Wednesday, September 12, 2012

20120912 1017 Global Commodities Related News.

Commodity investors should demand benchmark change
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, Sept 10 (Reuters) - For the last two decades, the diversified approach to commodity investing encapsulated by the Dow Jones-UBS Commodity Index has outperformed the more production-weighted system employed by the Standard and Poor's Goldman Sachs Commodity Index.
While the GSCI remains popular with asset managers because it is easier to beat, institutional investors concerned about absolute rather than relative performance, should insist on using the DJUBS rather than the GSCI as a benchmark.

Stimulus to Reverse Commodity Bull-to-Bear Fastest Since 2008(Bloomberg)
Commodities surged from a bear to a bull market in anticipation of economic stimulus measures from the Federal Reserve, completing the fastest turnaround since the depths of the financial crisis starting in 2008. Within 11 weeks the Standard & Poor’s GSCI spot index rose 22 percent from its 2012 low, stoked by falling supplies of oil and grains and speculation that the European Union will successfully end its sovereign debt crisis. The gauge of 24 raw materials soared to a record high four years ago before plunging as the U.S. slid into the deepest recession since the 1930s. After the jobless rate stayed at more than 8 percent for 43 months, traders are speculating that Fed Chairman Ben S. Bernanke will unveil a third round of so-called quantitative easing as soon as this week. Corn prices advanced to an all-time high last month after the worst U.S. drought since 1956 and oil is climbing amid mounting tension over Iran’s nuclear program.
“There have been a lot of moving parts within the commodities markets this year,” Jim Paulsen, chief investment strategist in Minneapolis at Wells Capital Management, which oversees $320 billion, said in a telephone interview. “We are turning a corner. The surprise is going to be that global growth is going to accelerate.”

DTN Closing Grain Comments 09/11 14:31 Grains Extend Losses Ahead of USDA Reports
Grain contracts, led by soybeans, continued to sell off ahead of Wednesday morning's supply and demand and crop production reports. Corn, beans, and wheat are all growing more bearish technically.

GRAINS: Chicago soybeans slid to a two-week low falling for a fifth consecutive session, while corn hovered near its lowest in six weeks as investors moved out of bullish bets ahead of key U.S. government reports. Wheat also eased, tracking the weakness in corn and soy, but analysts said the market could move higher with dryness hurting crops in Australia and lower output in the Black Sea region. (Reuters)

Pro Farmer: After the Bell Wheat Recap(CME)
Wheat futures were choppy today and most contracts ended mid- to low-range. Chicago and Minneapolis wheat ended with slight losses in most contracts while Kansas City wheat settled narrowly mixed. Wheat traders worked to even positions ahead of USDA's Supply & Demand Report tomorrow morning. Pre-report expectations are for USDA to raise its 2012-13 carryover estimate by 11 million bu. from last month to 709 million bushels.

Wheat Market Recap Report(CME)
December Wheat finished down 6 at 883 3/4, 14 1/2 off the high and 1 1/2 up from the low. March Wheat closed down 5 3/4 at 895 3/4. This was 1 3/4 up from the low and 13 3/4 off the high. December Chicago wheat traded slightly lower in the close. Kansas City and Minneapolis traded weaker for most of the day but KC managed marginal gains in July 2013 contract, perhaps due to drier than normal conditions in the western plains. The sharply lower US Dollar offered marginal support in early trade but pressure from the soybean and corn markets spilled over to wheat. ABARES cut their Australian wheat production estimate overnight to 22.5 million tonnes vs. 24.1 in June. The trade expects the USDA to cut production by 2-3 million tonnes in tomorrow's report. Most traders feel the USDA could cut 2012/13 world ending stocks to 174.5 million tonnes vs. the current estimate of 177.17. Egypt announced a wheat purchase of 235,000 tonnes of Ukrainian, Russian, and French wheat today. Price spreads between Russian and French wheat continue to narrow signaling tight supply and less aggressive offers by Russian shippers. The negative tone to wheat was also linked to profit taking and repositioning ahead of tomorrow's USDA report. December Oats closed up 1 at 387 1/2. This was 3 1/2 up from the low and 1 off the high.

