Thursday, September 6, 2012

20120906 1019 Global Commodities Related News.

Food-Price Jumps May Get Larger On Weather, Oxfam Says (Bloomberg)
Field corn plants with wilted and dying leaves stand in a dry field in Idaville, Indiana, on July 6, 2012. Jumps in food prices may be larger in the future as extreme weather events linked to climate change affect production, charity Oxfam International said. The impact of climate change on food prices may have been underestimated because most studies focus on how long-term temperature and rainfall changes affect farming, ignoring extreme events, Oxfam said today in a report. “Extreme weather events in a single year could bring about price spikes of comparable magnitude to two decades of long-run price rises,” Oxfam said today in a report, citing a study conducted for the charity by Dirk Willenbockel of the Institute of Development Studies in the U.K. Willenbockel used a model to simulate how export and domestic prices for food commodities could be affected by extreme weather in 2030 in sub-Saharan Africa and the main export regions for rice, corn and wheat, according to Oxfam.
A drought in North America in 2030 similar to the one in 1988 may increase export prices for corn by about 140 percent and world wheat prices by about 33 percent, according to the study. Simultaneous poor rice harvests in India and Southeast Asia may lift global average export prices for processed rice by 25 percent, Oxfam said. For East Africa and West Africa, drought on a similar scale as that experienced in 1992 may lift average corn prices for consumers in the region by 50 percent, the study showed. A “bad” harvest year in South America, with droughts and flooding similar to 1990, may could lift world corn prices by 12 percent, Oxfam said.

Wheat Falls To 3-Week Low As Livestock Farmers May Use More Corn (Bloomberg)
Wheat futures tumbled to the lowest in almost three weeks on speculation that demand will slow as livestock producers use more corn, a cheaper substitute for animal feed. Corn prices have slumped 6.9 percent since touching a record high on Aug. 10, cooling a rally sparked by crop damage from the worst U.S. drought since 1956. Over the same period, wheat dropped 3.7 percent. “Wheat needs to have something to follow, and today it’s following corn lower,” Dewey Strickler, the president of Ag Watch Market Advisers in Franklin, Kentucky, said by telephone. “The market has fallen, and we haven’t been able to muster a bounce back.” Wheat futures for December delivery declined 2.4 percent to settle at $8.6775 a bushel at 2 p.m. on the Chicago Board of Trade, after reaching $8.6525, the lowest since Aug. 16. The contract posted the biggest decline since Aug. 23, and prices have dropped in nine of the past 10 sessions.
Corn futures for December delivery fell 1.8 percent today on the CBOT to close at $7.9075 a bushel, compared with an all- time high of $8.49 last month. Corn is the biggest U.S. crop followed by soybeans, hay and wheat, government figures show.

Wheat Market Recap Report(CME)
December Wheat finished down 21 at 867 3/4, 20 3/4 off the high and 2 1/2 up from the low. March Wheat closed down 19 at 880 1/2. This was 2 1/4 up from the low and 18 1/4 off the high.
December Chicago wheat traded sharply lower into the close and traded down to levels not seen since the middle of August. Kansas City and Minneapolis wheat traded sharply lower as well. Outside markets are mixed with US stocks slightly higher and the dollar traded weaker, but neither were enough to support prices today. Bulls did receive a bit of positive news near the midpoint of the session after it was reported that Ukraine's Agriculture ministry and their grain trader's union agreed on a 2012/13 maximum export volume of 4 million tonnes of wheat vs. current USDA estimates of 6 million tonnes. The news was seen as supportive but the markets fell victim to technical selling the remainder of the day. The weather forecast for the western plains calls for a slightly better chance for showers heading into the weekend which will benefit Hard Red Winter wheat planting. Concern that next week's USDA report could show a drop in the US average corn yield and production is supportive to wheat but this assumption by some traders offered little support to the market as traders took profits midday. December Oats closed down 8 1/4 at 387. This was 1 1/2 up from the low and 8 off the high.

