Monday, December 17, 2012
20121217 1052 Global Commodities Related News.
Hedge Funds Reduce Bullish Bets by Most in a Month: Commodities (Bloomberg)
Hedge funds cut bullish commodity bets by the most in a month as the Federal Reserve warned the U.S. budget impasse may damage the economy, increasing concern about demand just as prices head for the first loss since 2008.
Speculators and money managers decreased net-long positions across 18 U.S. futures and options by 11 percent to 802,817 contracts in the week ended Dec. 11, U.S. Commodity Futures Trading Commission data show. Sugar holdings tumbled 68 percent, the most in five years, and those for wheat dropped to the lowest since June. Wagers on higher crude-oil prices tumbled 21 percent, the most since May.
The Standard & Poor’s GSCI Spot Index of 24 raw materials retreated 4.3 percent this quarter, with U.S. lawmakers in a stalemate on how to avoid about $600 billion in tax increases and spending cuts that start next month. The Fed “doesn’t have the tools” to counter the risks to the economy should there be no deal, Chairman Ben S. Bernanke said Dec. 12.
“The fact that the Fed is saying that there’s only so much they can do spooked people,” said John Stephenson, who oversees about $2.74 billion at First Asset Investment Management Inc. in Toronto. “They basically admitted that they don’t have what it takes to deal with the fiscal cliff, and it took the shine off the idea that unlimited money printing will help commodities.”
The S&P GSCI climbed 0.7 percent last week, paring its loss this year to 1.2 percent. The MSCI All-Country World Index of equities climbed 0.6 percent, and the dollar dropped 1 percent against a basket of six major trading partners. Treasuries lost 0.3 percent, a Bank of America Corp. index shows.
Wheat Market Recap Report (CME)
March Wheat finished up 5 1/2 at 814, 3 1/2 off the high and 7 3/4 up from the low. May Wheat closed up 5 at 826 1/4. This was 7 1/2 up from the low and 3 1/4 off the high.
March Chicago and KC wheat traded higher on the day with Chicago leading the way. Positive technical signals and thoughts that US Soft Red Winter wheat could see significant amounts of export demand soon helped to support the move. Thoughts that domestic feeders in the east may use more feed wheat in 2013 have added to the supportive tone. KC wheat was higher on the day but struggled to keep up with Chicago. Weather forecasts call for a modest rainfall in the west into this weekend which could help ease stress in some areas although much more precipitation will be needed this winter to stabilize the drought conditions. Heavy rainfall will be seen in areas of Wisconsin and Michigan over the next 3-5 days which should improve soil moisture profiles. The updated drought monitor shows the lower southeast, delta, and Carolinas are trending drier than normal and rainfall is needed. Missouri, western Illinois, and fringe areas of Kentucky and Tennessee are seeing drought stress which will need to be monitored as we move through winter.
March Oats closed up 2 3/4 at 389 3/4. This was 5 1/2 up from the low and 5 off the high.
Corn Market Recap for 12/14/2012 (CME)
March Corn finished up 10 1/2 at 730 3/4, 1 off the high and 13 up from the low. May Corn closed up 9 3/4 at 733 3/4. This was 12 up from the low and 1/4 off the high.
March corn traded higher to finish out the week on firm interior cash markets and buying support showed up on thoughts the market had drifted low enough the last couple of days. Newswires reported this morning that 2 containers of corn from Argentina were being held at a Chinese port after officials detected GMO strains that have not been approved. Chinese officials noted that no further corn can enter the country until the situation is resolved. If the situation drags out, this could shift demand to other suppliers like Ukraine or the US. Corn bids on the river and Gulf of Mexico were steady to lower on poor export demand and as barge freight values weakened. Good rainfall over the next 7-10 days for most of Brazil and Argentina should dry down during this period. Both countries should see stable temperatures, which should promote good conditions for row crops and move along the planting pace.
January Rice finished down 0.08 at 15.42, 0.06 off the high and equal to the low.
Rubber Surges to Seven-Month High as Yen Weakens on Abe Victory (Bloomberg)
Rubber surged to a seven-month high after Japan’s Liberal Democratic Party reclaimed power, weakening the Japanese currency on expectations for further stimulus and boosting the appeal of yen-denominated contracts.
