Grain Farmers Tap Viterra as Wheat Board Monopoly Ends (Source:Bloomberg)
The first thing grain farmer Kent Erickson does at 6 a.m. before irrigating his 2,000 acres of wheat is check his BlackBerry for the latest grain prices from buyers like Viterra Inc. (VT) With the end of the Canadian Wheat Board’s 70-year-old monopoly last week, he can price, market and sell his crops for the first time. “Now that we have that ability as farmers, we’re able to make those decisions on our own,” Erickson, 31, said by phone from his 4,700-acre farm in Irma, Alberta, about 200 kilometers (124 miles) from Edmonton. “That’s going to give us more profit but it’s going to cause more chance for a loss too.”
For the country’s 75,000 grain farmers, the end of the monopoly means for the first time they have options to shop their wheat to the highest bidder as a global drought bolsters prices. For companies such as Glencore International Plc (GLEN), which bought Regina, Saskatchewan-based Viterra Inc. for C$6.1 billion ($6.12 billion) in March, it means tapping into an export market worth C$5.7 billion last year, the third-largest in the world. From 1935, the wheat board was the only game in town, the sole body sanctioned to buy and sell grain for export from Canada, the third-largest shipper of wheat after the U.S. and the European Union. As the biggest wheat marketer worldwide, it sold grain to more than 70 countries, generating C$6.07 billion in sales in 2011 that was passed directly on to farmers.
Pro Farmer: After the Bell Wheat Recap(Source:CME)
Wheat futures favored a weaker tone in choppy trade for much of the day, but Kansas City ended steady to 2 cents higher. Chicago futures ended 3 to 5 3/4 cents lower, with Minneapolis mixed. Much of today's weakness came on spillover from the corn market, which was lower on concerns about demand destruction. But losses were limited by ongoing global crop concerns.
Wheat Market Recap Report(Source:CME)
September Wheat finished down 4 1/4 at 889, 15 1/2 off the high and 5 1/2 up from the low. December Wheat closed down 3 1/2 at 902 3/4. This was 5 3/4 up from the low and 15 off the high. September Chicago wheat traded slightly lower into the closing bell with KC and Minneapolis following lower. The weaker trade is linked to a lower corn market and profit taking before meetings are held in Russia tomorrow to discuss their domestic grain supply. Traders remain concerned over the extreme heat that has caused steep declines in Black Sea wheat production and the impact it will have on the global balance sheet. Wheat areas in France will see drier weather to finish out this week as they move through harvest. Above normal rainfall has trimmed yield for some areas and wheat quality continues to be a concern. Global wheat supply remains a concern as demand increases due to the growing feed wheat usage. A drier than normal forecast for southwestern Australia is supportive to the wheat market but the country still has time to make up moisture deficits before the crop enters key growth stages. The US Dollar traded slightly lower midday and crude oil was higher, adding slight support to the commodity complex. September Oats closed down 3 1/4 at 370 1/4. This was 1 1/4 up from the low and 4 1/2 off the high.
Pro Farmer: After the Bell Corn Recap (Source:CME)
Corn futures reversed early gains when pit trading opened and ultimately ended low-range with 1- to 7-cent losses through the September 2013 contract. Far-deferred months finished narrowly mixed. Corn futures were firmer in early trade, but this gave way to light profit-taking which dominated market action into the close. Encouraging this was positioning for Friday's Crop Production Report.
Corn Market Recap for 8/7/2012 (Source:CME)
September Corn finished down 6 1/2 at 796 1/2, 10 3/4 off the high and 4 1/4 up from the low. December Corn closed down 4 1/2 at 800 1/2. This was 5 1/2 up from the low and 9 1/2 off the high. December corn traded slightly lower into the close and settled near the 800 level. The new crop contract continues to consolidate ahead of this Friday's USDA report. The trade believes the average US corn yield is near 127 bushels per acre with total production just over 11 billion bushels. A closely followed crop scout revised his US yield lower to 125 bushels per acre and moved production below 11 billion bushels. Warm and dry weather in Ukraine continues to add stress to their corn crop which could mean revisions to Ukrainian corn production soon. Argentina is getting ready to start corn planting at the end of August and planted acreage is expected to fall 20% from 2011/12 to 3.1 million hectares. Poor cash flow for farmers and a switch to planting more soybeans were reasons for the decline in planted acreage. The US Dollar traded slightly lower today and crude oil was higher, adding support to the commodity complex. September Rice finished down 0.205 at 15.745, 0.21 off the high and equal to the low.
GRAINS-Soybeans inch up after weather losses on Monday
SYDNEY, Aug 7 (Reuters) - U.S. soybeans edged higher after losing almost 3 percent in the previous session as rain over some key growing regions of the U.S. Midwest eased concerns of further damage to new-crop supplies."It could be simply a recovery from last night," Luke Matthews, commodities strategist at the Commonwealth Bank of Australia said, referring to the soybean gains. "We are also approaching the U.S. Department of Agriculture's monthly supply and demand report, and the market is going to be a bit jumpy in the lead up to that."
