Wednesday, December 19, 2012

20121219 1001 Global Commodities Related News.

Goldman Bullish With Hedge Funds Amid Citi Warning: Commodities (Bloomberg)
Investors almost doubled purchases of commodities this year, at a time when Goldman Sachs Group Inc. and Morgan Stanley are forecasting higher prices and Citigroup Inc. (C) says the best returns are over.
Money invested in commodity funds increased by $21.6 billion this year, up 92 percent from the gain in 2011, according to Cambridge, Massachusetts-based EPFR Global, which tracks the flows. Hedge funds’ bets on a rally are 51 percent bigger than a year ago, U.S. government data show. Precious metals will lead returns in 2013, rising as much as 25 percent, as grains advance 18 percent and industrial metals 16 percent, according to a Bloomberg survey of 131 traders, investors and analysts across 15 raw materials.
While commodities are headed for their first annual retreat since 2008, growth in emerging markets will boost demand and tighten supply, Goldman Sachs’ analysts said in a report Dec. 5. The Standard & Poor’s GSCI gauge of 24 raw materials almost tripled in the past decade as producers failed to keep up with consumption. That “super cycle” of returns has now ended because China is growing more slowly and supply has caught up, Citigroup’s analysts said in a report last month.
“It comes back to the uncertainty about the economy, and the government policies that are going to be enacted or potentially changing over the next year,” said Peter Jankovskis, who helps oversee about $3 billion of assets as co- chief investment officer at Lisle, Illinois-based Oakbrook Investments LLC. “That’s why you’re seeing that disparity in the outlooks of many of these forecasting firms.”

Wheat Market Recap Report (CME)
March Wheat finished up 3 1/4 at 811 1/4, 3 off the high and 9 3/4 up from the low. May Wheat closed up 2 3/4 at 823. This was 9 3/4 up from the low and 3 off the high.
March Chicago and KC wheat traded higher on the day with most of the action linked to inter-commodity spread trading. Traders noted significant strength in the March Chicago wheat vs. March corn spread and Kansas City wheat lost some ground to Chicago on a better weather forecast for the westerns plains this week. A sharp decline in the soybean market offered resistance to price gains midday. Additional support in the wheat market stemmed from ideas that Chicago wheat was now competitive to Egypt, Brazil and possibly Europe following the recent decline in prices. Egypt released a tender for Feb 11-20 shipment near the closing bell which added a positive tilt to prices near the end of the day. UK wheat exports fell sharply in October to 90,355 tonnes while imports were pegged at 220,874 tonnes, down from 224,023 last month. Weather maps show a better chance for rainfall and snow for portions of eastern Colorado, western Kansas, and Nebraska this week which kept new crop wheat contracts on the defensive.
March Oats closed down 8 3/4 at 380 1/2. This was 1 up from the low and 12 3/4 off the high.

Corn Market Recap for 12/18/2012 (CME)
March Corn finished down 4 at 720, 5 3/4 off the high and 4 3/4 up from the low. May Corn closed down 3 3/4 at 723 3/4. This was 4 3/4 up from the low and 5 1/4 off the high.
March corn finished slightly lower on the day amid a weaker trade in calendar spreads and a steady basis in the Gulf of Mexico. The slow export demand for US corn continues to be a drag on prices in the short term but a slightly wetter forecast for Argentina triggered some buying support near the key technical levels this morning. The corn market also saw selling resistance from a sharply lower soybean market. Traders noted midday that support was seen in the long Chicago wheat vs. short corn spreads as feeders might be taking on feed wheat coverage in the east for 2013. Interior cash markets were firm as farmer selling has shut off due to the recent decline in prices. A more favorable outlook for precipitation for the US Corn Belt in the 8-14 day weather map favored the bear camp midday but the western plains remains extremely dry.
January Rice finished down 0.05 at 15.155, 0.055 off the high and equal to the low.

Wheat Heads to 5-Month Low on Moving Average: Technical Analysis (Bloomberg)
Wheat futures, already heading for their biggest monthly decline in more than a year, may extend decline to a five-month low, according to technical analysis by Dan Hofstad, a risk management consultant at INTL FCStone.
The contract for March delivery on the Chicago Board of Trade slipped below its 200-day moving average for four straight sessions to close yesterday at $8.1125 a bushel. A drop below $8 will send prices slumping over two or three days to $7.65 a bushel, the lowest since July 2, as hedge funds and other large speculators liquidate bullish bets that already are the lowest since June, Hofstad said in an e-mail from London.
Prices that reached a four-year high in July, during a U.S. drought, have tumbled 6.1 percent this month, heading for the biggest drop since September 2011. The U.S. Department of Agriculture said Dec. 11 that world stockpiles as of May 31 will total 176.95 million metric tons, more than the 173.61 million forecast in a Bloomberg survey.
“Wheat broke the 200-day moving average, which was major support, now the only support below us is $8, which is a psychological level,” Hofstad said. “Improving crop and weather for winter wheat in Ukraine and Russia, and weaker cash markets in the U.S.” have led to the lower prices, he said.
Wheat futures still are up 24 percent this year, the most of 24 commodities tracked by the Standard & Poor’s GSCI Spot Index, after drought curbed production in Russia, Ukraine, Australia and the U.S., the world’s largest exporter.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

