Tuesday, November 20, 2012

20121120 0939 Global Commodities Related News.

Hedge Funds Cut Bets in Longest Retreat Since 2008: Commodities (Bloomberg)
Hedge funds cut bullish commodity bets for a sixth straight week, the longest slump since the depths of the global recession four years ago, on mounting concern that economies are slowing. Money managers lowered combined net-long positions across 18 U.S. futures and options by 17 percent to 772,512 contracts in the week ended Nov. 13, Commodity Futures Trading Commission data show. Holdings have tumbled 38 percent since Oct. 2 in the longest retreat since August 2008. Investors turned bearish on copper for the first time since August. Commodities are little changed this year as weaker growth and more supply will mean surpluses in sugar, aluminum and zinc, according to Morgan Stanley. U.S. industrial production unexpectedly declined in October, while applications for jobless benefits rose to the highest since April 2011, separate reports showed last week. The 17-nation euro-area’s economy tumbled back into recession last quarter for the second time in four years, official figures showed Nov. 15.
“I am not bullish on commodities,” said Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages about C$100 billion ($97 billion) of assets. “I don’t think we are going to see improvement in the world economy for some time as there are too many problems.”

Commodities Climb to 4-Week High on U.S. Budget Optimism (Bloomberg)
Commodities rose to a four-week high on optimism that a deal will be reached to avoid automatic U.S. spending cuts and tax increases, boosting the outlook for economic growth and demand for metals, energy and grains. The Standard & Poor’s GSCI Spot Index of 24 raw materials rose as much 2.3 percent to 651.75, the highest since Oct. 22. Gains were led by sugar, which jumped the most since June. Oil reached the highest in four weeks amid concern that unrest in the Middle East will disrupt supplies. Copper climbed the most in nine weeks. Commodities erased their 2012 loss after President Barack Obama said yesterday he’s “confident” about reaching an budget agreement with lawmakers to avoid the $607 so-called fiscal cliff. A group of European finance officials met in Paris today to try to forge a common position on Greece’s next aid payment. Sales of previously owned U.S. homes climbed in October, a private report showed.
“Investors are saying here that the politicians are taking steps in the right direction to find some resolution,” Greyson Colvin, the managing partner at New York-based Colvin & Co., which manages $22 million of assets said in a telephone interview. “Bullish home data is also giving us some hope that 2013 may be a better year.”

DTN Closing Grain Comments 11/19 14:29 (CME)
Grains Close Higher Monday
Grains traded higher throughout the day, closing on a modest run with both corn and soybeans showing double-digit gains. Wheat contracts were sluggish as both Kansas City and Minneapolis finished near unchanged.

Wheat Market Recap Report (CME)
December Wheat finished up 3 3/4 at 841 3/4, 6 1/4 off the high and 6 1/4 up from the low. March Wheat closed up 4 at 857 3/4. This was 6 1/4 up from the low and 5 3/4 off the high. December Chicago wheat finished the day slightly higher but gained on KC and Minneapolis throughout the session. Strength was linked to a significant rally in the corn and soybean market to start the week. The US Dollar traded sharply lower and US stocks soared, both of which helped support the broader commodity complex. Export data continues to be a drag on wheat futures in the short term and export inspections for the week ending November 15th were disappointing with only 11.10 million bushels reported, but this was against 10.46 the week prior. Inspections needed each week to reach this crop years USDA estimate are at 26.93 million bushels which is about 540 million bushels more than last week's needed shipment pace. The current crop year's cumulative inspection pace is 36.5% of the USDA estimate vs. the 5 year average of 48.6%. Most traders view the long term export outlook at supportive but sales and shipments are struggling in the short term as cargos continue to be sold out of the Black Sea. Below average crop condition ratings for US winter wheat are also adding to the positive tone of the market. December Oats closed up 11 at 375 1/2. This was 10 up from the low and 2 1/2 off the high.

