Corn (Source: CME)
US corn futures finish limit down as USDA's increased inventory estimate surprises traders expecting supplies to decline or stay steady. The 8% increase in projected season-end supplies eases concerns that drove prices to record highs last month. Yet, grain users remain jittery about the potential for poor weather to reduce the size of the next harvest. Corn's focus will quickly return to the weather and prospects for continued planting delays in the eastern Corn Belt, according to Susquehanna International. CBOT July corn drops 30c to $6.77 1/4 a bushel. The limit expands to 45c Thursday.
Wheat (Source: CME)
US wheat futures close sharply lower on spillover selling from a limit-down drop in the corn market. Corn fell on an increased USDA inventory projection, dragging down wheat because both grains are used for animal feed. Adjustments to USDA's wheat estimates in monthly crop reports issued were uneventful. "I didn't see anything that would stick out that would be wildly bearish," Citigroup analyst Terry Reilly says. CBOT July wheat sinks 39 3/4c to $7.59 a bushel; KCBT July drops 28 1/2c to $9; MGE July slides 33 3/4c to $9.25 1/2.
Rice (Source: CME)
US rice futures tumble on spillover selling from the sliding wheat and corn markets. Rice feels pressure from the other grains because wheat and rice are both global food staples and the markets often influence one another. It was difficult for wheat and rice to fight off losses as corn was limit-down amid an unexpected inventory-forecast increase. CBOT July rice sinks 21 1/2c to $13.95 1/2 per hundredweight.
USDA: FSU Wheat Exports To Double in 2011-12, Cutting EU, US Hopes (Source: CME)
Wheat exports from the Former Soviet Union are expected to double next season, the U.S. Department of Agriculture said, sapping demand for European and U.S. grain. In its first forecast for world wheat production in 2011-12, the USDA estimated exports from the region would rebound to 26 million metric tons. That includes 10 million tons from Russia, 8.5 million tons from Ukraine and 7.5 million tons from Kazakhstan. Exports from this season are forecast at just 13.1 million tons after the region's two top producers, Russia and Ukraine, limited exports because drought devastated their 2010 harvest. The forecast is well below the peak of FSU exports three years ago. Still, the USDA said the arrival of FSU wheat on world markets is expected to cut U.S. exports by 18% to 1.05 billion bushels, or 28.6 million tons. European Union exports are expected to fall 19% to a four-year low of 18 million tons in 2011-12.
"Export prospects are sharply diminished with reduced [U.S. hard red wheat] production and increasing competition as Black Sea production and exports are projected to rebound," said the report. The estimate adds weight to hopes that Russia may soon lift a ban on grain shipments imposed last summer after drought slashed the country's harvest by around a third. Officials are due to meet at the end of May to discuss whether to allow exports this year as production improves. But traders remain skeptical over whether the Kremlin will lift the embargo after comments from Prime Minster Vladimir Putin, stating that the "crop results must convince us that we fully satisfy our internal necessities."
Corn, Sugar Demand Driven By Emerging Markets - Distinction (Source: CME)
Demand for corn, soybeans and sugar will continue to be driven by imports from emerging markets, said Patrick Armstrong, Managing Partner of Distinction Asset Management. Patrick Armstrong said year-end corn inventories fell by 16% from the previous year, and he expects Chinese imports of corn to rise from 1.5 million metric tons to well over 10 million tons in the next three years. "The long-term demand case is driven by income growth and increased purchasing power from emerging markets consumers," Armstrong said. Regarding last week's sell-off, "we have rebuilt positions in Agricultural commodities in our Multi-Asset Real Return funds following last week's broad-based commodity sell-off," said Armstrong. Armstrong attributed last week's sell-off to silver, "the canary in the coalmine." He added, "the sell-off was led by silver, a commodity very much in a bubble driven by speculative activity. It's also a commodity that can be manipulated by investment banks and the hedgefunds."
