Thursday, November 8, 2012

20121108 1100 Global Commodities Related News.

DTN Closing Grain Comments 11/07 14:39 Wheat Impresses Wednesday (CME)
Grains started the pit session weaker, but very quickly exploded to the plus side led by Chicago wheat. Corn was able to finish modestly higher while soybeans were unable to sustain bullish momentum almost wiping out Monday's gains.

Wheat Market Recap Report (CME)
December Wheat finished up 17 at 894, 3 off the high and 23 1/4 up from the low. March Wheat closed up 17 1/4 at 907 3/4. This was 23 1/2 up from the low and 3 off the high. December Chicago wheat surged to its highest level since October 1st and finished the day with double digit gains. KC and Minneapolis wheat traded higher as well. Poor growing conditions in the western plains, short covering ahead of Friday's USDA report, and new contract highs in the Paris Wheat futures market overnight prompted a massive round of buying shortly after the open outcry open. Outside markets negatively following the reelection of the President but fears of a Greek default on debt as well as concern over the US fiscal cliff added to the negative tone and pushed the US Dollar higher on the day. The strong dollar and weak soybean market offered resistance to gains but many in the market also feel the USDA report this Friday could be supportive to the market.
Some feel global wheat ending stocks will fall near 170 million tonnes vs. current estimates of 173 million tonnes. Traders will also watch for cuts to Argentina and Australian wheat production. December Oats closed up 5 1/4 at 365 1/4. This was 9 3/4 up from the low and 1/2 off the high.

Corn Market Recap for 11/7/2012 (CME)
December Corn finished up 3 1/4 at 744 1/4, 7 1/2 off the high and 10 1/4 up from the low. March Corn closed up 3 at 746. This was 10 1/2 up from the low and 6 1/4 off the high. December corn trade higher on the day and briefly traded above 750 shortly after open outcry began trading. Buying support was linked to a sharply higher wheat market as well as thoughts that Argentina corn production will be slashed due to heavy rainfall in October. Exports remain sluggish for corn but this only makes up 10% of the demand matrix. Demand for corn remains strong in feeder markets as wheat extends its premium to corn futures. Basis bids at ethanol facilities are strong as well and ethanol production for the week ending November 2nd averaged 827,000 barrels per day which is up 0.25% vs. last week and down 9.2% vs. last year. On top of the better production, ethanol stocks were drawn down which could imply a significant improvement in overall ethanol demand. Total ethanol production for the week was 5.79 million barrels which was up from 5.77 the week prior. Corn used in last week's production is estimated at 86.8 million bushels which was up from last week. This crop year's cumulative corn used for ethanol production for this crop year is 765.9 million bushels. Corn use needs to average 86.5 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. November Rice finished down 0.1 at 14.935, equal to the high and equal to the low.

Wheat Gains as Declining Crop Conditions Threaten Supply (Bloomberg)
Wheat futures rose to a five-week high on speculation that global supplies will tighten as crop conditions deteriorate in the U.S. because of dry weather and rain delays planting in parts of Europe. About 39 percent of the U.S. winter crop was in good or excellent condition as of Nov. 4, the lowest for the week since data started 27 years ago, the Department of Agriculture said on Nov. 5. The French soft-wheat crop was 64 percent planted as of Oct. 29, compared with 88 percent last year, FranceAgriMer said on Nov. 2. “In the U.S. Plains, they’re going into dormancy in very dry conditions,” Mike O’Dea, a risk-management consultant at INTL FCStone in Kansas City, Missouri, said in a telephone interview. As the French price rises, “it will give the impression that U.S. grain is undervalued compared to the world market,” he said.
Wheat futures for December delivery gained 1.9 percent to settle at $8.94 a bushel at 2 p.m. on the Chicago Board of Trade, after reaching $8.97, the highest for a most-active contract since Oct. 1. The grain is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show. In Paris, milling-wheat futures for January delivery gained 1.5 percent to 275.50 euros ($351.70) a metric ton on NYSE Liffe. Earlier, the contract reached a record 277.50 euros.

