Tuesday, January 8, 2013

20130108 1100 Global Commodities Related News.

Corn Market Recap for 1/7/2013 (CME)
March Corn finished up 5 1/4 at 685 1/2, 4 1/2 off the high and 7 1/2 up from the low. May Corn closed up 4 1/2 at 685 1/4. This was 6 3/4 up from the low and 4 3/4 off the high.
March corn traded higher into the closing bell on thoughts that US cargos are becoming more competitive in the global export market and bullish signals in calendar spreads added support. The USDA reported this morning that US exporters sold 102,200 tonnes of corn to an unknown destination for the 2012/13 crop year which was seen as a positive for demand but much more is needed at this point in the crop year to meet the USDA estimate of 1.15 billion bushels. Inspections were once again disappointing with only 7.2 million bushels shipped; this was down from 7.9 last week. Shipments needed each week to reach this crop years USDA estimate are 25.8 million bushels, up from 25.2 last week. Cumulative shipments are now 23% of the USDA export estimate vs. the 5 year average of 33%. Weather in South America is mixed with a drier pattern in Argentina which should promote healthy growth for row crops. Brazil will see light showers with the exception of Northeast Brazil which is too dry at the moment. A private analyst in Brazil cut their Brazilian corn production estimate from 73.57 million tonnes to 72.06 million tonnes but this is still well above the USDA estimate of 70 million tonnes.
January Rice finished down 0.055 at 14.975, equal to the high and equal to the low.

Wheat Market Recap Report (CME)
March Wheat finished up 4 at 751 1/4, 9 1/4 off the high and 7 3/4 up from the low. May Wheat closed up 4 1/4 at 761. This was 8 up from the low and 8 3/4 off the high.
KC and Chicago wheat markets trade higher early in the session but saw pressure the second half of the day despite a strong performance by the corn and soybean markets and a lower US Dollar. Technical short covering was seen early on but the lack of any new bullish headlines left the bears in control. Thoughts that feeders are showing more interest in the southwest and east coast in feed wheat along with US wheat being competitively priced in the world market are adding a positive tilt to the trade long term. Outside markets were mixed with equities trending modestly lower and the US Dollar was down on the day. Wheat export inspections fell in line with market estimates at 13.4 million bushels, up from 7.8 last week. Inspections needed each week to reach this crop years USDA export estimate are 24.5 million bushels, up from 24 million last week. The cumulative shipment pace is now 50% of the current USDA export estimate vs. the 5 year average of 59%.
March Oats closed down 1 1/4 at 331 1/2. This was 3 up from the low and 7 off the high.

Wheat Advances as U.S. Drought Threatens Winter Harvest (Bloomberg)
Wheat futures rose on speculation that farmers will abandon more of their winter crop than usual amid lingering drought in the U.S., the world’s top exporter.
As much as 25 percent of hard red winter wheat may not be harvested after the most-severe drought since the 1930s killed plants, Mark Hodges, the executive director of Plains Grains Inc. in Stillwater, Oklahoma, said last week. The Department of Agriculture will announce planting estimates on Jan. 11.
“The winter wheat-seeding number is generally expected to be higher” than last year, Jeff McReynolds, the owner of McReynolds Marketing & Investments in Hays, Kansas, said in a telephone interview. “If the weather pattern doesn’t change, abandonment will be up.”
Wheat futures gained 0.5 percent to settle at $7.5125 a bushel at 2 p.m. on the Chicago Board of Trade. Last week, the price slumped 4 percent, the fifth straight decline and the longest slump since October 2011, amid signs of declining U.S. exports.
On Jan. 4, the price closed at $7.4725, down more than 20 percent from $9.4325 on July 20, the highest settlement since April 9, 2008. That signaled the start of a bear market.
In 2012, wheat gained 19 percent, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.
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.

Soy, Corn Rise From Six-Month Lows on U.S. Supply Concern (Bloomberg)
Soybean and corn futures rose from six-month lows on speculation that U.S. reserves fell to the lowest in nine years after the worst drought in seven decades damaged crops.
On Dec. 1, soybean inventories probably fell 16 percent from a year earlier to the lowest since 2003, while corn supplies dropped 15 percent, a Bloomberg News survey showed. The U.S. government will update its estimates on Jan. 11.
“The market is beginning to refocus on tightening U.S. supplies,” Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago, said in a telephone interview. “We have had a big selloff, and there is some end- user interest in locking in supplies.”
Soybean futures for March delivery climbed 1.6 percent to close at $13.885 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest gain since Dec. 21. On Jan. 4, the commodity touched $13.56, the lowest intraday price since June 20.
On Dec. 31, the oilseed closed at $14.095, down 20 percent from the record settlement of $17.6825 on Sept. 4. That signaled the start of a bear market.
Soybeans inspected for export rose 21 percent to 39.652 million bushels in the week ended Jan. 3 from a year earlier, the U.S. Department of Agriculture said today.
Corn futures for March delivery gained 0.8 percent to $6.855 a bushel. Earlier, the price touched $6.78, the lowest since July 3.
The price reached an intraday record of $8.49 on Aug. 10 after drought cut U.S. production to a six-year low.
Export demand for U.S. grain may increase after five consecutive weeks of declines, Grow said. U.S. exporters sold 102,200 metric tons to unknown destinations, the USDA said today.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government data show.