At present, 6% of Distinction's portfolio exposure lies with agriculture. The asset manager medium-term adopts a bullish stance for sugar, despite the recent losses witnessed in futures markets. "Short-term supply of sugar does exceed demand. But further out, with China consuming more coffee and coca-cola, the supply picture will most definitely change," Armstrong added. Armstrong said inventory draw down would definitely be witnessed in corn markets however over the next 12 months. Regarding Asia growth, Armstrong said China would not be able to sustain growth forever and concerns of inflation are now noted by the government. "A shift from an export driven economy to an economy that deals primarily with internal consumption could happen, leading to a sustainable trajectory growth for the country."
Libya Food Stocks Could Run Out By July -WFP Spokeswoman (Source: CME)
Libya could run out of food in the next six to eight weeks if humanitarian supply lines are not dramatically improved, a spokeswoman for the United Nations' relief body said. The World Food Program's Caroline Huford said that the heavily import-reliant country is on the brink of a "full-blown food security crisis" which could affect the entire population within two months. "Replenishment of public and private food stocks is a critical issue," she said. "Current stocks will be used up in one and a half to two months, based on current consumption." Food shortages are particularly critical in the rebel-held east of the country, where heavy fighting is disrupting supply lines. Only one aid ship a week is reaching the port city of Misrata, a spokesman for the insurgents said last week. The European Union said it plans to open an office in the Libyan city of Benghazi to improve the flow of aid to the authorities there. But Huford said the food shortage is already having a severe impact on Libya's poor.
They normally rely heavily on government support programs to afford food, but the subsidies have been stopped since fighting began in February. "Many food items had increased up to 40% in price, which is of extreme concern as social safety nets and subsidy schemes have been disrupted," she said. Libya is especially vulnerable to food shortages as it relies heavily on international markets for supplies. The desert country imports 90% of its food and with what little production there is concentrated in western regions. Huford said the WFP has distributed food assistance to around a quarter of a million people in 15 locations in eastern parts of the country to date. A supply line has also been opened into Western Libya from the Tunisian border where its partner agency the Libyan Red Crescent is distributing 250 tons of food.
Flood Soaks Mississippi Casinos, Farmlands (Source: CME)
The Mississippi River crested at Memphis, Tenn., and kept rising to the south, dealing a blow to Mississippi's gambling and agriculture industries. Fifteen of the state's 19 riverside casinos have been closed because of flooding, with another scheduled to shut down, said Larry Gregory, executive director of the Mississippi Gaming Commission. The gambling facilities, stretching from Tunica in the north to Natchez in the south, employ about 13,000 people and generate some $13 million a month in state and local taxes. The casinos themselves float, but access ramps and parking lots are under water. It could take weeks for the casinos to reopen, said Mr. Gregory. The state's gambling industry "has been hit hard by the recession," said Webster Franklin, president of the Tunica Convention and Visitors Bureau. "The flood has come at a time when we'd hoped to begin rebounding." In Memphis, the river hit its expected high of 47.8 feet, but it will take weeks for the water to recede. Area levees were holding.
Barges continued to navigate the Mississippi, but smaller ports have had to shut down because the equipment used to load and unload goods was submerged. Three conveyor belts used to handle agricultural goods were underwater at the Port of Rosedale, in the heart of the Delta about 115 miles southwest of Memphis. "Everything's shut down now, and we're looking to be down another four to five weeks," said Butch James, the terminal manager. He spent much of Tuesday in his office, gazing out at the engorged river. "We won't be doing nothing," he said. Some residents in the lowest-lying areas evacuated weeks ago in anticipation of the rising waters, which authorities said were expected to crest as soon as Tuesday night in the northernmost part of the state. About 600 people who live around the fishing camps of Tunica Cutoff have fled to relatives' homes or a local shelter, said Larry Liddell, public information officer for Tunica County.
Statewide, 585 homes have been affected by flooding, according to Mike Womack, executive director of the Mississippi Emergency Management Agency. But the flood-protection system along the Mississippi was holding. "We think the main levee system is in good shape," he said. What concerns him is the expected flooding of the Yazoo River basin as the tributary gets backed up from where it meets the Mississippi at Vicksburg. Mr. Womack estimates that flooding in the area could reach 850 homes and between 300,000 and 600,000 acres of land, much of which is devoted to agriculture. Fields of recently planted corn, cotton and soybeans throughout the Delta have been inundated, officials said. "I really can't compare it to anything," said Andy Prosser, head of marketing at the state Department of Agriculture and Commerce. "This is unprecedented territory." Yet some Delta residents seemed unfazed.
