Thursday, October 25, 2012

20121025 1046 Global Commodities Related News.

Commodity Supercycle Seen Continuing on Emerging Markets Demand (Bloomberg)
The commodity supercycle has further to go on increasing demand from China and emerging markets, according to Longview Economics Ltd. and economist Dambisa Moyo. Raw materials have been in a supercycle since 2001 and the average length of each phase since the late 1700s has been almost 21 years, Chris Watling, chief executive officer of London-based Longview Economics, said today at a World Commodities Week conference in the U.K. capital. The Standard & Poor’s GSCI spot gauge of 24 commodities erased this year’s gain yesterday after entering a bull market in the third quarter. Emerging market and developing economies will grow 5.3 percent this year, compared with 3.3 percent globally, the International Monetary Fund said Oct. 9. The Washington-based group estimated growth of 7.8 percent for China this year and 8.2 percent next year. Raw materials, as measured by the S&P GSCI, have risen for most of the past decade, making annual advances in 11 of the last 13 years.
“It’s all about what’s happening in emerging markets,” Moyo, a former Goldman Sachs Group Inc. economist, said in a presentation at the conference. Improving wealth levels “have implications for what we’ll eat” and more people will want consumer products, she said. Moyo pointed to more urbanization globally as why there will be higher demand for some commodities. Increasing urbanization in China, the biggest user of industrial metals, means more demand there for consumer-driven commodities, Richard Elman, chairman and executive director of Hong Kong-based commodity supplier Noble Group Ltd. (NOBL), said at a London Metal Exchange conference in London Oct. 15. Arable land, needed for growing foods, covers about 11 percent of the world, Moyo said.

Hurricane Sandy Heads Toward Cuba, May Strike U.S. Next Week (Bloomberg)
Hurricane Sandy, which closed businesses and airports on Jamaica as it moved north in the Caribbean, may strike the U.S. East Coast next week with the potential to cause millions of dollars in damage. Sandy’s top winds reached 85 miles (137 kilometers) an hour as it moved off the north coast of Jamaica and headed toward Cuba, according to a U.S. National Hurricane Center advisory at 8 p.m. New York time. “The table is set for some pretty major weather,” said Henry Margusity, an expert senior meteorologist at AccuWeather Inc. in State College, Pennsylvania. “Is it going to be an epic storm or is going to be just your typical nor’easter? We will have the answers next week.” Sandy is expected to cross Cuba overnight and the Bahamas tomorrow, according to the hurricane center. The storm may then move parallel to the U.S. East Coast and either be pushed into the Atlantic Ocean or pulled into the coastline.
A computer model based in Europe took the storm up Delaware Bay, while another by the National Oceanic and Atmospheric Administration had Sandy curve into Portland, Maine, Margusity said. Both events would take place early next week. The Massachusetts Emergency Management Agency said residents should monitor the storm’s progress.

France Tops U.S. Wheat With Premium Seen at Record: Commodities (Bloomberg)
Surging demand for European Union wheat is reducing stockpiles to a 14-year low and driving prices in France, the biggest exporter, to a record premium over U.S. grain after drought withered supply from the Black Sea region. EU licenses to ship wheat in the six weeks to Oct. 16 were 40 percent higher than a year ago, data from the 27-nation bloc show. French grain for March delivery now trades at a premium of 33 cents a bushel to Chicago futures, from a 78-cent discount in July. That will widen to 50 cents by the time the contracts expire, the highest since they began trading, according to the median of five analyst estimates compiled by Bloomberg.
Global consumption will be the second-highest ever this marketing year, at a time when output in Russia, Ukraine and Kazakhstan, the Black Sea region’s three biggest exporters, is falling to a nine-year low, the U.S. government estimates. Egypt, the largest importer, bought at least 540,000 metric tons from France in the past six weeks and nothing from the U.S. Once shipping is included, U.S. wheat is still too expensive, said Nomani Nomani, vice chairman of Egypt’s state grain buyer. “The entire story in wheat is one of location,” said Chris Gadd, an analyst at Macquarie Group Ltd. in London. “Right now the exportable surplus in Russia and most of the former Soviet Union is running out. The French seaborne supply will get tight into the first quarter, so this will be supportive of prices in Paris versus Chicago.”

