South America Readies Record Crops Amid U.S. Drought (Source: Bloomberg)
South American farmers are preparing to plant record grain and oilseed crops that may temper surging food inflation caused by the worst U.S. drought in a generation. Argentine farmers, buoyed by rains that alleviated a drought, will smash a previous corn harvest record of 22 million metric tons by reaping as much as 31 million tons in the 2012- 2013 season, growers group Crea said July 23. Brazil may harvest its biggest-ever soybean crop in 2012-13 to surpass the U.S. as the world’s biggest grower, according to Sao Paulo-based research Agroconsult. Corn rose to a record in Chicago yesterday, capping the biggest monthly gain since 1988, while soybeans reached a record on July 23 after surging 15 percent last month. The response from South American growers to the worst U.S. drought since 1956 will be the “turning point” in the corn and soybean rally, Wayne Gordon, the head of global agriculture markets research at UBS AG in New York, said in an interview yesterday.
“We are in a great situation,” said Martin Otero, the owner of Buenos Aires-based farm investment group Hillock Capital Management that owns and manages farmland in Argentina and Uruguay. “We have very high yield prospects, and there’s a high probability that prices will be very good.”
Wheat Market Recap Report September (Source:CME)
Wheat finished down 26 1/4 at 888 1/4, 31 1/4 off the high and 2 1/4 up from the low. December Wheat closed down 24 3/4 at 902 1/2. This was 2 up from the low and 29 off the high. September Chicago wheat traded sharply lower into the close of today's session as traders took profits following gains this week. The wheat market began the day weaker, but losses were accelerated after corn began to tumble from it's record highs. Russia's Agriculture Ministry may cut it's 2012 grain crop production forecast to 75 million tonnes from it's current estimate of 80 million tonnes but traders brushed off the news after the Prime Minister of Russia said he did not expect a domestic deficit for grain despite the lower production estimates. Jordan announced a purchase of 100,000 tonnes of wheat from their tender issued last week. The official origin is unknown, but traders believe the seller likely came from the Black Sea region. Outside markets were mixed with the US Dollar trading lower and crude oil trade sharply lower on the day. September Oats closed down 4 at 380 1/4. This was 2 1/4 up from the low and 5 off the high.
Corn Market Recap for 7/31/2012(Source:CME)
September Corn finished down 13 1/4 at 806 3/4, 18 1/4 off the high and 1 1/2 up from the low. December Corn closed down 8 at 806. This was 4 1/2 up from the low and 14 1/2 off the high. December corn traded slightly lower into the closing bell and managed to hold the 800 level on the day. The lower trade reflects profit taking following yesterday's sharply higher trade. The Midwest weather forecast remains unfavorable for fall crops, with 90-100 degree temperatures expected for growing areas in the Southwestern Corn Belt this week and part of next week. Scattered showers are also expected in the Midwest to finish out the week but soil conditions are so poor that the light rainfall will provide limited relief. Most of the corn crop is beyond repair at this point, but cooler temperatures may be able to stabilize yield loss for some areas. Taiwan reportedly bought 60,800 tonnes of Brazilian corn overnight, which may be adding pressure to the corn complex today. Argentina also announced that they would enact a new export policy that grants farmers permission to sell their whole corn harvest as they set single year export quotas, instead of the incremental quota system currently in place. The market is still trying to gauge yield and production expectations for this year's corn crop ahead of the USDA report next week. Current market conditions suggest a corn yield near 129 bushels/acre with some estimates coming in near 120-122. Outside markets were mixed today with the US Dollar trading lower and crude oil sharply lower on the day. September Rice finished down 0.22 at 15.615, 0.135 off the high and equal to the low.
GRAINS-Corn heads for biggest monthly gain in over 5 yrs
SINGAPORE, July 31 (Reuters) - Chicago soybeans edged lower giving back some of the previous session's strong grains, while corn was little changed following a rally as the worst drought since 1956 causes more damage to crops in the U.S. grain belt.
"I think the bullish tone in the agricultural markets is still intact," said Ker Chung Yang, commodities analyst at Phillip Futures in Singapore.