Longest Sugar Glut in Decade Extends on Indian Crop: Commodities (Bloomberg)
Indian farmers may reap at least 6 percent more sugar than forecast by the government and industry, extending the longest global glut in more than a decade and a bear market that began in September. Output in the world’s second-biggest producer will reach 25.53 million metric tons in the season that began Oct. 1, according to a survey of 820 farmers across an area responsible for 93 percent of national output by Geneva-based SGS SA (SGSN) for Bloomberg. While that’s 2.6 percent less than a year earlier, the government expects output of 23.5 million tons and the Indian Sugar Mills Association predicts 24 million tons.
The extra sweetener would expand global supply already forecast by the International Sugar Organization to reach a record this season. Producers from Russia to Thailand raised output after prices averaged the most in three decades in 2011. Futures fell 26 percent since March on prospects for a third straight annual surplus, helping to contain the surge in global food costs caused by droughts in the U.S., Europe and Australia. “If the actual crop is going to be more than expected it’s detrimental for the world market,” said Sergey Gudoshnikov, a senior economist at the ISO in London who has studied the commodity for about three decades. “For the time being the world sugar market is still in surplus.”
Raw-sugar futures fell 16 percent to 19.50 cents a pound this year on ICE Futures U.S. in New York. Prices, which reached 36.08 cents in February 2011, the highest since 1980, may drop to 18 cents by the year-end, based on the median of 15 trader and analyst estimates compiled by Bloomberg last month. It’s this year’s third-biggest decliner in the Standard & Poor’s GSCI Spot Index of 24 commodities, behind coffee and cotton.

Recap Energy Market Report (CME)
December crude oil prices trended sharply lower during the US trading session, under pressure from a sell off in risk-taking sentiment, gains in the US dollar and renewed concerns over the US fiscal cliff. The decline in crude oil turned lower following renewed concerns over the European debt situation and ahead of a Greek austerity vote. December crude oil prices plunged below yesterday's low in the wake of EIA inventory data that showed a build that was slightly more than expected of 1.766 million barrels last week. Some of the build came from a hefty decline in refinery capacity, which was down 2.3% last week to 85.40%. Crude oil prices seemed to stabilize in early afternoon trade as prices attracted a measure of support on the downdraft to $84.50 and modest rebound in US equity markets.

Oil Trades Near Four-Month Low After Biggest Decline This Year (Bloomberg)
Oil traded near the lowest level in almost four months in New York on concern the so-called fiscal cliff threatens to slow economic growth in the U.S, the world’s biggest oil-consuming nation. Futures were little changed after dropping 4.8 percent yesterday as President Barack Obama was re-elected and a government report showed that U.S. crude and fuel supplies rose last week. Democrat Obama faces a showdown with the Republican- controlled House over more than $600 billion in tax increases and spending cuts next year. West Texas Intermediate oil for December was at $84.68 a barrel, up 24 cents, in electronic trading on the New York Mercantile Exchange at 9 a.m. in Tokyo. Crude slumped $4.27 yesterday to $84.44, its lowest close since July 10. Prices have fallen 14 percent this year. Brent oil for December settlement slid $4.25, or 3.8 percent, to $106.82 a barrel on the ICE Futures Europe exchange yesterday. The European benchmark crude closed at a premium of $22.38 to New York-traded WTI.

U.S. Oil Production Increases to Highest Since December 1994 (Bloomberg)
U.S. oil production rose to the highest in almost 18 years as a shale drilling boom cut reliance on foreign fuel and nudged the country closer to energy independence. Output swelled by 8,000 barrels to 6.68 million barrels a day in the week ended Nov. 2, the Energy Department reported today. It was the most since Dec. 23, 1994. Improvements in horizontal drilling and hydraulic fracturing, or fracking, have unlocked fuel trapped in deep underground rock formations in states such as North Dakota, Texas and Oklahoma. The U.S. met 83% of its energy needs in first six months of 2012, on track to be the highest annual level since 1991, according to department data compiled by Bloomberg. Production advanced 31 percent this year in North Dakota, 19 percent in Texas and 11 percent in Oklahoma, department records show. Crude imports have declined 11 percent this year.
“Every added barrel we make here is another barrel we don’t need from somewhere else,” said Kyle Cooper, director of commodities research at IAF Advisors, a Houston consulting firm. “U.S. production could reach 9 million to 10 million barrels per day in another five to 10 years.” Oil fell $3.59 a barrel, or 4.1 percent, to $85.12 on the New York Mercantile Exchange at 12:19 p.m. Futures have declined 14 percent this year.

