Friday, November 9, 2012

20121109 1006 Global Commodities Related News.

FAO slashes grain f'casts, world food prices stay high
Thu Nov 8, 2012 7:45am EST
* Wheat production seen falling 5.5 pct to 661 mln T
* World cereals production seen down 2.7 pct 2.284 bln T
* World food prices eased slightly in October (Adds comments from FAO economist, details)
By James Mackenzie
ROME, Nov 8 (Reuters) - Global supply of key cereal staples including wheat is to tighten sharply in the 2012/13 crop season as wheat and maize output feels the pinch of the worst U.S. drought in more than half a century, data from the United Nations food agency showed.
Separate figures indicated a slight easing of pressure on overall food prices on Thursday, but the Food and Agriculture Organisation's (FAO) global index stayed close to levels seen in the 2008 crisis when food riots broke out in some countries.
The FAO's November Food Outlook report pointed to continuing pressure on grains output in the current season following this year's droughts in key producer regions from the Black Sea to the U.S. cornbelt.
Wheat production, which has also suffered heavily in the droughts in eastern Europe and central Asia, was seen falling 5.5 percent to 661 million tonnes, the agency said.
World cereals production is expected to fall 2.7 percent to 2.284 billion tonnes in the 2012/13 season, it said, trimming slightly its previous output forecast of 2.286 billion tonnes.
"This season's world cereal supply and demand balance is proving much tighter than in 2011/12 with global production falling short of the projected demand and cereal stocks declining sharply," the FAO said.
The Black Sea drought is set to cut wheat output in Russia and Ukraine by some 30 percent, while Kazakhstan will see its crop down by more than half.
Wheat production is set to rise in the United States but U.S. maize output was decimated by a drought which caught farmers by surprise and slashed the corn crop.
On wheat, FAO noted that levels were close to the average of the past five years and it said plantings in major producing regions next year would match or even increase over levels seen in 2012, pointing to a rise in production next season.
However senior FAO economist Abdolreza Abbassian said the forecast was still very tentative and it would require a strong rise in production next year to ease pressure on prices.
"Anything short of a significant increase would mean a further need to draw down stocks, which means getting to critically low levels and therefore higher prices," he said.
"We need very strong production for wheat, corn and soybeans, certainly these three important crops," he said.

FAO's monthly reading of world food prices showed some easing in October, largely because of a dip in cereals and oils prices in the month but the wider outlook remains volatile and uncertain, Abbassian said.
"It's a very mixed picture," he said. "The uncertainty we are dealing with is not just limited to supply, it's also to do with demand," he said.
The Rome-based agency said its monthly Food Price Index, fell to 213.5 points from 215.5 points the previous month, but stayed near 2008 levels.
It said reduced wheat trade activity and slowing demand for maize by livestock and industrial consumers during the month had cut grains prices, while higher palm oil output in Southeast Asia and weak import demand had reduced edible oil prices.
The FAO lifted its estimate of rice production but cut its forecast for coarse grains output and slightly lowered its estimate of global grains stocks at the end of the 2012/13 season to 497.4 million tonnes.
It said global cereal utilization in 2012/13 would decline slightly from the previous season but would still exceed production.
Declines in animal feed use and industrial maize for ethanol production in the United States would cut utilization of wheat and coarse grains but would be balanced by a 1.5 percent increase in rice consumption. (Reporting By James Mackenzie; editing by Veronica Brown and Keiron Henderson)

DTN Closing Grain Comments 11/08 14:27 Quiet Day Ahead of USDA Report, End of Week (CME)
It was a quiet day in the grain complex ahead of Friday morning's USDA reports. However, wheat had another solid day while corn and beans drifted lower, the latter inching closer to initial support.