Wheat Advances as U.S. Budget Progress Spurs Commodity Optimism (Bloomberg)
Wheat rose for the second time in three sessions on signs of progress in resolving a U.S. budget dispute that threatened to slow the economy and erode demand for commodities.
House Speaker John Boehner said today that he will push a budget “plan B” measure that will include tax increases for those making more than $1 million a year and that he hopes to reach a broader deal with President Barack Obama. A solution will prevent $600 billion in automatic spending cuts and tax increases and reduce concern that demand for raw materials will decline. The Standard & Poor’s GSCI Spot Index of 24 raw materials climbed for the second time in three sessions.
“There’s more optimism than I’ve seen in a month as far as a deal getting done,” Mike Zuzolo, the president at Global Commodity Analytics in Lafayette, Indiana, said by telephone. “The funds had done a good job liquidating so the short traders are buying back.”
Wheat futures for March delivery advanced 0.4 percent to settle at $8.1125 a bushel at 2 p.m. on the Chicago Board of Trade. The price has risen 24 percent this year.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Recap Energy Market Report (CME)
February crude oil prices grinded higher during the US trading hours, and registered a new eight day high in the process. Early support for the crude oil market came from optimism flowing out of Japan and China, as well as signs of compromise by US lawmakers in reaching a solution to avert the fiscal cliff. Risk-appetites benefited and the US dollar sold off to a fresh two month low, and that lent added support to the crude oil market. Expectations for this week's EIA crude stocks report are for a draw in the range of 1.25 million barrels last week.

Oil Trades Near Two-Week High as U.S. Crude Stockpiles Decline (Bloomberg)
Oil traded near the highest level in two weeks in New York after an industry report showed stockpiles fell the most in more than three months in the U.S., the world’s biggest crude consumer.
West Texas Intermediate futures were little changed after advancing a third day yesterday. U.S. crude supplies declined 4.1 million barrels in the seven days to Dec. 14, the most since the week ended Aug. 31, data from the American Petroleum Institute showed. An Energy Department report today is forecast to show inventories shrank by 1.75 million barrels, according to a Bloomberg News survey. Oil has gained this week amid speculation lawmakers will agree a deal on the U.S. budget.
Crude for January delivery, which expires today, was up 4 cents at $87.97 a barrel in electronic trading on the New York Mercantile Exchange at 11:16 a.m. Sydney time. The more-actively traded February future rose 2 cents to $88.42. Front-month prices advanced 73 cents to $87.93 yesterday, the highest close since Dec. 4., and are down 11 percent this year.
Brent for February settlement climbed $1.20 to $108.84 a barrel on the London-based ICE Futures Europe exchange yesterday. The front-month European benchmark contract closed at premium of $20.44 to the corresponding WTI contract.
More than $600 billion in automatic spending cuts and tax increases are set to start in the U.S. in January unless a deal to avert the measures is reached. House Speaker John Boehner said yesterday he will push a budget “plan B” measure that would include tax increases for people on incomes of more than $1 million, while continuing to negotiate with President Barack Obama.

Silver Market Recap Report (CME)
The silver market fell sharply today in sync with gold and the grain markets. Surprisingly sharply higher equities, weaker Treasuries and hope for a fiscal deal were basically discounted by the silver trade. Some players fear that a poor deal might be similar to going over the fiscal cliff, while others think that discouraging Chinese growth targeting is mostly responsible for the washout today in silver and other physical commodity markets. It probably goes without saying that silver suffered at least some technically related selling in the hard range down action today.

Gold Market Recap Report (CME)
While other markets saw the potential to avoid falling off the fiscal cliff, gold didn't seem to take that approach today. In fact, sharp gains in equities, sharp declines in US Treasuries and a slide in the Dollar would seem to have suggested that some type of deal was in the works. However, gold and grains were under what appeared to be a deflationary selling wave that might have been indirectly the result of rather disappointing economic growth targeting from China. Some suggest that slower official growth targeting in China signaled a desire to knock inflation down even further, before any fresh Chinese stimulus was applied and that was probably seen as a negative by a portion of the bear camp. With a series of technical chart violations in February gold, it is also possible that some of the selling in gold today was knock on or stop loss type selling.

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