 29.5 million tonnes.
Nebraska corn fields hit by disease
June 12 (Reuters) - U.S. plant scientists have found the debilitating disease Goss's Wilt in multiple corn fields across Nebraska, raising fears of yield loss in the No. 3 U.S. corn state.
The disease is not widespread at this time, but oozing leaves and leaf lesions have been noted on corn plants. Testing has confirmed the Goss's bacterial wilt and blight in corn samples received from south central and eastern Nebraska, according to University of Nebraska-Lincoln (UNL) researchers.

Argentine farmers to end strike, warn of more protests
BUENOS AIRES, June 12 (Reuters) - Argentine farmers said they would allow a one-week freeze on grains sales to end as planned on Tuesday, but threatened to stage more anti-government protests against taxes and export curbs.
The sales strike was called by growers angry about state-centric agricultural policies and a recent tax increase in No. 1 soy- and corn-producing province Buenos Aires.
From Russia to U.S., wheat crop gets smaller-USDA
WASHINGTON, June 12 (Reuters) - Harsh weather in Russia, Europe and the United States will shrivel the global wheat harvest, leading to sharply lower consumption, the U.S. government forecast on Tuesday.
In a monthly update, the Agriculture Department, however, surprised markets by holding to its projections of a record-large U.S. corn crop.
Ukraine starts 2012 grain harvesting
KIEV, June 12 (Reuters) - Farmers in southern Ukrainian regions have started the 2012 grain harvest, threshing the first 280 hectares of early grains, regional officials said on Tuesday.
The government of Ukraine's southern Crimea region said in a statement the grain yield averaged 2.03 tonnes per hectare.
Iran team looks at India wheat for possible imports
MUMBAI, June 12 (Reuters) - A delegation from sanctions-hit Iran arrived in India on Tuesday to explore the possibility of importing wheat from the south Asian nation, which has huge stocks and wants to reduce its trade imbalance with the oil exporter, government sources said.
Food shipments to Iran are not targeted under Western sanctions aimed at curbing Iran's nuclear programme, but payments remain difficult because of financial sanctions, even though India has just won a waiver from Washington on the strictures.

ICE coffee above 2-year low, cocoa consolidates
LONDON, June 13 (Reuters) - Arabica coffee futures on ICE hovered above a two-year low under pressure from ample supplies and slack demand, while cocoa edged higher, as the eurozone debt crisis remained the key driver of commodities markets in the lead up to Greece's election this weekend.
Arabica coffee futures were slightly higher, trading above the previous session's two-year low, with September  up 0.5 cent or 0.3 percent at $1.5585 per lb at 0929 GMT. The second month fell to $1.5480 on Tuesday, the lowest level for the benchmark second month since mid-June 2010.

Zambia Illovo Sugar unit workers strike over pay
LUSAKA, June 13 (Reuters) - About 3,000 workers at Zambia Sugar , a unit of South Africa's Illovo Sugar , have gone on strike demanding a 35 percent pay rise, the company said on Wednesday.
Zambia Sugar said in a statement that operations at its Nakambala Sugar Estate, about 130 km (80 miles) south of Lusaka, had been disrupted following the illegal strike, which started on Tue day.

Oil Trades Near Eight-Month Low Before OPEC Meets on Production (Source: Bloomberg)
Oil traded near the lowest close in eight months in New York before OPEC meets to discuss production quotas amid speculation the group won’t cut output as the global economy weakens. Futures were little changed after dropping a fourth time in five days yesterday. The Organization of Petroleum Exporting Countries, which meets in Vienna today, will probably maintain its output ceiling as concern that global growth is shrinking outweighs calls for supply cuts to stem sliding crude prices, three of the cartel’s oil ministers said. U.S. retail sales fell and Spain’s debt rating was cut by Moody’s Investors Service. Oil for July delivery was at $82.54 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 9:40 a.m. Sydney time. The contract fell 0.8 percent yesterday to $82.62, the lowest close since Oct. 6. Prices are down 16 percent this year.
Brent oil for July settlement, which expires today, slipped 1 cent to $97.13 a barrel on the London-based ICE Futures Europe exchange yesterday. The more-actively traded August contract slid 25 cents to $96.72. The European benchmark contract’s premium to West Texas Intermediate closed at $14.51. Ministers from Ecuador, Kuwait and Nigeria said yesterday that OPEC is set to keep its 30 million barrel-a-day limit. Venezuela, Iran, Iraq, Angola, Ecuador and Libya have argued that crude supplies are excessive. While an increase of as much as 1 million barrels a day suggested by some Gulf Arab countries would help Europe weather its slowdown, the 12-member group will probably settle on the status quo, according to two Middle Eastern delegates who declined to be identified because a decision hasn’t been made.

Tumbling oil tests notional price floor
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, June 12 (Reuters) - Following recent falls, oil prices are much closer to the industry's marginal cost, especially in North America, where light sweet crude futures are now valued at only a little over $80 per barrel.
For bullish investors, lower prices promise to provide support by threatening to curb rapid output growth, especially from high-cost tight oil and bitumen projects across the United States and Canada, as well as deepwater exploration, unless the global economy enters another tailspin.

OIL-Oil steady above $97 ahead of OPEC meet, Greek polls
LONDON, June 13 (Reuters) - Brent crude oil held firm, with investors awaiting the outcome of the meeting this week of the producer group OPEC, while gains were capped by worries about Europe's debt crisis and prospects for oil demand.
"The IEA confirmed that there are stock builds and they don't want to say that the market is over-supplied, but it's not a game-changer in terms of prices and the market is still well-supplied," Olivier Jakob at Petromatrix in Zug said.

OPEC price hawks call on Saudi to cut oil output
VIENNA, June 12 (Reuters) -    OPEC's price hawks on Tuesday called on Saudi Arabia to rein in excess production to stem a slide in oil prices that has knocked $30 a barrel off crude since March.
"We are going to make a very strong call in the meeting that the countries that are over-producing cut," said Venezuelan Oil Minister Rafael Ramirez.  

Nigeria aims for 25 pct oil capacity rise by 2020-NNPC
PARIS, June 12 (Reuters) - Nigeria aims boost its oil output capacity by a quarter to 4 million barrels per day by 2020 as Africa's top producer seeks to overhaul a sector plagued by corruption and theft, a top executive at state-oil firm NNPC said on Tuesday.
The target is in line with what oil majors operating in Nigeria like Shell  have said is possible, but only if big challenges such as NNPC funding for joint ventures and massive organised oil theft are addressed.

Turkey starts talks to buy Saudi oil -minister
ANKARA, June 12 (Reuters) - Turkey has begun talks with Saudi Arabia on long-term crude oil purchases, Turkish Energy Minister Taner Yildiz said on Tuesday, after the United States said it would exempt Turkey from financial sanctions because it cut purchases of Iranian oil.
Yildiz said the talks were in line with Turkey's main energy target to increase the number of countries from which Turkey imports crude oil.

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