Pro Farmer: After the Bell Wheat Recap(CME)
Wheat futures weakened into the close to finish with losses mostly in the upper teens at all three exchanges. Wheat saw spillover from neighboring pits, as well as from concerns U.S. wheat isn't competitively priced on the global market. Traders were also encouraged to take profits as recent rains have helped recharge soil moisture across the key wheat-growing areas of the Central and Southern Plains.

Pro Farmer: After the Bell Corn Recap(CME)
Corn futures ended low-range with losses of 11 3/4 to 17 1/4 cents in the September through May contract, while farther deferred months closed steady to slightly lower. USDA data yesterday showed that harvest was 10% complete as of Sept. 2. The market expects harvest-related hedge pressure to mount, regardless of the pitiful state of the crop. This has caused basis levels to soften around the country and has encouraged profit-taking in corn futures.

Corn Market Recap for 9/5/2012(CME)
December Corn finished down 14 1/4 at 790 3/4, 15 3/4 off the high and 1 1/4 up from the low. March Corn closed down 13 at 794 3/4. This was 1 1/2 up from the low and 14 3/4 off the high.
December corn traded under pressure for most of today's session and closed near the lows of the day. The weaker trade was linked to profit taking, technical selling, and weaker cash markets as harvest begins to pick up it's pace across the Corn Belt. Some traders believe next week's USDA report could show downward revisions to the 2012/13 corn yield and production but the market saw very limited support from this and instead took profits ahead of tomorrow's European Central Bank meetings. There are reports that Brazilian corn has started to unload on the east coast and the sluggish US exports recently added to the weaker tone today. Argentina's Agriculture Secretary made statements that suggest that Argentina's 2012/13 corn production could reach 25 to 26 million tonnes vs. 21 million tonnes in 2011. Outside markets offered minimal direction today with US stocks trading higher and the US Dollar lower. November Rice finished down 0.255 at 14.92, 0.01 off the high and 0.05 up from the low.

GRAINS: Chicago wheat eased falling for a fourth consecutive session as rains across the U.S. Plains improved the prospects for winter crop planting and as exports from the Black Sea region continued to pressure the market. Soybeans were little changed after climbing to a record top of around $18 a bushel on Tuesday, while corn edged higher as tightening global supplies underpinned the market. (Reuters)

US corn harvest 10 pct done; a record but below forecast (Reuters)
U.S. farmers made little progress in harvesting corn during the past week as rains related to Hurricane Isaac kept them out of their fields, but the harvest was still at a record pace because early planting and the summer's drought caused the crop to mature earlier than usual.

Argentina approves more old crop corn exports (Reuters)
Argentina's government on Tuesday approved the export of another 2.75 million tonnes of 2011/12 corn as growers in the world's No. 2 supplier start new crop plantings, an industry source said.

India could become net sugar importer as early as 2013/14, bolster prices (Reuters)
India, the world's largest consumer of sugar, is likely to become a net importer of the sweetener as early as 2013/14, as drought-hit farmers replace cane with less water-intensive crops.

ICE raw sugar hovered above a fresh 3-month low in early trading weighed by brisk harvesting in Brazil, while arabica coffee eased, pressured by a firmer dollar. (Reuters)

ICE cocoa edged up in light volumes, as dealers closely watched weather in the main growing regions of West Africa before the start of the main crops. (Reuters)

Oil Gains A Second Day As U.S. Stockpiles Drop Most Since July (Bloomberg)
Oil rose a second day in New York after a report showed stockpiles declined the most in five weeks in the U.S., the world’s biggest crude consumer. Futures advanced as much as 0.7 percent after the industry- funded American Petroleum Institute said inventories slid 7.2 million barrels last week, the most since the period ended July 27. An Energy Department report today may show supplies fell 4.95 million barrels as Hurricane Isaac curtailed output in the Gulf of Mexico, according to a Bloomberg survey. About 49 percent of oil production and 26 percent of natural-gas output remains shut because of the storm, the government said. Oil for October delivery gained as much as 70 cents to $96.06 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.79 at 9:27 a.m. Sydney time. The contract climbed 6 cents yesterday to close at $95.36. Front- month prices are down 3.1 percent this year.
Brent oil for October settlement decreased $1.09, or 1 percent, to $113.09 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $17.73. U.S. gasoline stockpiles dropped 2.3 million barrels last week, API data shows. They are forecast to decline 3 million barrels, according to the median estimate of 12 analysts in the Bloomberg News survey.