DTN Closing Grain Comments 10/24 14:24 Soybeans, Wheat Impress Wednesday (CME)
Soybean and wheat contracts were sharply higher Wednesday on solid support from both commercial and noncommercial traders. Corn, on the other hand, had another disappointing day on a lack of interest from either side of the market.

Pro Farmer: After The Bell Wheat Recap (CME)
Wheat futures enjoyed gains throughout today's session and ended roughly 15 to 16 cents higher in Chicago, mostly 8 to 13 cents higher in Kansas City and mostly 7 to 13 cents higher in Minneapolis. This represented a close in the upper half of today's trading range. Wheat futures benefited from improved outside markets compared with yesterday's broad risk aversion thanks to a reminder of tightening wheat stocks.

Wheat Market Recap Report (CME)
December Wheat finished up 15 1/4 at 884, 11 off the high and 19 up from the low. March Wheat closed up 15 1/4 at 897 1/4. This was 18 1/2 up from the low and 10 3/4 off the high. Chicago wheat surged higher after open outcry trading began as traders holding short positions ran for cover but the market stabilized midday and closed well off the 895 session high. Kansas City and Minneapolis wheat followed Chicago higher in anticipation of better export demand for high protein milling wheat over the next 3-6 months. The wheat market started the day with a bullish tilt after China released data pegging imports of wheat at 524,156 tonnes which was up 196% on the year and January through September imports were reported at a new 7-year high. The Ukraine Ag Minister confirmed this morning that they plan on banning wheat exports as of November 15th, which came as no surprise to many in the trade. As a result, this could push more demand to the US later this crop year. Argentina and Australia continue to deal with unfavorable weather conditions with Argentina too wet and Australia too dry. Each of which could see further production cuts in the next USDA report as a result. December Oats closed up 3/4 at 386 3/4. This was 2 1/2 up from the low and 1 3/4 off the high.

Pro Farmer: After The Bell Corn Recap (CME)
December corn futures ended 1 1/2 cents lower and the March contract was steady while deferred futures settled fractionally to 5 1/4 cents higher. Corn futures lacked buying interest today due to a lack of bullish news, but spillover support from soybeans and wheat kept the market from sliding. While corn supplies are tight, traders are concerned about the demand side of the market.

Corn Market Recap for 10/24/2012 (CME)
December Corn finished down 1 1/2 at 754 1/2, 9 off the high and 3 up from the low. March Corn closed unchanged at 756. This was 3 1/4 up from the low and 7 3/4 off the high. December corn saw good buying interest at the opening bell this morning but fell back into negative territory midday and settled well off today's session highs. Strong trade in the soybean and wheat markets helped to support but bearish supply and demand data in the crude oil market limited gains. The basis in the Gulf of Mexico was firm midday on better export interest as the discount between South America and the US narrows. South American corn prices have risen this week on tight supplies and increased demand from Europe. Corn also saw a boost this morning on a supportive ethanol production report. Ethanol production for the week ending October 19th averaged 801,000 barrels per day. This is up 0.50% vs. last week and down almost 12% vs. last year. Corn used in last week's production is estimated at 84.1 million bushels which was a 420,000 bushel increase from the week prior and a new 4-week high. This crop year's cumulative corn used for ethanol production for this crop year is 592.4 million bushels and corn use needs to average 86.6 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. November Rice finished up 0.075 at 15.055, 0.065 off the high and 0.015 up from the low.

