Wednesday, October 10, 2012

20121010 0958 Global Commodities Related News.

One in eight of world population going hungry-UN (Reuters)
One out of every eight people in the world is chronically undernourished, the United Nations' food agencies said on Tuesday, warning that progress to reduce hunger has slowed since 2007/08 when high food prices sparked riots in several poor countries.

DTN Closing Grain Comments 10/09 14:21 (CME)
Grains Mixed Following Quiet Session
Grains spent much of the latter part of Tuesday's session drifting back toward unchanged, though wheat and soybeans were able to close with modest gains. Corn never showed much interest in rallying over the course of the session. Buying enthusiasm was cooled by the solid rally in the U.S. dollar index.

Pro Farmer: After The Bell Wheat Recap (CME)
Nearby wheat futures favored a firmer tone though the day and ended mid-range. Chicago and Minneapolis futures ended mostly 2 to 4 cents higher, with Kansas City up 4 to 6 cents. Global crop concerns supported nearby wheat futures, as the inability of El Nino to develop has increased concerns about crops in areas like Australia.

Wheat Market Recap Report (CME)
December Wheat finished up 3 1/4 at 864 1/4, 9 1/2 off the high and 4 1/2 up from the low. March Wheat closed up 4 1/2 at 875 3/4. This was 5 3/4 up from the low and 8 off the high. December Chicago wheat ended the day in positive territory and traded higher throughout the session. KC and Minneapolis wheat followed higher. Support in wheat came from private forecasts that pegged Australian wheat production near 20-22.5 million tonnes vs. the current USDA estimate of 26 million tonnes. Additional upside momentum was added after the Russia Agriculture Minister revised his estimate of their wheat crop to 40 million tonnes vs. previous forecasts of 40-42 million tonnes. The exportable surplus of wheat for Russia is estimated at 10 million tonnes vs. previous government estimates of 10-12 million tonnes. Syria issued a tender to buy 100,000 tonnes and Morocco is expected to come to the market soon as well. Export inspections for the week ending October 4th were reported at 13.2 million bushels vs. 24.5 last week and were below trade estimates. Inspections need to average 24.2 million bushels each week to reach the current USDA export forecast. Outside markets added pressure throughout the day with US stocks trading lower and the US Dollar sharply higher. December Oats closed up 7 1/2 at 378. This was 7 1/2 up from the low and 2 1/2 off the high.

Pro Farmer: After The Bell Corn Recap (CME)
The corn market enjoyed gains much of the session, but bears gained some traction heading into the close. Futures ended steady to 3 cents higher for the day, which was low-range for the day. The corn market enjoyed corrective short-covering most of the day as traders continued to ready positions for what is expected to be friendly USDA reports Thursday.

Corn Market Recap for 10/9/2012 (CME)
December Corn finished unchanged at 742, 6 1/2 off the high and 1 3/4 up from the low. March Corn closed up 1/4 at 742 1/4. This was 2 up from the low and 6 1/4 off the high. December corn ended the day nearly unchanged. After trading higher for most of the afternoon, sell pressure at the close pushed December corn near its lowest level of the session and closed just off the lows. Some in the trade believe current price levels in corn are rationing demand which could limit the long term price outlook. US corn export inspections for the week ending October 4th were reported at 17.4 million bushels vs. 20.2 the week prior. Inspections of 25.30 million bushels are needed each week to reach the current USDA forecast. Export demand remains sluggish for US corn as South American supply trades at a steep discount. The Brazilian government pegged their corn crop for 2012/13 at 73.2 million tonnes vs. 72.6 in 2011/12. Early support in corn was seen after a private analyst in Ukraine cut Ukraine's estimated corn production to 21 million tonnes vs. 25-27 million tonnes previously. Some commodity markets turned sour this morning after the IMF announced a downward revision in their global growth forecasts. The US Dollar moved sharply higher on the news which kept gains limited for the remainder of the day. November Rice finished down 0.135 at 15.23, 0.17 off the high and equal to the low.

