Friday, September 7, 2012

20120907 1044 Global Commodities Related News.

Hurricane Leslie Slows on Track East of Bermuda (Bloomberg)
Hurricane Leslie is moving at a crawl in the Atlantic south of Bermuda and probably won’t start strengthening until tomorrow on a path past the islands. The storm’s top winds have remained about 75 miles (121 kilometers) per hour since yesterday and it’s 430 miles south- southeast of Bermuda, moving north at 2 miles per hour, the U.S. National Hurricane Center said. “Leslie has barely moved since last night,” the center said in an advisory at 11 a.m. New York time. “No significant change in strength is expected today.” High wind shear has been tearing at Leslie and the storm has been pulling up colder ocean water, according to the center. That has been holding the system’s strength down. Eventually, Leslie, now a Category 1 hurricane on the Saffir-Simpson scale, is expected to develop top winds of 105 mph, which would bump it up a level to a Category 2, the center said. The storm’s current track would take it east of Bermuda this weekend and possibly into Newfoundland next week.
Newfoundland was hit hard in 2010 by Hurricane Igor, which followed a similar path. Winds of 105 mph were recorded, and 90 cities and towns were isolated after 9.4 inches of rain fell, washing out roads, according to a provincial report. The Fire and Emergency Services of Newfoundland and Labrador are monitoring Leslie’s track, according to a statement from the agency.

DTN Closing Grain Comments 09/06 14:37 (CME)
Wheat Surges Ahead Thursday
Wheat received a strong shot in the arm from another wave of Russian rumors. Corn followed along while soybeans were stuck in directionless trade, closing fractionally lower.

Pro Farmer: After the Bell Wheat Recap(CME)
Wheat futures posted strong gains at all three exchanges. Chicago wheat closed 22 1/4 to 26 1/4 cents higher in the September through May contracts, with far-deferred contracts advancing about half that much. Kansas City wheat was mostly 21 to 25 cents higher, although far-deferred contracts were around 9 cents higher. Minneapolis wheat finished 13 1/2 to 19 3/4 cents higher. Wheat futures were boosted by demand news today as Egypt bought 475,000 metric tons (MT) of Black Sea origin wheat -- 300,000 MT from Russia, 120,000 MT from Romania and 55,000 MT from Ukraine.

Wheat Market Recap Report(CME)
December Wheat finished up 24 at 891 3/4, 2 3/4 off the high and 24 1/4 up from the low. March Wheat closed up 23 1/4 at 903 3/4. This was 23 3/4 up from the low and 2 off the high. December Chicago wheat traded sharply higher into the close and extended gains against the corn market. Kansas City and Minneapolis wheat were higher as well. The midday surge in wheat futures kicked off after Egypt bought 475,000 tonnes of wheat from Russia, Romania, and Ukraine. The trade reacted bullishly to the news on thoughts that world demand is increasing and Black Sea stocks will continue to dwindle later this year which could force more export demand to the US. Following the results of the tender, Iraq announced a tender to buy 50,000 tonnes of wheat from any origin. It is also being reported that Russia could begin importing wheat from Kazakhstan later this year if domestic food prices continue to rise. The commodity complexes, as well as outside markets, saw widespread support today following this morning's ECB meeting. December Oats closed up 4 at 391. This was 3 3/4 up from the low and 3 1/2 off the high.

Pro Farmer: After the Bell Corn Recap(CME)
Corn futures closed 3 1/4 to 10 3/4 cents higher, which was in the upper end of today's range, but off session highs. Corn futures were supported by fresh demand news today as USDA reported daily export sales of 217,424 metric tons -- 184,912 MT for 2012-13 and 32,512 MT for 2013-14 -- to unknown destinations. While traders were curious if "unknown" was China, the key is that end-user buying surfaced following recent price pressure, signaling there's still solid demand under the market.

Corn Market Recap for 9/6/2012(CME)
December Corn finished up 7 3/4 at 798 1/2, 3 1/2 off the high and 10 1/2 up from the low. March Corn closed up 6 3/4 at 801 1/2. This was 9 1/2 up from the low and 3 3/4 off the high. December corn closed higher on the day on support from explosive wheat market. Corn began the day with a subdued tone as harvest picks up it's pace and on a steady to slightly weaker cash market in the Gulf of Mexico. Domestic basis rose in specific regions later this afternoon with an ethanol plant in Linden, IN raising bids 17 cents per bushel, citing tight local supplies. The USDA announced that private exporters sold 217,424 tonnes of US corn to an unknown destination this morning. The shipment periods for the sale included the 2012/13 and 2013/14 marketing years. Corn also saw support on thoughts that the USDA could reduce the average US corn yield and production in next week's report. Ethanol production for the week ending August 31 averaged 829,000 barrels per day. This is up 1.2% vs. last week and down 7.50% vs. last year. This crop year's cumulative corn used for ethanol production for this crop year is 4.96 billion bushels which falls just short of the 2011/12 USDA estimate. Commodity markets saw broad-based support following the ECB meeting this morning which turned the US dollar lower midsession and offered a positive tilt to commodity markets. November Rice finished down 0.295 at 14.625, 0.145 off the high and equal to the low.

