Thursday, December 6, 2012

20121206 1002 Global Commodities Related News.

DTN Closing Grain Comments 12/05 14:34 Beans Hit High Near Close (CME)
Unlike Tuesday's session that saw a late rally turn the grain sector around, soybeans were strong throughout the day, hitting a new session high shortly before the close.

Corn Market Recap for 12/5/2012
March Corn finished up 5 3/4 at 757 3/4, 1 1/2 off the high and 7 1/2 up from the low. May Corn closed up 5 1/2 at 758 1/2. This was 7 up from the low and 1 1/2 off the high.
March corn traded higher into the closing bell seeing support from a stronger day in the soybean and wheat market. Very wet weather in Argentina this week is helping to support the trade and many analysts are expecting a drastic cut to production in next week's USDA report. The USDA is projecting Argentina corn production at 28 million tonnes while some analysts are near 23. Export demand remains very weak and Brazil continues to be an aggressive trader in the global market. The EIA ethanol production report was slightly bullish for the corn market. Ethanol production for the week ending November 30th averaged 835,000 barrels per day which was up almost 4% vs. last week but down 12.5% vs. last year. Total ethanol production for the week was 5.85 million barrels. Corn used in last week's production is estimated at 87.7 million bushels which was up from 84.32 last week. This crop year's cumulative corn used for ethanol production is 1.10 billion bushels. Corn use needs to average 86.62 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of November 30th were 19.3 million barrels, up 5.4% vs. last week and up 7.9% vs. last year. January Rice finished up 0.145 at 15.555, equal to the high and 0.035 up from the low.

Wheat Market Recap Report
March Wheat finished up 3 1/2 at 860, 3 1/2 off the high and 7 1/2 up from the low. May Wheat closed up 3 1/4 at 868 1/2. This was 6 3/4 up from the low and 3 1/4 off the high.
March Chicago and KC wheat traded positive on the day with KC leading the way higher. Soybeans surged over 20 cents and corn was up 6 to help support the overall market. The weather outlook for the eastern Midwest calls for light showers which should benefit soil conditions but much of the crop has already entered dormancy. Dry areas of eastern Colorado, southern Nebraska, and northwest Kansas could see rainfall by the weekend. Only an inch or less is expected which likely adds no relief to the region. Soil moisture conditions will continue to deteriorate with little relief after this weekend. Statistics Canada released their estimate for Canadian wheat production this morning. This year's production estimate was pegged at 27.2 million tonnes vs. 26.7 previously. This would be the second largest wheat harvest in 16 years according to the Canadian agency. US export demand remains very soft but fears that global supply may contract further continues to add speculative support. The KC market gained on Chicago due to the dry conditions in the western plains. March Oats closed up 12 at 397. This was 12 3/4 up from the low and 3 off the high.

Commodities ‘Super Cycle’ Not Ending as Goldman Sees More Gains (Bloomberg)
The “super cycle” of gains for commodity prices is not ending as improving global economic growth boosts demand for raw materials, Goldman Sachs Group Inc. said. Rising consumption may create limited availability of immediate supplies and boost near-term prices higher than long- term levels, a trading opportunity that may provide “significant” returns, New York-based Jeffrey Currie, Goldman’s head of commodity research, said in an e-mailed report today. The bank reiterated its recommendation that investors should be “overweight” in commodities, and that prices will return 7 percent in 12 months. “As economic growth improves into the latter half of 2013, we believe current fundamentals are likely to create near-term shortages,” Currie said. “We now believe that any upside will be more near term and demand driven in nature as opposed to long term and supply driven, which leads us to expect a return to high near-term prices relative to long-term prices.”
The Standard & Poor’s GSCI Spot Index of 24 raw materials which has increased almost fourfold since 2001, is little changed this year as growth slowed in economies including China, the world’s biggest consumer of cotton, soybeans and copper. Goldman’s view contrasts with Citigroup Inc., which said the “super cycle” has ended in a Nov. 19 report written by analysts including Edward L. Morse, the bank’s global head of commodities research.

Best-Performing Fund Manager Sees U.S. Pipeline Growth (Bloomberg)
Kevin McCarthy, the world’s best- performing energy fund manager in the past year, stared at the tangle of tax-exempt partnerships and corporate parents that drive the U.S. oil and gas pipeline business and kept his cool. That was in 2010, when the Kayne Anderson Capital Partners LP manager in Houston said he found a way to profit from the mess: He realized the most undervalued of the bunch were the companies managing the partnerships, the so-called general partners, especially since they were positioned to earn escalating shares of cash flow as pipeline assets expanded.
McCarthy’s Midstream/Energy Fund Inc. (KMF) made 32 percent in the last 12 months, the best return of 259 energy funds with more than $100 million worldwide, data compiled by Bloomberg show. His top investments are general partners such as Williams Cos. (WMB) and Kinder Morgan Inc. (KMI), according to Sept. 30 data. The industry has room to increase profit in 2013, as the drilling boom in U.S. shale fields creates a need for more pipelines, processing plants and compressor stations, McCarthy said. “We think the development of the unconventional fields is a multiyear, if not a multidecade, process,” McCarthy, 53, formerly a banker at UBS Securities LLC, said in an interview.