In the town of Gunnison, 60-year-old Odessa Jackson Owens has spent three decades living with her husband in a house right next to the levee. "We're not worried about it at all," she said Tuesday, as she cooked up ham and spaghetti. Though Bolivar County, where Gunnison is located, suffered a major levee break in the historic flood of 1927, Ms. Owens isn't budging. "We didn't have this tall levee then," she said.
USDA Raises Predictions For Corn, Soybean Supplies (Source: CME)
End-of-season corn inventories in the U.S. won't be as tight as previously expected, federal forecasters said, easing supply concerns that had driven prices to record highs. The U.S. Department of Agriculture, in a monthly crop report, now projects corn supplies at 730 million bushels as of Aug. 31, up 8% from last month's estimate, as it cut expected exports. The agency increased its outlook for U.S. soybean inventories, also on slowing exports. Recent federal data show export demand cooling as high prices curb interest from foreign buyers. The increase in projected corn inventories caught traders and grain buyers by surprise as many expected the USDA to keep its forecast unchanged, particularly since last month's report was widely viewed as underestimating demand. "There is nothing friendly about today's report," said Joseph Vaclavik, a broker for MF Global in Chicago. "A cut in exports for both commodities is an indicator that demand may be softening at high price levels."
The report also reflected slowing demand for cotton with lower exports from the U.S., the world's top exporter of the fiber. Federal forecasters in Wednesday's report raised their soybean inventory forecast 21% from last month to 170 million bushels. The increase was widely expected by analysts as exports have been seen cooling for some time now and domestic demand has remained relatively flat. The new USDA forecast for U.S. soybean exports for 2010-11 crop year is 1.55 billion bushels, down from 1.58 billion bushels. The forecast for Brazil's soybean production continues to grow and the country's crop is expected to take more pressure off U.S. supplies. The USDA raised its forecast for Brazil production to 73 million metric tons, up from last month's forecast of 72 million tons. As for corn, federal forecaster now see exports at 1.9 billion bushels in the 2010-11 marketing year, down from a 1.95 billion-bushel estimate a month ago.
The USDA also tweaked its expectations for U.S. corn imports, increasing them to 25 million bushels from 20 million bushels a month ago. Meanwhile, the USDA lowered its forecast for winter-wheat production this year to 1.42 billion bushels, a 4% drop from last year. Dry weather conditions in Great Plains states have taken a sharp toll on the production forecast. Farmers in the region grow hard red winter wheat, which is milled into flour used to bake bread. Hard red winter wheat production in the U.S. is now forecast at just 762 million bushels, a 25% drop from last year. Farmers will begin harvesting the crop in the next few weeks.
FAO:One Third Of Human World Food Production Wasted Each Year (Source: CME)
Approximately one third of food produced in the world for human consumption, roughly 1.3 billion metric tons, is wasted each year, the Food and Agriculture Organization of the United Nations said with reference to a commissioned study. The document, Global Food Losses and Food Waste, was commissioned by FAO from the Swedish Institute for Food and Biotechnology. "Every year, consumers in rich countries waste almost as much food (222 million tonnes) as the entire net food production of sub-Saharan Africa (230 million tons). The amount of food lost or wasted every year is equivalent to more than half of the world's annual cereals crop (2.3 billion tonnes in 2009/2010)," the FAO said.
Mississippi Floodwaters Move South (Source: Bloomberg)
Communities between Memphis, Tennessee, and the Gulf of Mexico inspected levees and packed sandbags as they watched the Mississippi River’s floodwaters roll south toward refineries, riverboat casinos and farms. As many as 3,900 people may be affected by flooding in northern Louisiana, above the point where officials may have to open a spillway that would inundate more than 3 million acres to the south, Governor Bobby Jindal said at a press conference today in Baton Rouge. In Mississippi, officials are most concerned about tributary flooding in the fertile Delta region in the northwestern corner of the state, Governor Haley Barbour told reporters today in Greenville.