Gasoline Losing Streak Hits Longest in 26 Years on Supply (Bloomberg)
Gasoline fell for a 10th consecutive day, extending a losing streak to the longest since the start of New York futures trading in 1986, as fuel supplies surged to the highest level in almost two months. Futures slipped after the Energy Department reported stockpiles rose 1.44 million barrels to 198.6 million, the highest level since Aug. 31. The median forecast by 11 analysts surveyed by Bloomberg called for an increase of 500,000 barrels. The fuel is down 22 percent this month as refineries, including Delta Air Lines Inc. (DAL)’s Trainer plant, started units. “We’ve seen the restart of the Trainer refinery and restart of a number of other units that could supply the East Coast, so the supply situation has improved,” Andy Lipow, president of Lipow Oil Associates LLC, an energy consulting firm in Houston, Texas, said by phone. “In conjunction with the supply improvement, this is the time of year we expect this type of pressure on gasoline.”
Gasoline for November delivery dropped 0.2 cent to settle at $2.603 a gallon on the New York Mercantile Exchange, a four- month low. This is the longest down streak since futures began trading in May 1986. Demand for the motor fuel sank 2.7 percent to 8.49 million barrels a day, the lowest level since March 16, department data show. Over the past four weeks, consumption was down 1.8 percent from a year ago.

Oil Falls for Fifth Day as Inventories Increase (Bloomberg)
Oil traded near the lowest close since July in New York as U.S. inventories rose more than expected and fuel demand dropped. Prices were little changed after capping the longest losing streak in five months yesterday. The Energy Department said stockpiles jumped 5.9 million barrels last week, more than three times the 1.8 million increase that analysts surveyed by Bloomberg expected. Gasoline demand fell to a seven-month low, according to the department. Prices also dropped after the Federal Reserve said the U.S. economy is growing modestly and unemployment remains elevated. “Inventory data overnight was a lot more bearish than expected,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. The Fed’s comments “added to a general risk-off tone to the markets overnight,” he said.
Crude for December delivery was at $85.74 a barrel, up 1 cent, in electronic trading on the New York Mercantile Exchange at 6:54 a.m. in Singapore. It settled yesterday at $85.73, the lowest since July 10. The five-day loss was the longest since May 18. Prices are down 13 percent this year. Brent crude for December settlement traded in London fell 40 cents, or 0.4 percent, to $107.85 a barrel yesterday. Brent’s premium to WTI widened to $22.12. Oil stockpiles increased to 375.1 million barrels last week, the most since July 20 and the highest level for this time of year since the government started reporting inventories in 1982. Oil production climbed for a seventh week to 6.61 million barrels a day, a 17-year high. Imports rose for a fourth week, up 5.7 percent to 8.82 million barrels. The refinery utilization rate dropped to 87.2 percent from 87.4 percent.

Recap Energy Market Report  (CME)
December crude oil prices closed lower for the fifth consecutive session and fell to the lowest level since July 2nd in the process. The market traded higher during the initial morning hours, supported by a rebound in outside market sentiment and a stronger than anticipated Chinese manufacturing data. However, a batch of soft European economic reports tamped down that optimism. December crude oil turned to sharply lower on the session in the wake of EIA inventory data that showed a larger than expected build in supply last week of 5.896 million barrels. The surprise build came from a jump in import activity to a rate of 8.823 million barrels per day and the slight decline in refinery operating rate to 87.2%. December crude oil managed to pare some of its losses by the close but still finished down more than 1%.

Silver Market Recap Report (CME)
The silver market also forged a moderately wide trading range today with a lot of time spent in negative territory. As in gold, the silver markets didn't seem to benefit from favorable scheduled data flows and silver also didn't seem to garner much in the way of lift from periodic strength in US equities. Some metals bulls might have been partially discouraged in the wake of positive US data as some traders think that reduces the prospect of additional Fed easing down the road. Like gold, the silver market saw a fleeting lift off the FOMC meeting statement.

Copper Heads for Longest Slump in Seven Weeks on Europe (Bloomberg)
Copper futures fell, capping the longest slump since August, as a bigger-than-expected contraction in Euro-area services and manufacturing added to concern that metals demand will slow. An index based on a survey of purchasing managers in the currency union that uses the euro dropped to the lowest in more than three years, London-based Markit Economics said today. In Germany, the Ifo institute’s business climate index fell in September. A Bloomberg survey of economists had forecast a rise. “There are a lot of worries out there about how economies continue to be very sluggish,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “The overall sentiment in copper is not good, and people are finding a reason to pull the sell trigger.”
Copper futures for December delivery declined less than 1 percent to settle at $3.568 a pound at 1:21 p.m. on the Comex in New York, dropping for a fifth straight session, the longest slump since Aug. 30. Earlier, the price touched $3.5475, the lowest for a most-active contract since Sept. 7. Reports showing stronger Chinese manufacturing and higher sales of new houses in the U.S. failed to lift copper. Signs that China’s economy may grow fast enough to allow the government to refrain from additional stimulus measures may be dragging copper lower, Zeman said. On the London Metal Exchange, copper for delivery in three months dropped 0.2 percent to $7,817 a metric ton ($3.55 a pound). Nickel, zinc and tin advanced, while aluminum and lead declined.

