Monday, November 5, 2012

20121105 0957 Global Commodities Related News.

Hedge Funds Reduce Bullish Bets Most in Five Months: Commodities (Bloomberg)
Hedge funds cut bullish wagers on commodities by the most since June as prices retreated to a three-month low on mounting concern that Europe’s debt crisis will worsen and U.S. growth slow. Money managers reduced combined net-long positions across 18 U.S. futures and options in the week ended Oct. 30 by 11 percent to 1.05 million contracts, the lowest since July 10, Commodity Futures Trading Commission data show. Copper holdings fell to an eight-week low, and gold wagers are now the smallest since September. Gasoline bets declined for a fourth week, and those in oil reached the lowest level in four months as Hurricane Sandy forced U.S. East Coast refineries to shut. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell a third week, the longest contraction since June. Greece cut its economic outlook for 2013 on Oct. 31, and Spain delayed asking for a bailout. U.S. lawmakers are at an impasse over tax rises and spending cuts, and the presidential election takes place tomorrow.
Sales trailed analyst estimates at 59 percent of U.S. companies that released third-quarter results through Nov. 2, data compiled by Bloomberg show. “It’s hard to see upward price pressures in commodities when we’re still seeing such slow growth,” said Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management in Seattle, which oversees about $111 billion in assets. “Supplies are sufficient for current demand.” The S&P GSCI retreated 2 percent last week, with 15 of 24 components declining, led by gasoline and heating oil. The MSCI All-Country World Index of equities advanced 0.6 percent, and the dollar climbed 0.7 percent against a basket of six major currencies, strengthening for a second week. Treasuries returned 0.1 percent, a Bank of America Corp. index shows.

DTN Closing Grain Comments 11/02 14:39 Corn, Beans Sharply Lower; Wheat Holds Up Well (CME)
Corn and bean contracts were hit hard by commercial selling and spillover pressure from bearish outside markets. Wheat held up extremely well in comparison as sell orders seemed to dry up, with the Kansas City market even able to close with fractional gains.

Corn Market Recap for 11/2/2012 (CME)
December Corn finished down 11 1/2 at 739 1/2, 12 off the high and 3 1/2 up from the low. March Corn closed down 11 at 742 1/2. This was 3 1/2 up from the low and 11 1/2 off the high. December corn closed 11 1/2 cents lower on the session but managed to close up 1 3/4 cents higher for the week. Sluggish export demand and weakness in gold and crude oil plus a surge higher in the US dollar helped to drive corn market sharply lower on the day. Instead of positioning for the market fundamentals ahead, hedge funds seem to be more concerned with getting out of the way of potential financial instability into the elections and markets like corn where funds hold a hefty net long position were under pressure. With trend-following fund traders holding a net long position of 222,932 contracts as of October 23rd and open interest up another 16,000 contracts since that report, traders appear concerned over the possibility of long liquidation selling ahead.
The market consolidated in a relatively tight trading range in October and consolidation is normally a continuation pattern. Weekly export sales came in at just 167,900 metric tonnes. Cumulative corn sales stand at 37.4% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 43.2%. Average weekly sales over the past four weeks are just 120,300 tonnes as compared with 411,900 tonnes as an average necessary each week to reach the USDA projection. Talk of the potential for higher production for the report next week helped to pressure the market as well. November Rice finished down 0.055 at 14.71, equal to the high and 0.02 up from the low.

Wheat Market Recap Report (CME)
December Wheat finished down 4 at 864 1/2, 9 1/4 off the high and 5 3/4 up from the low. March Wheat closed down 4 3/4 at 878 1/2. This was 5 up from the low and 10 off the high. December Chicago wheat closed 4 cents lower on the session but managed to close 3/4 of a cent higher for the week. The market jumped more than 14 cents off of the early lows to trade moderately higher on the day into the mid-session. At one point, July KC wheat was up 14 1/4 cents on the session and up to a 17-month high. Deteriorating crop conditions in the plains, a forecast for warm and dry weather over the next week and news of another downgrade in Argentina production were all seen as positive forces which helped to support. Kansas City wheat gained on Chicago wheat today; especially for the new crop. Weekly export sales came in at 362,900 metric tonnes which was near the low end of trade expectations.
As of October 25, cumulative wheat sales stand at 47.0% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 y ear average of 62.2%. Sales of 530,000 metric tonnes are needed each week to reach the USDA forecast. December Oats closed down 13 1/4 at 367. This was 1 1/2 up from the low and 13 3/4 off the high.

China’s Cotton Reserves Enough to Meet Deficit for Six Years (Bloomberg)
Cotton stockpiles in China, the world’s biggest importer, are set to climb to about 9 million metric tons this season, enough to cover the country’s deficit for the next six years, according to Allenberg Cotton Co. Inventories are rising as the government boosts purchases to support domestic prices and lift farmer incomes, Joe Nicosia, chief executive officer of world’s largest cotton trader, said at a conference in Hong Kong today. The country may buy 5 million tons for reserves this year, up from 3.2 million tons a year earlier, he said. “As long as China maintains this regime to subsidize cotton farmers, the world will be prone to overproduction,” he said. “Can you imagine a world without China importing any cotton for six years? They hold all the cards.”
Cotton plunged 68 percent from a record last year as farmers expanded output. Global stockpiles will reach a record 16.4 million tons in the year started Aug. 1, increasing 17 percent from a year earlier, according to the International Cotton Advisory Committee. The slump in prices has curbed costs at companies such as Levi Strauss & Co. and Gap Inc. (GPS) “Outside of China the world has 13.9 million bales of surplus,” said Nicosia, who is also executive vice president of Louis Dreyfus Commodities BV. “How much of this surplus China decides to absorb will determine the cotton market’s direction.” Each bale weighs 480 pounds (218 kilograms).