Jim Rogers Says Dollar Is Long Term ‘Total Disaster,’ Yuan May be ‘Safe’ (Source: Bloomberg)
The U.S. dollar is going to be a “total disaster” in the long term because of the country’s position as the world’s largest debtor and the policies being pursued by Federal Reserve Chairman Ben S. Bernanke, according to investor Jim Rogers. The Chinese yuan is likely to be a “safe” currency, although it is difficult for investors to buy, Rogers, the chairman of Rogers Holdings, told a conference in Edinburgh. “The situation is getting worse and I expect to see severe problems in the U.S.,” Rogers said today. “Dr Bernanke doesn’t understand economics, he doesn’t understand finance, he only understands printing money and we can’t quadruple the amount of money in the next slowdown.” U.S. government debt is currently 93 percent of gross domestic product compared with 60 percent before the financial crisis and is set to rise further in the next few years. The dollar has fallen over the past year against every currency in a basket of 16 major currencies.
The euro has gained about 7 percent against the dollar this year. It traded at $1.4311 as of 3:20 p.m. in London.
Drought seen starting to cut European wheat yields
HAMBURG, May 10 (Reuters) - Concern is growing that dryness is now damaging wheat in the European Union's top producers France, Germany and Britain but late rain could still save the crops, analysts said on Tuesday.
Some yield damage may have occurred in top EU wheat producer France, where harvest forecasts are being scaled back. In number two producer Germany, a bumper crop is no longer expected but late rain could still change the picture, analysts said.
Canadian Wheat Board ex-CEOs see tough road ahead
WINNIPEG, Manitoba, May 10 (Reuters) - The Canadian Wheat Board faces a tough battle to survive as a voluntary pool competing against grain-handling heavyweights, two former chief executives of the monopoly seller say.
The big three Canadian grain handlers, Viterra Inc , Richardson International Limited and Cargill Inc [CARG.UL], won't easily welcome a new competitor and the board is hobbled without elevators and port terminals, said Greg Arason, who headed the Winnipeg-based Wheat Board from 1999-2002 and 2006-2008.
Drought-hit French wheat crop to shed 5 pct-expert
PARIS, May 10 (Reuters) - A drought that has been running in France for more than a month will cut wheat output by at least 5 percent in the European Union's largest grain producer, the scientific director of France's grains technical institute said.
"We know we won't get last year's yields," Arvalis' Philippe Gate told Reuters in an interview on Tuesday.
Australia 2011/12 wheat output may shrink, quality improve -analysts
SYDNEY, May 10 (Reuters) - Australia's 2011/12 wheat crop may shrink from last year's record output, but quality is expected to improve as weather conditions return to normal, after rain and floods reduced the quality of last season's eastern harvest, analysts said on Tuesday.
Favourable weather in eastern Australia has raised hopes for a good 2011/12 wheat harvest, but focus remains on Western Australia, usually the top grain exporting state, where rain is needed by July to ensure a reasonable crop.
Cold spring chills US corn stocks outlook
WASHINGTON, May 11 (Reuters) - U.S. farmers could still produce a record corn crop this year despite their slow start getting to the fields because of the cold, wet spring, the government is expected to show in its first projections of this year's crop on Wednesday.
Even if the farmers do recover from the flooding in the U.S. Midwest, traders say the harvest will do little to alleviate the razor-thin corn stockpile.
Corn, Wheat, Soybean Futures Decline as USDA Supply Outlook Tops Forecast (Source: Bloomberg)
Corn plunged the most allowed by the Chicago Board of Trade, and wheat and soybeans fell after the government said U.S. inventories will be bigger than analysts expected, easing supply concerns for food and fuel. Corn stockpiles before next year’s harvest may climb to 900 million bushels from a 15-year low of 730 million this year, the Department of Agriculture said today. The price as much as doubled in the past year, helping to send world food costs to a record in February and boosting costs for livestock producers including Tyson Foods Inc. (TSN) and JBS SA, and makers of ethanol including Archer Daniels Midland Co.
Sugar Surplus Seen for a Second Year, Cutting Costs for Coca-Cola (Source: Bloomberg)
Sugar output may exceed demand for a second year after farmers boosted planting as futures surged, pushing prices lower, Standard Chartered Bank said. That may lower costs for drinks makers like units of Coca-Cola Co.