Corn Market Recap for 11/19/2012 (CME)
December Corn finished up 11 3/4 at 738 3/4, 2 1/2 off the high and 12 1/2 up from the low. March Corn closed up 11 1/2 at 742 1/2. This was 12 1/2 up from the low and 2 1/4 off the high. December corn traded sharply higher on the day on outside market support and as traders believe new export business is just around the corner. Additional strength was linked to a lower US Dollar and a stronger crude oil market due to conflict in the Middle East. Traders suggest the US will become a major player in world trade soon but no clear evidence of this has been seen just yet. Traders believe Japan, Indonesia, Malaysia, and the Philippians could become buyers of US corn soon as old crop, South American supplies dry up and due to corn's significant discount to wheat. Additional support is linked to a wetter long term forecast for Argentina which could delay planting. Export inspections for the week ending November 15th were reported at 14.35 million bushels vs. 9.46 the week prior. The sluggish pace favors the bear camp in the short term. Shipments needed each week to reach the current crop years USDA export estimate is 26.97 million bushels which is 300 million more bushels than the week prior. The cumulative inspection pace is 14% of this crop years USDA estimate vs. the 5 year average of 20%. January Rice finished unchanged at 14.845, 0.015 off the high and equal to the low.

Soybeans, Grains Rise as U.S., European Economic Concerns Ease (Bloomberg)
Soybeans rose the most in three weeks and grains advanced on optimism that the U.S. will avoid the so-called fiscal cliff as Europe took steps to resolve a Greek rescue, bolstering prospects for commodity demand. President Barack Obama said yesterday he’s “confident” about reaching an budget agreement with lawmakers to avoid $607 billion in automatic tax increases and spending cuts. European finance officials met in Paris today to try to forge a common position to aid Greece. “The perception is that the U.S. and European governments will avoid a financial crisis, and that is bringing in some new investor buying,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “There are signs of end-users increasing forward purchases to lock in lower prices.”
Soybean futures for January delivery rose 0.8 percent to close at $13.9475 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since Oct. 24. The oilseed has dropped 22 percent from a record $17.89 on Sept. 4 as rain improved crop prospects in Brazil, the world’s second-biggest exporter, and the U.S. U.S. exporters sold 20,000 metric tons of soybean oil to an unknown buyer, the government said today. Corn futures for March delivery climbed 1.6 percent to $7.425 a bushel. The price has declined 13 percent from a record $8.49 on Aug. 10. Wheat futures for March delivery gained 0.5 percent to $8.5775 a bushel. The price fell in the previous six sessions, the longest slump since September 2011. The U.S. was the top exporter of the three commodities last year. Corn is the nation’s biggest crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show. Wheat is the fourth-largest at $14.4 billion, behind hay.

Gas Futures Fluctuate on Outlook for Moderating Weather (Bloomberg)
Natural gas futures dropped in New York for the second time in three days on forecasts for warmer- than-normal weather that would cut heating-fuel consumption. Gas dropped 1.9 percent after MDA Weather Services in Gaithersburg, Maryland, said temperatures may be above normal across most of the contiguous U.S. states through Nov. 23, with normal weather the following week. Heating demand in the U.S. may be 35 percent lower than usual on Nov. 22, data from Weather Derivatives in Belton, Missouri, show. “We’re probably going to get warmer weather down the road, and that’s keeping a lid on prices,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “Futures are still holding up pretty well at these levels, though.”
Natural gas for December delivery fell 7.1 cents to settle at $3.719 per million British thermal units on the New York Mercantile Exchange. The futures are up 12 percent from a year ago. Prices advanced to $3.835 per million Btu in electronic trading, the highest intraday price since Nov. 4, 2011. December $4 calls were the most active gas options in electronic trading. They were 1.3 cents lower at 1.2 cents on volume of 652 contracts as of 2:43 p.m. Calls accounted for 60 percent of options volume. Prices have failed to settle above the 62 percent Fibonacci retracement level of $3.806, Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania, said in a note to clients today. Fibonacci analysis is based on the theory that prices tend to drop or climb by certain percentages after reaching a high or low.