Pro Farmer: After the Bell Corn Recap(CME)
Corn futures closed 4 to 6 cents lower in the December through September 2013 contracts, with September 2012 ending 1 1/4 cents higher. Traders rushed to the exits in late trade, working to lighten their long exposure to the market ahead of tomorrow morning's key USDA reports as they realize a sharp drop in the size of the crop is already factored into prices. While traders look for USDA to trim the size of the corn crop to 10.403 billion bu. from 10.779 billion bu. in August, they also expect USDA to lower its usage estimates.

Corn Market Recap for 9/11/2012(CME)
December Corn finished down 5 1/2 at 777 3/4, 10 3/4 off the high and 2 1/2 up from the low. March Corn closed down 6 at 781 1/4. This was 2 1/4 up from the low and 11 off the high. December corn traded slightly lower into the closing bell after being pressured by a sharply lower soybean market and on thoughts that current price levels are rationing enough demand. Demand for corn remains weak in export markets on slow demand as harvest moves across the US Corn Belt. Central Midwest weather conditions this week should promote good harvest activity but dry conditions in central and northern Brazil are being watched carefully. Some traders are also suggesting that the recent flooding in Argentina has resulted in minor corn acreage losses. The trade is expecting an average US corn yield for tomorrow's USDA report of just over 120 bushels per acres and production near 10.4 billion bushels. Traders took profits ahead of the USDA report on fears that the USDA might surprise the market with a slightly higher corn yield. The US Dollar traded sharply lower on the day which provided limited support to the grain markets. November Rice finished down 0.05 at 14.72, 0.07 off the high and 0.04 up from the low.

Egypt to lift ban on rice exports in October – paper (Reuters)
Egypt will resume exports of rice in October, lifting a ban imposed since 2008 to protect the domestic market, daily newspaper al-Borsa cited the agriculture minister as saying.

US Corn harvest slowed by moisture; soy ahead of expectations (Reuters)
U.S. farmers made slow progress in the fields in the past week but harvest of both corn and soybeans was at a record pace because the crops matured earlier than ever, government data released on Monday showed.

Vietnam's 2012/2013 coffee production(Reuters)
Harvesting of Vietnam's 2012/2013 coffee crop is due to begin next month, with farmers expecting output to ease by as much as a fifth in the key growing province of Daklak, following a record season.

SOFTS: Arabica coffee futures steadied digesting the previous session's sharp gains after speculators covered short positions, while raw sugar and ICE cocoa futures nudged higher. (Reuters)

OIL-Oil rises above $115 ahead of Fed meeting
LONDON, Sept 11 (Reuters) - Oil rose above $115 a barrel, lifted by expectations the U.S. Federal Reserve would unveil further steps to stimulate its economy this week.
"Prices have barely moved, suggesting the market is in waiting mode (ahead of the Fed gathering)," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investment.

Oil Trades Near Three-Week High on Stimulus Outlook(Bloomberg)
Oil traded near the highest level in three weeks amid speculation China and the U.S. will add stimulus to their economies, sustaining demand for fuel in the world’s biggest crude users. Futures were little changed after rising for a fifth day yesterday, the longest run of gains since July. Chinese Premier Wen Jiabao signaled the government has more room for fiscal and monetary policy to support growth. The Federal Open Market Committee starts a two-day meeting today where it may announce measures to stimulate the U.S. economy. The nation’s crude stockpiles probably shrank 2.9 million barrels last week, according to a Bloomberg News survey before an Energy Department report today. “The market is waiting on the outcome of the FOMC meeting and data from the Energy Department,” said David Lennox, an analyst at Fat Prophets in Sydney.
Oil for October delivery was at $97.04 a barrel, down 13 cents, in electronic trading on the New York Mercantile Exchange at 11:42 a.m. Sydney time. The contract yesterday rose 0.7 percent to $97.17, the highest close since Aug. 22. Prices are 1.8 percent lower this year. Brent oil for October settlement fell 1 cent to $115.39 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $18.35, from $18.23 yesterday.

