Corn (Source: CME)
US corn futures tumble Thursday after the USDA issues much larger-than-expected supply estimates. Although the USDA's changes from last month were not huge, traders had widely been expecting supply cuts. Instead, the USDA raised its 2011 crop estimate and 2012 world stockpile projection, while leaving its US inventory projection unchanged. Traders were leaning the wrong way headed into the report, and the market plunged limit down shortly after the open and stayed there most of the day. The market is expected to fall again Friday, although worries about South America's crop and a looming three-day holiday weekend could add some uncertainty. CBOT March corn ends down 40c, or 6.1%, to $6.11 1/2. Friday's trading limit will be expanded to 60c.
Wheat (Source: CME)
US wheat futures stumbled on spillover pressure from corn as the grains complex succumbed to larger-than-expected USDA supply estimates. The market was driven lower by corn, which tumbled on the new forecasts. Estimates weren't as bearish for wheat, although the government did estimate winter-wheat plantings well above analysts' expectations. That's why it, traded in Chicago and Kansas City, fell more sharply than Minneapolis spring wheat. Some traders question the USDA's soft red-winter-wheat estimate and say that the hard red-winter-wheat acreage doesn't reflect what will actually be harvested. CBOT March wheat ends down 36c at $6.05 a bushel while KCBT March slides 28 3/4c to $6.73. MGEX March falls just 9c to $8.07 1/2.
Rice (Source: CME)
US rice futures fell Thursday on spillover pressure from other grains and the USDA's supply and demand update. Grains generally, and corn in particular, tumbled on the USDA's reports, which showed more supplies than expected. For rice, the USDA hiked projected 2011-12 long-grain ending stocks to 20.6 million hundredweight from 17.6 million despite lowering production. The production cut was more than offset by weaker domestic and export demand, a theme that has weighed on prices throughout the past several months. CBOT March rice ends down 23c to $14.57 a hundredweight.
U.S. soy edges up after tumble on Argentine rains
SYDNEY, Jan 12 (Reuters) - U.S. soy futures were a touch higher in early Asian trade , ticking up after posting their steepest fall in 1-/12 months overnight on news of rain in Argentina aiding the drought-stressed crop.
Showers in Argentina are expected to bring 1 to 2 inches of rain to heat-stressed corn and soybeans, benefiting the developing soy crop more than the corn crop, easing soy supply worries.
Russia Deputy PM says grain exports reach 18.6 mln T -RIA
MOSCOW, Jan 11 (Reuters) - Russian grain exports from July 1 have reached 18.6 million tonnes, First Deputy Prime Minister Victor Zubkov said on Thursday.
"Russia has returned to the ranks of top grain exporters, literally today exports reached 18.6 million tonnes," the official was quoted by RIA news agency as saying.
Philippines says likely hit 2011 farm output goal
MANILA, Jan 12 (Reuters) - The Philippines' farm output growth in 2011 may have hit a government target of 3-3.5 percent, helped by favourable weather early in the year that boosted crop harvests led by rice, corn and sugar, the agriculture minister said on Thursday.
Rice output would have been better if not for a series of typhoons in the second half, Agriculture Secretary Proceso Alcala told reporters.
Glyphosate-resistant weed spreads to Canada crop belt
WINNIPEG, Manitoba, Jan 11 (Reuters) - A weed resistant to a widely used chemical to protect crops has spread for the first time to Western Canada, the country's grain and canola belt.
Kochia weed turned up in three fields in Southern Alberta last August, despite the use of glyphosate, and Canadian government scientists have now confirmed that it is resistant to the farm chemical, seed company Monsanto Canada said on Wednesday.
Rains come but Argentine farmers say need more
BUENOS AIRES, Jan 11 (Reuters) - Rains hit parts of Argentina's grains belt early Wednesday, moistening fields parched by drought, but farmers said the showers came to late to revive corn crops and clamored for government aid.
Weeks of dryness have shrunk Argentina's corn exporting capacity, which the world was counting on to replenish supplies after a disappointing U.S. harvest. The South American country is also a major soy producer.
Ukraine grain exports rise 22.4 pct in Dec vs Nov
KIEV, Jan 11 (Reuters) - Ukraine's grain exports rose to 2.454 million tonnes in December 2011 from 2.005 million in November, analyst UkrAgroConsult said on Wednesday.
The consultancy said in a report the volume included 1.975 million tonnes of maize, 367,100 of wheat and 82,800 of barley.
Ukraine '12 grain harvest could fall 22 pct-minister
KIEV, Jan 11 (Reuters) - Ukraine's 2012 grain harvest may fall to between 44 and 46 million tonnes from a record 56.4 million tonnes in 2011 due to a drought during sowing, Farm Minister Mykola Prysyazhnyuk said on Wednesday.
