Friday, June 22, 2012

20120622 1011 Global Commodities Related News.

Top 5 List - Why Managed Futures (Source: CME)
Reduce Portfolio Volatility with Managed Futures
Futures may be used to manage the risk of volatile investments and to capitalize on speculative opportunities associated with that volatility. But the fast-paced and increasingly sophisticated nature of futures markets sometimes renders it difficult for all but the most adept institutional and retail investors to take full advantage of these markets. Thus, many prospective investors have turned to managed futures as a means by which to harness the best professional trading talent in the pursuit of profitable futures trading opportunities. The managed futures industry has flourished from the 1980s through to the present day as a logical outlet for such investment demand. This article describes that growth and discusses our “top 5 list” of reasons why investors should be interested in managed futures investments.

Commodities Enter Bear Market as U.S. Economy Falters (Source: Bloomberg)
Commodities tumbled into a bear market as U.S. reports on manufacturing, jobless claims and home sales signaled a faltering economy after the Federal Reserve refrained from announcing another round of stimulus. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 2.8 percent to settle at 559 at 3:56 p.m. New York time. The gauge has dropped 22 percent from this year’s highest close of 715.52 on Feb. 24, entering a bear market. Earlier, the measure touched 558.14, the lowest since November 2010. Metals and energy led today’s slump. Manufacturing in the Philadelphia region contracted in June at the fastest pace in almost a year. Existing U.S. home sales fell more than forecast by analysts, and jobless claims topped estimates. Yesterday, the Fed, led by Chairman Ben S. Bernanke, reduced its 2012 forecast for economic growth, and policy makers decided against a third round of debt purchases.
“We got nothing significant from Bernanke, and data continues to paint a horrible picture,” said Steve Mathews, the chief investment officer of Flintlock Capital Asset Management LLC in New York, which manages $105 million of assets. “We have to wait until the next Bernanke event to know if the Fed will indeed do something to perk the economy.” The GSCI index surged 92 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing.

US budget axe may spare costly crop insurance
WASHINGTON, June 20 (Reuters) - With the U.S. Congress on the brink of passing the most sweeping farm spending cuts in a generation, critics are riled the budget axe will spare billions of dollars in federal subsidies for private companies that reap double-digit returns for insuring crops.
Two years of wrangling over the next farm bill has cut $23 billion over the coming decades from crop subsidies, conservation programs, food stamps and a range of rural economic development programs.

DTN Closing Grain Comments 06/21 15:04 : Grains Close Lower (Source: CME)
Corn futures closed lower on heavy selling from both sides of the market. Spillover pressure proved too much for soybeans to withstand, and they also moved lower. Wheat contracts were lower.

Recap: Grains (Source: CME)
Corn futures extended losses into the close to finish 14 3/4 to 25 1/4 cents lower, with the front-month July contract leading losses. Funds sold 17,000 contracts today. A combination of a "risk-off" atmosphere in the commodity markets and yesterday's rains over areas of the western Corn Belt triggered heavy selling in the corn pit.
Soybean futures softened into the close to finish 8 to 24 1/4 cents lower with new-crop futures leading losses. While the market did see some action in positive territory as traders remain concerned about dryness in the eastern Corn Belt, strong gains in the U.S. dollar index and overnight rains in the western Corn Belt ultimately gave bears the upper hand.
Wheat futures saw two-sided trade, but the market softened into the close. Chicago and Kansas City wheat ended roughly 2 to 6 cents lower. Minneapolis ended with double-digit losses. Wheat futures softened slightly in after-hours trade. Futures were able to run counter to outside markets this morning, but as the dollar rocketed higher and the stock market plummeted on disappointing U.S. economic data and concerns about soaring borrowing costs in Spain, losses in the corn market spilled over to wheat.
Cotton ended sharply to its 500-point limit lower. Much of today's weakness was attributed to strength in the U.S. dollar index. Concerns about an economic slowdown in China raises questions about the country's demand for U.S. cotton. Manufacturing data reflected a slowdown in the Chinese economy, which was traders' focal point today.