Oil Rises to One-Month High on Middle East Conflict (Bloomberg)
Oil rose to a one-month high amid concern that Middle East unrest will disrupt supply and on growing confidence that a deal can be reached to avoid automatic U.S. spending cuts and tax increases. Prices advanced for a second day as Israeli ground forces were poised to invade the Gaza Strip for the first time in almost four years if cease-fire efforts fail. President Barack Obama is “confident” of an agreement to avert the so-called fiscal cliff, he said in Bangkok yesterday. “The war drum is beating in the Middle East and that almost always tends to push up oil prices,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “There are reasons for optimism that the leaders will work something out to solve the fiscal cliff.” Crude for January delivery rose $2.36, or 2.7 percent, to $89.28 a barrel on the New York Mercantile Exchange, the highest settlement since Oct. 19. Futures are up 3.5 percent this month.
Brent for January settlement gained $2.75, or 2.5 percent, to $111.70 a barrel on the ICE Futures Europe exchange in London. Israel has massed tanks on its border east of Gaza and began to call up 75,000 reservists for a possible ground operation, the first invasion of Gaza since an assault that began in December 2008 and left more than 1,100 Palestinians and 12 Israelis dead.

Oil Trades Near Month’s High as Israel Unrest Threatens Supplies (Bloomberg)
Oil traded near the highest price in a month in New York on concern that Middle East unrest will disrupt supplies, countering speculation that stockpiles rose a third week in the U.S. Futures were little changed after climbing 2.7 percent yesterday as Israeli ground forces honed preparations to enter the Gaza Strip for the first time in almost four years. In the U.S., the world’s biggest crude user, inventories climbed by 1 million barrels last week, according to a Bloomberg News survey of analysts before an Energy Department report tomorrow. “The situation in the Middle East came at a time when there was a risk-on move in the markets, and that fed through into oil,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “At this stage, the fact is that inventory levels and supply capacity are large.”
Crude for January delivery was at $88.94 a barrel, down 34 cents in electronic trading on the New York Mercantile Exchange at 11:47 a.m. Sydney time. The contract increased $2.36 to $89.28 yesterday, the highest close since Oct. 19. Prices are down 10 percent this year. Brent for January settlement rose $2.75, or 2.5 percent, to $111.70 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract closed at a premium of $22.42 to West Texas Intermediate.

Soros Buying Gold as Record Prices Seen on Stimulus: Commodities (Bloomberg)
Gold’s 12-year rally, the longest in at least nine decades, is poised to continue in 2013 as central bank stimulus spurs investors from John Paulson to George Soros to accumulate the highest combined bullion holdings ever. The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 12 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.62 billion bet through the SPDR Gold Trust (GLD), the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show.
Central banks from Europe to China are pledging more steps to boost growth, raising concern about inflation and currency devaluation. Investors bought 247 metric tons through ETPs this year, exceeding annual U.S. mine output. While both sides said talks Nov. 16 between President Barack Obama and Congress over the so-called fiscal cliff were “constructive,” the Congressional Budget Office has warned the U.S. risks a recession if spending cuts and tax rises aren’t resolved. “We see gold as a hedge against the follies of politicians,” said Michael Mullaney, who helps manage $9.5 billion of assets as chief investment officer at Fiduciary Trust in Boston. “It’s a good time to garner some protection in portfolios by having some real asset like gold.”

Silver Market Recap Report (CME)
The silver market exploded to the highest price level since October 18th today on the back of a dramatic shift in overall market sentiment. In addition to improved US economic data, silver was supported by favorable currency market action, sharply higher equities and gains in a long list of physical commodity markets. With the sharp range up extension in silver prices, it is possible that some of the buying today was technically related buying. In the end, silver simply caught a lift from broad based commodity fund buying interest.

Gold Market Recap Report (CME)
The bulls might have hoped for flight to quality support in gold from the ongoing tension in the Middle East but instead the gold market seemed to be benefiting from a shift toward a risk on vibe. In addition to supportive currency market action, gold also seemed to catch a lift from a broad based physical commodity buying wave. Even the fiscal cliff issue was spun into a positive today, as gold and other commodities rallied off ideas that US leaders were going to attempt to resolve US budget woes prior to the end of the year. However, significant negotiations are still ahead on the fiscal cliff issues and therefore traders should be aware of sudden sentiment shifts ahead. In the action today, gold appeared to be a physical commodity market facing positive macro economic conditions.

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