Prysyazhnyuk told Reuters that a fall in the 2012 wheat harvest to about 12 million tonnes was the main reason for the decrease in the grain crop this year. Ukraine harvested 22.4 million tonnes of wheat in 2011. -
US Crop Report Triggers Price Falls (Source: CME)
Higher global grain supplies could signal more downward pressure on food prices after an influential U.S. government report pointed to larger-than-expected domestic stocks and lifted harvest estimates for Europe and Asia. A raft of monthly and quarterly reports released Thursday by the U.S. Department of Agriculture eased concerns about the impact of drought on crops in South America, sending ripples through the agribusiness sector as grain futures fell sharply. The reports came as a United Nations agency said that its global index of food commodity prices hit a record high last year, though it fell 2.4% in December because of bumper crops, slowing demand and the stronger U.S. dollar. The U.S. government's outlook for corn supplies caught most traders by surprise as the USDA said farmers harvested 12.36 billion bushels in 2011, up slightly from its December estimate.
Traders were widely expecting a decrease that would further reflect last year's volatile weather across the Midwest, which included unusually severe spring flooding and then a July heat wave. Stock prices for fertilizer and farm equipment suppliers slipped Thursday because investors fear that falling grain prices will take some steam out of the red-hot U.S. farm economy. The prospect of cheaper livestock feed costs, however, lifted the stocks of meat companies even though grain prices remain far higher than historical levels. The grain markets will remain volatile because the carryout is still very tight," said Mike Cockrell, chief financial officer of Laurel, Miss., chicken company Sanderson Farms Inc. (SAFM), whose shares rose more than 7% in the wake of the USDA reports. The USDA reports show that global grain inventories still remain tight by historical standards, which is why some analysts continue to expect U.S. grain farmers will generate record high revenue from their 2011 crops.
The agency projected world corn supplies by the end of the U.S. summer at 128.1 million metric tons, up nearly one million tons from its December estimate, despite analyst forecasts that it would drop by at least 4 million tons. While the USDA projected a smaller Argentina corn crop due to drought, those losses are offset by larger supplies in China and the Ukraine, the USDA said. Most of the USDA's changes to its grain forecasts were relatively small, but still triggered big price moves in part because tight corn supplies have traders and food executives on edge. Corn prices fell to their daily limit, with the March delivery contract at the Chicago Board of Trade down 40 cents at $6.11 1/2 per bushel. "The price reaction says more about the psychology of the markets than any fundamental change in supply and demand," said Michael Swanson, an economist at Wells Fargo & Co. (WFC).
However, the response could have "a major impact" this spring if they discourage farmers from planting as much corn as expected, said Joe Vaclavik, analyst with Straits Financial in Chicago. CBOT wheat futures closed down 36 cents, or 5.6%, to $6.05 a bushel, while CBOT soybeans closed down 20 1/2 cents to $11.82 1/2 a bushel. Futures prices remain well above historical levels due to worries about the South American crop and tight U.S. supplies. But with profits sinking at many corn-to-fuel ethanol plants, and many livestock producers operating at a loss, prices are going to have to drop to avoid a supply glut, Vaclavik said. "That demand, if we stay at these prices, is going to get choked off to an extent that we're going to have more corn than we know what to do with," he said. The U.S. government's estimates were also considered negative for wheat and soybean prices. The USDA increased its projected world wheat stockpile estimate due to higher production in Kazakhstan, Brazil and Russia.
It also estimated U.S. winter wheat plantings at 41.9 million acres, up from 40.7 million a year ago despite concerns about severe drought in the southern Plains and wet weather in the eastern Midwest that kept farmers out of their fields this fall. The government also raised U.S. export projections for wheat and corn. Market analysts were generally not expecting USDA to make any changes to domestic soybean supply estimates, but government forecasters said production was stronger than previously expected. The USDA raised its soybean production estimate slightly, adding that exports and the annual soybean crush would be weaker than expected, pushing projected stockpiles this year up to 275 million bushels. The December forecast was for 230 million bushels.
Thailand Won't Subsidize Rice Exports (Source: CME)
Thailand's rice procurement program has boosted growers' earnings but the government is undecided on having similar programs for other crops, despite strong demand, particularly from rubber planters, Deputy Prime Minister and Minister of Commerce Kittiratt Na-Ranong said Thursday. He also categorically ruled out any subsidies for exports or domestic sales of rice after having guaranteed a price of THB15,000 a metric ton, well above market rates, for the growers. The deputy prime minister's comments provide a crucial insight into the government policy because the clamor is rising for creating a rubber stockpile to boost prices on the one hand and to subsidize rice sales for giving a push to exports and checking domestic inflation on the other. "Every crop has a different cost of production and we are yet to study if any minimum price needs to be guaranteed to producers of commodities such as rubber, cassava and pineapples," the minister said at a media briefing.