Shrinking U.S. crops pose inflation challenge for countries
CHICAGO, Aug 7 (Reuters) - For nations like China and India fighting to tamp down inflation while spurring growth, even as the global economy faces headwinds from Europe's debt crisis, shrinking U.S. crops could be an additional headache as food prices creep higher.
Add to that, dry weather in eastern Europe dimming crop prospects in key grains exporting countries like Russia and Kazakhstan, and a less-than-stellar monsoon in India, the troubles for policy makers could escalate into major challenges.
Russia may not ban or tariff grain exports-SovEcon
MOSCOW, Aug 7 (Reuters) - Russia is not expected to ban grain exports or to introduce an export tariff despite weak prospects of 2012 wheat harvest, which could be equal to a 2010 level, Russia's SovEcon consultancy said.
"The government's ability to regulate its domestic market by restricting exports seems to be limited," SovEcon said in a note.
Russia AgMin sees wheat output at 45 mln t-source
MOSCOW, Aug 6 - Russia is expected to harvest 45 million tonnes of wheat in 2012, down from last year's 56 million tonnes, a source from the country's Agriculture Ministry told Reuters on Monday.
"It is the best estimate," the source said. The current range of estimates for the overall 2012/13 harvest officially stands at 75-80 million tonnes.
SOFTS-Sugar dips to near 5-week low, cocoa firms
LONDON, Aug 7 (Reuters) - Raw sugar futures on ICE eased to stand near a five-week low, weighed by harvest pressure in top producer Brazil, while coffee edged up in technically driven dealings in light volumes. Cocoa futures on ICE firmed, consolidating after investor selling on Monday to take profits from a rally to a 4-1/2-month high last week driven by concerns over dry weather in top growing region West Africa.
Chinese sugar importers resell cargoes as supply glut bites
SINGAPORE, Aug 7 (Reuters) - Chinese traders are reselling sugar cargoes on the international market as a better-than-expected domestic crop and the end of a government buying programme cut the need for imports of the sweetener, industry sources said on Tuesday.
China is the world's second-largest sugar consumer after India and the reselling of cargoes is likely to weigh on benchmark London sugar prices, which have fallen nearly 9 percent from a peak in July to a five-week low this month amid expectations of a global supply surplus.
Vietnam Coffee-Aug loading down, output at record
HANOI, Aug 7 (Reuters) - Vietnam, the world's largest producer of robusta coffee, is forecast to export between 70,000 and 100,000 tonnes, or 1.17 million to 1.67 million bags, of beans in August, down from the 110,000 tonnes loaded last month, traders said on Tuesday.
Falling supply from Vietnam two months before the new coffee crop year starts in October could help keep global prices stable despite favourable weather for harvesting in Brazil.
Brazil to harvest entire cane crop this season - Cosan CEO
SAO PAULO, Aug 6 (Reuters) - Brazil's center-south sugar cane mills should not have to leave any of the 2012/2013 crop in the fields for processing next season, the head of the country's largest sugar exporter Cosan said on Monday.
Cane mills in Brazil's main sugar-producing region kicked into high gear in early July after rains receded, calming fears that unseasonably wet weather in May and June would result in part of the crop left stranded in the field.
Brazil's Cooxupe to halt new coffee exports until Sept
SAO PAULO, Aug 6 (Reuters) - Brazil's Cooxupe, the world's largest coffee co-operative, said on Monday that it would halt new spot export business until September, when the current harvest is over and it has a better sense of the supply of top-quality arabica beans.
Top-quality arabica beans would only make up about 56 percent of Brazil's total 2012/13 arabica crop due to untimely rains during the harvest period, down from 80 percent in past crops, said Joaquim Libânio Ferreira Leite, Cooxupe's head of sales.
Sugar Stockpile in India at Four-Year High Seen Helping Exports (Source:Bloomberg)
The biggest sugar stockpile in India in four years is set to help the world’s top consumer avert a ban on exports as a drought threatens to cut output and stokes a rally in domestic prices. Inventories may jump to as much as 7 million metric tons by Oct. 1, the most since 2009, as exports slow because of higher domestic prices, said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd. Shipments may total 3.5 million tons this crop season, less than the 4 million tons estimated earlier, said Abinash Verma, director general of the Indian Sugar Mills Association. Exports for a third straight year from India, also the world’s second-biggest producer, may add to a global surplus and extend the 21 percent decline in futures in New York in the past year. Supplies will top usage by 5.5 million tons in the 2012- 2013 season that starts in October in most countries, according to Morgan Stanley, which remains bearish on prices.
