Monday, June 18, 2012

20120618 1028 Global Commodities Related News.

Hedge Funds Boost Bullish Bets as Stimulus Pressure Rises (Source: Bloomberg)
Hedge funds raised their bullish commodity bets as mounting speculation that central banks will announce more economic stimulus halted a slide in prices and drove gold to its longest rally since August. Money managers raised combined net-long positions across 18 U.S. futures and options by 9.1 percent to 587,327 contracts in the week ended June 12, rebounding from the lowest level this year, Commodity Futures Trading Commission data show. Gold holdings rose to a six-week high, while wagers on a rally in silver prices jumped to the highest since the start of May. More than $1.5 trillion was added to the value of global equity markets in the past two weeks on speculation the Federal Reserve will join central banks in bolstering growth at its policy meeting this week. Commodities rose more than 80 percent from December 2008 to June 2011 as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing and held borrowing costs at a record low.
Policymakers from the U.K. to Japan are warning of the thre at posed to markets by Europe’s debt crisis. “The markets are signaling they expect some kind of central monetary easing,” said Peter Sorrentino, a senior fund manager at Huntington Asset Advisors in Cincinnati, which oversees $14.7 billion of assets. “That tends to bode well for the type of assets that get re-priced very quickly when that happens, and that’s the commodity complex.”

DTN Closing Grain Comments 06/15 14:19 : July Corn Collapses Friday (Source: CME)
July corn finished sharply lower Friday on strong selling from both sides of the market, pulling new-crop issues along. Bean contracts were mixed with the new-crop market rallying on bullish export news. Wheat was a follower of corn, closing with solid double-digit losses.

Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat faced spillover pressure from the corn market today, with Chicago futures leading losses. Futures at all three exchanges extended last week's decline, with the exception being July Minneapolis wheat which posted gains. Weekend developments in Greece and the euro-zone will influence global stock markets and direct early price action in the U.S. markets next week. Investors are on edge ahead of Sunday's Greek elections, which will reveal the country's commitment to austerity measures.

Wheat Market Recap Report (Source: CME)
September Wheat finished down 11 3/4 at 629 1/2, 15 1/4 off the high and 4 1/2 up from the low. December Wheat closed down 12 1/4 at 654 1/4. This was 5 1/4 up from the low and 15 1/4 off the high. July wheat closed 14 lower on the session and pushed down to the lowest level since May 16th. Funds were active sellers even with a positive tilt to outside market forces. Weakness in corn and political uncertainties for Europe over the weekend helped to pressure the market and there was a lack of buying interest from speculators. The move below the June 1st lows is seen as a negative technical development. European wheat futures were down today with talk of better weather for Western Europe. However, crop uncertainties persist for the Black Sea region which may need to absorb 100 degree plus temperatures ahead and traders are also questioning the crop outlook for China wheat due to too much rain. There was also talk of a little better rain in the short-term for Russia late today which may have added to the negative tone. September Oats closed down 1/2 at 297. This was 3 3/4 up from the low and 7 off the high.

Pro Farmer: After the Bell Corn Recap (Source: CME)
July corn futures settled 22 cents lower today, while other contracts ended mostly 8 1/4 to 12 1/4 cents lower. Those losses were mildly trimmed in after-hours trading. For the week, corn futures posted sharp losses. Talk of potential Brazilian corn imports into the Southeastern U.S. and rumblings that end-users are moving corn to other end-users weighed on July futures and old-crop basis today.