Recap Energy Market Report (CME)
January crude oil prices trended lower throughout the US trading session and registered a new four day low in the process. The market garnered early support from favorable comments from China's new government regarding new urbanization projects. However, a weaker than expected European Retail Sales reported tempered early optimism. January crude oil price registered their low of the session following EIA inventory data that showed a larger than expected draw last week of 2.357 million barrels. While the headline number was seen as a positive force, unexpectedly large builds in the product markets served to take the complex lower. The refinery operating rate was up 2% to 90.6%, which contributed to the large product builds. EIA gasoline stocks rose 7.860 million barrels and distillate stocks rose 3.027 million barrels. Upbeat comments from President Obama that a deal on the fiscal cliff could come next week helped risk assets pare some of their mid-day deficit.

Nod to Gas Exports in U.S. Study Seen Downplaying Consumer Cost (Bloomberg)
A U.S. Energy Department report that supports expanded exports of natural gas cheered drillers wanting to sell overseas while drawing warnings from opponents that it may have underestimated the potential costs to consumers. The study, which was conducted by NERA Economic Consulting, is an almost unqualified endorsement of exports, a win for energy producers such as Sempra Energy (SRE) and Dominion Resources Inc. (D) looking to alleviate a domestic natural gas glut that earlier this year pushed prices down to a decade low. Energy stocks and gas prices rose yesterday, when the report was released. The Energy Department asked for the analysis as it weighs at least 15 applications from energy companies looking to build terminals for export. Initial reactions show the analysis won’t end the debate in Washington over how to shape the U.S. energy mix as a drilling technique known as hydraulic fracturing, or fracking, unlocks once-inaccessible reserves in shale rock formations.
“Forecasts and scenarios are worthwhile, but the department has an obligation to consider the impacts of each of the actual applications before it,” Senator Ron Wyden’s office said in a statement. Wyden, an Oregon Democrat and incoming chairman of the energy committee, has said he’s worried more exports could raise costs for U.S. consumers and trade away an economic advantage of cheap gas.

Oil Trades Near One-Week Low as U.S. Gasoline Stockpiles Surge (Bloomberg)
Oil traded near its lowest level in a week in New York after a government report showed U.S. gasoline inventories increased the most in 11 years as demand weakened. West Texas Intermediate futures were little changed after falling for a second day yesterday as the Energy Department said gasoline stockpiles rose 7.86 million barrels last week, the most since Sept. 21, 2001. Demand for the motor fuel slid for a third week and refineries ran at the highest rate since August. Crude for January delivery was at $87.83 a barrel, down 5 cents, in electronic trading on the New York Mercantile Exchange at 9 a.m. in Tokyo. Prices fell 62 cents yesterday to close at $87.88 a barrel, the lowest since Nov. 28. Futures have dropped 11 percent this year. Brent oil for January settlement on the London-based ICE Futures Europe exchange slid $1.03, or 0.9 percent, to end the session at $108.81 a barrel yesterday. The European benchmark crude closed at a premium of $20.93 to New York-traded WTI, the narrowest gap since Nov. 2.
U.S. gasoline inventories in the week ended Nov. 30 were forecast to increase by 1.55 million barrels, according to the median of 12 analyst estimates in a Bloomberg survey. Demand for the motor fuel declined 73,000 barrels a day and refineries ran at 90.6 percent of capacity, the highest level since Aug. 24, the Energy Department report showed. Supplies of distillate fuels, including heating oil and diesel, climbed 3.03 million barrels, according to the report. They were predicted to gain 850,000 barrels.

America's Oil Production Heading for '80s Flashback (CME)
By U.S. Energy Information Administration - Wed Dec 05 12:35:00 CST 2012 CT
Output Poised to Rise Sharply, Hit Three-Decade Highs
U.S. crude oil production is poised to rise sharply over the coming decade, by 2020 reaching the highest levels since the late-1980s, amid a shale-drilling boom North Dakota, Texas and other areas, the Energy Information Administration said in a new long-term forecast.
In 2020, the nation's crude output is projected to peak around 7.47 million barrels a day, an average annual increase of 3.5% from 2011 levels and the highest since 1989, according to the administration's Annual Energy Outlook 2013, released December 5. The report included projections as far out as 2040.
Additionally, Americans' gasoline use is expected to decline over the next three decades, dropping to 1970s levels, as autos become more fuel-efficient, while natural-gas exports will be greater than previously forecast.
The updated forecast "shows how evolving consumer preferences, improved technology, and economic changes are pushing the nation toward more domestic energy production, greater vehicle efficiency, greater use of clean energy and reduced energy imports," EIA Administrator Adam Sieminski said in a statement.