The contract for delivery in May advanced as much as 2.3 percent to 282.8 yen a kilogram ($3,369 a metric ton), the highest level since May 14, and traded at 281.6 yen on the Tokyo Commodity Exchange at 10:32 a.m. Futures climbed 6.9 percent this year, rebounding from a 36 percent drop in 2011.
Shinzo Abe’s LDP captured 294 seats in the 480-member lower house of parliament in elections yesterday, while Prime Minister Yoshihiko Noda’s Democratic Party of Japan lost three-fourths of its lawmakers, according to public broadcaster NHK’s vote count. The yen fell to 84.48 per dollar, the weakest since April 2011.
“Investors are betting the Bank of Japan will decide to take additional measures at this week’s meeting after the LDP’s landslide victory,” Kazuhiko Saito, an analyst at broker Fujitomi Co. in Tokyo, said today by phone.
The LDP returned to power after three years following a pledge to achieve nominal economic growth of 3 percent and set an inflation target with the central bank of 2 percent.
The BOJ expanded its fund to buy assets such as government bonds and corporate debt by 11 trillion yen to 66 trillion yen in October. Its board will meet Dec. 19-20.
Thai rubber free-on-board added 0.5 percent to 94.1 baht ($3.07) a kilogram on Dec. 14, according to the Rubber Research Institute of Thailand.
Recap Energy Market Report (CME)
January crude oil prices trended higher for most of the session but struggled to extend early morning gains into new high territory. Early support for the market came on a better than expected read on Chinese Manufacturing, as well as US Industrial Production figures. Some traders pointed to weakness in the US dollar as a factor contributing added support. However, weakness in equity markets and lingering uncertainty over the US fiscal cliff might have kept the upside limited.
Oil Rises Second Day on Speculation U.S., China to Boost Demand (Bloomberg)
Oil rose for a second day in New York after capping the fifth weekly gain in six as signs of economic growth in the U.S. and China stoked speculation fuel demand will grow.
Futures advanced as much as 0.6 percent after the Federal Reserve reported Dec. 14 that industrial output in the U.S. climbed by the most in two years in November. A preliminary purchasing managers’ index showed manufacturing in China expanding at a faster pace this month. Syrian fighter jets bombed a Palestinian camp in Damascus, reviving concern that unrest in the Middle East may spread to oil-producing countries.
“A positive outlook for global growth is confirmed by those numbers out of the U.S. and China,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “That’s also supportive of oil prices around the globe.”
West Texas Intermediate crude for January delivery was at $86.95 a barrel, up 22 cents, in electronic trading on the New York Mercantile Exchange at 9:41 a.m. in Tokyo. Front-month prices advanced 84 cents, or 1 percent, to settle at $86.73 a barrel Dec. 14.
Brent for February settlement advanced 4 cents to $108.22 a barrel on the London-based ICE Futures Europe exchange. The January contract settled $1.24 higher at $109.15 when it expired Dec. 14. The European grade was at a premium of $20.79 to WTI.
Silver Market Recap Report (CME)
March silver were able to consolidate above yesterday's low for the move but could only posting a mild gain by the end of Friday's trading. A lower than expected reading for the US CPI this morning may have boosted fears of deflation, which many in the market saw as weighing on silver prices during the later stages of today's trading. A sizable pullback in the Dollar did provide some measure of support for silver prices, and likely played a major role with March silver being able hold within positive by the close of trading.
Gold Market Recap Report (CME)
The gold market found relatively subdued trading during Friday's session, as prices remain close to unchanged levels for a large portion of the trading day. For the week, February gold finished with a loss of 8.50. A positive reception for Chinese manufacturing data during overnight trading as well as for US Industrial Production this morning were widely felt to have given a boost to global market risk sentiment but the gold market ultimately found little lasting benefit going into the weekend. A major global brokerage firm lowered their outlook for gold prices during 2013, however, which may have put additional pressure on the market early on during today's session. Lukewarm US equity markets in the wake of today's US inflation data were also seen as a key negative factor for gold prices during the session.
Posted by MW Chong at 10:52 AM