Corn Market Recap for 6/21/2012 (Source: CME)
September Corn finished down 18 1/2 at 550 1/4, 20 1/2 off the high and 3/4 up from the low. December Corn closed down 16 1/2 at 550. This was 1 3/4 up from the low and 18 off the high. December corn traded close to a 20 cent range today and was down near 16 1/4 cents heading into the closing bell. September corn lost 15 cents bringing the September vs. December calendar spread near even money. Weak manufacturing data out of China and the lack of any new stimulus program by the Fed triggered broad based commodity liquidation today. December corn saw profit taking and has retraced Wednesday's entire rally. Storm systems moved through parts of Iowa and western Missouri before heading north to Minnesota and Wisconsin this morning. Midday weather maps look unchanged with a chance for showers to finish out this week in the lower Midwest. The southeast and Delta regions will dry down significantly over the next 10 days which should increase stress on the crop. Cash corn basis in the Gulf of Mexico is steady to weaker on sluggish export demand due to high U.S. prices. Export sales released this morning were considered negative with net weekly export sales for corn at 171,400 metric tonnes for the current marketing year and 210,600 for the next marketing year for a total of 382,000. As of June 14, cumulative corn sales stand at 92.4% of the USDA forecast for 2011/2012 marketing year versus a 5 year average of 93.2%. Sales of 282,000 metric tonnes are needed each week to reach the USDA forecast. September Rice finished down 0.16 at 14.585, 0.195 off the high and equal to the low.

In 'Green Wheat' drive, Wal-Mart may transform farming
CHICAGO, June 21 (Reuters) - Wal-Mart Stores Inc  has long used its commercial might to forge a global supply chain with ruthless efficiency. It now has a new target: U.S. wheat fields.
As part of efforts to reduce its carbon footprint and burnish its image as an environmentally responsible company, the huge retailer is sending senior employees into the fields for the first time ever, looking for ways to help farmers reduce their use of carbon-intensive fertilizer or improve logistics.

Wheat Market Recap Report (Source: CME)
September Wheat finished down 5 3/4 at 677 1/4, 22 3/4 off the high and 3 up from the low. December Wheat closed down 8 at 698. This was 3/4 up from the low and 23 off the high. Heading into the closing bell, September wheat was trading near 5 cents lower on the day and 22 cents off its session highs. Chicago wheat traded lower overnight on negative outside markets but bounced midday to register 7 to 9 cent gains. Weak manufacturing data out of China and the lack of any new stimulus program by the Fed triggered broad based commodity liquidation today. Warm and dry weather in the Black Sea region offered underlying support to the wheat complex and the European Union granted export licenses for 143,000 tonnes of soft wheat, taking the 2011/12 season total to 12.4 million tonnes vs. 18.2 million tonnes cleared in 2010/11. November Paris wheat traded 1.75 Euros higher as harvest begins in Spain and will soon kick off in France. Short covering action was noted midday as a result of better than expected export sales released in this morning's export sales report. Net weekly export sales came in at 842,000 metric tonnes which was sharply higher than expected. Cumulative wheat sales stand at 20.4% of the current USDA forecast for 2012/13. The 5 year average sits at 19.9% and 495,000 metric tonnes are needed each week to reach the current USDA forecast. September Oats closed down 1 3/4 at 301. This was 3 1/2 up from the low and 4 off the high.