Wheat Climbs as U.S. May Cut Supply Estimates; Soy, Corn Gain (Bloomberg)
Wheat futures rose for the second straight day on speculation that the U.S. will lower its forecasts for global supplies as dry weather damages crops from Russia to Australia. Soybeans declined. Global wheat supplies before next year’s Northern Hemisphere harvest may be 172.77 million metric tons, down 2.2 percent from the U.S. Department of Agriculture’s estimate in September, according to analysts in a Bloomberg survey. Today, Russia cut its forecast for grain exports, and Australia last month reduced its harvest projection. “Fundamentals are still bullish,” said Kieran Walsh, an agricultural-derivatives broker at Aurel BGC in Paris. “It would not be entirely unexpected for the USDA report to cut global production outlook, and Russian exports were at the lower end of estimates.” Wheat futures for December delivery rose 0.4 percent to settle at $8.6425 a bushel at 2 p.m. on the Chicago Board of Trade. The price gained 0.4 percent yesterday.
The USDA will update its forecasts on supply and demand on Oct. 11. Last year, the U.S. was the world’s top exporter, followed by Australia and Russia. The price has jumped 32 percent this year. Soybean futures for November delivery fell 0.1 percent to $15.50 a bushel. Earlier, the price reached $15.74, the highest for a most-active contract since Oct. 1. Corn futures for December delivery were unchanged at $7.42 a bushel. Earlier, the price gained as much as 0.9 percent. In the U.S., corn is the biggest crop, followed by soybeans, hay and wheat.

Africa can easily grow wheat to ease hunger, price shocks-study (Reuters)
Wheat production in sub-Saharan Africa is at only 10 to 25 percent of its potential and nations can easily grow more to limit hunger, price shocks and political instability, a study showed on Tuesday.

Thai govt sees $2.6 bln losses in 2011/12 from rice scheme (Reuters)
Thailand's government expects losses of about 80 billion baht from its rice intervention scheme as of September 2012, the commerce minister said on Tuesday, a cost that may increase pressure on the state to scale back the programme.

GRAINS: U.S. corn rose for the first time in three sessions as the market readied for a U.S. Department of Agriculture report this week that is expected to show further cuts in yield projections, reducing harvest pressure that had squeezed prices. Soybeans rose on bargain hunting, while wheat firmed for the second straight session on concerns over tight global supply. (Reuters)

SOFTS: Raw sugar futures edged higher with selling of the remainder of top producer Brazil's crop limiting potential price upside, while arabica coffee and cocoa were steady. (Reuters)

Kenya cuts coffee sales frequency due to low supply (Reuters)
Kenya has reduced the frequency of its coffee auctions from weekly to every two weeks due to dwindling stocks levels, an industry official said on Tuesday.

Milk-Cow Drought Culling Accelerates as Prices Jump: Commodities (Bloomberg)
U.S. milk production is headed for the biggest contraction in 12 years as a drought-fueled surge in feed costs drives more cows to slaughter. Output will drop 0.5 percent to 198.9 billion pounds (90.2 million metric tons) in 2013 as the herd shrinks to an eight- year low, the U.S. Department of Agriculture estimates. Milk futures rose 45 percent since mid-April and may advance at least an additional 19 percent to a record $25 per 100 pounds by June, said Shawn Hackett, the president of Boynton Beach, Florida- based Hackett Financial Advisers Inc. He correctly predicted the rally in March.
Dairies in California, the top milk-producing state, are filing for bankruptcy, and U.S. cows are being slaughtered at the fastest rate in more than a quarter century. Corn surged to a record in August as the USDA forecast the smallest crop in six years because of drought across the U.S. Global dairy prices tracked by the United Nations rose 6.9 percent last month, the most among the five food groups monitored, and that will probably mean record costs next year, Rabobank estimates. “Farmers can’t afford to buy as much grain and protein, and that affects milk production,” said Bob Cropp, an economist at the University of Wisconsin in Madison who has been following the industry since 1966. “In California, there’ve been some foreclosures and some sell-off of cows quite heavily. You’re going to see that in other parts of the country.”

Natural Gas Drops as Mild Weather to Reduce Heating-Fuel Demand (Bloomberg)
Natural gas futures advanced to a five-day high in New York before a government report that may show a below-average inventory increase for last week. Gas rose 1.9 percent. The Energy Department may report a supply increase of 80 billion cubic feet, based on the median of five analyst estimates compiled by Bloomberg. The five-year average gain for the week is 84 billion. Price gains accelerated after National Weather Service forecasts for the Midwest turned cooler for mid-October. “People are anticipating a smaller number and the surplus to the five-year average could possibly fall even further,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “They are going to take advantage of any pullback in anticipation of a rally.” Natural gas for November delivery increased 6.4 cents to $3.467 per million British thermal units on the New York Mercantile Exchange, the highest settlement price since Oct. 2. The futures have risen 16 percent this year.
January $3 puts were the most active options in electronic trading. They fell 0.2 cent to 1.7 cents per million Btu on volume of 2,595 contracts at 2:38 p.m. January $4 calls were the second-most active gas options today, jumping 3.1 cents to 21.3 cents on volume of 1,648 contracts. The discount for November contracts versus December futures widened 0.7 cent from yesterday to 30.1 cents, the most since June 13.