Wheat Production in Australia Seen Missing Government Estimate (Bloomberg)
Wheat production in Australia, the world’s second-biggest shipper, may be less than a government forecast after dry weather curbed yield prospects just as drought from the U.S. to Russia threatens crops. Output may be 23.25 million metric tons in 2012-2013, according to the median estimate of six analysts and traders in a Bloomberg survey. That’s 3.5 percent less than the 24.1 million tons predicted by the Australian Bureau of Agricultural and Resource Economics and Sciences, and compares with a record 29.5 million tons a year earlier. The U.S. Department of Agriculture estimates the harvest at 26 million tons.
Wheat has climbed 35 percent this year, reaching a four- year high in July, as the worst U.S. drought since 1956 and dry conditions in Russia shrink global supplies. The world needs swift, coordinated action to avoid another food crisis in the face of rising prices, the heads of three United Nations agencies said Sept. 4. Surging grains and oilseeds prices drove the biggest monthly gain in food costs in July since 2009, according to the UN. “Colder and drier-than-ideal conditions in much of Western Australia and some parts of the east coast have really eroded the potential for the wheat crop,” said Graydon Chong, senior grains and oilseed analyst at Rabobank International. “The next two-to-four weeks will be crucial from a weather perspective.”
Abares is set to update its production forecast on Sept. 11 followed by the USDA on Sept. 12. Australian grain farmers begin harvesting from about November.

Wheat rose about one percent, with the market steadying after a four-session fall as it awaited the outcome of a tender by Egypt. (Reuters)
Corn ticked up after losing almost 2 percent on Wednesday, with operators already looking ahead to next week's monthly crop estimates from the U.S. Department of Agriculture for a clearer picture of the impact on supply and demand from the worst U.S. drought in 56 years. (Reuters)

Russia says G20 to hold urgent meeting on grain in Oct (Reuters)
Deputy Agriculture Minister Ilya Shestakov said on Thursday that the G20 countries will hold a rapid response meeting on the grain market next month, at which Russia will outline its view of the situation.

ICE cocoa futures touched a fresh 10-month high in early trading supported by concerns over possible damage to the West African crop. (Reuters)

Raw sugar bounced in a technical correction above a three-month low touched in the prior session. (Reuters)

Sugar vs. corn syrup: sweeteners at center of bitter food fight (Reuters)
A group of U.S. food companies that includes conglomerate Cargill Inc has sued a sugar industry trade group, claiming high fructose corn syrup is being unfairly maligned by promoters of "natural" sugar.

Indonesia to lift grain, sugar stocks to cap food prices (Reuters)
Indonesia's state procurement agency Bulog plans to lift rice stocks up to four-fold from current levels and boost sugar, soybean and corn stocks to defend against food inflation due to rising commodities prices, a junior government minister said.

Oil Drops From One-Week High on Speculation Crude Demand to Slow (Bloomberg)
Oil fell from the highest close in almost a week as investors speculated prices may have risen too far before a report forecast to show jobs growth slowed last month in the U.S., the world’s biggest crude consumer. Futures slid as much as 1 percent, declining for the first time in three days and heading for the first weekly drop in six weeks. U.S. employment probably rose by 130,000 in August after gaining 163,000 in July, according to a Bloomberg News survey before a Labor Department report today. West Texas Intermediate has technical resistance along its 200-day moving average, at $96.61 a barrel, according to data compiled by Bloomberg. “Oil has now arrived at a situation where prices are probably fairly well priced,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “It doesn’t seem likely that we’re going to see a situation where we will see significant growth in oil demand in coming months.”
Crude for October delivery declined as much as 98 cents to $94.55 a barrel in electronic trading on the New York Mercantile Exchange and was at $94.72 at 11:24 a.m. Sydney time. The contract climbed 17 cents yesterday to $95.53, the highest close since Aug. 31. Front-month prices are down 1.8 percent this week and 4.2 percent this year. Brent oil for October settlement decreased 81 cents, or 0.7 percent, to $112.68 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $17.96, unchanged from yesterday.