Crop Traders Bullish for Ninth Week on U.S. Drought (Source: Bloomberg)
Soybean and corn traders are bullish for a ninth week on mounting concern that dry weather will cut U.S. crop yields at a time when hedge funds are adding to wagers on higher prices. Twenty-three analysts surveyed by Bloomberg said they expect soybeans to climb next week and three were bearish. A further four were neutral. Twenty expect gains in corn, four predicted a decline and five were neutral. Speculators raised bets on costlier soybeans for the first time in six weeks and increased net-long positions for corn from the lowest level in almost two years in the week ended June 12, U.S. Commodity Futures Trading Commission data show.
The U.S. Department of Agriculture cut its estimate for corn and soybean conditions on June 18 after dry weather in the Midwest, prompting the biggest two-day rally for corn since October 2010 and soybeans since October 2011. Areas of Iowa and Illinois, the two largest U.S. growers of both crops, have had less than half the normal amount of rain in the past 30 days, National Weather Service data show. The USDA expects China to import record amounts of both crops next season. “The current dryness in the U.S. Midwest will further reduce the crop yields and crop conditions,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Because of the earlier planting and speedy crop progress, the need for moisture is quite high.”

Prices drop on Fed disappointment; weather woes check losses
SYDNEY, June 21 (Reuters) - U.S. corn fell as investors took profits after stellar gains earlier in the week, while disappointment that the U.S. Federal Reserve did not introduce more aggressive stimulus measures to boost the economy also dragged down grains prices.
"We are seeing a risk-off day," said Luke Mathews, commodities strategist for the Commonwealth Bank of Australia. "The crude oil market is extending its very sharp losses from yesterday on the back of negative sentiment flowing around the market, and that influence is flowing through into grains."

China to end anti-dumping probe on US distillers' grains
BEIJING, June 21 (Reuters) - China will immediately end an anti-dumping probe on imports of U.S. distillers' dried grains, opening the gates for more purchases of the feed ingredient from the United States, the Asian giant's commerce ministry said on Thursday.
Feed mills in China, the world's top meat consumer, substitute distillers' dried grains for corn and sometimes soymeal.

India's monsoon rains low for third straight week- sources
NEW DELHI , June 21 (Reuters) - India's crucial monsoon rains were likely to have been 5 percent below average in the week to June 20, sources at the weather office said on Thursday, a third week of scant rain and raising concerns about overall rainfall in the four-month season.
The June-September monsoon rains are important for farm output and economic growth as about 55 percent of the south Asian nation's arable land is rain-fed, and the farm sector accounts for about 15 percent of a nearly $2-trillion economy, Asia's third-biggest.

POLL-S.Africa maize output f'cast seen at 11.05 mln T
JOHANNESBURG, June 21 (Reuters) - South African traders have slightly cut their maize output estimate for 2012 to 11.05 million tonnes from a 11.1 million tonnes forecast last month, a Reuters survey showed on Thursday.
The latest average traders' forecast is in line with the government's Crop Estimates Committee's (CEC) estimate of 11.056 million tonnes released in May.

Argentina deploys military police in fuel strike
BUENOS AIRES, June 20 (Reuters) - Argentina's government sent military police to take control of fuel plants and get trucks back on the road on Wednesday, the first day of a truckers' pay strike that could cause widespread shortages in Latin America's third-biggest economy.
The powerful truck drivers union defied a government order for talks and launched the three-day protest, disrupting fuel distribution throughout the country, a leading exporter of grains.

Nigerian millers see more demand for U.S. wheat
KANSAS CITY, June 20 (Reuters) - Nigerian flour millers, key buyers of U.S. wheat, continue to need more U.S. supplies despite efforts by the Nigerian government to reduce reliance on foreign wheat imports, top Nigerian milling executives said on Wednesday.
"We are not expecting a drop in the amount of U.S. wheat we need. In all, the wheat we are needing should be increasing," said Benson Osaretin Evbuomwan, director of Honeywell Flour Mills, which has an annual milling capacity of 600,000 tonnes.

India can export 2-3 mln T of wheat to Iran
NEW DELHI, June 20 (Reuters) - India could export up to 3 million tonnes of wheat to Iran if supplies are requested, Food Minister K.V. Thomas said on Wednesday, as India seeks to reduce huge wheat stocks and help settle payment for a large oil import bill.  
An Iranian delegation last week explored the possibility of buying wheat from India, which has huge stocks and wants to fix a trade imbalance with the oil exporter.

