Thursday, November 22, 2012

20121122 1017 Global Commodities Related News.

DTN Closing Grain Comments 11/21 14:23 (CME)
Markets Drift Lower Ahead of Holiday
Grains traded quietly over the course of Wednesday's session, with most traders looking ahead to Thursday's holiday.

Corn Market Recap for 11/21/2012 (CME)
December Corn finished down 2 1/4 at 741, 6 off the high and 3 up from the low. March Corn closed down 2 at 745 1/4. This was 3 1/4 up from the low and 5 3/4 off the high. December corn traded lower on the day as traders took profits on gains this week ahead of the Thanksgiving holiday. Traders noted volume was light and markets will be closed tomorrow and reopen Friday morning. The supportive trade this week was linked to a stronger corn basis in the interior of the US and the Gulf of Mexico as traders anticipate an uptick in export demand in 2013. The bullish optimism was damped after data showed that ethanol production for the week ending November 16th averaged 811,000 barrels per day which was down 13,000 from the week prior and down 11.56% vs. last year. Total Ethanol production for the week was 5.67 million barrels. Corn used in last week's production is estimated at 85.2 million bushels which was down from 86.52 last week and vs. the 86.6 million bushels needed per week to meet this crop year's USDA estimate of 4.5 billion bushels. This crop year's cumulative corn used for ethanol production is 937.6 million bushels. Ethanol stocks increased by 1.08 million barrels to 18.93 million barrels and stocks are up 8.5% vs. last year. January Rice finished down 0.095 at 14.83, 0.06 off the high and 0.01 up from the low.

Wheat Market Recap Report
December Wheat finished up 1/4 at 845 1/4, 4 1/4 off the high and 4 1/4 up from the low. March Wheat closed down 3/4 at 859 3/4. This was 3 1/4 up from the low and 5 1/4 off the high. December Chicago wheat traded steady on the day and saw gains early in the session following reports that the US sold wheat to Japan overnight and on the very poor crop condition ratings released earlier this week. The export tender lineup is thin this week but Bangladesh issued a tender to buy 50,000 tonnes and Syria is tendering for 100,000 tonnes of soft wheat. South Korea bought 48,200 tonnes of milling wheat and half will come from the US and half from Canada. Japan's Ministry of Agriculture bought 134,693 tonnes of food wheat from the US, Canada, and Australia overnight. The head of the Russia Grain Union estimated 2012/13 ending stocks at 6 million tonnes vs. USDA estimates of 4.94 and against year ago levels of 10.44 million tonnes. This would be a critically low level and would likely require a successful harvest next year to enable Russia to be active in the export market. The news was supportive to wheat futures today but reports surfaced that Iraq bought 350,000 tonnes of wheat from Australia, Russia, and Canada limited gains. Many market participants expect US wheat exports to increase in 2013 but the export pace appears sluggish at the moment. December Oats closed down 6 1/2 at 370. This was 1 up from the low and 9 3/4 off the high.

Rice in Japan Climbs to Highest in Six Years, Boosting Imports (Bloomberg)
Rice in Japan rallied to a six-year high amid the best crop since 2008, boosting demand for cheaper overseas supply and raising questions about a government policy that protects producers. The average price of domestic food-rice sold by shippers to wholesalers jumped 10 percent from a year ago to the highest level since 2006, said Takashi Amou, director of the agriculture ministry’s policy planning division. Rice in Chicago has climbed 2.7 percent in the past year. Demand from Japan’s food industry for foreign grain reached 88,840 metric tons in an import tender this month, more than tripling from the state-set ceiling of 25,000 tons, as retailers sought cheaper alternatives. The ministry limits the volume of food-rice imports to protect farmers from foreign competition. Higher rice prices erode earnings of restaurant-chain operators such as Yoshinoya Holdings Co. (9861) and Matsuya Co. (8237)
“The current policy offers benefits to producers at the expense of consumers,” said Nobuyuki Chino, the president of Continental Rice Corp. in Tokyo. “It won’t be sustainable as rising prices will weaken demand for domestic rice further.” Prices rose as the nation’s largest farmers group paid more to collect rice from growers, who aren’t in a rush to sell under the government’s income-support program, said Ryo Kimura, the chairman of Japan Rice Millers and Distributors Cooperative.

Natural Gas Rises to 1-Year High as Supply Drop Exceeds Forecast (Bloomberg)
Natural gas futures advanced to the highest price in in more than a year after a government report showed a bigger-than-forecast inventory decline. Gas gained 1.9 percent after the Energy Department said U.S. stockpiles fell 38 billion cubic feet last week to 3.873 trillion. Analyst estimates compiled by Bloomberg showed a decrease of 28 billion and a survey of Bloomberg users predicted a drop of 30 billion. “That’s a big number; 38 bcf is a game changer,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “That is stronger than weather patterns would have suggested. If you’re of the mindset that demand wasn’t driving this, rather this was a supply issue and a function of producers cutting back, then this is going to be structurally helpful.” Gas for December delivery rose 7.1 cents to $3.903 per million British thermal units on the New York Mercantile Exchange, the highest settlement price since Oct. 31, 2011. The futures are up 15 percent from a year ago.
An assault on $4 gas prices is “imminent” amid rising seasonal demand and persistently high nuclear outages, Mike Fitzpatrick, editor of the Energy OverView newsletter in New York, wrote today. December $4 calls were the most active options in electronic trading. They rose 0.7 cent to 3.1 cents on volume of 1,208 lots at 4 p.m. Calls accounted for 57 percent of the volume today.