Oil Trades Near Four-Month Low as Storm-Hit Refineries Stay Shut (Bloomberg)
Oil traded near the lowest level in almost four months in New York as refineries in New Jersey remained shut after Hurricane Sandy, curbing demand for crude. Futures were little changed after falling 2.6 percent on Nov. 2 to cap a third weekly decline. Hess Corp. (HES)’s 70,000 barrel-a-day Port Reading refinery won’t resume until after full power has been restored, which will take several days, the company said in an e-mailed statement dated yesterday. Phillips 66’s 238,000 barrel-a-day Bayway refinery stayed shut as of Nov. 3, the company said on its website. Crude for December delivery was at $84.79 a barrel, down 7 cents, in electronic trading on the New York Mercantile Exchange at 8:01 a.m. Singapore time. The contract slid 1.7 percent last week to $84.86 a barrel, the lowest close since July 10. Prices have dropped 14 percent this year.
Brent oil for December settlement on the London-based ICE Futures Europe exchange was down 22 cents at $105.46 a barrel. The European benchmark crude was at a premium of $20.67 to New York-traded West Texas Intermediate grade. The spread narrowed for a fourth day on Nov. 2 to $20.82.

Gold Falls Most Since June to Below $1,700 on U.S. Payroll Data (Bloomberg)
Gold futures tumbled the most in more than four months to below $1,700 an ounce as U.S. payrolls in October rose more than forecast, easing pressure on the Federal Reserve to expand monetary stimulus. A government report showed a net 171,000 workers were hired after a 148,000 gain in September that was more than estimated. The dollar headed for the biggest gain since July 20 against a basket of currencies, eroding the appeal of gold as an alternative investment. “People are concerned that easy money will not be available for long since the economy is showing some signs of recovery,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. Gold futures for December delivery tumbled 2.3 percent to settle at $1,675.20 at 1:49 p.m. on the Comex in New York, the biggest drop for a most-active contract since June 21. Earlier, the metal touched $1,674.80, the lowest since Aug. 31.
This week, gold fell 2.1 percent, the fourth straight decline and the longest slump since September 2011. Gold reached a 10-month high approaching $1,800 on Oct. 5 on speculation that fiscal stimulus in the U.S., Europe and Japan enhanced the appeal of the metal as an alternative to currencies. Silver futures for December delivery plunged 4.3 percent to $30.857 an ounce in New York, the biggest fall since June 21. Earlier, the price touched $30.815, the lowest since Aug. 30. Platinum futures for January delivery fell 1.8 percent to $1,544.90 an ounce on the New York Mercantile Exchange.
Palladium futures for December delivery slumped 2.1 percent to $599.65 an ounce.

Gold Traders Most Bullish in 10 Weeks on Stimulus: Commodities (Bloomberg)
Gold traders are the most bullish in 10 weeks and investors are hoarding a record amount of bullion as central banks pledge to do more to spur economic growth. Eighteen of 27 analysts surveyed by Bloomberg expect prices to rise next week and five were bearish. A further four were neutral, making the proportion of bulls the highest since Aug. 24. Holdings in gold-backed exchange-traded products gained the past three months, the best run since August 2011, data compiled by Bloomberg show. They reached a record 2,588.4 metric tons yesterday, valued at $140 billion, the data show.
The Bank of Japan (8301) expanded its asset-purchase program on Oct. 30 for the second time in two months, increasing it by 11 trillion yen ($137 billion). The Federal Reserve said last week it plans to continue buying bonds and central banks from Europe to China have pledged more action to boost economies. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. “Central banks are all very concerned about a depression, so they’re keeping monetary policies as loose as possible,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores everything from quarter-ounce British Sovereigns to 400-ounce bars. “People are buying gold as a store of value to protect against currency depreciation.”

Silver Market Recap Report  (CME)
The big range down washout in silver prices probably kicked off some technically related selling today. With the slide today, December silver prices fell down to the lowest level since the end of August. Like gold, silver was pressured by declining US easing hopes, concerns ahead of the election and perhaps even fears that the fiscal cliff will soon become a headline story. Adverse currency market action and spill over selling from other markets clearly left the bear camp with the edge today.

Gold Market Recap Report (CME)
The gold market forged a sharp range down washout today in the wake of better than expected US scheduled data. Adverse currency market action, pressure on physical commodities and weakness in equities seemed to shift an initial risk on vibe into a risk off vibe. It is also likely that technical violations of key chart support levels in gold contributed to the downward motion in gold prices. In the end the decline in the US equity markets was probably the biggest influence on gold prices today.

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