Thursday, July 5, 2012

20120705 1001 Global Commodities Related News.

Milk Rallying as New Zealand-to-U.S. Weather Sours: Commodities (Source: Bloomberg)
Goldman Sachs Group Inc. says this may be the first time in five years that New Zealand, the world’s biggest dairy exporter, produces less milk, at a time when surging corn prices are raising costs for U.S. farmers. The country’s output will drop 2.4 percent in the 12 months ending June 30 as the weather turns less favorable, according to Goldman’s New Zealand unit. Supply from the seven biggest exporting regions may gain 1.2 percent in the second half of 2012, slowing from 3.2 percent in the first six months, according to Rabobank International. Futures, which rose 19 percent since mid-April, will climb a further 16 percent to $20 per 100 pounds in Chicago by Dec. 31, said Shawn Hackett, the agricultural advisor who correctly predicted the rally in March.
Milk tumbled 33 percent in the eight months to April 18 as New Zealand’s production was boosted by abundant rain that gave cattle more to eat and U.S. yields reached a record after an unusually mild winter. Global food costs tracked by the United Nations fell 14 percent since reaching a record in February 2011. The worst Midwest drought in a decade is now parching corn crops, driving prices for the feed 33 percent higher since June 15 and increasing the incentive for farmers to cull herds. “Last year was a perfect weather scenario that happens once in a long, long, long while,” said Hackett, the president of Boynton Beach, Florida-based Hackett Financial Advisors Inc. who has specialized in agriculture for almost a decade. “Animals are going to be stressed. They’re not likely to produce as much milk as last year.”

Rubber Climbs to Five-Week High as U.S. Auto Sales Top Forecast (Source: Bloomberg)
Rubber advanced to the highest level in almost five weeks as U.S. factory orders and auto sales topped estimates, raising speculation demand will improve for the commodity used in tires. December-delivery rubber rose 2.2 percent to end at 256.6 yen a kilogram ($3,216 a metric ton), the highest settlement level for a most-active contract since May 31, on the Tokyo Commodity Exchange. That pared this year’s loss to 2.6 percent. Asian stocks climbed for a sixth day, with the regional benchmark heading for its longest winning streak this year, after data showed U.S. factory orders rose in May for the first time in three months. General Motors Co. (GM), Ford Motor Co. and Chrysler Group LLC reported U.S. auto sales for June that topped analysts’ estimates, helping the industry surpass projections and stay on pace for the best year since 2007.
“The better-than-expected figures underlined the strength of the U.S. auto industry, which is positive for rubber demand,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone. U.S. auto sales accelerated to a 14.1 million seasonally adjusted annualized rate, according to researcher Autodata Corp. The pace topped the 13.8 million light-vehicle rate that was the average estimate of 15 analysts surveyed by Bloomberg. Auto- industry sales provide a bright spot in the world’s largest economy that has been hindered by persistent unemployment and weakening consumer confidence.

Japan Reduces Spot LNG Purchases as Prices Soar to Near a Record (Source: Bloomberg)
Japan cut purchases of spot liquefied-natural-gas cargoes by 27 percent in May from a month earlier as prices soared to near a record amid the closing of domestic nuclear power plants. Supplies for immediate and short-term delivery from the Atlantic Ocean area dropped to 847,624 metric tons in May from 1.16 million tons in April, according to calculations by Bloomberg based on data from the Ministry of Finance. Prices of spot LNG climbed to about $920 a ton, or $18.93 per million British thermal units, 16 percent higher than last year’s average. The fuel reached a record $25 in 2008. Japan shut all 50 of its nuclear reactors for safety tests after last year’s earthquake and tsunami, halting atomic power generation for the first time in more than four decades. The country is restarting two units this month. Total LNG purchases in May rose 16.8 percent from a year earlier.
“Spot cargoes will start to moderate in the second half as Japan re-starts some of its nuclear facilities,” said Neil Beveridge, an analyst for Sanford C. Bernstein & Co., in Hong Kong in an e-mail on June 29. Prices of LNG delivered into Japan including spot and term supplies declined by 0.6 percent from April to 70,916 yen ($889) a ton in May, equivalent to about to $18.30 per million Btu, as oil prices declined, according to the data.

Oil Drops in New York on Speculation Europe’s Economy Weakening (Source: Bloomberg)
Oil fell in New York after data signaled a worsening economic slump in Europe, stoking speculation that fuel demand may shrink. Futures slipped as much as 1.3 percent from the settlement on July 3. A gauge of German services fell to 49.9 in June, London-based Markit Economics reported yesterday, with a figure below 50 indicating contraction. Factory orders in the country, the European Union’s largest economy, may have dropped 6 percent from a year ago, according to a Bloomberg News survey ahead of data released today. The EU accounted for 15.9 percent of global oil demand in 2011, according to BP Plc. (BP/) Oil for August delivery slid as much as $1.16 to $86.50 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.76 at 9:21 a.m. Sydney time. Floor trading was closed yesterday for the U.S. Independence Day holiday and transactions since the July 3 close will be booked with today’s trades for settlement purposes. Prices are down 12 percent this year.
Brent oil for August settlement fell 91 cents, or 0.9 percent, to $99.77 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark’s premium to West Texas Intermediate closed at $12.11. U.S. crude stockpiles probably declined 2.3 million barrels last week, according to a Bloomberg survey before an Energy Department report today. Inventories may have dropped as Tropical Storm Debby delayed tanker arrivals and reduced output at Gulf of Mexico platforms, the respondents said.

