Tuesday, November 6, 2012

20121106 0915 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.”

Storm Threatens Sandy-Devastated Northeast With Cold Rain (Bloomberg)
A nor’easter may bring gusty winds, heavy rain and even snow this week across much of the U.S. East Coast that was hit by Hurricane Sandy last week, complicating cleanup efforts and possibly snarling air traffic. Winds of 45 to 55 miles (72 to 88 kilometers) per hour are expected to accompany coastal flooding and precipitation in New Jersey as the storm moves up the coast from Nov. 7 to 9, according to Mitchell Gaines, a meteorologist at the National Weather Service in Mt. Holly, New Jersey. “This nor’easter will have greater impact than usual because of the impacts of coastal storm Sandy,” Gaines said by telephone. “It’s another storm on top of an area that really doesn’t need another storm.”
The winds from the storm may crack and topple branches weakened by Sandy and coastal flooding may hit areas that were inundated last week. Sandy hit New York and New Jersey killing at least 90 and leaving about 8.5 million homes and businesses without power at its peak. The storm may have caused $10 billion to $20 billion in insured damage, according to Hiscox Ltd. (HSX), the biggest Lloyd’s of London insurer by market value. The cold from the new storm may boost energy demand as people turn up thermostats to heat homes and businesses. About 1.37 million customers were still without power today, according to the U.S. Energy Department. The storm has the potential to delay restoration efforts and may even bring about more blackouts, according to a statement from Consolidated Edison Inc., which provides service to New York City and Westchester County.

DTN Closing Grain Comments 11/05 14:39 Beans Continue to Slide (CME)
Pressure from both sides of the market kept bean contracts on the defensive to start the week on the improved weather pattern for Brazil and Argentina. Corn followed along, but withstood a test of key support, while wheat held to the plus side on concerns over domestic production.

Wheat Market Recap Report (CME)
December Wheat finished up 1 1/2 at 866, 9 3/4 off the high and 3 up from the low. March Wheat closed up 3/4 at 879 1/4. This was 2 1/2 up from the low and 9 3/4 off the high. December Chicago wheat ended the day in positive territory along with KC and Minneapolis wheat. Traders added risk premium to prices due to dry weather in the western plains and on hopes that demand may be picking up for high protein hard wheat classes. The USDA will release an updated crop condition report this afternoon and the trade expects Good/Excellent ratings to be near 37-39% which is down from 40% last week. The dry conditions in the western and northern plains are raising concerns that some of the crop may not germinate ahead of winter dormancy. Additional support was linked to thoughts that Argentina and Australian wheat production may decline in this week's USDA report. Most analysts feel global wheat production may be slashed again which offers a bullish bias long term. Export inspections for the week ending November 1st were reported at 13.9 million bushels which was up from 9.7 million last week. The sluggish shipment pace helped the bear camp the second half of the trading session. The US needs to average a whopping 25.9 million bushels each week to reach the USDA goal and cumulative inspections are just 35% of the current USDA estimate vs. the 5 year average of 45%. December Oats closed down 9 at 358. This was 1/2 up from the low and 10 off the high.

Corn Market Recap for 11/5/2012 (CME)
December Corn finished down 4 at 735 1/2, 9 1/2 off the high and 2 1/2 up from the low. March Corn closed down 4 1/2 at 738. This was 2 1/4 up from the low and 9 1/4 off the high. December corn traded a quarter cent lower at the midpoint of today's session but technical sell pressure picked up in the second half of the day to push futures 3-4 cents lower into the close. Support came from a stronger wheat market but gains were limited due to a weaker soybean market. The corn markets sluggish pace of export sales continues to be a drag on futures in the short term but a worse than expected start to the US wheat planting season helped to support grain prices to start the week. Export inspections for the week ending November 1st were reported at 14.7 million bushels vs. 15.5 last week and 26.3 million bushels are needed each week to reach this crop years USDA export estimate. The cumulative inspection pace for 2012/13 is now 12% of the USDA export goals vs. the 5 year average of 16.5%. Money flow by hedge funds could be key to price direction this week and many large fund traders have stepped to the sideline until the Presidential election is over. The USDA will release an updated Supply and Demand report on Friday and some analysts believe the government could trim US corn production which is supportive to the price outlook long term. November Rice finished up 0.15 at 14.86, equal to the high and 0.17 up from the low.

Japan to Lift Corn Reserves as Imports Rise From Ukraine (Bloomberg)
Japan, the world’s largest corn importer, is set to spend $20 million to help feed mills boost stockpiles and safeguard food security as the nation shifts purchases from the U.S. to Ukraine and Brazil. Feed makers will probably expand inventories to 750,000 metric tons in the 12 months starting April 1, or about 7 percent of consumption, from 450,000 tons this year, said Ryosuke Hirooka, deputy director for the feed division of the Ministry of Agriculture, Forestry and Fisheries. The government may spend 1.62 billion yen to meet part of the cost, he said in an interview in Tokyo. Japan purchased a record amount of corn from Brazil and Ukraine this year, cutting U.S. supplies to the lowest level in at least two decades, as drought sent Chicago futures to a record. Shipments from South America and Europe were delayed, forcing feed mills to draw on stockpiles, Hirooka said.
“Diversification of supply raises the risk of instability in shipments” because transport facilities in some emerging markets are not as good as the U.S., said Tetsuhide Mikamo, director at Marubeni Research Institute. “Holding higher stockpiles is one option for managing the risk.” An increase in inventories may curb the decline in corn imports, which have slumped to a 26-year low as feed mills use more wheat. The U.S. was the top corn exporter in the 2011-2012 marketing year, followed by Brazil, Argentina and Ukraine, U.S. Department of Agriculture data show.