U.S. Crude Output Near 15-Year High on Shale Boom (CME)
By U.S. Energy Information Administration - Tue Dec 04 12:45:00 CST 2012 CT
North Dakota, Texas Account for Bulk of Surge
U.S. crude oil production reached the highest level in nearly 15 years during September, driven by a shale-drilling boom in North Dakota and Texas, the Energy Information Administration said.
Crude output, including drilling byproducts known as lease condensates, averaged about 6.5 million barrels a day in September, the highest monthly production since January 1998, according to an Energy Information Administration update released December 4. September’s production was up 900,000 barrels, or 16% from the same month in 2011.
“Most of that increase is due to production from oil-bearing rocks with very low permeability through the use of horizontal drilling combined with hydraulic fracturing,” the administration said.
The states with the largest increases were North Dakota and Texas, the respective homes to much of the Eagle Ford and Bakken shale formations. Oklahoma, New Mexico, Wyoming, Colorado, and Utah also contributed to rising domestic crude oil production.

Bank of Korea Raises Gold Holdings as Central Banks Buy (Bloomberg)
The Bank of Korea increased gold reserves 20 percent last month to diversify investments, boosting holdings for the fourth time since June 2011 and underscoring increased demand by central banks. Prices gained. The bank added 14 metric tons in November, bringing the total to 84.4 tons, the bank said in a statement today. By value, holdings increased about $780 million to $3.76 billion, equivalent to 1.2 percent of total reserves, the bank said. Central banks from Brazil to Kazakhstan have been expanding their gold reserves at a time when investors increased holdings in exchange-traded products to a record to protect against weaker currencies and the potential for faster inflation. Gold is poised for a 12th annual gain as the U.S. Federal Reserve boosts stimulus to buttress the recovery in the world’s largest economy and European policy makers battle the debt crisis.
“Central-bank buying is a solid pillar for gold,” Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., said by phone from Singapore. “It’s not a story that will go away soon.” Countries bought 373.9 tons in the first nine months of the year, according to the producer-funded World Gold Council, which said in November that full-year additions will probably be at the “bottom end” of a range from 450 to 500 tons. Last year, central banks purchased 456 tons. “Gold is a physical, safe asset,” the Bank of Korea said in the statement. The precious metal “is a way of diversification, which helps reduce investment risk in terms of foreign-exchange reserves management,” it said.

Silver Market Recap Report (CME)
The silver market also saw a fresh new low for the move early today but prices were able to reject those losses well ahead of mid session. Silver was probably knocked a little off balance by a brokerage firm price forecast down grade and perhaps silver and other metals markets were a little discouraged by the ebb and flow of the Washington fiscal cliff debacle. In the end, minor negative influences from the currency markets were probably countervailed in the silver trade by decent US scheduled data and periodic gains in US equities.

Gold Seen Peaking in 2013 by Goldman After 12-Year Bull Market (Bloomberg)
Gold, still in its longest winning streak in at least nine decades, will probably peak in 2013 and keep declining the following year as U.S. growth accelerates, Goldman Sachs Group Inc. said. Prices will peak in 2013 before declining even as the Federal Reserve expands stimulus, the bank said in an e-mailed report today. Bullion will be at $1,825 an ounce in three months, $1,805 in six months and $1,800 in a year’s time, it said, lowering its three-month forecast from $1,840 and its six- and 12-month outlooks from $1,940. It introduced an average 2014 estimate of $1,750. This year’s average is $1,670.
The metal is headed for a 12th consecutive annual gain as central banks from the U.S. to Europe to China pledged more steps to spur economic growth. Investors are holding a record amount in gold-backed exchange-traded products and nations from Russia to South Korea added to gold reserves this year. Global growth will accelerate to 3.6 percent in 2013, from 3.3 percent this year, the International Monetary Fund estimates. “In the short term, the combination of more easing and weaker growth should prove supportive to gold,” Jeffrey Currie, an analyst at the bank, wrote in the report. “Medium term, however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in U.S. real rates on better US economic growth. Our expanded modeling suggests that the improving U.S. growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013.”

Gold Market Recap Report (CME)
The gold market forged a fresh new low for the move this morning but managed to reject a noted portion of those losses into mid session. However, February gold seemed to run into some overhead resistance around the Tuesday close. The bull camp in gold saw some lift off the lows, but gold prices during the session didn't show a directly positive reaction to US data that was better than expected. However, gold did seem to gather some minor lift off the US recovery in equities, even if that recovery followed a slide off the beginning of a fiscal cliff press conference in Washington. While gold continues to see signs that central bankers are poised to continue buying gold, fears of a broad based physical commodity market washout are real in the face of the nearing end of the Lame Duck Congress.

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