OIL-Oil slips to $114 on growth concerns before ECB
LONDON, Sept 5 (Reuters) - Brent crude oil slipped to around $114 a barrel on worries over economic growth and ahead of a European Central Bank (ECB) meeting expected to announce new measures to tackle the region's debt crisis.
"We are seeing some volatility as the political rhetoric around Europe continues ahead of tomorrow's (ECB) meeting," said Guy Wolf, macro strategist at brokers Marex Spectron in London.

Japan to expand national reserve of oil products
TOKYO, Sept 5 (Reuters) - Japan will expand its national strategic reserves of oil products by adding gasoline, gas oil and A-type fuel oil for the first time as it equips itself to better cope with crises such as last year's devastating earthquake, trade ministry officials said.
The world's third biggest oil consumer, which now stores only kerosene in its oil product strategic stockpile, will add one day's worth each of gasoline, gasoil, kerosene and A-type fuel oil in national reserves by March 31, the officials said on Wednesday.

US says 51.51 pct oil output still shut due to Isaac
Sept 4 (Reuters) - U.S. regulators said 51.51 percent of daily oil production and 29 percent of daily natural gas output in U.S.-regulated areas of the Gulf of Mexico remained shut on Tuesday due to Hurricane Isaac, whose remnants were moving toward the East Coast.  
The amount of shut oil output was down from Monday's 58.29 percent and natural gas production compared with 38.62 percent shut a day earlier.

China's top refineries to raise crude runs in Sept
BEIJING, Sept 5 (Reuters) - China's biggest refineries are set to increase the volume of crude oil processed in September, reversing cuts in the previous two months, a Reuters poll showed, after the startup of a new unit offsets production drops at other plants.
However, officials at the biggest two refiners, Sinopec  and PetroChina , doubt if demand in China, the world's second-largest oil user, is reviving after falling through the second quarter of this year.

The G7 is pushing on an oily string
--Robert Campbell is a Reuters market analyst. The views expressed are his own--
NEW YORK, Sept 4 (Reuters) - It is a problem familiar to central bankers: under certain weak economic conditions the tools available to policymakers become ineffective, hence the expression "pushing on a string."
Western governments wishing to undo this summer's geopolitically-induced oil rally (incidentally, one of their making) face a conundrum similar to central bankers' puzzles.

Deeper Correction Looms for Crude Futures, Robin Mesch Says(CME)
By Robin Mesch - Wed Sep 05 12:30:00 CDT 2012 CT
Drop Near $90 Possible as Bulls No Longer Driving Bus
A recent pullback in West Texas Intermediate crude oil futures below $98 a barrel may open the door for a deeper market correction toward $90.50 during September, technical analyst Robin Mesch said in a monthly report. Bullish traders were the "clear directional drivers" in crude futures during August, as prices briefly pushed above chart resistance at $98 to touch the highest levels in over three months, Mesch said. Based in Oregon, Mesch is a leading market strategist and a pioneer in the field of technical analysis and market theory. Oil has since dropped about $3, and the market's short-term profile suggests that for now, the buy order flow imbalance has begun to dry up, "leaving an interim congestion confine top for the bulls to overcome squarely at $98," Mesch wrote. Still, a renewed climb above $98 increases the likelihood oil will reach the "next significance zone" near $102.
In other futures, gold market bulls grabbed control after prices surpassed resistance around $1,620 to $1,640 an ounce, and there is little standing in the way of a continued rally toward $1,715 in the December contract. In September E-mini S&P 500 futures, chart patterns suggest the market may pull back to 1,375 to 1,385 to lure long interest back.

