Wednesday, October 17, 2012

20121017 0956 Global Commodities Related News.

DTN Closing Grain Comments 10/16 14:29(CME)
Grains Fail to Sustain Momentum
What started out as a promising day with solid gains was wiped out by the close near unchanged across the grain complex. This doesn't exactly bode well for grains heading into the CME Globex Session this evening.

Pro Farmer: After The Bell Wheat Recap(CME)
Wheat futures were unable to hold onto early corrective gains and could only muster a narrowly mixed close at all three exchanges. Wheat futures were supported by corrective short-covering overnight and through mid-morning amid ideas Monday's losses were overdone and by weakness in the U.S. dollar index. But given a lack of bullish fundamental news, the buying interest faded.

Wheat Market Recap Report(CME)
December Wheat finished down 1/2 at 847 3/4, 10 off the high and 4 up from the low. March Wheat closed down 1/4 at 860 1/4. This was 4 1/4 up from the low and 9 1/2 off the high. December Chicago wheat ended the day slightly lower while KC and Minneapolis saw marginal gains. Minneapolis wheat gained on the other two wheat markets after it was reported that China purchased 295,000 tonnes of Canadian spring wheat over the last two weeks. The fact that the US remains behind the average pace needed to reach this year's USDA export goal as well as being overprice relative to other world origins is a short term negative and continues to add a bearish tilt to the market. Traders are optimistic that the US will be competitive in the Algerian wheat tender which was issued yesterday for 50,000 tonnes. Pressure is linked to news that Ukraine would not limit exports of corn and barley this crop year which would directly compete with US wheat in the world feed markets. Outside market were positive throughout the day with the US Dollar trading lower and US stocks were higher. Most commodities were mixed to slightly higher and short covering was prevalent following yesterday's steep declines across the sector. December Oats closed up 4 1/2 at 392 1/2. This was 4 1/2 up from the low and 2 1/2 off the high.

Pro Farmer: After The Bell Corn Recap(CME)
Corn futures favored a firmer tone throughout the day on short-covering following yesterday's losses, but buying interest eroded into the close and futures ended 1 cent higher to 3 cents lower, with nearbys leading gains. Weakness in the U.S. dollar index also helped to support short-covering in early trade, but given a lack of fresh positive news, buying interest was lackluster and eventually gave way to profit-taking.

Corn Market Recap for 10/16/2012(CME)
December Corn finished up 1 at 738 1/4, 7 off the high and 3 1/4 up from the low. March Corn closed up 1 at 738 1/4. This was 3 1/4 up from the low and 7 off the high. December corn finished the day around a penny higher but traded throughout the day in positive and negative territory. The lower trade was linked to profit taking and on very poor export demand. Support came from scattered end user coverage, strong interior basis levels, and on positive outside markets. Basis values in the Gulf of Mexico were steady as the lower futures prices have offset the sluggish export demand. Strong basis levels exist in the interior of the US as processing markets struggle to keep physical corn moving. Ukraine announced overnight that they had no plans to restrict exports on corn and barley which adds to the negative outlook for US corn exports. South American corn is also taking market share away from the US as it continues to trade at a steep discount. Outside markets limited losses throughout the day as the US Dollar traded lower and the stock market was higher. Most commodity markets bounced off the steep declines from yesterday but buyers were hesitant to establish positions on fears that funds will continue to liquidate positions. This added to the short term bearish tilt in the marketplace. November Rice finished down 0.14 at 14.87, 0.06 off the high and equal to the low.

Wheat Futures Fall as Kansas Rain Boosts Crop Outlook (Bloomberg)
Wheat futures fell for the third straight session on speculation that rain in parts of Kansas, the biggest U.S. grower of winter varieties, will boost crop prospects. Precipitation increased soil moisture in central and eastern counties in Kansas. Yesterday, the U.S. Department of Agriculture reported that 81 percent of the state’s winter crop was planted as of Oct. 14, up from 65 percent a week earlier, while wheat dropped to a 13-week low. “The rain was pretty widespread,” Jeff McReynolds, the owner of McReynolds Marketing & Investments in Hays, Kansas, said in a telephone interview. “The northwest part of the state didn’t get anything, so we still have a fairly sizeable dry patch, but for the rest of the state, this is going to be enough to allow the crop to be planted and germinate.” Wheat futures for December delivery fell 0.1 percent to settle at $8.4775 a bushel at 2 p.m. on the Chicago Board of Trade. The price has dropped 4.3 percent in three sessions.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Milk Seen Surging 15% on Drought-Feed Costs Before Demand Slows (Bloomberg)
Retail-milk prices will rise as much as 15 percent by the first quarter of 2013 after the worst U.S. drought since 1956 sent livestock-feed costs to a record, according to Dairy Management Inc., an industry group. “Since the drought started, the milk price has gone up quite a bit,” Dairy Management Chief Executive Officer Tom Gallagher said yesterday during an interview in Chicago. “Prices are going to go up worldwide.” The drought led to the biggest U.S. drop in corn production in 17 years, sending the price of the main feed ingredient for dairies to an all-time high on Aug. 10 of $8.49 a bushel. Prices are up 47 percent since mid-June, forcing some California dairies into bankruptcy, while others cut their herds and output to limit losses. Milk futures in Chicago touched $21.26 per 100 pounds on Oct. 3, a 13-month high.
“When you get to $25 milk, if that happens, the effect on the retail price is enormous,” Gallagher said. Consumers paid on average $3.469 a gallon in September, U.S. Bureau of Labor Statistics data show. Milk futures through yesterday were up 36 percent since mid-June on the Chicago Mercantile Exchange and may advance to a record $25 by June, according to Shawn Hackett, the president of Boynton Beach, Florida-based Hackett Financial Advisers Inc., who in March correctly forecast prices would rally. Dairy Management, a marketer based in Rosemont, Illinois, receives 15 cents on every 100 pounds of milk produced in the U.S. to promote dairy products domestically and overseas. The organization includes the American Dairy Association, National Dairy Council and U.S. Dairy Export Council.

Sugar Glut Extending to Longest in More Than Decade: Commodities (Bloomberg)
The global sugar glut is extending into a third year, the longest stretch in more than a decade, as Brazil and Australia expand output and imports contract to the smallest since 2008. Production will exceed demand by 5.9 million metric tons in the year that began Oct. 1, more than the U.S. consumes in six months, the International Sugar Organization estimates. Global supply including inventories will be the highest ever, the London-based group says. Raw-sugar futures traded in New York may drop 11 percent to 18 cents a pound by the end of the year, according to the median of 15 estimates from traders and analysts compiled by Bloomberg.
Futures fell 44 percent since reaching a three-decade high of 36.08 cents in February 2011 as farmers from Russia to Thailand planted more crops. The drop is moderating global food prices that the United Nations says rose 7.7 percent in the past three months as drought and heat waves wilted U.S. and European wheat, corn and soybeans. Lower prices are helping to cut costs for food companies including Nestle SA (NESN), which spent about 1.5 billion Swiss francs ($1.6 billion) last year on sugar. “The surplus is probably getting worse,” said Jonathan Kingsman, the chief executive officer of Lausanne, Switzerland- based research company Kingsman SA who has traded sugar for more three decades. “More sugar will have to be stockpiled on lack of demand and we would expect prices to stay under pressure.”

Cheap Gas From Fracking Fuels Profits at LyondellBasell (Bloomberg)
Profit margins for ethylene, a colorless gas used to ripen fruit, open flowers and make products from plastic bags to paint removers, are surging to near record levels and may climb further, reviving fortunes of U.S. producers. Two of the commodity’s largest makers, LyondellBasell Industries NV (LYB) and Westlake Chemical Co. (WLK), have posted their highest-ever profits and their shares have gained 66 percent and 91 percent respectively this year. Their margins will continue to improve as constrained production capacity pushes up prices, say Brian Maguire and Bob Koort, analysts at Goldman Sachs Group Inc. in Houston.
The driver is cheap shale gas, which is rejuvenating the country’s chemical industry after a decade of decline. Hydraulic fracturing of shale rock formations, known as fracking, cut U.S. gas prices to a 10-year low in April. It has also produced an oversupply of ethane, a natural gas component that is converted to ethylene with heat and pressure in a process known as cracking. Gas liquids, mostly ethane, supply about 85 percent of the feedstock for U.S. ethylene makers. Ethane at Mont Belvieu, Texas, the main supply hub for Gulf Coast chemical makers, has fallen 67 percent in a year to 31.6 cents a gallon. Consumers and manufacturers alike benefit. Ethylene is the raw material used to make polymers -- sturdy chemical compounds that are building blocks for products in the transportation, electronics, textiles, construction and packaging industries.

Natural Gas Drops as Mild U.S. Weather to Crimp Heating Demand (Bloomberg)
Natural gas futures declined for a second day in New York as forecasts for mild weather signaled reduced demand for the heating fuel. Gas fell 1.4 percent after forecasters including Commodity Weather Group LLC predicted above-normal temperatures for the East Coast over the next six to 10 days. Heating demand in the lower 48 states will be 42 percent below normal Oct. 22 through Oct. 26, said Weather Derivatives in Belton, Missouri. “The spotlight is on the mild weather forecasts for the next couple of weeks,” said Brad Florer, a trader at Kottke Associates LLC in Louisville, Kentucky. “Fair value is somewhere right around where we are right now. We might see a bit of a tug of war.” Natural gas for November delivery fell 4.9 cents to $3.437 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Oct. 8. The futures have dropped 7.2 percent from a year ago.
February $5.50 calls were the most active gas options in electronic trading. They were unchanged at 1.1 cents per million Btu on volume of 6,150 contracts as of 3:04 p.m. Calls accounted for 70 percent of options volume. The low temperature in Boston on Oct. 23 may be 54 degrees Fahrenheit (12 Celsius), 10 above normal, and Washington may see a low of 59 degrees, 11 above normal, according to AccuWeather Inc. in State College, Pennsylvania.

Recap Energy Market Report(CME)
November crude oil prices flipped-flopped around unchanged levels throughout the US trading session, despite a favorable risk-on attitude in outside markets. Some traders indicated that weakness in the expiring November Brent crude oil might have limited upside potential in WTI during the session. There were also concerns that this week's EIA inventory report would show another build in crude supplies last week. November crude oil established a higher high in early morning action but spent most of the US session fractionally lower.

Oil Gains a Second Day on Spain Bailout Optimism, U.S. Economy (Bloomberg)
Oil rose a second day in New York on signs Germany may ease its resistance to a Spanish bailout and after U.S. industrial production rose more than forecast. Futures advanced as much as 0.7 percent after two German lawmakers said the country is open to Spain seeking a precautionary credit line. Output at U.S. factories, mines and utilities rose 0.4 percent in September, twice as much as the median forecast of economists surveyed by Bloomberg News, according to data from the Federal Reserve in Washington. “The proposal for a line of credit seems like a positive compromise,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “It may mean, as far bondholders and the market are concerned, there’s a back-up facility there to be used. There was also a positive response to the U.S. industrial production figures, which were a little higher than expected.”
Crude for November delivery climbed as much as 67 cents to $92.76 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.41 at 10:23 a.m. Sydney time. The contract yesterday rose 24 cents to $92.09, the highest settlement since Oct. 9. Prices are down 6.5 percent this year. Brent oil for November settlement, which expired yesterday, dropped 73 cents to $115.07 a barrel on the London-based ICE Futures Europe. December futures slid 40 cents to $114. The European benchmark grade’s premium to West Texas Intermediate closed at $22.98. It settled at $23.95 on Oct. 15, the widest gap since reaching a record on Oct. 14, 2011.

U.S. crude oil exports may be inevitable
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, Oct 15 (Reuters) - Requests from Shell, BP and Vitol, among others, to start sending substantial amounts of U.S. crude to refineries in Canada have hit the headlines, as oil producers try to find outlets for surging production of light oil from North Dakota and elsewhere by easing decades-old restrictions on exporting domestically produced crude .
Less well-known is that record volumes of light hydrocarbons such as propane, butane and pentane are already being exported, as oil and gas producers seek alternative markets for the prodigious quantity of natural gas liquids (NGLs) now being produced alongside oil and gas from shale formations.

Gold, Silver Rebound on Investment Demand as Dollar Drops (Bloomberg)
Gold futures rebounded from a four- week low as the dollar’s decline boosted demand for the metal as an alternative investment. Silver also climbed. The greenback fell as much 0.5 percent against a basket of major currencies on speculation that Spain may get a line of credit from Europe’s rescue fund, easing debt concerns in the region. Yesterday, gold and silver tumbled the most in three months, partly on speculation that China may refrain from expanding economic stimulus. “The dollar trading lower, and talk about Spain set to ask for a bailout is helping set the positive tone,” Steve Scacalossi, a New York-based vice president at TD Securities Inc., said in an e-mail. Gold futures for December delivery rose 0.5 percent to settle at $1,746.30 an ounce at 1:43 p.m. on the Comex in New York, the biggest advance for a most-active contract since Oct. 4. Yesterday, the metal slumped 1.3 percent, the most since July 6, after touching $1,729.70, the lowest since Sept. 13.
“The gold market experienced momentum-based selling but appears to have found a base” around $1,735, Australia & New Zealand Banking Group Ltd. (ANZ) analysts led by Mark Pervan said in a report. Silver futures for December delivery climbed 0.7 percent to $32.959 an ounce on the Comex. Yesterday, the metal fell 2.8 percent, the most since June 21. This year, silver has gained 18 percent, and gold has climbed 11 percent. On the New York Mercantile Exchange, platinum futures for January delivery rose 0.8 percent to $1,645.20 an ounce. Palladium futures for December delivery advanced 1 percent to $638.95 an ounce.

Copper Advances in London as U.S. Factory Report Buoys Outlook (Bloomberg)
Copper prices rose in London for the first time in three sessions after a report showed industrial production increased more than forecast in the U.S., the world’s second-biggest consumer of the metal. Output at factories, mines and utilities advanced 0.4 percent last month after a 1.4 percent decline in August, the Federal Reserve said today. The median estimate in a Bloomberg survey of economists was for a 0.2 percent rise. Copper also climbed as two German lawmakers said the country is open to Spain seeking a precautionary credit line, bolstering optimism that Europe can contain its debt crisis. “The economic and the Spanish-bailout news are helping to prop things up,” Dennis Cajigas, a senior market strategist at Zaner Group in Chicago, said in a telephone interview. “The U.S. and China are driving markets, and the industrial production figure is boosting expectations for demand.”
Copper for delivery in three months gained 0.4 percent to settle at $8,125 a metric ton ($3.69 a pound) at 5:50 p.m. on the London Metal Exchange. Last week, the price fell 2 percent, the most since July 20, amid concern that demand will ease in the U.S. and China, the top consumer. Stockpiles in warehouses monitored by the LME declined 0.7 percent today to 210,725 tons, the lowest since Oct. 23, 2008. Copper futures for December delivery fell less than 1 percent to settle at $3.70 a pound on the Comex in New York. On the LME, nickel, aluminum and zinc declined, while lead and tin gained.

Silver Market Recap Report(CME)
The silver market spent a large portion of the trade today in positive ground. Favorable outside market conditions, upbeat macro economic sentiment and positive leadership from gold and platinum probably emboldened the bull camp in silver today. Perhaps silver managed to de-link from the hopes of additional easing and that in turn could mean that silver prices in the coming trading sessions will be driven by the ebb and flow of the outlook for the US economy. If silver was shifting back toward a growth/no growth focus, it is possible that lackluster action in the copper market might have dampened bullish sentiment for silver.

Gold Market Recap Report(CME)
The gold managed to recoil from the big range down extension in the prior session and for the bull camp today might have been a moral victory. In other words, gold seemed to throw off a recent pattern of weakness in the face of events that reduced the prospect for additional easing and that in turn would seem to suggest that gold was shifting back toward a classic physical market focus again. However, it goes without saying that gold prices benefited today from currency, commodity and equity market action.

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