Drought could delay India fuel reforms - adviser
NEW DELHI, July 31 (Reuters) - The drought threatening India due to elusive monsoon rains will make it politically harder for the government to raise prices of subsidised fuel, delaying a reform urgently needed to rein in the country's fiscal deficit, a top policy adviser told Reuters.
So far India's summer monsoon rains are 22 percent below average and are unlikely to pick up enough to avert a drought, which could dent both crop output and rural incomes and increase reliance on subsidised fuel such as diesel to irrigate farmland.
Midday US weather updates drier than before
CHICAGO, July 30 (Reuters) - Midday weather updates indicated even drier weather than earlier forecasts in the U.S. Midwest for the next week or two which will increase stress on corn and soybean crops that already have been slashed due to the worst drought in over 50 years, an agricultural meteorologist said on Monday.
"It doesn't look good for crops at all, now it's a matter of just how bad it's going to get," said Andy Karst, meteorologist for World Weather Inc.
SOFTS-Sugar, coffee, cocoa ease as dollar firms
LONDON, July 31 (Reuters) - Raw sugar, arabica coffee and cocoa futures on ICE dipped in early trading pressured by a firm dollar and weak financial and commodity markets.
Sugar was supported by poor monsoon rains in major growing areas of number two producer India, while robusta coffee was underpinned by a steady drawdown of certified stocks.
Oil Declines for a Third Day as Fed May Forgo Stimulus (Source: Bloomberg)
Oil dropped for a third day as speculation the Federal Reserve may not announce additional stimulus measures for the economy outweighed a drop in U.S. crude stockpiles. Futures slid as much as 0.4 percent in New York, extending a 1.9 percent decline yesterday. The Fed will probably forgo announcing a third round of asset purchases after a two-day meeting ends today, according to 88 percent of economists in a Bloomberg News survey. Crude inventories shrank 11.6 million barrels last week, the most since September 2008, an industry report showed. Oil for September delivery slipped as much as 33 cents to $87.73 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.76 at 9:42 a.m. Sydney time. The contract yesterday dropped $1.72 to $88.06, the lowest close since July 13. Prices gained 3.7 percent last month and are 11 percent lower this year.
Brent crude for September settlement fell $1.28, or 1.2 percent, to $104.92 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark’s premium to West Texas Intermediate closed at $16.86, the widest gap since May. U.S. crude stockpiles slid to 369.7 million barrels, the American Petroleum Institute said in its report. The Energy Department may say today that supplies fell 1 million barrels to 379.1 million, a Bloomberg News survey showed. Gasoline inventories decreased 1.3 million barrels last week, according to the API. The government report may show supplies rose 800,000 barrels.
OIL-Oil slips below $106; stimulus hopes fade
LONDON, July 31 (Reuters) - Oil slipped below $106 a barrel as investors grew less convinced that new stimulus measures from central banks in the United States and Europe would be enough to revive fragile economies and boost oil demand.
"For the moment, the economy remains the main focus for most investors; that isn't to say that the situation in Iran and the Middle East isn't of concern," said Ric Spooner, chief market analyst at CMC Markets.
Turkey's Iranian crude imports hold steady in June
DUBAI, July 31 (Reuters) - Turkey's Iranian crude oil imports stopped falling in June, according to official data, before reaching its pledge to cut imports by 20 percent to win a waiver from U.S. sanctions.
But traders said they expected to see lower imports from July onwards as state refiner Tupras is having difficulty lifting Iranian crude with Turkish tankers due to sanctions in shipping insurance, leaving Tehran scrambling to sell its oil stuck in storage tanks in Egypt.
Silver Market Recap Report(Source:CME)
Like gold, the silver market tried to rally early in the session and it generally outperformed the gold market. However, silver generally seemed to be disappointed with the flow of scheduled US data and it is also possible that silver was undermined by news of rising silver production from Mexico for the month of May. While silver hasn't paid that much attention to classic supply side developments lately seeing Mexican silver production increase by double digits probably discouraged some would be longs, especially with the outlook for the global economy in a constant state of flux.
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