OIL-Oil rises towards $113 on Syria-Turkey tensions
LONDON, Oct 9 (Reuters) - Oil rose towards $113 a barrel after two days of losses, with tensions in the Middle East and the risk of supply disruptions outweighing concerns about sluggish global demand.
"Right now the market is concerned about the continuing conflict between Syria and Turkey, and the worry is that, if it escalates, it may disrupt supplies," said Ker Chung Yang, senior investment analyst at Phillip Futures in Singapore.

Oil Declines From One-Week High as Crude Stockpiles Seen Rising (Bloomberg)
Oil declined from the highest level in a week in New York before a government report that may show stockpiles climbed in the U.S., the world’s biggest crude user. Futures slipped as much as 0.5 percent. Crude inventories probably increased by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Department report tomorrow. The American Petroleum Institute will release separate supply data today. London-traded Brent is “still high” and Saudi Arabia “will work towards moderating the price,” Oil Minister Ali al-Naimi said yesterday. Crude for November delivery decreased as much as 47 cents to $91.92 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.97 at 10:10 a.m. Sydney time. The contract gained 3.4 percent yesterday to $92.39, the highest close since Oct. 1. Prices are down 6.9 percent this year.
Brent oil for November settlement rose $2.68, or 2.4 percent, to $114.50 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $22.11. The spread reached $22.49 on Oct. 8, the widest since October 2011. Saudi Arabia, the world’s biggest oil exporter, wants to see Brent fall closer to $100 a barrel, al-Naimi told reporters in Riyadh today ahead of a conference of oil ministers from the Gulf Cooperation Council. “We will meet the market demands fully,” he said.

Recap Energy Market Report (CME)
November crude oil experienced a wide range up day on the session that established a new five day high. The source of upside action seemed to come in response to concerns that unrest in Syria might spread to surrounding areas. There were reports that NATO drafted plans to protect Turkey's border, and that might have provided an added boost in the geopolitical risk premium. In the meantime, the outside market tone was weaker, with stocks lower and the US dollar higher. The was also disappointing global growth forecasts from the IMF overnight, that seemed to do little to impede today's advance.

Alcoa Cuts Global Aluminum Forecast on China Slowdown (Bloomberg)
Alcoa Inc. (AA), the largest U.S. aluminum producer, cut its forecast for global consumption of the metal by 1 percentage point as the Chinese economy slowed. Demand will climb by 6 percent this year, the New York- based company said yesterday in its third-quarter earnings statement. It said in July that usage would rise 7 percent, after increases of 10 percent in 2011 and 13 percent in 2010. “We do see a slight slowdown in some regions in end markets, and the main driver for this is China,” Chairman and Chief Executive Officer Klaus Kleinfeld said in a conference call with analysts. Chinese demand may pick up at the end of the fourth quarter because of stimulus spending, he said.
The International Monetary Fund yesterday cut its global growth forecast and lowered its projected expansion for China, the world’s biggest aluminum user, by 0.2 percentage point annually, to 7.8 percent this year and 8.2 percent in 2013. Aluminum prices on the London Metal Exchange have declined in the past year, touching a 34-month low in August, as global supply exceeds demand. “The global economy is clearly slowing,” Lloyd O’Carroll, a Richmond, Virginia-based analyst for Davenport & Co., said yesterday in an interview. “That’s what the IMF said today and so I think what Alcoa is doing is consistent with that.” Demand from heavy-truck and trailer manufacturing will fall in 2012, Alcoa said. It now sees Chinese truck and trailer output declining as much as 21 percent, compared with a drop of as much as 8 percent projected three months ago. Chinese can and packaging growth may be 8 percent, down from a July forecast of as much as 20 percent Alcoa estimated in July.

Copper Consumption in China to Drop for First Time Since ‘08 (Bloomberg)
Copper consumption in China will contract this year for the first time since 2008 as demand falters and inventories climb in the largest user, before rebounding in 2013, according to Simon Hunt Strategic Services. Consumption will drop about 8.5 percent to 5.6 million metric tons in 2012, said Simon Hunt, chief executive officer of the Weybridge, Surrey-based consultancy, which compiles analysis for users and fabricators. Next year, usage may grow 5.6 percent to 5.9 million tons, Hunt said in an interview in Singapore after visiting China for two weeks last month. Hunt’s assessment adds to signs that China’s slowdown is hurting demand for commodities. Copper, used in wires and cables, helps set the pace for other base metals and the drop in China’s consumption may hurt prices and cut profits at mining companies including Freeport-McMoRan Copper & Gold Inc. (FCX) Copper rose 6.8 percent last quarter as central banks in the U.S., China, Japan and Europe expanded stimulus to try to revive economic growth.
“The safety valve of exports has gone, the domestic economy is slowing down, they have a problem of surplus capacity and cash is extraordinarily tight,” said Hunt, who estimated total copper reserves in China at 3.5 million tons, including reported and unreported stockpiles. “There are no signals of a recovery in heavy industry and manufacturing.”