Recap Energy Market Report (CME)
Not surprisingly energy prices saw some initial lift off reports of a terrorist attack overnight in the Middle East. However, energy prices lost the initial bullish buzz in the wake of weekly inventory stats from the US which should US domestic crude oil production to have reached up to the highest level since May of 1994. Apparently new energy sources in the US are starting to impact the world oil market and therefore slack US economic data in the months ahead could end up having a more negative impact on world energy prices. Crude stocks at 374.47 million barrels were the highest for this week since 2010. EIA crude stocks fell 1.466 million barrels and are 43.655 million barrels above year ago levels. Also, crude stocks stand 42.224 million barrels above the five year average. Crude oil imports for the week stood at 7.768 million barrels per day compared to 7.870 million barrels the previous week. The refinery operating rate was 87.50% up, 1.50% from last week compared to 85.50% last year and the five year average of 85.37%. EIA gasoline stocks fell 1.547 million barrels and are 9.244 million barrels below last year and 4.893 million below the five year average. Average total gasoline demand for the past four weeks was up 1.60% compared to last year. Gasoline imports came in at 616,000 barrels per day compared to 598,000 barrels the previous week. Gasoline stocks at 112.842 million barrels were the lowest for this week since 1996. EIA distillate stocks fell 2.675 million barrels and stand at 20.121 million barrels below last year and 30.296 million below the five year average. Distillate imports came in at 176,000 barrels per day compared to 200,000 barrels the previous week. Average total distillate demand for the past four weeks was down 9.13% compared to last year. Gasoline stocks at 27.019 million barrels is the lowest for this week since 2009 EIA heating oil stocks fell 1.144 million barrels and are 9.578 million barrels below last year and 18.353 million below the five year average. The weekly natural gas storage report showed a draw of 38 bcf. Total storage stands at 3873 bcf or 4.5% above the 5 year average. Over the last four weeks natural gas storage has increased 30 bcf.

Oil Gains a Second Day as Crude Stockpiles Unexpectedly Decline (Bloomberg)
Oil gained for a second day after a government report showed stockpiles declined for the first time in three weeks in the U.S., the world’s biggest crude user. Futures advanced as much as 0.5 percent in New York after climbing 0.7 percent yesterday. Crude inventories dropped 1.5 million barrels last week, the Energy Department said. They were forecast to rise 1 million barrels, according to a Bloomberg News survey of analysts. Prices also rose as the Labor Department said fewer Americans filed applications for unemployment benefits. Oil pared gains yesterday after Israel and Hamas agreed to a cease fire. “An improvement in U.S. initial jobless claims and a surprise decline in domestic oil inventories were supportive,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. (ANZ) in Melbourne, said in a note today. “Reports of a ceasefire in the Middle East removed some of the geopolitical risk premium in oil.”
Crude for January delivery rose as much as 39 cents to $87.77 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.67 at 12:06 p.m. Sydney time. The contract increased 63 cents yesterday to $87.38, the highest since Nov. 19. Prices are down 11 percent this year. Brent for January settlement climbed 17 cents to $111.03 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $23.36 to West Texas Intermediate, down from $23.48 yesterday.

Silver Market Recap Report (CME)
The silver market also managed a fresh lower low early today but the trade was able to reverse course and claw its way back into positive ground. Like gold, silver was partially off balance today because of smoldering tensions in the Middle East, an unresolved Greek debt payment situation and perhaps because of mixed and confusing US scheduled data flows. Silver might have been put a little off balance today by weakness in copper prices, but mostly positive action in gold and platinum ultimately saved the day for the silver bulls.

Gold Market Recap Report (CME)
After an early slide below the prior session's lows, December gold gathered itself and climbed back into positive ground. However, gold price action today was overly definitive in the face of a long list of countervailing big picture macro economic developments. Some traders were discouraged from bargain hunting buying in gold today because EU Ministers failed to get a Greek aid deal in place and clearly the lack of a cease fire early in the trade today set a negative tone for gold and other physical commodity markets. In the near term action in the Middle East and Europe might take precedence over developments in the US.

Gold Advances for Second Time in Three Days as Central Banks Buy (Bloomberg)
Gold gained for the second time in three days as central banks increased holdings and rising tension in the Middle East boosted demand for the precious metal as an investment haven. Bullion holdings linked to exchange-traded products rose to a record. Brazil, Kazakhstan and Russia added to gold reserves last month, data on the International Monetary Fund’s website show. The week-long conflict in the Middle East continued with air strikes in Gaza and a blast that hit a bus in Tel Aviv. A cease-fire accord was agreed to late in the day. Markets in the U.S. are closed tomorrow for the Thanksgiving holiday. “Physical demand is showing some strength,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Middle East tension is also pushing some people toward gold.” Gold futures for December delivery rose 0.3 percent to settle at $1,728.20 an ounce at 1:39 p.m. on the Comex in New York. The precious metal has gained 10 percent this year.
Holdings in gold-backed exchange-traded products added 0.73 metric ton to a record 2,604.9 tons yesterday, data compiled by Bloomberg show. Assets and prices gained this year as central banks from the U.S. to Asia took steps to bolster economies. Brazil added 17.2 tons to bullion reserves last month, Kazakhstan expanded them by 7.5 tons and Russia bought 0.4 ton, IMF data show. Silver futures for December delivery climbed 1.3 percent to $33.35 an ounce in New York. On the New York Mercantile Exchange, platinum futures for January delivery rose 0.7 percent to $1,583.90 an ounce. Palladium futures for December delivery advanced 2 percent to $651.30 an ounce, the second increase in three days.

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