ICE coffee, sugar dip as commodities retreat
LONDON, June 21 (Reuters) - Arabica coffee, raw sugar and cocoa futures on ICE were lower in early trade, weighed by a stronger dollar and broad-based weakness in commodity markets.
"New York Sept coffee  is expected to hover in a range of $1.5010-$1.5445 per lb as a rebound from the June 18 low of $1.5010 has not completed, according to Reuters market analyst Wang Tao."

Brazil mid crop cocoa harvest still accelerating
SAO PAULO, June 20 (Reuters) - Brazil's main cocoa state Bahia looks near to peak flow in the mid crop harvest, with deliveries to warehouses of 102,434 60-kg bags (6,146 tonnes) in the last week, a third more than the same week last year, Bahia Commercial Association data showed.
Combined deliveries from smaller cocoa-growing states reached their highest ever for any single week and were expected to quicken further, Bahia-based cocoa analyst Thomas Hartmann said in a weekly crop bulletin.

China May crude imports from Iran down 2.3 pct y/y
BEIJING, June 21 (Reuters) - China's imports of crude oil from Iran in May fell 2.3 percent from a year earlier to 521,936 barrels per day (bpd), customs data showed on Thursday, with Beijing boosting shipments from other oil suppliers to help fill the gap.
In January-May, China's crude imports from Iran totalled 389,857 bpd, down 25 percent from a year earlier largely because of a contract dispute that saw refiner China Petroleum & Chemical Corp (Sinopec)  slash imports in the first quarter by about half to 285,000 bpd.

Petronas awards 3 North Malay Basin gas fields to Hess Corp
KUALA LUMPUR, June 21 (Reuters) - State oil firm Petronas signed three production sharing contracts with the exploration arm of U.S. firm Hess Corp  on Thursday, kicking off a $5.2 billion gas project off Malaysia's east coast.
The North Malay Basin project, comprising nine gas fields about 300 km (186 miles) off the east coast of peninsular Malaysia, is aimed at securing new gas supplies for Petronas as it faces a supply crunch.
Petronas awarded production sharing contracts (PSC) for three fields to Hess Corp and its own exploration arm, Petronas Carigali. One was an amended PSC, while the others were new exploration PSCs with a 50:50 equity split between the two firms, the company said.

OIL-Oil falls to 18-month low on global growth worries
LONDON, June 21 (Reuters) - Brent crude oil hit an 18-month low of $91 per barrel  as the outlook for economic growth darkened, pointing to lower-than-expected energy consumption worldwide.
"It is a toxic combination of negative factors," said Eugen Weinberg, head of commodities research at Commerzbank.

Oil Rebounds From Biggest Slump of 2012 as Storms Build (Source: Bloomberg)
Oil rebounded from its biggest decline this year in New York, trimming a second weekly drop after a storm started to form in the Gulf of Mexico and prices approached a technical support level. Futures gained as much as 0.5 percent after sliding 4 percent yesterday, the most since December. A swath of rain and thunderstorms across the Caribbean from Mexico to southern Florida has a 70 percent chance of becoming a tropical storm in 48 hours, according to the National Hurricane Center in Miami. West Texas Intermediate crude rose after falling to near its lower Bollinger Band. Oil for August delivery increased as much as 41 cents to $78.61 a barrel in electronic trading on the New York Mercantile Exchange, and was at $78.53 at 11:09 a.m. Sydney time. The contract yesterday tumbled $3.25 to $78.20, the lowest close since Oct. 4. Prices are down 6.5 percent this week and 21 percent lower this year.
Brent oil for August settlement rose 39 cents, or 0.4 percent, to $89.62 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $11.09 after closing at $11.03 yesterday, the narrowest gap since January. West Texas Intermediate crude has technical support along its lower Bollinger Band on the 30-day chart, data compiled by Bloomberg show. Futures yesterday halted their decline near the indicator, which is at about $77.37 a barrel today. Buy orders tend to be clustered near chart-support levels.

No comments: