20121012 1121 Global Commodities Related News.

DTN Closing Grain Comments 10/11 14:30 (CME)
Grains Surge Ahead
Grains closed sharply higher Thursday, driven by strong buying interest from both sides of the market. Corn was the clear leader, trading near limit-up for a lion's share of the session.

Pro Farmer: After The Bell Wheat Recap  (CME)
Wheat futures settled high-range with gains in the mid-teens in Chicago, in the upper teens to low 20s in Kansas City and roughly 10 to 15 cents higher in Minneapolis. Friendly USDA reports for both the wheat and corn market today encouraged followthrough buying in wheat futures. USDA trimmed 2012-13 wheat carryover from September to 654 million bu., which was 27 million bu. less than expected.

Wheat Market Recap Report (CME)
December Wheat finished up 16 1/4 at 886, 8 off the high and 27 up from the low. March Wheat closed up 16 at 897. This was 26 1/2 up from the low and 7 1/2 off the high.
December Chicago wheat traded sharply higher on the day along with KC and Minneapolis wheat. The USDA report for wheat was considered neutral but the rally in other grains supported the bounce. World ending stocks for the 2012/13 season came in at 173 million tonnes as compared with 176.7 million last month and vs. trade estimates of 172.81 million tonnes. Total FSU production was estimated at 77.71 million tonnes vs. 78.96 last month. Australian production was cut by 3 million tonnes to 23 million tonnes which was in line with market estimates. US all wheat carryout was also cut to 654 million bushels which was 24 million bushels above market expectations but below the September estimate of 698. Long term headwinds remain for wheat as it remains uncompetitive in the world wheat market but the prospects of better feed wheat demand could support. The EU granted export licenses for 376,000 tonnes of soft wheat today which takes the total for this crop year to 4.2 million tonnes vs. 4.05 for the same time period last year and the government of Argentina expects wheat production near 10.12 million tonnes vs. 11.50 by the USDA. This was slightly supportive to the trade midday.
December Oats closed up 5 at 388 1/2. This was 7 up from the low and 6 1/2 off the high.

Pro Farmer: After The Bell Corn Recap  (CME)
Corn futures surged in reaction to USDA's report data today and posted fresh monthly highs. Nearby futures ended 30-plus cents higher, with deferreds posting gains mostly in the mid-teens. The high-range close gives bulls the upper hand heading into the next trading session. Traders responded to this morning's USDA report with strong gains, as 2012-13 carryover was trimmed more than expected to 619 million bushels.

Corn Market Recap for 10/11/2012 (CME)
December Corn finished up 36 1/2 at 773 1/4, 2 3/4 off the high and 39 1/2 up from the low. March Corn closed up 35 1/2 at 773 1/4. This was 38 3/4 up from the low and 2 1/2 off the high.
The USDA report this morning was considered bullish against trade expectations and December corn traded sharply higher on the day and nearly posted a limit move higher. US ending stocks were pegged at just 619 million bushels which was down from 733 million last month. The average US corn yield was reported at 122 bushels/acre compared with 122.8 last month. Corn production was pegged at 10.706 billion bushels which was 105 million above trade expectations and compared with 10.727 last month. Furthermore, total demand declined by just 100 million bushels due to lower exports. Long term headwinds may remain for the corn market with export demand lagging the pace needed to meet this year's forecast and negative ethanol margins for many areas of the US Midwest remain. Ethanol production for the week ending October 5th averaged 800,000 barrels per day. This was up 1.9% vs. last week and down 6.9% vs. last year. Corn used in last week's production was estimated at 84 million bushels however this fell just short of the 86.45 million bushels per week that is needed to meet this crop year's USDA estimate of 4.5 billion bushels which was left unchanged on today's USDA report.
November Rice finished down 0.05 at 14.975, 0.095 off the high and equal to the low.

Corn Center of Attention as USDA Cuts Supply Outlook (CME)
Corn was the center of attention following the government's latest crop updates, as the U.S. Department of Agriculture further trimmed its estimate for this year’s harvest in the wake of severe drought and said supplies of the grain at the end of next summer will be even lower than previously forecast. The nation's farmers will harvest 10.71 billion bushels of corn, down 0.2% from a September estimate and down 13% from last year, according to the USDA's Crop Production report October 11. In the USDA's monthly Supply and Demand report, also released October 11, corn supplies at the end of the 2012-13 marketing year were reduced 16% to 619 million bushels, a 17-year low. CME Group grain futures rose sharply after the release of the reports, with corn prices surging over 37 cents. There wasn’t really any surprise in the numbers, DTN Senior Analyst Darin Newsom wrote in a report. Still, "did the markets react like there was? Yes," he said.
The USDA hiked its estimate for the U.S. soybean crop by 8.7% from last month’s forecast, to 2.86 billion bushels, down 7.4% from 2011. The increase was larger than the estimates from many analysts, who on average expected a decline of 5.3% from the USDA's August forecast.

Corn Surges to Three-Week High as USDA Sees Smaller World Supply (Bloomberg)
Corn futures jumped to a three-week high after a government report showed global inventories will drop more than expected as the worst U.S. drought in more than 50 years cuts output by the most since 1996. Worldwide inventories on Oct. 1 will be 117.27 million metric tons, down from 123.95 million predicted a month ago and 131.54 million estimated this year, the U.S. Department of Agriculture said today. Reserves as a percent of consumption will fall to 13.7 percent, the lowest since 1974, USDA data show. Stockpiles in the U.S., the largest grower and exporter, will fall 37 percent to 15.73 million tons, from last year. “This report signals there is absolutely no supply cushion,” Dale Schultz, the buyer-relations manager for AgWest Commodities LLC in Holdrege, Nebraska, said in a telephone interview. “We have to raise prices and reduce demand immediately to prevent a real shortage.”
Corn futures for December delivery rose 5 percent to close at $7.7325 a bushel at 2 p.m. on the Chicago Board of Trade, after touching $7.76, the highest since Sept. 17. The gain was the biggest since Sept. 28. Prices have rallied 53 percent since June 15. June and July in the Midwest were the hottest and driest since 1936, according to Donald Keeney, a senior meteorologist for MDA Information Systems Inc. in Gaithersburg, Maryland. About 50 percent of the crop was in poor or very poor condition as of Sept. 30, government data show.

Wheat Has Longest Rally in Seven Weeks on Supply Outlook (Bloomberg)
Wheat rose, capping the longest rally in seven weeks, after the U.S. Department of Agriculture lowered its forecast for global stockpiles and said domestic cattle producers will use more of the grain as livestock feed. Global stockpiles will be 173 million metric tons on May 31, down from 176.71 million estimated on Sept. 12, the USDA said today in a report. World production was forecast at 653.05 million tons, down 0.9 percent from last month. About 315 million bushels in the U.S. will be fed to cattle, up from last month’s estimate of 220 million, the USDA said. “The wheat crop in Russia is down, Canada is down, Australia is down,” Jason Britt, the president of Central States Commodities Inc., a Kansas City, Missouri-based broker, said in a telephone interview. “There seems to be a trend.”
Wheat futures for December delivery rose 1.9 percent to settle at $8.86 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since Sept. 28. The price gained for the fourth straight day, the longest rally since late August. The grain has climbed 41 percent since mid-June after a drought scorched the Midwest. Australian production was forecast at 23 million tons, down 12 percent from September, and Russian output was cut to 38 million tons from 39 million, USDA data show. Canadian farmers will harvest 26.7 million tons, down from 27 million estimated last month. The U.S. was expected to be the top exporter this year, followed by Canada, Australia and Russia. Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Coffee Harvest in Vietnam to Drop From Record on Dry Weather (Bloomberg)
Coffee production in Vietnam, the world’s biggest grower of the robusta variety used by Nestle SA (NESN) in instant drinks, is poised to decline from a record as dry weather cuts yields, bolstering prices. The harvest may drop 9.4 percent to 1.45 million metric tons in the season that started Oct. 1 from an all-time high of 1.6 million tons in 2011-2012, according to the median of eight trader and shipper estimates compiled by Bloomberg. That’s less than the 26 million bags (1.56 million tons) estimated by Volcafe Ltd. A bag weighs 132 pounds. Robusta rallied 16 percent in London this year on rising demand from roasters after arabica beans, favored for specialty drinks such as those made by Starbucks Corp. (SBUX), soared to a 14- year high. A smaller harvest in Vietnam may help sustain the rally, potentially raising costs for Nestle, the world’s biggest food company. Consumption of robusta will grow at a faster rate than arabica, Luigi Lavazza SpA said last month.
“There wasn’t much rain this year, so there wasn’t enough water for the trees to develop and for the beans to grow,” said Mai Ky Van, a deputy director at October Coffee-Cocoa One Member Ltd. in Dak Lak province, Vietnam’s biggest growing region. “Coffee output in my area may fall about 20 percent.” Krong Pak district, where October Coffee-Cocoa is based, is among the largest coffee-growing areas in Dak Lak. Rainfall was 23 percent less than normal in the first nine months of this year, according to the Meteorology and Hydrology Department. The district received 756.1 millimeters from the start of the year to Sept. 30, less than the 986.2 millimeters average, it said.

OIL-Oil rises as Turkey-Syria tensions fuel supply concerns
NEW YORK, Oct 11 (Reuters) - Oil prices rose on Thursday to their highest levels in weeks as tensions between Syria and Turkey escalated, while maintenance on North Sea oilfields pushed the premium for Europe's Brent crude to another one-year high.
"The Syrian situation is heating up and there are fears about Turkey, a NATO member, retaliating and contagion in the region," said Bjarne Schieldrop, analyst at SEB in Oslo.

NATURAL GAS-US natgas futures end up, front hits 2012 high
NEW YORK, Oct 11 (Reuters) - U.S. natural gas futures settled higher on Thursday for a fourth straight day, with a government report showing a weekly inventory build well below market expectations driving the front contract to a new high for the year.
"This injection has provided a catalyst for the market to make a move. There is clear buying pressure behind this move ... creating the potential for further gains, but today's price response was a bit of an overreaction," Gelber & Associates analyst Aaron Calder said in a report.