Sugar, Coffee Climb on Index Rebalancing; Cocoa Rises (Bloomberg)
Sugar and coffee futures rose on speculation that investment funds tracking commodity indexes will increase their holdings. Cocoa and cotton also advanced, while orange juice dropped.
Investors will probably buy 31,451 contracts of raw sugar and 11,148 lots of arabica coffee as weightings shift for the Standard & Poor’s GSCI and Dow Jones-UBS Commodity gauges, Morgan Stanley estimates. That may bring inflows of $1.5 billion to the sugar, coffee, cocoa and cotton markets, the New York- based bank said today in a report.
As the weightings shift this month, “one would think we should at least see some stability” for prices, Michael McDougall, a senior vice president at Newedge Group in New York, said in a report.
Sugar for March delivery gained 0.1 percent to settle at 18.86 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the first increase in three sessions. The price fell 16 percent last year.
Coffee futures for March delivery rose 2.1 percent to $1.504 a pound, the second straight gain.
Cocoa futures for March delivery jumped 2.1 percent to $2,267 a metric ton, the biggest increase for a most-active contract since Dec. 12.
Processing in Europe, the world’s top consuming region, probably fell 4 percent last quarter, according to the median estimate in a Bloomberg survey of 12 traders. That compares with declines of 16 percent in the third quarter and 18 percent in second. The European Cocoa Association will publish its latest figures on Jan. 15.
“People are buying ahead of the grinding numbers, which might show improvement,” Keith Flury, an analyst at Rabobank International in London, said in a telephone interview.
Cotton futures for March delivery climbed 0.9 percent to 75.71 cents a pound in New York.
Orange-juice futures for March delivery slumped 2.1 percent to $1.106 a pound. Earlier, the price touched $1.105, the lowest since Nov. 14.

Commodity Investments Attract $20.5 Billion in 2012, Citi Says (Bloomberg)
Investors put a net $20.5 billion into commodity exchange-traded funds and index swaps last year, led by purchases of energy and precious metals, according to Citigroup Inc.
The rise contrasted with a net withdrawal of $12.3 billion in 2011, analysts including Aakash Doshi and Edward Morse in New York said in a report dated yesterday. Crude and other fuels had a net inflow of $8.8 billion in 2012, while precious metals drew in a net $6.7 billion, led by gold, they wrote.
The Standard & Poor’s GSCI Index of 24 raw materials advanced 0.3% last year, the smallest gain since 2008, amid concern that China’s expansion was slowing. Brent crude climbed 3.5 percent, rising for a fourth year, while gold posted a 12th consecutive annual advance.
This year, in the period to Jan. 4, investors withdrew more than $400 million from commodities as the dollar strengthened, the analysts said. Minutes from the U.S. Federal Reserve showed that policy makers debated an end to the bank’s asset-purchase program in 2013, driving the Dollar Index to a six-week high.

Natural Gas Drops on January Weather Outlook, Record Production (Bloomberg)
Natural gas futures fell for the fourth time in five days after revised forecasts called for milder weather in late January that would reduce fuel demand and a government report showed record production.
Gas slid 0.6 percent after MDA Weather Services said a midday weather update showed warmer weather for the Midwest and the East over the next 11 to 15 days. Output in the contiguous U.S. states climbed 0.4 percent to a record 73.54 billion cubic feet a day in October, according to the Energy Department’s monthly EIA-914 report.
“The market is holding out hope that colder weather at the end of January will salvage the heating season,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “The problem is the 11- to 15-day forecast turned warmer. Less heating demand than originally expected will mean slightly higher end-of-season storage levels. The 914 data is just affirmation that supplies are continuing to grow.”
Natural gas for February delivery dropped 2.1 cents to settle at $3.266 per million British thermal units on the New York Mercantile Exchange. Trading volume of 174,473 contracts at 2:42 p.m. was 42 percent below the 100-day average. Prices have risen 6.7 percent from a year ago.
April $2.50 puts were the most active options in electronic trading on the Nymex. They were down 0.4 cent to 0.9 cent on volume of 1,873 lots as of 2:44 p.m. Puts accounted for 69 percent of the volume.