Corn Market Recap for 6/15/2012 (Source: CME)
September Corn finished down 8 3/4 at 512, 14 1/2 off the high and 2 1/2 up from the low. December Corn closed down 7 3/4 at 508 1/4. This was 2 1/4 up from the low and 13 3/4 off the high. July corn was trading near 19 cents lower late in the session with December down 7. Weather uncertainties, Greek uncertainties and talk of collapsing ethanol plant margins plus indications of cooler weather on the extended forecast models were all factors which helped to pressure the market. The surging cash basis levels have sparked talk that ethanol plants may just slow or stop production and sell the corn onto the cash market. Cash basis was firm again today so it does not appear that this has occurred yet but the talk helped to pressure the July. Traders see rains this weekend for the western Corn Belt but also better chances for the eastern Corn Belt of some light rains of 1/2 inch or so on the weekend and again for later next week. This could ease stress on crops which may need to absorb some hotter weather for the next week. Both events are still uncertain but many traders see the weather as potentially bearish next week. Nervousness for the euro zone plus weather uncertainties are expected to keep the trade volatile into next week. A prominent research firm revised their corn planted acreage estimate up to 96.8 million acres as compared with 95.9 million by the USDA. Traders have been expecting a slight increase so the news was seen as a negative factor. September Rice finished down 0.065 at 14.15, 0.01 off the high and equal to the low.

US wheat rises for 2nd day as China cuts crop f'cast
SINGAPORE, June 15 (Reuters) - Chicago wheat extended gains from the previous session, after China's official think-tank revised down the nation's winter crop estimates, raising the prospect of higher imports by the world's biggest producer and consumer of the grain.
"Wheat sales to China out of the U.S. are an encouraging sign for the market and show that U.S. wheat is good value," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia, referring to numbers in a weekly report from the U.S. Department of Agriculture.

Ukraine grain stocks at 10.9 mln T June 1
KIEV, June 15 (Reuters) - Ukraine's grain stocks totalled 10.9 million tonnes as of June 1, 79 percent more than at the same date in 2011, the State Statistics Service said on Friday.
Stocks at large- and medium-sized agriculture companies included 5.2 million tonnes of wheat, 1.1 million tonnes of barley and 4.1 million tonnes of corn, the service said.

China think-tank cuts 2012 winter wheat estimate on disease
BEIJING, June 15 (Reuters) - China's official grain think-tank has lopped about 2 percent off its estimate of 2012 winter wheat output in the world's largest producer and consumer of the grain, where widespread damage from a fungus disease looks set to spur imports.
The forecast adds to a darkening global supply picture after Australia this week slashed its winter wheat production forecast by more than 7 percent, following projections for harsh weather to hit output in top exporters Russia, Europe and the United States.

China makes biggest U.S. SRW wheat buy since 2004
CHICAGO, June 14 (Reuters) - China bought 110,000 tonnes of U.S. soft red winter wheat, the U.S. government said on Thursday, that country's largest single purchase of that class of wheat in 8-1/2 years, which traders said signaled the start of more sales there due to a smaller crop in that country.
The purchase by China, the top importer of U.S. soybeans and a leading buyer of U.S. corn, surprised traders and helped rally winter wheat futures at the Chicago Board of Trade as the country mostly buys high-quality U.S. spring wheat.

Brazil grain industry raises '11/'12 soy estimate
SAO PAULO, June 14 (Reuters) - Brazil's grain industry association Abiove said on Thursday it estimates the 2011/12 soybean crop that finished harvest in May at 66.2 million tonnes, up slightly from the 65.9 million tonnes forecast in April.
Brazil harvested a record 75.2 million tonnes of soybeans in the previous crop. Drought over the grain belt cut the current crop's potential by about 10 million tonnes.

US Grain Exports-Corn sales fall to 11-week low
June 14 (Reuters) - U.S. corn export sales tumbled to an 11-week low last week, with purchases for shipment in the current season the lowest for the marketing year, as prices soared more than 8 percent, traders said following a weekly U.S. Department of Agriculture report.
Shrinking stocks of U.S. corn and worries about crop-stressing heat and dryness in key production areas fueled the strongest weekly futures rally in more than a year, sending many importers to the sidelines.