Sugar steady; arabicas dip, near 34-year high
LONDON, May 11 (Reuters) - ICE sugar futures were steady, while arabica coffee prices dipped in choppy early trading and were in sight of last week's 34-year high. Sugar futures consolidated in early trading after a rally on Tuesday, with a focus on a line-up of ships at Brazilian ports.
Australia's sugar crushing season to start early - industry
SYDNEY, May 11 (Reuters) - Australia, a leading raw sugar exporter, will start its 2011 sugarcane crush about four weeks earlier than usual due to signs of sugar content peaking early in some districts, industry officials said on Wednesday.
Sucrogen, Australia's largest sugar miller and refiner, now owned by Singapore's Wilmar International , will start crushing at its Pioneer Mill in the Burdekin region on May 18, in the north-eastern state of Queensland, a company spokeswoman said.
Thin sugar supplies congest Brazil ports
LONDON/SAO PAULO, May 10 (Reuters) - A line of vessels waiting to load sugar at Brazilian ports has swelled because supplies of the sweetener from the new cane harvest have been slow to hit terminals, trade and shipping sources said on Tuesday.
There are currently 55 ships to load sugar at the country's main two ports -- Santos and Paranagua, compared with 36 vessels a year ago, according to Santos-based SA Commodities/Unimar shipping agency.
Brazil's CS sugar output seen up, ethanol down
SAO PAULO, May 10 (Reuters) - Sugar output in Brazil's main center-south cane producing region will rise to record volume this season, despite a drop in yields caused by dry weather in 2010, the government crop supply agency Conab said Tuesday.
But ethanol output is expected to fall as mills favor sugar production in search of higher returns, Conab said, in its first estimate for the new season (April-March).
Tumbling prices, global surplus in focus at sugar meet
SINGAPORE, May 11 (Reuters) - Record cane crop in Brazil, soaring sugar output in Thailand, exports from India, a global surplus and a dramatic fall in prices from 30-year highs will be in the spotlight at an industry gathering this week.
Mounting worries that supply will outstrip demand have dragged down sugar prices by nearly 40 percent from a peak of around 36 U.S. cents/lb hit in February, when fears of damage to the crop in Australia -- one of the biggest exporters of the sweetener -- from cyclone Yasi ignited a rally.
Indonesia coffee woes keep global prices on the boil
SINGAPORE, May 10 (Reuters) - Global robusta coffee prices may challenge a recent three-year peak as continued heavy rains in Indonesia's Sumatra island cause severe damage to unripe cherries and threaten the upcoming harvest, leading exporters to cancel shipments from the world's second largest producer.
As inventories drop in the main growing island of Sumatra, dealers are also struggling to meet demand from domestic roasters, with annual consumption in Southeast Asia's largest economy growing by an average around 4 percent since the mid-1980s.
Kenya 2010/11 coffee export earnings seen higher
NAIROBI May 10 (Reuters) - Kenya expects its coffee export earnings to rise by 5-10 percent in the 2010/11 season thanks to good prices and improved output, the ministry of agriculture's top official said on Tuesday.
Statistics from industry regulator Coffee Board of Kenya showed east Africa's biggest economy earned 16 billion Kenyan shillings ($189.7 million) from the 2009/10 (Oct-Sept) coffee season, a 50 percent jump from the previous year.
Oil Gains, Recovering from ‘Very Hard’ Decline, on Mississippi Flooding (Source: Bloomberg)
Oil advanced from a three-day low in New York on renewed speculation flooding on the Mississippi River will disrupt U.S. fuel supplies before the start of the driving season in the world’s biggest crude-consuming nation.
Oil Drops Below $100 a Barrel, Gasoline Tumbles, After U.S. Supplies Surge (Source: Bloomberg)
Oil fell below $100 a barrel in New York and gasoline tumbled the most in more than two years after an Energy Department report showed that U.S. supplies surged and fuel demand slipped. Crude dropped 5.5 percent after the department said stockpiles jumped 3.78 million barrels to 370.3 million last week. Gasoline inventories unexpectedly increased 1.28 million barrels to 205.8 million, the first gain in 12 weeks. Total fuel consumption declined 0.9 percent to 18.2 million barrels a day, the lowest level since June 2009.
