OIL: Crude steady near 27-month peak; U.S. stocks seen lower
SINGAPORE, Jan 4 (Reuters) - Oil was steady near the highest price levels in more than two years as accelerating manufacturing activity in industrialized economies and winter weather fanned optimism that U.S. crude inventories will continue to drain.
Crude oil inventories in the U.S., the world's top consumer, fell for the fifth straight time last week, down by 1.7 million barrels, as refiners continued to use up more of their stored supplies while holding off on imports to lower their year-end taxes, a Reuters poll ahead of weekly supply data showed on Monday.
COMMODITY MARKETS: Copper, oil extend run into 2011; natgas up 5 pct
NEW YORK, Jan 3 (Reuters) - Copper hit record highs on Monday and oil jumped to a two-year top while natural gas posted its biggest gain in more than a month as investors bought commodities to greet 2011, extending December's price peaks.
"People are generally upbeat over the index re-weightings. Also, there'll be new money coming into commodity hedge funds at the start of the year, so there's no real worry about inflows at the moment," said Shawn Hackett, commodities analyst at Hackett Financial Advisors in Boynton Beach, Florida.
GLOBAL MARETS: Stocks resume rally on economy, oil gains
NEW YORK, Jan 3 (Reuters) - World stocks rallied in the first trading session of 2011 on Monday on stronger global manufacturing data, while oil closed at a 27-month high as the improved growth outlook increased demand expectations.
"There is a lot of money in cash, a lot of money in bonds that would like out of bonds. It's only natural, with the economic improvement, it's finding its way to equities," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
Oil nears $100, 2008-style surge not in cards
NEW YORK, Jan 3 (Reuters) - Nearly three years to the day after oil prices first pierced $100 a barrel, they are again threatening to break triple digits on a wave of fund-led optimism, but similarities between 2008 and 2011 end there.
Even the most bullish analysts are quick to recite a litany of reasons why oil will not surge to near $150 again this year. Such a sharp spike would deal the world economy a heavy blow it can ill afford.
India Offers 3.5 Mln Tons Wheat, Rice Sales To Trim Stocks (Source: CME)
India has offered to sell 3.5 million metric tons of wheat and rice to retail and bulk consumers over the next six months, a senior government official said, reviving a move to trim bulging federal stocks as well as to cool prices. The government tried to sell around 5 million tons of wheat and rice between April 2009 and December 2010, but only half the quantity was lifted because it was costlier than the grains sold in local markets. The government has kept the wheat and rice price unchanged from last year, but the response is likely to be better due to a sharp rise in local market prices. The government has offered to sell 1.5 million tons of wheat to bulk buyers, such as makers of flour and bakery products, for around INR1,200-INR1,400 per 100 kilograms, the official said, asking not to be named. Another 1.0 million tons wheat has been earmarked for retail buyers for a minimum of INR1,099/100kg, he said.
Spot wheat prices are currently around INR1,240-INR1,500/100kg. Rice from government stocks will be sold to retail consumers at INR1,585.5/100 kg, which is almost 30% cheaper than the market price. Sales of cheaper grain by the government will not only help reduce stocks and create space for fresh stock, but will also help cool surging local prices. Food inflation accelerated to 14.44% in the week ended Dec. 18 from 12.13% a week earlier, inviting sharp attacks from lawmakers and consumers. "It [the government's move to sell wheat] will help to bring down spot prices that have been on a high due to reduced supplies by traders," said Veena Sharma, secretary of the Roller Flour Mills Federation of India.
Commodities Off To Brisk Start In 2011 On Economic Optimism (Source: CME)
Commodity markets opened the year with a bang amid rising optimism about the health of the global economy. Crude oil futures breached $92 a barrel, and wheat closed above $8 a bushel. Both hit two-year highs on Monday, the first trading day of 2011, setting the tone for what is expected to be a year of strong commodity price performance. Copper, a bellwether for the manufacturing sector, edged up to set its third consecutive record. "There's a global optimism that's out there," said John Kilduff, a partner at hedge fund Again Capital. "Part of the reaction is going to be higher commodity prices." Analysts forecast that the momentum gained in the second half of 2010 will carry into 2011 thanks to growing worldwide demand, strains on supplies, and interest in the asset class, which has only been embraced by mainstream investors over the past decade. Monday's trading was thinner than usual and concentrated in the U.S., with markets closed across much of Asia and Europe.
Futures markets were closed for coffee and sugar, which posted some of the sharpest gains last year. While China has become a major force in commodities due to its rapid growth, attention is turning back to the U.S. Not only is the U.S. the world's largest economy, it is still the biggest consumer of crude oil and a significant user of industrial metals. Stubbornly high unemployment and the struggling housing market kept certain commodities, including oil, in check for much of 2010. But stronger holiday sales in the U.S. may herald consumers' willingness to accept price increases on clothes and other goods, pointing to sustained high prices for commodities like cotton.
U.S. wheat jumps to 5-month top on Australia floods
U.S. wheat futures started the New Year with a gain of 1.6 percent to a new five-month top as floods in Australia hampered grain shipments, threatening to further tighten global supplies.
"There is supporting news from Australia as it seems that Australia is not going to recover from floods soon," said Ker Chung Yang, an investment analyst at Phillip Futures in Singapore.
Australia's floods may disrupt grain movement for weeks
SINGAPORE, Jan 3 (Reuters) - Floods in Australia's Queensland could disrput grains supply for weeks, top grains handler GrainCorp Ltd said on Monday, further delaying the transportation to market of the country's waterlogged wheat crop.
Even ahead of the latest deluge, Australia's wettest spring on record had damaged the crop quality in the world's fourth largest wheat exporter, stoking supply concerns and pushing up global wheat prices. U.S. wheat futures rose more than 1 percent in early Asian trade on Monday.
La Nina dryness threatens Argentine corn - Govt
BUENOS AIRES, Dec 31 (Reuters) - Parched, hot conditions caused by the La Nina weather phenomenon are threatening corn yields in Argentina, the world's No. 2 exporter of the cereal, and rains are urgently needed, the government said on Friday.
Argentine farmers gathered a record corn crop of 22.7 million tonnes last season, but the dry weather is raising concerns that production could be hit this season and U.S. corn futures have risen in recent weeks due to supply fears.
European shares open new year higher, euro falls
LONDON, Jan 3 (Reuters) - European shares rose on Monday in the first trading session of 2011, led by German automaker Porsche, while the euro fell against the dollar on concerns the euro zone sovereign debt crisis could resurface soon.
"Sentiment is positive and that is mainly because of the seasonality. Money managers typically get some new inflows at the start of a year and they put them to work," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
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