“There will be surplus available for exports next year as stocks are going to be comfortable and production will not fall below 25 million tons,” said Kiran Wadhwana, director at New Delhi-based broker Comdex India Ltd., who’s traded sugar for 25 years. “Exports will depend on global prices and the rupee- dollar exchange rate.” Raw sugar for October delivery fell 1.9 percent to 21.42 cents a pound on ICE Futures U.S. yesterday. Futures gained 7.8 percent in July.
Coal to Drop as Steel Output Slows in BHP Setback: Commodities (Source:Bloomberg)
Coal used to make steel is set to drop to the lowest price in two years, eroding earnings at BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO), as European demand wanes and China shifts supply contracts to Mongolia from Australia. The contract price may drop 11 percent to $200 a metric ton in the three months to Dec. 31 from $225 a ton this quarter, according to seven analysts and industry officials in a Bloomberg survey. The spot price in China fell 24 percent to $179.50 as of Aug. 2, the lowest this year, according to data compiled by Bloomberg. A deepening debt crisis in the eurozone has dragged down demand and prices of commodities, forcing the world’s largest steelmaker ArcelorMittal (MT) to shutter or idle plants in the region. Slowing economic growth in China, the second-biggest importer of metallurgical coal, has increased chances of output cuts at mills and further shrinkage in demand for the fuel.
“Steel demand in Europe is very weak and consumption has slowed dramatically in recent months,” said Tim Cahill, an analyst at J&E Davy Holdings Ltd. in Dublin. “It’ll get worse in the second half as government spending slows and banks stop lending to home buyers. Unless the U.S., Europe, China pump in serious stimulus, global steel demand will remain subdued.” The EU produced 14.73 million tons of steel in June, the lowest output for that month since 2009.
OIL-Oil up on supply concerns, economic growth hopes
LONDON, Aug 7 (Reuters) - Oil futures rose above $110 a barrel, on hopes that Europe would take further action to tackle its intractable debt crisis, while supply worries stemming from North Sea maintenance and Middle East tensions added further support.
"I do not think this strength is specific to Brent. Risk appetite is coming back to the market," said Eugen Weinberg at Commerzbank in Frankfurt.
Oil Drops From Two-Month High in New York as U.S. Demand Slides (Source:Bloomberg)
Oil slid from the highest close in more than two months as investors sold contracts on speculation that crude’s gain was excessive amid signs of weakening demand in the U.S, the world’s biggest consumer of the commodity. Futures fell as much as 0.5 percent, dropping for the first time in four days. Oil’s gains stalled near the upper Bollinger Band, an indicator of technical resistance. Crude consumption declined 4 percent to 15.9 million barrels last week, the biggest percentage decrease in a month, data from the American Petroleum Institute showed. Gasoline usage was the lowest since February, according to the API figures. Oil for September delivery decreased as much as 47 cents to $93.20 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.29 at 11:13 a.m. Sydney time. It climbed 1.6 percent yesterday to $93.67, the highest settlement since May 15. Prices are 5.6 percent lower this year.
Brent crude for September settlement fell 39 cents, or 0.4 percent, to $111.61 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was unchanged from $18.33 yesterday.
Gold Market Recap Report(Source:CME)
December gold was able to climb out to a new four day high during the morning hours but was unable to hold those gains into the close. Early support for the market came from a slight improvement in sentiment toward the situation in the Euro zone, as well as talk that the US Fed might be in a position to ease in their September meeting. In fact, dovish comments from the Fed's Rosengren this morning seemed to give the talk of September easing even more credence. Ongoing gains in equities, favorable currency market action and strength in energy and industrial metals prices offered support to the gold market. However, a measure of uncertainty over the next course from the Fed and light trading volumes seemed to weigh on prices by day's end.
Gold May Snap Three-Day Advance as Dollar Strength Damps Demand (Source:Bloomberg)
Gold may drop for the first time in four days as the metal’s advance to a one-week high encourages sales and as the dollar’s strength saps demand for bullion as an alternative investment. Silver declined. Spot gold lost as much as 0.2 percent to $1,609.40 an ounce, and was at $1,611.25 at 9:41 a.m. in Singapore. The metal climbed to $1,618.40 an ounce yesterday, the highest level since Aug. 1. The dollar rose 0.2 percent versus a six-currency basket including the euro, gaining for the first time in four days, before data that may show weakness in German industrial production. Bullion tends to move inversely to the greenback. “In the last few months, gold prices have slipped as investors have flocked to the traditional safe haven assets of U.S. treasuries and the U.S. dollar in lieu of gold as the European debt crisis has intensified,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail today. “However, we believe the hopes of central bank stimulus will keep prices firm.”
December-delivery bullion was little changed at $1,614 an ounce on the Comex in New York. Exchange-traded product holdings were unchanged at 2,403.477 metric tons yesterday, the most since July 19, data compiled by Bloomberg show.
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