Wednesday, November 21, 2012

20121121 0937 Global Commodities Related News.

DTN Closing Grain Comments 11/20 14:22 (CME)
Soybeans Charge Higher Tuesday
Renewed commercial buying in the soy complex, soybeans and especially meal, supported the other grains for much of the session, holding at bay possible pressure from outside markets.

Wheat Market Recap Report (CME)
December Wheat finished up 3 1/4 at 845, 4 3/4 off the high and 7 1/2 up from the low. March Wheat closed up 2 3/4 at 860 1/2. This was 7 1/2 up from the low and 5 off the high. December Chicago wheat traded slightly higher on the day and gained on KC and Minneapolis wheat contracts. The worse than expected winter wheat crop condition ratings released yesterday added a bullish bias to the market this morning and the strong corn and soybean market fueled additional buying support. KC lost to Chicago wheat on the day as traders took profits in long KC vs. short Chicago wheat spreads. The weekly Winter Wheat Conditions report showed 34% of the crop was rated good/excellent compared to 36% last week and 50% last year. This was below market expectations and the 3rd straight week of declines. US wheat exports remain very sluggish but Japan is seeking 134,000 tonnes of feed wheat for January through February shipment. Japan also reported that corn usage in animal feed fell for the 9th straight month as buyers continue to use more wheat in rations. Wheat usage was pegged at 4.4% in September vs. 4.3% in August and against year ago levels of 1.5%. Some traders believe exports could pick up in 2013 if Argentina and Australia have less wheat to sell. This could be supportive to the wheat market in the 1st quarter. Very little moisture is expected in the western plains to finish out this month which could leave a third to a half of the Hard Red Winter wheat crop entering dormancy with poor establishment. This added to the bullish sentiment throughout the day. December Oats closed up 1 at 376 1/2. This was 4 1/4 up from the low and 1/4 off the high.

Corn Market Recap for 11/20/2012 (CME)
December Corn finished up 4 1/2 at 743 1/4, 4 off the high and 9 up from the low. March Corn closed up 4 3/4 at 747 1/4. This was 9 1/4 up from the low and 3 3/4 off the high. December corn traded sharply higher on the day and support was linked to a stronger wheat market and prospects for better export demand going forward. Many traders believe a revival in export growth is just around the corner which could spur on considerable price appreciation long term due to tight domestic supplies. Too offset, importers like Japan have increased their use of feed wheat this year and corn used in feed fell for the 9th month in a row in September. The ratio of corn in animal feed production fell to 42.5% in September vs. 42.7% in August and this is against 44.5% for the same month last year. Basis for corn in the Gulf of Mexico was steady on the day but basis has firmed over the last week as traders attempt to drum up cash grain movement in the country. Fears that a portion of the Mississippi River may shut down in early December has also added to the stronger cash market tone. Additional support was found as some private analysts are beginning to slash Argentina's corn production estimate near 22.50 to 23 million tonnes vs. the current USDA estimate of 28 million tonnes. Excessive rainfall has delayed corn planting in Argentina this year and the forecast calls for additional rainfall tonight and Wednesday. January Rice finished up 0.08 at 14.925, equal to the high and equal to the low.

Drought No Obstacle to Record Income for U.S. Farms: Comm (Bloomberg)
Even after the worst drought in a half century shriveled crops from Ohio to Nebraska, U.S. farmers are having their most-profitable year ever because of record- high prices and insurance claims. Farmer income probably will jump 6.9 percent to $144 billion, exceeding the government’s August estimate of $139.3 billion, said Neil Harl, an economist at Iowa State University. Parched fields that drove corn, soybean and wheat futures as much as 68 percent higher since mid-June mean insurance payouts may more than double to $28 billion, according to Doane Advisory Services Co., a farm and food-company researcher in St. Louis. “Crop insurance was a savior this year,” said Kyle Wendland, 29, whose corn yields plunged 36 percent and soybean output dropped 11 percent on the 1,030 acres he farms near Fredericksburg, Iowa. “It was the difference between making a profit or sustaining a loss.”
Farming accounted for 0.9 percent of the U.S. economy last year, Bureau of Economic Analysis data show. Midwest farmland values rose by 13 percent to a record in the third quarter, and spurred sales of Monsanto Co. seeds, Deere & Co. (DE) tractors and CF Industries Holdings Inc. fertilizer. Costlier grain eroded profit for pork producer Smithfield Foods Inc. and restaurant owners including Texas Roadhouse Inc. The government is predicting food inflation will accelerate next year, led by meat, dairy and baked goods.