Gold Set for Longest Winning Run in 2 Months on Obama Win (Bloomberg)
Gold declined for the first time in three days as a stronger dollar crimped demand for the precious metal as an alternative investment. The dollar gained as much as 0.4 percent against a basket of six currencies on concern that President Barack Obama will struggle to convince Congress to avert the so-called fiscal cliff after his re-election. European Central Bank President Mario Draghi said the region’s crisis is affecting Germany. The Standard & Poor’s GSCI Spot Index of 24 commodities slumped as much as 2.6 percent. “We are seeing a risk-off day today,” Donald Selkin, the New York-based chief market strategist at National Securities Corp., which manages about $3 billion of assets, said in a telephone interview. “There is a sell-off across the board.” Gold futures for December delivery slid 0.1 percent to settle at $1,714 an ounce at 1:53 p.m. on the Comex in New York. Earlier, prices touched $1,733, the highest for a most-active contract since Oct. 19.
Silver futures for December delivery declined 1.2 percent to $31.661 an ounce in New York. On the New York Mercantile Exchange, platinum futures for January delivery fell 1.2 percent to close at $1,539.50 an ounce. Palladium futures for December delivery slipped 1.6 percent to $610.35 an ounce.

Gold, Copper Lead Gains in Commodities as Obama Wins Second Term (Bloomberg)
Gold and copper advanced after Barack Obama won a second term as U.S. president, entrenching prospects for continued stimulus in the world’s biggest economy and weakening the dollar. The Standard & Poor’s GSCI Index of raw materials climbed as much as 0.5 percent to 647.66. Gold advanced to $1,731.82 an ounce in London, the highest in more than two weeks, while copper rose as much as 1.4 percent to $7,806.25 a metric ton. Obama defeated Republican Mitt Romney, securing at least 303 electoral votes, with 270 needed for victory. The S&P GSCI Index is little changed this year as investors weigh stimulus from the world’s central banks including the Federal Reserve against a global slowdown and impact of Europe’s debt crisis.
“The outcome of the U.S. election increases the probability that the ultra-expansionary monetary and fiscal policy will continue, which puts pressure on the U.S. dollar and gives buoyancy to commodity prices,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said today in a report. The Dollar Index (DXY), a gauge of the U.S. currency against six counterparts, declined 0.2 percent to 80.453. Commodities priced in dollars tend to move counter to the currency. Obama’s victory erases a question mark that has shadowed the U.S. economy and the Fed all year as the U.S. central bank presses on with a program of quantitative easing to spur growth and cut joblessness. Romney had vowed to replace Fed Chairman Ben S. Bernanke when his term ends in 2014 because “the amount of currency that he’s created” with his purchases of Treasuries and other debt securities has failed to create jobs. The U.S. jobless rate rose to 7.9 percent in October, according to a Labor Department report on Nov. 2.

Silver Market Recap Report (CME)
The silver market forged a large trading range today but at times the December silver contract surrendered more than half its initial gains. In addition to concerns of slowing fostered by renewed attention to the looming US fiscal cliff, it is also possible that silver was undermined by talk of rising investment taxes. For good measure the silver bulls might have been emboldened by the looming uncertainty of the Chinese Congress kick off on Thursday and perhaps some silver bulls decided to stand aside rather than risk a sell off in the events the situation in Greece deteriorates.

Gold Market Recap Report (CME)
The gold market forged a rather wide two sided trading range today. The December gold contract has now seen 3 out of the last 4 trading session's exhibiting some very extensive volatility and that could be something that begins to favor the bear camp ahead. Gold was probably undermined as a result of talk that rising investor taxes in the US were likely to be seen as a headwind for the US economy and that in turn could rekindle old fears toward the Euro zone situation. While the currency markets posted some adverse action for gold today, the main pressure on gold seemed to be the result of big picture macro economic slowing concerns. While gold did see volume and open interest pick up to start this week, the failure on the charts today might put the prior two day's noted gains in jeopardy.

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