Oil Trades Near Four-Month High as Run Rates, Supply Seen Rising (Bloomberg)
Oil traded near the highest level in almost four months in New York before a government report that may show refinery utilization rose and stockpiles increased in the U.S., the world’s biggest crude-consuming nation.
West Texas Intermediate futures were little changed after advancing a second day yesterday. Refineries probably boosted their average run rate last week by 0.2 percentage points to 90.6 percent, according to a Bloomberg survey before an Energy Department report tomorrow. Crude inventories probably climbed 1.4 million barrels and fuel supplies also gained, the survey shows. The U.S. corporate earnings season starts today, while Chinese export and import data for December are due Jan. 10.
“Investors will want to see that we’re getting the numbers during earnings season to suggest that the recovery in the U.S. is sustained,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney. “We’ve got data due out this week from China and I think that will be a key as to whether or not we bust through $95.”
Crude for February delivery was at $93.17 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 1 p.m. Sydney time. The contract increased 10 cents to $93.19 yesterday, the highest settlement since Sept. 18.
Brent for February settlement rose 3 cents to $111.43 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $18.26 to WTI. It closed at $18.21 yesterday, the narrowest since Sept. 24.

Recap Energy Market Report (CME)
February crude oil prices experienced a choppy trading session but managed to post a new high for the day late in the session. Some traders indicated that some of the support in the crude oil market came on the growing hope that the Seaway pipeline expansion effort would go into effect later this week. The expansion is expected top increase the flow of supply out of Cushing Oklahoma to the US gulf coast to as much as 400,000 barrels per day. Expectations of the expansion has tightened the spread differential between February Brent and WTI below the $18.00 during the session. Meanwhile, some traders pointed to concerns surrounding the US debt ceiling as a force that could limit demand.

Gold Drops for Third Straight Session on Fed’s Stimulus Signals (Bloomberg)
Gold futures declined for the third straight session on signs that Federal Reserve policy makers may end monthly purchases of U.S. debt this year.
The drop today followed the longest run of weekly declines since May 2004. On Jan. 3, minutes from the Fed showed $85 billion in monthly bond purchases, the third round of so-called quantitative easing, probably will end sometime in 2013. Gold gained 5.1 percent in September when the central bank announced the stimulus measures.
“The market is lackluster since people want some clarity from the Fed,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview.
Gold futures for February delivery fell 0.2 percent to settle at $1,646.30 an ounce at 1:57 p.m. on the Comex in New York. On Jan. 4, the price touched $1,626, the lowest for a most-active contract since Aug. 21. Last week, the metal dropped 0.4 percent, the sixth straight decline. In the previous two sessions, the commodity slumped 2.4 percent.
Fed Bank of Richmond President Jeffrey Lacker said on Jan. 4 that further monetary stimulus is unlikely to boost economic growth and will “test the limits” of the central bank’s credibility. He speaks tomorrow in Columbia, South Carolina.
Silver futures for March delivery rose 0.5 percent to $30.082 an ounce.
On the New York Mercantile Exchange, platinum futures for April delivery slipped 0.1 percent to settle at $1,556.30 an ounce. Palladium futures for March delivery slumped 2.7 percent to $670 an ounce, the biggest fall for a most-active contract since Oct. 23.

Silver Market Recap Report (CME)
The silver market diverged with the gold market today, as silver spent most of the Monday US trade action in positive ground, while gold prices spent a large portion of the day in negative territory. Silver saw some minor outside market support today from platinum, but weakness in gold and copper prices probably discouraged some would-be buyers of silver. In the near term, silver might continue to diverge with gold as silver seems to be primarily focused on its physical commodity market fundamentals.

Gold Market Recap Report (CME)
The gold market tried to start out on a positive footing before prices reversed course and tracked lower. With the setback off the early highs, February gold seemed to settle back toward the middle point of the large range down trade from last Friday. While the currency market action today was somewhat supportive, gold seemed to be positively tied to the US equity markets and the ebb and flow of the US economy. Gold probably saw only fleeting support from scheduled data today as the data released was certainly not a top tier report. With the gold market seemingly taking some direction from the US macro economic picture today, that could make the kick off of the US corporate earnings cycle on Tuesday afternoon, a fairly important event.

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