Saudi oil price rise to Asia reverses discount
-- Clyde Russell is a Reuters market analyst. The views expressed are his own. --
LAUNCESTON, Australia, Sept 6 (Reuters) - At first glance it may appear that Saudi Aramco has been a little mean to its Asian customers by raising its oil prices for them while cutting for refiners in Northwest Europe.
But an analysis of moves in official selling prices (OSP) and the underlying crude costs over the past three months shows that what's happened is the relative discount Asian refiners were receiving has been unwound.

OIL-Oil rises on expectations of new ECB bond programme
LONDON, Sept 6 (Reuters) - Oil futures rose above $114 per barrel, buoyed by expectations the European Central Bank will manage to ease its debt crisis with a new programme of bond purchases.
"Investors are pricing in (hopes for) the ECB meeting tonight," said Natalie Rampono, a commodity strategist at ANZ.

U.S. crude stocks fall sharply after hurricane-API
NEW YORK, Sept 5 (Reuters) - U.S. crude stocks fell sharply last week as Hurricane Isaac's passage through the Gulf of Mexico shut in production and closed ports, data from the industry's American Petroleum Institute showed on Wednesday. Crude inventories fell by 7.2 million barrels in the week to Aug. 31, compared with analysts' expectations for a drawdown of 5.3 million barrels.
The API-reported inventory drop was the largest since the week to July 27, when stocks fell by almost 12 million barrels. Traders attributed that earlier inventory drop in part to fog in the Houston Ship Channel, which at the time may have delayed imports.

Copper Trade Most Bullish Since October on Stimulus: Commodities (Bloomberg)
Copper traders are the most bullish in almost 11 months on mounting speculation central banks will do more to bolster growth, strengthening demand for metals. Twenty-one analysts surveyed by Bloomberg said they expect prices to gain next week and five were bearish. A further four were neutral, making the proportion of bulls the highest since Oct. 14. Hedge funds are betting on higher prices for the first time since May and stockpiles in warehouses monitored by the London Metal Exchange, the largest metals bourse, dropped to the lowest level in almost four years.
Commodities, which entered a bull market last month, may rise another 10 percent, Jeffrey Currie, the head of commodities research at Goldman Sachs Group Inc., said in an interview. The European Central Bank yesterday held interest rates at a record low and President Mario Draghi said policy makers agreed to an unlimited bond-purchase program. Federal Reserve Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with “additional policy accommodation as needed.” “It’s really expectations of what the next round of initiatives will do for global growth,” said Carole Ferguson, an analyst at Fairfax IS in London. “It’s a good indicator of industrial activity. If there’s any recovery in demand, copper should go up quite a lot.”

Mitsui’s 200% Copper Mine Premium Signals More Codelco Deals (Bloomberg)
Mitsui & Co. (8031), Japan’s second-largest trading house, paid three times as much as Codelco for a stake in a Chilean copper asset last month as it seeks to build a foundation for future deals with the largest copper producer. A joint venture between Codelco and Tokyo-based Mitsui agreed to buy a 29.5 percent stake in Anglo American Sur SA, which owns the world’s fifth-largest copper mine, for $2.8 billion last month. Codelco’s 24.5 percent stake was priced at $73 million per 1 percent, compared with Mitsui’s at $220 million per 1 percent, according to Bloomberg calculations based on the terms of the deal. Mitsui, which has the most cash of the Japanese traders, is seeking to benefit as state-owned Codelco plans to spend $20 billion to almost double copper output, expand abroad and into other metals. Codelco has 132 million metric tons of copper resources valued at $1 trillion based on today’s prices.
“We’d like to be co-investor, to be jointly involved in the upstream” with Codelco, Daiki Sato, head of projects at Mitsui’s base metals division, said in an interview in Tokyo. Codelco has mining rights across South America and attractive lithium and molybdenum assets, he said. The move mirrors investments Mitsui made in BHP Billiton Ltd. (BHP)’s iron ore mines in the 1960s, which propelled it to become Japan’s biggest importer of the material. A 2003 purchase of shares in Vale SA (VALE3)’s holding company for $830 million the last fiscal year alone accounted for 75 billion yen ($958 million) of profit. The stake, equivalent to 5 percent of Vale, the world’s largest iron ore miner, is worth about $4.25 billion today.

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.”

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