India’s April Coal Imports From South Africa Decline 29%; China Buys More (Source: Bloomberg)
India’s imports of coal from South Africa fell 29 percent in April from a year earlier while Chinese purchases rose, according to mjunction Services Ltd. South Africa supplied 1.21 million metric tons of the fuel last month to India from a year earlier, the Kolkata-based trader said in an e-mail. That was 18 percent lower than the 1.48 million in March. China’s purchases rose 12 percent to 504,000 tons in April from March, and none in a year earlier period, it said.
Gold, Silver Futures Slump in New York as Dollar Strengthens Against Euro (Source: Bloomberg)
Gold fell in New York, halting a three-session rally, as a stronger dollar eroded the appeal of the precious metal as an alternative asset. Silver also declined. The dollar rose against the euro on speculation that European leaders may not grant Greece additional aid, forcing the nation to restructure its debt. Gold touched a record $1,577.40 an ounce on May 2 before dropping 4.2 percent last week as the greenback climbed.
COPPER-Major market developments in April
LONDON, May 10 (Reuters) - Copper prices fell in April and tumbled further still last week in a rout across commodities markets, but supplies of the metal remain tight and the market could set its sights higher if China starts buying again.
"We expect copper prices to recover very strongly from where they are now. The question is just one of timing," said Barclays Capital analyst Gayle Berry.
ALUMINIUM-Major market developments in April
LONDON, May 10 (Reuters) - Aluminium prices made gains in April and, despite being knocked back by last week's broad-based sell-off the metal's near term fundamentals remain robust, some analysts say, while others think it will head lower.
"I think the short term fundamental picture is very strong, demand is still growing very strongly across all regions," said Barclays Capital analyst Gayle Berry. "This is a trend which is going to continue and that's going to help support the price."
China aluminium output seen fresh record in May after April high
HONG KONG, May 11 (Reuters) - China's production of primary aluminium hit monthly records in April for the second consecutive month and output may rise further in May as extra capacity comes online, which could weigh on domestic prices.
But refined copper production in the world's top copper consuming nation, China is likely to be restricted by scrap supply, a cheaper alternative of copper concentrate for refined production, analysts and smelter official said on Wednesday.
China April daily steel output hits record 1.97 mln T
BEIJING, May 11 (Reuters) - China's daily crude steel output reached a record 1.968 million tonnes in April, buoyed by strong seasonal demand in the world's second-biggest economy, but looming power shortages in summer could hurt production over the coming months.
Chinese steel mills ramped up steel production to meet an expected pick up in construction demand during the second quarter, shrugging off a margin squeeze brought on by surging raw material costs.
NICKEL-Major market developments in April
LONDON, May 10 (Reuters) - Nickel prices held up well in April only to fall sharply in the recent broad sell-off while the prospect of rising supply suggests they could remain under pressure through the rest of the year.
"I would expect nickel to struggle. I think we've had the highs for the year," said David Wilson, analyst at Societe Generale.
Europe zinc premiums firm, prices attract buyers
LONDON, May 10 (Reuters) - Premiums for physical zinc have firmed in the past few weeks, traders said, as lower prices of the metal on futures markets attracted more buying.
Premiums are the amount paid over and above the London Metal Exchange (LME) cash price to cover the cost of shipping and delivering metal.
METALS-Copper confidence crumbles after China output data
LONDON, May 11 (Reuters) - Copper clambered lower on Wednesday after data from China suggested a cooling economy and potentially less demand from the world's largest consumer, but analysts say growth is still strong.
Weighing on investor sentiment was a generally firmer dollar across a basket of currencies.
PRECIOUS-Gold set for 4th day of gains, China in focus
LONDON, May 11 (Reuters) - Gold was headed for a fourth day of gains on Wednesday, while silver was on course for its strongest weekly performance in two years, driven by the prospects of greater demand from China and a softer dollar.
Data from China, a major consumer of silver and the second largest consumer of gold, showed inflation picked up more than expected in April, while industrial output slowed.
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