Thailand is the world's biggest exporter of natural rubber. Prices have slumped following a global economic slowdown, prompting many growers to take to the streets in protest. "It is not a policy of the government to negotiate with protesters on the street, but we can consider their grievances by meeting their representatives," the minister said. He said a panel headed by him to discuss these demands will likely meet Tuesday. Thailand's agriculture ministry favors the creation of a 200,000-ton stockpile to shore up USS3 prices to about THB120/kg from THB94/kg now. "But we need to first check whether the issues involved are directly related to price or other factors are involved," the minister said. Besides, the price of THB120/kg may be acceptable to planters in the south--which produces most of the country's natural rubber--but not to growers elsewhere, he said. The government's aim is not to create stockpiles but ensure a reasonable income to growers, the minister said.
He added that state procurement of rice is way below expectations and only around 25% of the output is finding its way into the stockpile, with the rest being traded in the open market. This shows that setting the government procurement price 50% above market rates has prompted private traders to buy at higher prices as well, he said. However, this has made Thai rice exports uncompetitive, with prices at least $100/ton higher than sales by India and Pakistan, leading to demands that the government should sell rice to exporters at lower rates but the minister ruled it out. Earlier policy of paying the differential between government-set price and market rates to the growers in cash was indirectly subsidizing exports, he said. Thai rice exports in volume will definitely fall this year due to higher prices but their price value will increase, he noted. Thailand is world's top rice exporter and had almost a one-third share in global trade volumes in 2011.
Thailand's unmilled rice output will likely fall by 10% this year to 27 million tons due to severe floods during plantings, the minister said. Around 5 million tons of unmilled rice was lost, but this will be partly offset by higher output from the secondary crop, to be harvested in April.
World Food Prices Fell In Dec On Big Crops (Source: CME)
World food prices decreased by 2.4% in December, the United Nation's food body said Thursday, driven by sharp falls in cereals, sugar and vegetable oils due to bumper crops and slowing demand. The Food and Agriculture Organization's food price index, which measures the monthly change in international prices of a basket of food commodities, fell five points from November to a new level of 211 points. The index now stands 11%, or 27 points, below its peak in February 2011, but the FAO said it was difficult to make any firm prediction on price trends for coming months. "International prices of many food commodities have declined in recent months, but given the uncertainties over the global economy, currency and energy markets, unpredictable prospects lie ahead," FAO Senior Grains Economist Abdolreza Abbassian said.
However, Rabobank grains analyst Nicholas Higgins said global food prices in 2012 will likely be driven higher by Ukrainian drought and La Nina weather effects in South America, while the performance of row crops--such as corn, wheat and soybeans--in the U.S. and European Union will also be eyed. "The FAO [grains] indicator tends to lag the market measure and as such doesn't fully factor in the mid- to late-December rally in prices, which certainly bias' the indices move this month to the upside," Higgins added. Cereal prices registered the biggest fall in December due to record crops and an improved supply outlook, with the FAO Cereal Price Index dropping 4.8% to 218 points. Corn prices fell 6%, wheat 4% and rice 3%, the FAO said, meaning the index averaged 247 points in 2011, up around 35% from 2010 and the highest level since the 1970s. Meanwhile, expectations of an upcoming large production surplus weighed on sugar prices, with good harvests seen in India, the European Union, Thailand and Russia.
The FAO Sugar Price Index fell for the fifth consecutive month to 327 points in December, down 4% from the previous month and 18% from its peak in July. Poor global demand for soybeans and better-than-expected supplies of vegetable oil led to a rise in stocks, especially for palm and sunflower oil, deflating prices, the FAO said. The FAO Oils and Fats Price Index stood at 227 points in December, down 3% from November and well below the level of 264 points one year ago.
Corn, Wheat Plunge Most in Three Months as U.S. Sees Bigger World Supplies (Source: Bloomberg)
Corn and wheat prices plunged the most in three months, while soybeans slid, after an increase in stockpile forecasts by the U.S. government eased concern that shortages will inflate prices for food and biofuels. Inventories of corn in the U.S., the world’s top grower and exporter, may total 846 million bushels before this year’s harvest, 12 percent more than analysts expected, a U.S. Department of Agriculture report showed today. The 2011 crop totaled 12.358 billion, above a December forecast, while global output will be a record for a fifth straight year. World wheat reserves will rise to the highest since 2000, the USDA said. The prospect of ample supplies of grain for livestock feed boosted shares of Tyson Foods Inc. (TSN), the largest U.S. meat producer, and Smithfield Foods Inc., (SFD) the top pork processor. World food prices fell in December for the fifth time in six months and are down 11 percent from a record in February, the United Nations Food and Agriculture Organization said today.