Rains to break new Russia heatwave in next 5 days
MOSCOW/PARIS/KIEV, June 14 (Reuters) - Rains and lower temperatures are expected to provide relief from a fresh heatwave in Russia's grain growing regions, where harsh spring weather has already taken a toll on the upcoming harvest, the state crop weather forecaster said.
"We expect temperature in the main regions to be at 26-31 Celsius degrees (79-88 Fahrenheit) during the next five days. Rains are expected on June 16-17," Anna Strashnaya, the head of the agricultural forecasting department at Russia's Federal Hydrometeorology and Environment Monitoring Service (Rosgidromet), told Reuters.
FranceAgriMer expects small rise in wheat crop
PARIS, June 14 (Reuters) - Farm office FranceAgriMer currently anticipates a small rise in French soft wheat output this year as a higher yield would offset area lost to winter frost, the head of the office's grains committee said.
FranceAgriMer's preliminary outlook, based on information from crop institute Arvalis, puts the 2012 French soft wheat crop at 34.4 million tonnes, up from 33.9 million tonnes in 2011, Remi Haquin told Reuters.

ICE coffee firms above two-year low, sugar rises
LONDON, June 15 (Reuters) - Arabica coffee futures on ICE edged higher to levels above Thursday's two-year low, pressured by Brazilian producers who are selling as the harvest in the top producer is under way.  Arabica coffee futures firmed as dealers focused on elections in Greece scheduled for June 17, which could determine the future of the debt-ridden country in the euro zone currency bloc.

Thai govt buys 5,000 tonnes of rubber in intervention
BANGKOK, June 15 (Reuters) - The government of Thailand, the world's largest producer of rubber, has bought 5,000 tonnes of rubber sheet, or just 2.5 percent of the volume of purchases planned in an intervention scheme kicked off early in May, officials said on Friday.
The scheme, which sparked a rally on the Tokyo Commodity Exchange when it was first announced this year, has failed to help the rubber market defy pressure from declines in other commodities as the debt crisis in Europe worsens.

Brazil's early sugar output washed out by rain
SAO PAULO, June 14 (Reuters) - An unusually wet May for the world's biggest sugar cane belt in center-south Brazil slowed the output of sugar early in this harvest season, industry association Unica said on Thursday.
In its biweekly report on crushing since the start of the season in April, Unica said sugar output from mills fell 26 percent through May compared with a year ago, to 3.53 million tonnes.
Ivorian cocoa mid-crop seen short, main crop early
SOUBRE, Ivory Coast, June 14 (Reuters) - Ivory Coast's western cocoa region of Soubre will see a short mid-crop harvest this year due to an extended dry season, but abundant rainfall since early April is likely to produce an early start to the 2012/2013 main crop, farmers said on Thursday.
A five-month dry spell that lasted into March cut short this season's October-to-March main crop and has delayed harvesting of mid-crop beans.

US coffee roasters stick with less costly robusta
NEW YORK, June 11 (Reuters) - U.S. coffee roasters quietly pulled off a financial feat last year that went unnoticed by most customers: Adding a higher proportion of cheaper, lower-grade robusta to their grounds as the price of top-notch arabica beans surged.
As new data reveals the surprising extent of that substitution, which appears to have been far more widespread than experts had thought possible, the industry faces a vexing question: As the price premium for arabica beans returns to historically normal levels, will roasters switch back?

Unconventional oil to alter geopolitical balance
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, June 14 (Reuters) - ConocoPhillips Chief Executive Ryan Lance has caused a stir by warning an audience including OPEC oil ministers that North America could become self-sufficient in oil by the middle of the next decade, ending the region's dependence on imports.
"In 1990, North American reserves and production were falling, but thanks to unconventionals proved reserves have risen 68 percent since then," Lance told an audience of OPEC ministers on Wednesday.

Backwardation amid plenty, the 2012 oil paradox
(Robert Campbell is a Reuters market analyst. The views expressed are his own)
VIENNA, June 14 (Reuters) - How can oil fall 25 percent in a matter of months when the principal futures market has signaled all along a situation of dearth, not plenty?
Or put another way, why have buyers of oil this year been paying a premium for prompt delivery when supply has far outstripped demand?

