Tuesday, December 4, 2012

20121204 1128 Global Commodities Related News.

Wheat Market Recap Report (CME)
December Wheat finished down 2 3/4 at 842, 16 1/2 off the high and 1 1/2 up from the low. March Wheat closed down 2 3/4 at 860 3/4. This was 2 1/2 up from the low and 16 1/2 off the high. March Chicago wheat traded slightly lower today but KC wheat led all three wheat markets in losses on the day. Early gains were seen after it was reported that the US sold Egypt wheat over the weekend. Early strength was also linked to a lower US dollar and weather patterns that look less than ideal in Argentina. Heavy rainfall is expected through Thursday of this week which could delay harvest, trim yields, and worsen quality. Argentina's Agriculture Ministry estimates harvest at 28% harvested vs. 32% last year. There were rumors floating around late Friday that the government of Argentina may halt any additional export licenses. Kansas City wheat was the downside leader today as it was the most expensive offer in the Egyptian tender over the weekend. Dry weather in the western plains over the next 6-10 days limited losses. The weekly export inspections report offered a neutral bias. Inspections for the week ending November 29th were reported at 14.19 million bushels vs. 7.84 last week and 24.3 million bushels of shipments are needed each week to reach this crop years USDA export estimate. This year's cumulative shipment pace is 42% of the USDA estimate vs. the 5 year average of 52%.
December Oats closed up 6 at 366 3/4. This was 1 1/4 up from the low and equal to the high.

Corn Market Recap for 12/3/2012 (CME)
December Corn finished up 1 at 749, 10 off the high and 4 3/4 up from the low. March Corn closed up 2 at 754 3/4. This was 5 1/4 up from the low and 9 1/4 off the high.
March corn traded slightly higher into the close after a very strong overnight session. Heavy rainfall will be seen in areas of Argentina through Thursday which may cause significant delays to corn sowing. The unfavorable conditions could shift additional acreage over to soybeans which in effect have led many to trim Argentina corn production estimates from the 28 million tonne estimate from the USDA to near 23-25 million tonnes. Gains were limited shortly after open outcry trading began following a very poor export inspections report. Inspections for the week ending November 29th were reported at 9.6 million bushels vs. 15.9 last week and 23.9 million bushels are needed each week to reach this crop years USDA export estimate. The cumulative sales pace for this crop year is 18% of the USDA export estimate vs. the 5 year average of 24%. Many in the market believe the US may see an increase in export demand soon but South America continues to sell corn at a discount to the US.
January Rice finished up 0.105 at 15.375, equal to the high and 0.065 up from the low.

Record Brazil Coffee Crop Cuts Costs for Starbucks: Commodities (Bloomberg)
Record coffee harvests in Brazil, the biggest grower, are compounding a global glut of arabica used by Starbucks Corp. (SBUX) and Dunkin’ Donuts Inc. Brazilian farmers will reap 50.8 million bags in 2013, a record for a so-called low-crop season, according to the median of nine analyst estimates compiled by Bloomberg. The harvest reached 55.9 million 60-kilogram (132-pound) bags in 2012, an all-time high for a peak year. Output usually drops in alternate years because of growing cycles. Prices may fall 13 percent to $1.311 a pound by June 30, the average of 14 predictions shows.
Futures slumped about 50 percent since May 2011, as the highest prices in 14 years spurred Brazilian farmers to boost supply. Their exports jumped 54 percent to $8.7 billion in 2011. The flood of beans has continued and stockpiles tracked by the ICE Futures U.S. exchange are headed for the biggest annual gain in more than a decade. Rising costs and concern that economies are slowing encouraged roasters and consumers to favor cheaper robusta beans. “There’s a significant crop coming from Brazil if the weather continues to be favorable,” said Claudio Oliveira, the head of trading at Castlestone Management LLC in New York, which manages about $500 million of assets. “Abundant supply is the driving force in the market.”

Recap Energy Market Report (CME)
January crude oil prices trended higher throughout the US morning hours, supported by a boost in risk sentiment, gains in global equity markets and weakness in the US dollar. Further support came from an improving European debt situation, with details on Greece's new bond buying program and Spain formally requesting EU support. Some traders pointed to uncertain geopolitical factors as a source of support. However, January crude oil sold off from its best level of the morning in response to US manufacturing data that unexpectedly contracted in November. That along with weakness in equity market pressured crude oil back toward unchanged levels on the session.

Copper Drops From Six-Week High Amid U.S. Fiscal Cliff Concern (Bloomberg)
Copper declined for the first time in four days after touching the highest level in more than six weeks as U.S. manufacturing unexpectedly shrank and a budget standoff intensified. Aluminum, zinc and lead also dropped. Three-month delivery copper fell as much as 0.4 percent to $7,970 a metric ton on the London Metal Exchange and was at $7,974 at 11:19 a.m. in Tokyo. The metal touched $8,045 yesterday, the highest level since Oct. 19. U.S. manufacturing contracted last month amid concern about the potential economic fallout from the so-called fiscal cliff. Budget talks became more confrontational as House Republicans rejected President Barack Obama’s demand for higher tax rates, countering with a $2.2 trillion deficit-cutting plan that would trim Medicare and Social Security. “The U.S. manufacturing data and concern over the fiscal cliff weighed down the metals market,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul.
The Institute for Supply Management’s factory index fell to 49.5, the lowest since July 2009, from 51.7 in October. The median forecast in a Bloomberg survey called for 51.4. Fifty marks the dividing line between expansion and contraction. The contract for March delivery fell 0.4 percent to $3.645 a pound on the Comex in New York. March futures retreated 0.3 percent to 57,380 yuan ($9,213) a ton on the Shanghai Futures Exchange.

Gold Falls as U.S. Budget Standoff Outweighs Record ETP Holdings (Bloomberg)
Gold dropped as the stalemate in U.S. budget talks weighed on commodities, countering record assets in exchange-traded products. Silver, platinum and palladium fell. Spot gold slid 0.2 percent to $1,712.95 an ounce at 10:13 a.m. in Singapore. Bullion for February delivery dropped 0.4 percent to $1,714.30 an ounce on the Comex in New York, while oil and copper retreated. Holdings in ETPs, up 11 percent this year, expanded to 2,623.446 metric tons yesterday, data compiled by Bloomberg show. U.S. lawmakers are trying to avert more than $600 billion in tax increases and spending cuts starting in January. House Republicans, rejecting President Barack Obama’s demand for higher tax rates, yesterday countered with a $2.2 trillion deficit-cutting plan, which White House Communications Director Dan Pfeiffer said then “does not meet the test of balance.”
“Gold will be driven by sentiment in the broader financial markets in the near term as investors weigh the U.S. fiscal cliff negotiations,” said Xiang Nan, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage. Gold may advance as businesses temper spending and central- bank stimulus measures fall short, John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), wrote in a newsletter. Buffett said in a February letter to Berkshire shareholders that investors should avoid gold, because its uses are limited and it doesn’t have the potential of farmland or companies to produce new wealth. Cash silver fell 0.7 percent to $33.42 an ounce, spot platinum lost 0.4 percent to $1,599.50 an ounce, and palladium slipped 0.7 percent to $686 an ounce.

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