Typhoon No Bar to Third Record Chinese Corn Harvest: Commodities (Bloomberg)
Chinese farmers are reaping a third record corn harvest even after a typhoon wiped out some of the crop, easing demand for imports at a time when the U.S. drought is driving sales from the biggest exporter to a four-decade low. The harvest rose 3.6 percent to 199.74 million metric tons, according to a survey of farmers in China’s seven biggest producing provinces by Geneva-based SGS SA (SGSN) for Bloomberg. The country’s stockpiles last month were at a nine-year high, and the U.S. Department of Agriculture expects a 64 percent drop in imports. The agency will raise its estimate for U.S. reserves by 2.4 percent when it reports Nov. 9, the average of 29 analyst estimates compiled by Bloomberg shows.
Consumers are paying the most ever for corn this year after drought parched U.S. and European crops, contributing to a 7.7 percent rise in United Nations-tracked global food prices since June. Chinese farms planted more acres and used hybrid seeds to supply feed to the world’s biggest hog herd after the country shipped in more corn in the past three years than it had in the previous 22. Prices will drop 12 percent by March, according to U.S. Commodities Inc. in West Des Moines, Iowa. “China’s best investment has been to boost its corn production,” said Jeff Hainline, the president of Advance Trading Inc. in Bloomington, Illinois, who has been buying and selling grain since 1977. “China has more than enough corn to last until the next harvest.”

Oil Rises From Four-Month Low as Refineries Restart (Bloomberg)
Oil rose from the lowest level in almost four months as refineries restored production after Hurricane Sandy tightened fuel supplies. Prices snapped a three-week loss as four of the six Northeast refineries that were forced to close because of Sandy resumed output. Gains accelerated in the final 15 minutes of floor trading as gasoline jumped and Brent oil in London climbed on unprecedented delays in North Sea Forties shipments. “Refineries are kicking back up and it’s a little supportive for oil in the short term,” said Kyle Cooper, director of commodities research at IAF Advisors in Houston. “Market’s sold off quite a bit and you probably have value investors coming in.” West Texas Intermediate oil for December delivery rose 79 cents, or 0.9 percent, to settle at $85.65 a barrel on the New York Mercantile Exchange. The contract ended at $84.86 a barrel on Nov. 2, the lowest settlement since July 10. Prices have dropped 13 percent this year.
Brent oil for December settlement increased $2.05, or 1.9 percent, to end the session at $107.73 a barrel on the ICE Futures Europe exchange. Three refineries in New Jersey, Delaware and Pennsylvania with a total capacity of 527,200 barrels a day returned to normal operations last week and Philadelphia Energy Solutions’ 335,000-barrels-a-day plant in Philadelphia was producing at reduced rates as of today, according to the Energy Department.

Iron Ore Transport Rates Seen Surging as Ships Scrapped: Freight (Bloomberg)
The beaches of Bangladesh are filling with unwanted ships waiting to be scrapped, driving up prices for transporting iron ore and halting losses for STX Pan Ocean Co. (028670), South Korea’s biggest owner of the carriers. The cost of shipping iron ore in Capesize vessels will increase almost sixfold to $14,900 a day in December from the 2012 low, according to prices of swaps used by traders to hedge freight costs that reveal the direction of the market accurately about 60 percent of the time. Prices are rising as the fleet shrank 0.6 percent last month, its first contraction since November 2008, according to data from IHS Inc. (IHS), an Englewood, Colorado-based research company.
Earnings for Capesizes tumbled 94 percent from the 2008 record after the supply of vessels rose three times faster than demand, leading owners to sell ships. Carriers with total capacity of 12.8 million deadweight tons -- enough iron to build 150 Empire State Buildings -- will be dismantled this year, estimates Clarkson Plc (CKN), the world’s largest shipbroker. So many ships are being broken up that Bangladesh, the world’s second- largest recycler, is low on space on its beaches. “Yards are pretty close to capacity and Bangladesh is running out,” according to Anil Sharma, chief executive officer of Global Marketing Systems Inc. in Cumberland, Maryland, the largest buyer of obsolete carriers. “This is the biggest boom for scrapping of Capesizes we have seen in history.”

Silver Market Recap Report (CME)
The silver market was able to reject an initial thrust downward on the charts and in turn the market was able to regain the $31.00 level on the charts. Silver had to fight adverse currency market action, weaker copper and platinum prices as some soft US scheduled data to return to positive ground today. Apparently silver is taking most of its direction from gold and not from the rest of the metals complex. Uncertainty ahead of an austerity vote in Greece, anxiety into the US election and an ongoing lack of clarity toward the situation in China, might continue to limit commodities like silver in the days ahead.

Gold Market Recap Report (CME)
The gold market initially managed to forge a fresh downside breakout on the charts before rebounding rather definitively ahead of mid session. Clearly gold and silver diverged from the action in platinum and copper today and that would seem to suggest that some metals markets were tracking flight to quality developments, while others were following classic physical commodity market fundamentals. Adverse currency market action might have held back gold but the December gold contract was able to forge a low to high bounce of roughly $13 an ounce. Unfortunately some gold players remained concerned about the length of the non-commercial and non-reportable net spec long positioning perhaps because the figures released Friday didn't account for the slide in prices at the end of last week.

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