OIL-Brent rises above $98 after OPEC meet; Greece eyed
SINGAPORE, June 15 (Reuters) - Brent futures climbed above $98 per barrel , extending gains on expectations Saudi Arabia would scale back supplies after the OPEC kept its output target unchanged, although uncertainty surrounding Europe's debt crisis capped gains.
"That news is giving some comfort to the market that there will be coordinated action if it is required," said Ken Hasegawa, a commodity sales manager at Newedge Japan. "That is why we are seeing gains in prices today, but trading will be within a narrow range ahead of the Greek elections."

S.Africa looks to Nigeria, Angola to replace Iran oil
CAPE TOWN, June 15 (Reuters) - South Africa is looking to source oil from Angola, Nigeria and Saudi Arabia to replace supplies from Iran, which is facing sanctions over its nuclear programme, a top energy official said on Friday.
Africa's biggest economy used to import a quarter of its crude from Iran, but has come under Western pressure to cut the shipments as part of sanctions designed to halt Tehran's suspected pursuit of nuclear weapons.

Taiwan Formosa refinery to hit 90 pct utilization rate in July
SINGAPORE, June 15 (Reuters) - Taiwan's Formosa Petrochemical Corp will raise the average utilization rates at its 540,000 barrels per day (bpd) refinery to nearly 90 percent in July from around 67 pe r cent in June as a crude unit is about to restart, said its spokesman.      
Asia's fifth largest refinery owns three crude distillation units (CDUs) of equal of 180,000 bpd.  

Oil Rises Most in a Week in New York on Greek Election Estimates (Source: Bloomberg)
Oil rose to the highest in a week as projections showed the two largest pro-bailout parties in Greece winning enough seats to forge a parliamentary majority, easing concern Europe’s debt crisis will worsen and crimp fuel demand. Futures climbed as much as 1.9 percent in New York. The New Democracy and socialist Pasok parties won a combined 163 seats in the 300-member legislature, according to estimates from the Interior Ministry based on partially counted returns from voting yesterday. The death of Crown Prince Nayef bin Abdulaziz Al Saud in Saudi Arabia, the world’s largest oil exporter, raised the issue of succession for the second time in less than a year. “The result in the Greek election is certainly better than the alternative,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “An element of risk has been taken off the board, a box has been ticked, and some adjustment of risk premium is warranted but there’s more to go yet in Europe.
The stability of the Saudi government is a very important thing.” Oil for July delivery advanced as much as $1.57 to $85.60 a barrel in electronic trading on the New York Mercantile Exchange, the highest intra-day price since June 11. It was at $85.06 at 10:31 a.m. Sydney time. The contract increased 12 cents to $84.03 on June 15, the highest close since June 8. Prices are down 14 percent this year.

Hong Kong LME Bid Faces Regulator as $32 Billion in Deals Killed (Source: Bloomberg)
Hong Kong Exchanges & Clearing Ltd.’s bid for the London Metal Exchange, the most expensive bourse merger over $1 billion, may succeed in gaining the approval of regulators who’ve scuttled $32 billion of similar cross-border deals. Hong Kong’s offer of 107.6 pounds a share, or 180 times LME’s 2011 net income, requires approvals from LME’s shareholders and the U.K. Financial Services Authority. It doesn’t need shareholder approval in Hong Kong, where the local bourse operator’s stock fell 23 percent since Feb. 18, when the South China Morning Post first reported the bid. The Bloomberg World Exchanges Index (BNWEXCH) has dropped 14 percent in that time. The takeover would give Hong Kong control of a business that sets global prices for base metals, while LME stands to gain greater access to China, the biggest consumer of metals including nickel, aluminum and copper.
The London bourse will remain under the watch of the FSA, meaning the deal may avoid national interest and market power concerns that prompted market regulators and politicians to block other exchange mergers. “There’s a much lower level of political concern about the LME than there would be about the takeover of the London Stock Exchange,” said Ruben Lee, chief executive officer of Oxford Finance Group, a London company specializing in financial and commodity markets. “U.K. regulators will maintain their control over the operations of the exchange. There will be concern about the fitness and the properness of any new owner, but I’m sure that Hong Kong Exchanges & Clearing are going to satisfy that.”

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