Oil Declines From Three-Week High as U.S. Crude Stockpiles Climb(Bloomberg)
Oil fell from the highest closing price in three weeks in New York after an industry report showed stockpiles climbed in the U.S., the world’s biggest crude user. Futures slipped as much as 0.5 percent, dropping for the first time in six days. Crude inventories rose 221,000 barrels last week, data from the American Petroleum Institute showed. An Energy Department report is forecast to show they slipped by 2.9 million, according to a Bloomberg News survey. Oil supplies are abundant and consumption will slow next year, the Organization of Petroleum Exporting Countries said yesterday. Oil for October delivery decreased as much as 46 cents to $96.71 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.78 at 9:16 a.m. Sydney time. The contract yesterday rose 0.7 percent to $97.17, the highest close since Aug. 22. Prices are 2.1 percent lower this year.
Brent oil for October settlement climbed 59 cents, or 0.5 percent, to $115.40 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $18.23. World oil consumption will rise by an average 800,000 barrels a day to 89.55 million a day in 2013, OPEC said in its monthly market report. Demand is forecast to increase by 900,000 barrels a day to 88.74 million this year. The group estimates its 12 members will need to pump an average of 29.5 million barrels a day next year, or 1.9 million less than current output. WTI will average $93.67 a barrel during the final three months of this year, the Energy Department said in its Short- Term Energy Outlook yesterday. Prices will average $92.63 a barrel next year, the department said.

Brent-WTI Oil Gap Sliding as North Sea Output Rebounds(Bloomberg)
The difference between the world’s two most-traded grades of oil is narrowing as North Sea production rebounds from the lowest level in five years. Brent crude on the ICE Futures Europe exchange in London cost about $18 a barrel more than West Texas Intermediate on the New York Mercantile Exchange yesterday, down from $21.92 on Aug. 15, the widest in almost 10 months. Daily exports of the four crude grades comprising the Dated Brent benchmark will rise 24 percent in October, the biggest monthly increase in two years, as offshore maintenance work ends, according to data compiled by Bloomberg. “It is when we fully exit maintenance in the North Sea that the impact of additional barrels will be felt,” Harry Tchilinguirian, BNP Paribas SA’s head of commodity-markets strategy in London, said in an interview yesterday. “The market tends to look at the difference in price between these two crudes as it tends to guide arbitrage activity across the Atlantic.”
The recovery in North Sea supply is combining with a slew of refinery repairs that are sapping demand for Brent just as new rail links and pipelines are cutting a glut of WTI stored in the U.S. Midwest. Goldman Sachs Group Inc. has stuck this year to a forecast that the difference between the two grades, the most-traded spread on energy exchanges, will shrink to $5 a barrel. BNP says it may drop to between $13 and $14 after staying at $20 until the maintenance period ends.

POLL – U.S. crude stocks forecast down for 2nd week after Isaac
Sept 10 (Reuters) - U.S. crude oil stockpiles likely fell last week for the second straight time, with U.S. Gulf Coast oil production and imports still reeling after Hurricane Isaac, a preliminary Reuters poll showed on Monday.
Crude inventories are forecast to have fallen by 2.1 million barrels in the week to Sept. 7, according to the survey of seven analysts. Five analysts projected a draw in inventories.

Iran says oil prices too low, may rise more
DUBAI, Sept 11 (Reuters) - Crude oil prices are still low and could rise further, Iranian Oil Minister Rostam Qasemi said on Monday, the same day Saudi Arabia said prices are too high and would work to moderate them.
"In our view, the price of oil is still low and has the potential to rise further," Qasemi was quoted as having said on Monday by Iran's oil ministry news website on Tuesday.

Gold Advances on Outlook for Further Stimulus From Fed(Bloomberg)
Gold rose for the third time in four sessions as prospects for more U.S. stimulus from the Federal Reserve spurred demand for the metal as a store of value. The policy-setting Federal Open Market Committee may consider asset purchases at its two-day meeting staring tomorrow. Chairman Ben S. Bernanke signaled last month that a third round of so-called quantitative easing may be needed to reduce joblessness. Germany’s Federal Constitutional Court in Karlsruhe will decide tomorrow whether to halt the country’s participation in the 500 billion-euro ($640 billion) European Stability Mechanism, the euro area’s permanent bailout fund. “More and more people are gravitating toward the metal in anticipation of events over the next 48 hours,” Adam Klopfenstein, the senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The market is already pricing in a QE3, and uncertainty over the European vote is helping gold.”
Gold futures for December delivery added 0.2 percent to settle at $1,734.90 an ounce at 1:38 p.m. on the Comex in New York. Bullion touched a six-month high on Sept. 7 after U.S. job growth in August trailed estimates, adding to speculation that the Fed will announce more stimulus measures this week. The metal surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing. Assets in gold-backed exchange-traded products expanded to a record 2,480.43 metric tons yesterday, data compiled by Bloomberg show. Silver futures for December delivery fell 0.2 percent to $33.566 an ounce in New York.

No comments: