Tuesday, October 23, 2012

20121023 1006 Global Commodities Related News.

DTN Closing Grain Comments 10/22 14:43 Grains Start Week Mostly Higher (CME)
Grain contracts started the week mostly higher following a quietly traded session. Soybeans had a solid day rallying double digits in nearby contracts on robust demand and possible concerns brewing over a less-than-ideal weather situation in South America. Corn drifted to a fractionally lower close, while wheat contracts finished with modest gains.

Pro Farmer: Wheat futures end higher  (CME)
Wheat futures ended mostly 5 to 8 cents higher across the board at all three exchanges, which was good for a mid- to high-range close. Wheat was supported by spillover from the soybean market, as well as tightening supplies in the Black Sea region. As reported last week, starting Nov. 15, Ukraine will stop exporting wheat and traders suspect Russia's exportable supplies will soon dry up as well.

Wheat Market Recap Report (CME)
December Wheat finished up 5 3/4 at 878 1/4, 6 1/4 off the high and 6 3/4 up from the low. March Wheat closed up 6 1/2 at 890 1/4. This was 7 1/4 up from the low and 5 1/2 off the high. December Chicago wheat traded marginally higher on the day seeing support from a weaker US Dollar but resistance continues to come from US wheat's uncompetitive price structure in the global market. Kansas City and Minneapolis wheat traded higher on the session as well. The higher trade overnight carried over to this afternoon but a weaker Crude Oil market and along with softer trade in other commodity markets weighed on price gains. Initial support continues to come from a more positive outlook for US exports after Ukraine announced it would ban wheat exports by November 15th. Export Inspections for the week ending October 18th were pegged at 16.4 million bushels which was up from last week's 7 million bushels but well behind the 25 million needed each week to reach this crop years USDA forecast. The current export pace is just 33% of the USDA export estimate vs. the 5 year average of 42%. The report was considered slightly supportive since most in the trade expected a number near 13 million bushels. It was announced this morning that Syria bought 100,000 tonnes of Black Sea wheat in their tender and it's being reported that Romania and Hungary were the cheapest offers for the 50,000 tonne Iraq tender. This added to the short term resistance in price action today. Taiwan Flour Mills issued a tender to buy 104,000 tonnes of milling wheat that can be sourced from the US or Europe so the trade will wait for results tomorrow. December Oats closed up 1 1/4 at 395 1/2. This was 1 3/4 up from the low and 4 1/2 off the high.

Pro Farmer: Corn futures chopped sideways  (CME)
Corn futures traded in a narrowly mixed range today but market bears wrestled control from the bulls ahead of the close. Futures ended fractionally to 1 3/4 cents lower. Corn futures chopped sideways today as traders are uncertain whether to place more emphasis on tight supplies or lackluster demand. With harvest winding down and farmer selling slowing, cash corn basis is historically high.

Corn Market Recap for 10/22/2012 (CME)
December Corn finished down 1/4 at 761 1/4, 5 3/4 off the high and 2 1/2 up from the low. March Corn closed down 1/4 at 759 1/4. This was 2 3/4 up from the low and 5 3/4 off the high. December corn traded both sides of the unchanged today and saw support from a lower US Dollar and surging soybean prices. Outside markets deteriorated throughout the day however which limited gains. The demand influences continue to be mixed for the corn market as the US export pace continues to add momentum to the bear camp. Export inspections for the week ending October 18th were reported at 9.6 million bushels which was down from 17.2 last week. Cumulative export inspections are only 9.8% of the USDA export estimate vs. the 5 year average of 13%. Export inspections need to average 26 million bushels in order to reach this year's USDA estimate. Traders are beginning to become a bit more optimistic towards US exports after the EU approved a GMO corn variety that will allow Brazil corn to be imported. The approval by the EU is a signal that corn and wheat supply is tightening in Europe. Rising cash prices in South America along with the potential for a demand shift from Asian importers to the US could be supportive to corn over the next 3-6 months. South American corn continues to trade at a discount to US but Ukraine's recent ban on wheat exports could limit additional sales of corn. The tightening global grain balance sheet may suggest that US corn exports will be needed long term which could be supportive to prices if realized. November Rice finished down 0.12 at 14.9, equal to the high and equal to the low.

Australia Wheat Harvest Seen Slumping 28% to Five-Year Low (Bloomberg)
Wheat production in Australia, the world’s second-biggest shipper, will probably decline 28 percent to the lowest level in five years, missing a government estimate, after dry weather reduced yields. The harvest (ALHVS) will total 21.2 million metric tons in the 2012-2013 marketing year, according to the median of estimates from four analysts and two traders compiled by Bloomberg. That compares with 23.25 million tons in a survey last month and an official forecast of 22.5 million tons. The crop was a record 29.5 million tons last year. Wheat climbed 34 percent this year as dry weather in parts of the European Union and Russia cut global stockpiles to the lowest in four years, helping boost food costs 7.7 percent the past three months. The U.S. Department of Agriculture cut its estimate for Australian output 12 percent to 23 million tons on Oct. 11. That may be lowered a further 2 million tons in coming reports because of dry conditions, said Rabobank International.
“Western Australia had a very prolonged dry stretch through the cropping year,” said David Johnson, general manager of risk and pricing at Emerald Group Australia Pty in Melbourne. Eastern Australia “hasn’t been getting convincing rain to be able to fulfill crop potential, so the crop has just been slowly declining.” The Australian Bureau of Agricultural and Resource Economics and Sciences, or Abares, will revise its estimate in December.

Oil Rebounds From Lowest in Two Weeks; Keystone Supply Curtailed (Bloomberg)
Oil rose for the first time in four days in New York amid signs its slide to the lowest level in more than two weeks was excessive. The Keystone pipeline won’t resume full deliveries until next month after a shutdown. Front-month futures gained as much as 0.7 percent, snapping a three-day, 3.7 percent loss. Prices rebounded after nearing technical support along the lower Bollinger band. Buy orders tend to be clustered near chart-support levels. The band is at about $87.08 today. Prices also advanced before a report tomorrow that may show new home sales in the U.S. in September rose to the highest in more than two years. “The markets said that given where we are, it could just be a little bit over done,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “It’s been quite a dramatic decline.”
Crude for December delivery rose as much as 64 cents to $89.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.94 at 10:09 a.m. in Tokyo. The November contract fell 1.5 percent yesterday to $88.73, the lowest close since Oct. 3. Brent for December settlement gained 14 cents, or 0.1 percent, to $109.58 a barrel on the London-based ICE Futures Europe exchange after losing 70 cents to settle at $109.44 yesterday. The European benchmark crude was at a premium of $20.65 to New York-traded West Texas Intermediate grade, compared with $20.79 yesterday

Recap Energy Market Report  (CME)
December crude oil prices trended lower during the US trading session, falling to their lowest level since October 4th in the process. The market was higher during the initial morning hours, supported by weakness in the US dollar and a rally in global equity markets. That seemed to change following earnings announcements from Caterpillar that showed higher than expected profit but lowered FY 2012 forecasts. This seemed to reignite slowing economic growth concerns. Meanwhile, the restart of TransCanada's Keystone pipeline served to calm supply disruption concerns in the mid-US, and that seemed to overshadow festering Middle East tensions.

Silver Market Recap Report  (CME)
Like the December gold contract, the December silver contract also forged a fresh new low for the move overnight in the face of soft Japanese export data and weakness in some global equity markets. However, silver was able to throw off the initial weakness a return to positive ground well ahead of mid session and therefore technical considerations might have fueled part of the bounce in silver prices today. The bull camp might point to a tailing off of open interest on the declines at the end of last week as a possible technical bottoming signal but the presence of a lower low this morning hurts that argument somewhat.

Gold Market Recap Report  (CME)
Gold was under early pressure but managed to recover despite seeing adverse equity and currency market action into the mid day trade. There were some reports of physical buying of gold today and perhaps some would-be buyers were moving back into gold ahead of the upcoming FOMC meeting as the Fed has consistently talked up its capacity to support the US economy. Some players also suggested that the inability to sustain the new low for the move early in the trading session fostered short covering and for some that might make the $1,725 level in the December gold contract a critical pivot point in the days ahead. A lack of scheduled data from the US ahead might leave US equities and currency market action as a major influence on gold prices.

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