S. Korea Agency Buying More Metals Than Planned as Prices (Source: Bloomberg)
South Korea, Asia’s third-biggest buyer of industrial metals, increased its 2012 spending plan for purchases by 9.4 percent as prices fell and domestic demand is forecast to climb, the head of a state agency said. The state-run Public Procurement Service, which manages strategic commodities, will spend 580 billion won ($510 million), up from an earlier estimate of 530 billion won and up 60 percent from last year, Kang Ho In, 54, said in an interview in Daejeon. The LMEX index of six metals including copper and aluminum has dropped 20 percent in the past year as Europe’s debt crisis and an economic slowdown in China, the biggest consumer, threatened to curb demand. South Korean demand may climb 7.5 percent to 3.2 million metric tons this year, the Korea Nonferrous Metal Association said March 30. “Our main goal is to ensure stable supply for small companies,” said Kang, a former deputy finance minister. “Global fundamentals point to further drops in metals prices.”

Gold Poised to Drop as ECB Seen Cutting Interest Rates (Source: Bloomberg)
Gold, trading near a two-week high, is poised to drop on speculation that the European Central Bank will cut interest rates to a record low today as policy makers take more action to spur growth and combat the debt crisis. Immediate-delivery gold was little changed at $1,614.43 an ounce at 8:13 a.m. in Singapore. Prices climbed $1,625.07 on July 3, the highest level since June 19. The August-delivery contract fell as much as 0.6 percent to $1,611.60 an ounce on the Comex in New York, and traded at $1,614.60. The ECB will probably reduce the benchmark rate 25 basis points to 0.75 percent, according to the median forecast in a Bloomberg survey of 62 economists. The Bank of England may raise its target for bond purchases today, boosting it 50 billion pounds ($78 billion) to 375 billion pounds, another survey shows.
“Expectations are for a cut in the interest rate,” Alexandra Knight, an economist at National Australia Bank Ltd., said by phone from Melbourne. That “could give a bit of support to gold. Inflationary pressures are likely to increase, if anything, if there’s further monetary-policy easing.”

Copper Drops From Seven-Week High on Signs of Slowing Economies (Source: Bloomberg)
Copper fell from a seven-week high in London as signs economies are slowing worldwide fed concern that demand may weaken. Euro-area services and manufacturing output contracted for a fifth month in June, an index from Markit Economics showed today. Retail sales in Europe slid from a year earlier in May, according to European Union statistics. The European Central Bank may lower its benchmark interest rate to a record 0.75 percent tomorrow, economists surveyed by Bloomberg said. “The market has been positioned very bearishly,” Gayle Berry, an analyst at Barclays Plc in London, said by phone. “We are not seeing any significant change in the short-term picture. The market is already expecting a cut tomorrow.”
Copper for three-month delivery declined 1.3 percent to $7,714 a metric ton by 4:03 p.m. on the London Metal Exchange. Prices yesterday touched $7,823, the highest level since May 15. Copper for September delivery fell 0.9 percent to $3.507 a pound on the Comex in New York, where floor trading is closed today for the Independence Day holiday. Price gains spurred sales of copper scrap, Herwig Schmidt, head of sales at Triland Metals Ltd. in London, said by phone.

Baltic Exchange Seeks to Double Asian Membership as Trade Shifts (Source: Bloomberg)
The Baltic Exchange, whose benchmarks for freight rates cover about 75 percent of global commodity cargoes, plans to double its Asian membership in the next two years to reflect a decade-long surge in trade to the region. Quentin Soanes, who starts as chairman today, wants 25 percent of the Baltic’s members to come from Asia by the end of his two-year term, from 10 percent to 15 percent now. The 268- year-old London bourse will convert its Singapore representative office into a full subsidiary that can collect fees and recruit new members, he said in an interview. Asia now accounts for about 63 percent of global seaborne imports of crude oil and dry bulk commodities such as iron ore and coal, from 45 percent in May 2002, according to London-based Clarkson Plc, the world’s largest shipbroker. Companies from BHP Billiton Ltd. (BHP) to Cargill Inc. are also expanding in Singapore, increasing the number of ships chartered there, Baltic Exchange Chief Executive Officer Jeremy Penn said in an interview.
“The Baltic has been perceived as a very London-centric organization,” said Soanes, 57, who retires July 31 as an executive director at Braemar Shipping Services Plc (BMS), the U.K.’s second-largest publicly traded shipbroker. “If we are going to be relevant to the world, Asia is where we’re going to have to do a lot more.”

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