Gold To Fall As Stronger Dollar Curbs Investment Demand (Bloomberg)
Gold futures declined for the first time in three sessions as a European Central Bank plan to buy bonds as part of an economic-stimulus program lowered demand for the precious metal as a hedge against inflation. The ECB was said to propose unlimited government-debt purchases that will be sterilized, ensuring a neutral impact on the money supply by removing funds from elsewhere in the banking system. Yesterday, gold reached $1,701.60 an ounce, the highest since March 13. “The word ‘sterilized’ is bearish for gold,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “There is some profit- taking too.” Gold futures for December delivery fell 0.1 percent to settle at $1,694 at 1:41 p.m. on the Comex in New York. The commodity gained 2.3 percent in the previous two sessions. In August, the metal jumped 4.5 percent, the most since January, on speculation that the Federal Reserve and ECB will increase steps to bolster their economies.
Silver futures for December delivery slid 0.3 percent to $32.329 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for October delivery advanced 0.5 percent to $1,575.60 an ounce, the third straight gain. Palladium futures for December delivery rose 0.9 percent to $646.95 an ounce.

Platinum Buying Expands As Mining Strikes Escalate: Commodities (Bloomberg)
Investors are buying platinum at the fastest pace since 2010 after disruptions at South African mines caused the biggest loss of supply in at least seven years. Strikes and pit closures meant mining companies extracted 380,000 ounces less than they could have this year, equal to about 6 percent of global output, Deutsche Bank AG estimates. Metal purchases through exchange-traded products were the most in 20 months in August, data compiled by Bloomberg show. Prices will average $1,625 an ounce in the fourth quarter, the highest in more than a year, according to the median of 12 analyst estimates compiled by Bloomberg. The lost production is diminishing a glut that drove prices to within 0.4 percentage point of a bear market in July and below the cost of extracting the metal. The rebound accelerated after police killed 34 strikers at Lonmin Plc (LMI)’s Marikana complex last month.
It was the worst mine violence since the end of apartheid in 1994 in South Africa, which accounts for about 75 percent of global output. Hedge funds are now their most bullish since March, U.S. government data show. “Supplies are going to be challenged,” said Nic Johnson, who helps manage $30 billion of commodity assets at Pacific Investment Management Co. in Newport Beach, California. Platinum “moved very close to the marginal cost of production which should put an upward pressure on prices. Any type of outages in South Africa will make it more attractive.”

U.S. Drought Helps Drive Shipping Rates To 3-1/2 Year Low (Bloomberg)
The worst U.S. drought in more than half a century helped drive down rates for Panamax vessels shipping grains to the lowest in more than 3 1/2 years as it results in a slump in cereal cargoes. The ships hauling about 60,000 metric tons of grains and other commodities including coal and iron ore slid 5.7 percent to $5,141 a day, the lowest since January 2009, according to data from the Baltic Exchange in London today. The Baltic Dry Index, a wider measure of costs, fell 1.3 percent to 684 points. Global grain exports will fall the most in 27 years in the 2012-13 marketing year as the drought curbs shipments from the world’s largest supply country, U.S. Department of Agriculture data show. Canceled grains cargoes mean owners of vessels are undercutting each other or dropping anchor waiting for employment, said Fearnleys A/S, an Oslo-based shipbroker. “The horizon does not look very bright,” Fearnleys said in a report today. “Only a few forward cargoes of grains are being quoted in the market.”
Panamaxes joining the fleet jumped 43 percent in the last two quarters, adding new vessels at the fastest pace since 2001, according to data from Macquarie Research and Clarkson (CKN) Plc. Daily earnings to hire Panamaxes for voyages across the Atlantic Ocean fell the most since Feb. 12, sliding 9.5 percent to $4,153, the lowest since Dec. 18, 2008, exchange data show.

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