EURO COAL-Prices drop $1-2/T
LONDON, Oct 11 (Reuters) - Prompt physical coal prices fell by $1-2 a tonne on Thursday in line with coal swaps' weakness in early trading.
A November loading South African cargo was bid at $80.00 and offered at $84.00 a tonne, down more than $2.00 on the offer.
"Industrial growth (in India) is the problem, not the price of coal," one major Indian trade importer said.
"The cement sector is oversupplied, so is sponge iron and at the same time their costs have been rising so they need less coal," he said.

Oil Gains a Second Day on Falling Jobless Claims, Mideast Unrest (Bloomberg)
Oil gained for a second day in New York after U.S. claims for jobless benefits dropped to the lowest level in four years and rising tension in the Middle East prompted concern crude supplies may be disrupted. Futures advanced as much as 0.6 percent and are headed for the first weekly gain in a month. First-time unemployment claims fell to 339,000 last week, the lowest since February 2008, according to data from the Labor Department. Brent oil traded near the highest premium to West Texas Intermediate in a year after Turkey said a Syrian plane that it grounded contained munitions, while Italian Foreign Minister Giulio Terzi said Europe is prepared to tighten sanctions on Iran. “The potential for a blow-up in the Middle East is being reflected in that persistently wide spread between Brent and WTI,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “Jobless claims were better-than-expected.”
Crude for November delivery climbed as much as 53 cents to $92.60 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.38 at 10:45 a.m. Singapore time. The contract yesterday rose 82 cents to $92.07 a barrel. Prices are up 2.8 percent this week and down 6.5 percent this year. Brent oil for November settlement fell 9 cents to $115.62 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $23.24 to WTI. It reached $23.64 yesterday, the widest gap since October 2011.

Recap Energy Market Report  (CME)
November crude oil prices trended higher throughout the US trading session, supported by weakness in the US dollar, a boost in risk-taking sentiment and ongoing tensions between Syria and Turkey. This morning US economic data showed US jobless claims falling to their lowest level in more offered a measure of support. November crude oil prices traded up to their high of the morning following EIA inventory data that showed a build of 1.672 million barrels. The refinery operating rate was down 1.5% to 86.7%, which compared to 84.2% last year. Prices drifted lower into the close as equity markets erased most of their early morning gains.

Silver Market Recap Report  (CME)
December silver prices waffled around both sides of unchanged today and clearly silver was a follower today instead of a leading market. The bull camp were probably emboldened by gains in a number of physical commodity markets but seeing supportive currency and equity market action simply rounded out the market environment in favor of the risk-on vibe. Residually high open interest in silver seems to favor the bull camp but a continued rise in open interest on a sharp slide in silver prices could shift that indicator squarely into the bear camp.

Gold Gains as Investor Demand Increases ETP Holdings to Record (Bloomberg)
Gold advanced for a second day, paring this week’s losses, as holdings in bullion-backed exchange traded products climbed to a record on added measures by the world’s central banks to stimulate growth. Spot gold climbed as much as 0.2 percent to $1,771.30 an ounce and traded at $1,770.40 at 9:51 a.m. Singapore time, heading for a 0.6 percent drop this week, the most since August. Holdings in exchange-traded products rose for an 11th straight day, reaching an all-time high of 2,582.98 metric tons yesterday, according to data compiled by Bloomberg. Gold jumped 11 percent in the third quarter, the most since June 2010, as the U.S. Federal Reserve announced a third round of monetary stimulus. The European Central Bank held interest rates at a record low last week after agreeing on an unlimited bond-purchase program in September when the Bank of Japan added 10 trillion yen ($127 billion) to an asset-purchase fund. Brazil and South Korea cut interest rates yesterday to boost growth.
“Gold is supported by the U.S. quantitative easing program and other countries’ stimulus measures,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “On the other hand, the U.S economy is doing relatively better than the euro zone. That will drive the dollar higher and limit further gains in gold prices.” U.S. jobless claims fell 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008, government data showed yesterday. The Dollar Index, a gauge against the currencies of six major U.S. trading partners, weakened from a one-month high reached yesterday. Bullion rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. Gold for December delivery was little changed at $1,771.30 an ounce on the Comex in New York. Spot silver gained 0.3 percent at $34.09 an ounce, heading for a weekly loss of 1.2 percent, the most since July. Cash platinum advanced 0.4 percent at $1,684.50 an ounce, set for a drop of 1.4 percent for the week. Palladium rose 0.2 percent to $652.50 an ounce.

Gold Market Recap Report  (CME)
The bull camp suggests that the gains today were primarily built off hopes that the latest debt downgrade for Spain would result in that country moving forward with requests for bailout funds, which in turn was thought to get Spain beyond its near term troubles. Others think that the gold market was lifted because of dovish talk from the Fed, others think that strength in equities lifted gold and others thing that ultimately beneficial US scheduled data provided the primary lift for gold prices. However, the initial reaction by gold today was for prices to slide but eventually that news seemed to be able to pull gold prices back up. Unresolved labor issues in South African might have been another theme prompting the bulls into action during the session today.