Recap Energy Market Report (CME)
January crude oil prices trended lower throughout the session and more than erased yesterday's gains. The crude oil market came under a measure of pressure during the initial morning hours following a downgrade of France's credit rating and ideas that Monday's rally might have been over exaggerated. January crude oil showed little reaction to this morning's better than expected US housing data and modest gain in equity markets. The market broke down sharply in response to headlines that a ceasefire between Israel and Hamas was reached. Expectations for this week's EIA inventory data are for another build in crude oil supplies in the range of 750,000 to 1.0 million barrels.

Oil Rebounds After Biggest Drop in Two Weeks as Stockpiles Fall (Bloomberg)
Oil advanced in New York after the biggest drop in almost two weeks as a report showed stockpiles declined in the U.S., the world’s biggest crude user. Futures climbed as much as 0.8 percent after the American Petroleum Institute said crude inventories slid 1.9 million barrels last week. An Energy Department report today may show supplies rose 1 million barrels, according to a Bloomberg News survey of analysts. The Israeli army renewed its bombardment of Gaza yesterday as talks to end fighting continued. Crude for January delivery gained as much as 65 cents to $87.40 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.29 at 11:06 a.m. Sydney time. The contract slipped 2.8 percent yesterday to $86.75, the most since Nov. 7. Prices are down 12 percent this year.
Brent for January settlement declined $1.87, or 1.7 percent, to $109.83 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract closed at a premium of $23.08 to West Texas Intermediate. Israeli Prime Minister Benjamin Netanyahu told U.S. Secretary of State Hillary Clinton that he would “prefer” a diplomatic solution that stops Hamas’ rocket attacks against Israel. “But if not, I’m sure you’ll understand Israel will have to take whatever action is necessary to defend its people,” he said as the two spoke to reporters.

Gold Drops From One-Week High on Signs Israeli Fighting May End (Bloomberg)
Gold declined from a one-week high as a Hamas official said a draft accord with Israel that would end fighting in the Gaza Strip is almost ready, crimping demand for the metal as an investment haven. An announcement was likely at 9 p.m. Cairo time, and the cease-fire will take effect at midnight, Osama Hamdan, a Hamas official, said by telephone from Beirut. His comments came as U.S. Secretary of State Hillary Clinton flew to the region to join truce talks that also include United Nations Secretary- General Ban Ki-moon. “Signs of a cease-fire seems to have taken some blush off gold,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. Gold futures for December delivery fell 0.6 percent to settle at $1,723.60 an ounce at 1:39 p.m. on the Comex in New York, after reaching $1,736, the highest since Nov. 12. The price has gained 10 percent this year.
Silver futures for December delivery dropped 0.8 percent to $32.93 an ounce in New York, after touching $33.26, the highest since Oct. 18. On the New York Mercantile Exchange, platinum futures for January delivery slid 0.7 percent to $1,573 an ounce. Palladium futures for December delivery retreated 1.1 percent to $638.35 an ounce, the third drop in four sessions.

Silver Market Recap Report (CME)
The silver market actually managed a fresh new high for the move today and that would seem to leave the silver bulls with a slight technical edge. However, silver was unable to translate hope for a fiscal deal and improved US housing starts into a positive Tuesday trade. With weakness throughout the metals complex and a failed rally in US equities, the risk on vibe today just didn't have the same pedigree as the track of thinking on Monday. In fact, silver and other metals markets might need to see fresh assurances of a fiscal cliff deal before consistently higher pricing on the charts is sustained. Silver was clearly undermined by comments from the Fed Chairman who suggested that the Fed doesn't have the tools to offset the US fiscal cliff on its own.

Gold Market Recap Report (CME)
The gold market mostly waffled around both sides of unchanged today but the bull camp wasn't able to exert much in the way of dominance. However, seeing December gold prices hang up within striking distance of the recent highs might have been seen as a positive technical development by some traders, especially after the partially overbought condition on Monday's close. Gold didn't seem to get much of a lift off news of a Middle East cease fire and that might be the result of some confusion on the safe haven focus of gold and other financial markets. However, with decent US economic data, generally higher equities and rising grain prices, the bull camp in gold might have expected more upside action than was seen at times today. Gold was clearly undermined by comments from the Fed Chairman who suggested that the Fed doesn't have the tools to offset the US fiscal cliff on its own.

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