Gold Moving Average Signals Slump to $1,600, Analyst Says (Bloomberg)
Gold futures may slump to $1,600 an ounce by the end of the year, according to technical analysis by Paul Kavanaugh at FuturePath Trading LLC. The contract for December delivery settled below its 50-day moving average for the second straight day, signaling the metal may slide 6 percent from yesterday’s closing price of $1,701.60 on the Comex in New York, Kavanaugh, the Chicago-based director of business development, said in a telephone interview. “The downside risks are growing, and prices have peaked for this year,” said Kavanaugh, who correctly predicted in early April that the Standard & Poor’s GSCI Spot Index of 24 raw materials would slump by the end of the second quarter. “Gold will correct further.” Yesterday, the metal touched $1,698.70, breaching $1,700 for the first time since Sept. 7. The 50-day moving average is $1,726.55. In October, gold has declined 4.1 percent, heading for the first drop since May.
The price has advanced 8.6 percent this year, heading for the 12 straight annual gain, as economic stimulus by the U.S., Europe and Japan spurred demand for the metal as an inflation hedge. This month, gold has averaged $1,755.28, the highest since September 2011, when the commodity surged to an intraday record of $1,923.70. This year’s high was $1,798.10 on Oct. 5. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

Gold Market Recap Report (CME)
The bull camp in gold has to be disappointed as higher equities, favorable US housing readings and a stronger Chinese PMI result failed to entrench a risk on vibe in the Wednesday US trade. Some gold players suggested that better US and Chinese numbers dented expectations of additional Fed action, while others suggested that gold saw so much chart damage on the charts that an improvement in macro economic sentiment was discounted in the trade. Gold might also have been undermined as a result of adverse currency market action and weakness in energies, industrial metals and grain prices. The gold market only saw a fleeting lift from the FOMC statement and the market wasn't able to hold all of those initial gains.

Maersk Rate Rise Adds to Mothballing Ships for Profit: Freight (Bloomberg)
Europe’s largest container lines are making an attempt to increase Asia-Europe rates to more than break-even levels and restore profit before year-end. Capacity cuts may boost their chance of success. A.P. Moeller-Maersk A/S (MAERSKB)’s container line, the world’s largest, and Hapag-Lloyd AG, Europe’s No. 4 line, have announced a $500 per-standard-container rate increase from Asia to Europe starting Nov. 1. France’s CMA CGM SA, Europe’s No. 3 container company, will also increase Asia to Europe rates by $500 on that date, while Hong Kong’s Orient Overseas International Ltd. (316) has announced a rise of $525 per box.
Container lines are losing money on routes from Asia to Europe because of an overcapacity of ships and slumping demand due to the European debt crisis. That’s made it difficult for carriers to raise prices on the televisions, T-shirts and shoes they ship from China to such ports as Hamburg and Rotterdam. While efforts to increase prices in March restored profits, rates have since slumped to below break-even levels. “This will be a major trigger for Maersk and other container share prices,” Frode Moerkedal, an analyst at RS Platou Markets AS in Oslo, said in a phone interview. “Utilization should improve and support higher rates.”
Container carriers such as Maersk Line, Hapag-Lloyd and Hanjin Shipping Co. have announced the removal of capacity of more than 30,000 standard containers between Asia and Europe in recent weeks. Coupled with the planned Nov. 1 rate hike, that may allow Maersk Line to achieve the full-year profit it forecasts for the year and help offset rising fuel prices in an industry in which all major container lines lost money in 2011.

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