ICE cocoa hovers near 8-week high, coffee firms
LONDON, Jan 12 (Reuters) - Cocoa futures on ICE hovered below an 8-week high early, in a mild technical correction after this week's steep rally fuelled by a sharp slowdown in port arrivals in top producer Ivory Coast.
ICE arabica coffee futures edged up, while raw sugar was marginally positive in thin volume.
China Dec cotton imports 790,400 T, up 71 pct on yr - report
BEIJING, Jan 12 (Reuters) - China's cotton imports in December totalled 790,400 tonnes, up 71 percent from a year earlier, an industry website reported on Thursday, citing customs data.
Cotton imports for the whole of 2011 totalled 3.36 million tonnes, up 19 percent, said the report on www.cncotton.com, a website operated by China National Cotton Reserves Corp.
Ghana cocoa buys hit 556,847 T by Dec 29 -Cocobod
ACCRA, Jan 11 (Reuters) - Cocoa purchases declared to Ghana's Cocobod reached 556,847 tonnes by Dec. 29 since the start of the 2011/2012 harvest season on Oct. 14, data from the industry regulator showed on Wednesday.
The figures, which covered the first 11 weeks of the 2011/12 main crop, were up 7.3 percent over the first 11 weeks of last season, according to the data seen by Reuters.
Oil Heads for Biggest Weekly Drop in a Month as Iran Embargo Seen Delayed (Source: Bloomberg)
Oil headed for the biggest weekly decline in almost a month in New York after a proposed European Union embargo of Iranian crude imports against the nation’s nuclear program was said to be facing a delay of six months. Futures were little changed after sliding the most in two weeks yesterday to the lowest settlement this year. The embargo postponement will allow countries such as Greece, Italy and Spain to find alternative supplies, according to an EU official with knowledge of the talks. Oil also fell after a report showed U.S. retail sales rose less than forecast in December, signaling an economic slowdown in the world’s biggest crude consumer. Crude for February delivery was at $99.34 a barrel, up 24 cents, in electronic trading on the New York Mercantile Exchange at 11:15 a.m. Sydney time. The contract yesterday fell $1.77, or 1.8 percent, to $99.10, the lowest close since Dec. 30. Prices are down 2.2 percent this week, the biggest decline since the period ended Dec. 16, and up 0.5 percent this year.
Bullish China oil demand depends on storage: Clyde Russell
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
SINGAPORE, Jan 12 (Reuters) - There appears to be an emerging consensus that China's oil demand will accelerate in 2012 compared to last year, with consumption slated to jump by more than half a million barrels a day.
Such an increase would take China's crude demand to around 9.5 million barrels a day.
Japan crude stocks rise to 2-1/2 month high
TOKYO, Jan 12 (Reuters) - Japan's commercial crude inventories rose last week for the second straight week to hit a 2-1/2-month high as oil companies curbed refining to reflect weak demand for gasoline, industry data showed on Thursday.
The refinery utilisation rate fell by 2 percentage points to 88 percent in the week to Jan. 7 after hitting the highest rate since March 2008 in the previous week.
Brent up as tensions between Iran, West mount
SINGAPORE, Jan 12 (Reuters) - Brent rose above $113 as worries about supply disruptions from Nigeria and Iran offset pressure from a high inventory build and persisting euro zone debt woes.
"Clearly, there are reasons for the market to be jittery," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.
China Gold Hoarding Turns Traders Most Bullish in Two Months: Commodities (Source: Bloomberg)
Gold traders are the most bullish in two months after mainland China imported the most metal ever from Hong Kong and investors bought U.S. bullion coins at the fastest pace in more than a decade. Eighteen of 23 surveyed by Bloomberg expect the metal to gain next week, the highest proportion since Nov. 11. Mainland China imported almost 102.8 metric tons in November, valued at about $5.5 billion, trade data on Jan. 11 showed. The U.S. Mint said it sold 82,500 ounces of American Eagle gold coins in the first 11 days of January. Full-month sales would reach 235,000 ounces at that pace, the most since 1999.
Bullion rallied 7.3 percent since plunging to within 1 percentage point of a bear market on Dec. 29, on mounting concern that economic growth is slowing and European leaders are failing to contain the region’s debt crisis. Holdings (.GLDTONS) in exchange-traded products backed by the metal are heading for the biggest weekly expansion since mid-November and are within 2 percent of an all-time high, data compiled by Bloomberg show.