Wheat Market Recap Report (CME)
December Wheat finished up 8 1/2 at 902 1/2, 2 1/2 off the high and 16 up from the low. March Wheat closed up 8 3/4 at 916 1/2. This was 15 1/2 up from the low and 2 1/4 off the high. December Chicago wheat closed higher for its 4th straight session and finally broke above the $9.00 level. Positive technical signals along with surging European wheat markets continue to offer support to the bull camp. Additional support was linked to a sharp increase in open interest after yesterday's move higher which suggests a bullish tilt to the market. Export sales continue to disappoint and this week's sales came in below market estimates. Net weekly export sales, came in at 209,400 tonnes for the current marketing year and 11,500 for the next marketing year for a total of 220,900. As of November 1st, cumulative wheat sales stand at 48% of the USDA forecast for the current marketing year vs. 5 year average of 63%. Sales of 541,000 tonnes are needed each week to reach the USDA forecast. Traders remain hopeful that export interest will begin to pick up in 2013 due to a tightening global supply outlook. Some in the market believe tomorrows USDA report will have a bullish tilt to it and expect cuts to the global ending stocks near 168-170 million tonnes vs. current estimates of 173. Argentina could see current production of 11.5 million tonnes trimmed to 10.5 and Australia from 23 million tonnes to 20.5. The EU cleared 421,000 tonnes of wheat for export this week bringing the season total to 5.75 million tonnes vs. 5.5 million tonnes for the same period last year. December Oats closed down 1 1/2 at 363 3/4. This was 6 up from the low and 1 1/4 off the high.

Corn Market Recap for 11/8/2012 (CME)
December Corn finished down 3 at 741 1/4, 6 3/4 off the high and 3/4 up from the low. March Corn closed down 2 3/4 at 743 1/4. This was 1 up from the low and 6 3/4 off the high. December corn traded lower into the closing bell but traded in positive territory early in the session on positive action out of the Chicago wheat market. The market continues debate how much corn production Argentina may lose due to the heavy rainfall in October that has delayed planting. Some suggest 1-2 million tonnes may be lost and the USDA currently expects the country to produce 28 million tonnes. A reduction to 26 would still mean a record crop. The weather outlook is more favorable this week but rainfall is expected to return next week. The government of Brazil expects their corn production to fall to between 71.55 and 72.85 million tonnes which is down from its previous forecast of 71.9 to 73.2. The USDA is currently projecting 70.00 million tonnes. Export sales were in line with market estimates this morning with sales reported at 157,600 tonnes for the current marketing year and 51,800 for the next marketing year for a total of 209,400. The USDA announced this morning that US exporters sold 152,400 tonnes of corn to Japan for 2013/14 delivery. Some in the market expect corn exports to pick up in 2013 as South American prices rise. November Rice finished down 0.165 at 14.77, equal to the high and equal to the low.

Corn Top Commodity Pick at Morgan Stanley on Dwindling Supplies (Bloomberg)
Corn may beat all other commodities in the first half of next year, surging as much as 34 percent to a record as shrinking supply from the U.S. stokes competition among meat and ethanol producers, according to Morgan Stanley. “There’s a growing probability that you see corn trade up to the $9 to $10 level,” Hussein Allidina, the New York-based head of commodities research, said in an interview. “Demand needs to decrease in order to preserve what we have.” Corn rose to an all-time high in August as drought killed crops in the U.S., driving output in the biggest supplier to a six-year low and cutting world reserves as a share of demand to the smallest since 1974, according to the U.S. Department of Agriculture. Higher prices may stoke global food inflation as policy makers from Washington to Beijing seek to bolster growth. A rally in corn may help lift soybeans and wheat, Allidina said.
“The market has gotten a little bit relaxed about the supply-demand balance because U.S. exports have been weak,” Allidina said in an interview in Singapore yesterday, selecting natural gas as his second pick for the period. “I worry about being complacent, given how tight things are.” Corn for delivery in December traded at $7.465 a bushel on the Chicago Board of Trade at 4:49 p.m. in Singapore yesterday, 12 percent below the $8.49 peak on Aug. 10. Soybeans, which surged to a record $17.89 a bushel in Chicago in September, traded at $15.0975. Allidina didn’t give forecasts for soybeans and wheat in the first half of next year.

Recap Energy Market Report (CME)
December crude oil prices grinded higher throughout the US trading session and registered an inside day trading range. Some traders indicated that early support for the market came from technical buying after yesterday's rout and a somewhat upbeat outside market tone. A round of better than expected US economic data this morning kept the complex supported. However, ongoing concerns over slowing economic growth in Europe, debt woes in Greece and uncertainty surrounding the US fiscal cliff seemed to limit the upside action.