Gold Seen Declining as a Stronger Dollar Curbs Demand (Bloomberg)
Gold declined to the lowest in more than a week as a stronger dollar eroded demand for the precious metal as an alternative investment. The dollar gained the most in more than two months against a basket of currencies after the International Monetary Fund said the world economy will grow 3.3 percent this year, the slowest pace since the 2009 recession. The region using the European currency will contract 0.4 percent this year, 0.1 percentage point worse than forecast in July, the IMF said. Gold rallied last week as central banks from the U.S. to Asia pledged to spur growth. “The IMF forecast has taken some blush off the rose,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “We are seeing some move towards the dollar.”
Gold futures for December delivery fell 0.6 percent to settle at $1,765 an ounce as of 1:33 p.m. on the Comex in New York, after earlier slipping to $1,762, the lowest since Sept. 27. Bullion retreated 1.2 percent in the previous two sessions. The metal reached $1,798.10 on Oct. 5, the highest since Nov. 9. The IMF’s 188 member countries convene in Tokyo this week as low growth damped by fiscal consolidation in the richest economies hurts developing counterparts from China to Brazil. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent. Silver futures for December delivery dropped 0.1 percent to $33.985 an ounce on the Comex.
Platinum futures for January delivery fell 0.2 percent to $1,695.30 an ounce on the New York Mercantile Exchange. Palladium futures for December delivery gained 0.2 percent to $658.20 an ounce.

Silver Market Recap Report (CME)
A big range down move saw December silver prices dip to a fresh new low for the move but the market was able to return to the vicinity of even numbers at $34.00. Like gold, silver was under pressure as a result of adverse currency market action and the reversal in equities. While copper was weak for a large portion of the trading session today, it seemed to perform better than the rest of the metals complex and that might have helped silver discount some of the action in gold today.

Gold Market Recap Report (CME)
The gold market forged a downside breakout which at times put December gold prices as much as $36 an ounce below last week's highs. Clearly gold was somewhat undermined by the reversal in equities and the Euro today. At times gold was clearly leading the entire metals complex lower. Some gold longs might have decided to bank long profits and step temporarily to the sidelines ahead of the kick off to the US earnings cycle. Some traders even suggested that a slight up tick in an Investor Business Daily Economic Optimism Index served to undermine gold as that data might have tamped down the prospect of fresh easing talk.

Iran Oil Sanctions Boosting Returns for Nordic American: Freight (Bloomberg)
European sanctions on buying oil from Iran are turning into a windfall for owners of Suezmax tankers, shipping the most cargoes in at least nine years as Saudi Arabia and Iraq increase supply. Rates for the vessels, which can sail fully loaded with 1 million barrels through the Suez Canal to destinations in the Mediterranean, will rise 61 percent to an average of $19,000 a day this quarter, the median of six analyst estimates compiled by Bloomberg shows. Shares of Nordic American Tankers Ltd. (NAT), which operates a fleet of 20 carriers, will gain 33 percent in 12 months, based on the average of seven forecasts.
Saudi Arabian output is now within 1 percent of a record and Iraq is pumping the most since 2000, compensating for Iran, once OPEC’s second-biggest producer, which is exporting about 50 percent less oil than last year. The 27-nation European Union imposed an embargo in July over Iran’s nuclear program. The extra cargoes are helping to diminish a glut of Suezmaxes that caused earnings for the ships to drop 59 percent this year. “The canal trade is becoming a new mainstay,” said Jeff McGee, the head of marine research and consulting at Poten & Partners Inc., a shipbroker in New York. “There was a heavy appetite in the Mediterranean for Iranian oil, and now they have to get it from somewhere else.”
Suezmax earnings dropped to $11,810 this year, according to London-based Clarkson Plc, the world’s largest shipbroker. Forward freight agreements, handled by brokers and used to bet on future shipping costs, anticipate a fourth-quarter average of $13,034, based on data from Marex Spectron Group, which handles the contracts.

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