Oil Fluctuates After Rebounding From Lowest Level in Four Months (Bloomberg)
Oil fluctuated in New York after rebounding from the lowest level in four months before reports that may signal an economic recovery in China, the world’s second-biggest crude consumer. Futures were little changed after increasing 0.8 percent yesterday. China’s industrial production and retail sales probably extended gains last month, according to separate Bloomberg surveys before government data today. Oil is set to snap three weeks of losses even after slumping 4.8 percent, the most this year, on Nov. 7. West Texas Intermediate crude for December delivery was at $84.96 a barrel, down 13 cents, in electronic trading on the New York Mercantile Exchange at 9:34 a.m. in Tokyo. Futures rose 65 cents to $85.09 a barrel yesterday, rebounding from the lowest close since July 10. Prices are up 0.1 percent this week and down 14 percent this year.
Brent oil for December settlement increased 43 cents to $107.25 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade closed at a premium of $22.16 to New York crude. Crude in New York has technical support along the lower Bollinger Band on the daily chart, according to data compiled by Bloomberg. Futures have pared losses after reaching this indicator, around $82.20 a barrel today, for the past two weeks. Buy orders tend to be clustered near chart-support levels.

Silver Market Recap Report (CME)
Silver prices were strengthened today by a moderate inflow of safe-haven support but the market was unable to reach up into new high ground by the close of trading. Weak earnings from a major North American silver producer may have dampened silver market sentiment enough so that silver futures ended up lagging behind gold prices later on during the trading session.

Gold Market Recap Report (CME)
The gold market found strong support late in Thursday's session to finish the day with sizable gains and with a new high for November. Positively received US economic data earlier in the morning did not have that great an impact on the gold market, which may have set the stage for gold's rally later on in the session. With extensive weakness in global equity markets, December gold was strengthened by a considerable amount of safe-haven support. EU debt problems and the impending US "fiscal cliff" are also factors which were seen as supporting gold prices during today's session.

Copper Rebounds From Two-Month Low on U.S, China Demand Outlook (Bloomberg)
Copper rebounded from a two-month low as better-than-expected U.S. jobs and trade data and signs that China’s economy may be on the mend signaled improving demand in the world’s biggest metals users. The U.S. trade deficit unexpectedly narrowed in September on record exports, and fewer Americans filed claims for jobless benefits, government reports showed today. China’s central bank governor and statistics chief signaled that October data to be published from tomorrow will show growth improving this quarter. “Jobless claims were better, and the trade data show that while the economy still has a long way to go, the positive numbers we have seen are probably going to hold,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. Copper futures for delivery in December rose 0.8 percent to settle at $3.4695 a pound at 1:18 p.m. on the Comex in New York. Prices fell to $3.431 yesterday, the lowest for a most-active contract since Aug. 31.
Reports tomorrow may show industrial production and retail sales strengthened last month in China, according to economists surveyed by Bloomberg. On the London Metal Exchange, copper for delivery in three months advanced 0.3 percent to $7,630 a metric ton ($3.46 a pound). Aluminum, tin, nickel, lead and zinc also climbed.

Gold Traders More Bullish After Obama’s Re-Election: Commodities (Bloomberg)
Gold traders are the most bullish in 11 weeks and investors accumulated record bullion holdings on speculation U.S. policy makers will add to stimulus following President Barack Obama’s re-election. Twenty-five of 33 analysts surveyed by Bloomberg expect prices to rise next week and three were bearish. A further five were neutral, making the proportion of bulls the highest since Aug. 24. Investors boosted assets in gold-backed exchange-traded products to an all-time high of 2,592 metric tons on Nov. 7, valued at $143.1 billion, data compiled by Bloomberg show.
Obama won the Nov. 6 election against Mitt Romney, who had criticized the Federal Reserve’s policies and said he’d replace Chairman Ben S. Bernanke, whose second term expires in January 2014. The European Central Bank kept interest rates at a record low yesterday and nations from the U.S. 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. “Obama is a supporter of Bernanke and his re-election means that the ultra-loose monetary and fiscal policies by the Fed will continue,” said Daniel Briesemann, a commodities analyst at Commerzbank AG in Frankfurt. “More and more liquidity will be put into the system and therefore there’ll be inflation fears and concern about currency devaluation.”

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