Corn (Source: CME)
US corn futures spring to life, ending higher in a rebound fueled by crop worries and broad-based commodity strength. An ebb in worries about Europe's debt helped the market rebound from steep recent losses, as did Monday's crop-progress report, which showed corn in worse condition than expected and called into question analyst talk of "benign" US weather. Traders are awaiting Thursday's USDA acreage and quarterly stocks reports, which could be pivotal for market direction. July corn ends up 3.4% at $6.83/bushel.
Wheat (Source: CME)
U.S. wheat futures rally amid broad-based strength in corn and other commodities. Optimisim about the economy helped lift equities and commodities, and weighed on the dollar. Worries about the hard red spring crop, particularly in North Dakota, led the way, as MGEX July wheat surged 33 1/4 cents, or 4.1%, to $8.39. Traders are awaiting Thursday's acreage and quarterly stocks report from the USDA. CBOT July wheat climbed 17 1/4 cents to $6.40 1/4 per bushel and July KCBT wheat gained 15 1/4 cents, or 2.1%, to $7.43 3/4.
Rice (Source: CME)
US rice futures rallied, managing to stabilize after slumping to over 3-month lows. The market bounced in unison with grain futures, as traders evened positions ahead of Thursday's USDA reports, analysts say. Futures had experienced sharp declines on fund long liquidation, but the exhaustion of the selling and concerns about 2011 production provided support to underpin prices, analysts say. CBOT Sep rice rose 0.5% to $14.39 1/2/hundredweight.
Cargill says U.S. corn production may fall on flooding-FT
SINGAPORE, June 28 (Reuters) - Heavy rains that have caused flooding along the Mississippi and Missouri rivers have damaged about 2.5 million acres of U.S. farmland and may lead to a drop in corn production this year, the chief executive of the world's top commodities trader told the Financial Times.
"Clearly, we have lost acres with the flooding," Greg Page, chief executive of U.S.-based Cargill Inc., told the newspaper during a visit to the Ukraine capital of Kiev. "Certainly our company is fighting the floods on the Missouri River.
U.S. futures post modest recovery ahead of USDA report
SYDNEY, June 28 (Reuters) - U.S. wheat, corn and soybeans staged gains of up to 1.2 percent in a nervous market on Tuesday, rebounding after large falls at the start of the week and ahead of a key U.S. crop report.
"We've seen a little bit of a rebound in equity markets but movements in agricultural commodities are a bit inconsequential ahead of Thursday's (U.S. Department of Agriculture) report," said Adam Davis, senior commodities trader at Merricks Capital in Melbourne.
Focus shifts to U.S. harvested grain acres
CHICAGO, June 27 (Reuters) - The U.S. government is expected to keep its estimate of the area to be planted with corn this year unchanged in its report on Thursday, after its surprise reduction last month.
But, analysts added that, they were expecting the number of harvested acres to decline in coming months.
High prices fail to dent US corn demand
CHICAGO, June 27 (Reuters) - U.S. corn supplies shrank 23 percent to their smallest level in seven years as high prices failed to quench the thirst for the grain from the burgeoning livestock, ethanol and export markets.
The U.S. Agriculture Department will issue its quarterly grain stocks data on Thursday. Analysts are expecting U.S. corn stocks as of June 1 to be 3.302 billion bushels, a Reuters poll showed. Estimates given by 19 analysts in a survey ranged from 2.998 billion to 3.515 billion bushels.
US corn, soy ratings seen unchanged
CHICAGO, June 27 (Reuters) - U.S. corn and soybean ratings were expected to remain unchanged from a week ago as good weather for crop development in some areas was offset by harsh conditions in other places.
Flooding around the U.S. Midwest and in the northern U.S. Plains as well as hotter-than-usual conditions in the South weighed on the recently seeded corn and soybean crops. Other areas experienced ideal weather for growth.
Rains hinder Argentina corn harvest, wheat sowing
BUENOS AIRES, June 27 (Reuters) - Rains in Argentina last week hampered 2010/11 corn harvesting in top producing regions and slowed wheat seeding in some areas, the Agriculture Ministry said in its weekly crop report.
Argentina is the second-largest corn exporter in the world after the United States, and farmers are seen harvesting high yields despite severe dryness in December and January.
China Corn Output Constraints To Support Prices -StanChart (Source: CME)
Global corn prices are likely to be supported by constraints on Chinese corn output due to insufficient water resources, Standard Chartered said in a research note. While China has downplayed the likelihood of a surge in its corn imports, the bank said that the lack of water could affect the country's output potential. "We are cautiously optimistic on its ability to improve its corn yield in the medium to long term," analysts Abah Ofon and Koun-Ken Lee wrote. "However, this will be constrained by insufficient water availability." In the first five months of this year, China imported about 1.24 million metric tons of corn, compared to 1.6 million tons in the full year of 2010. China had highlighted at a recent International Grains Council conference that while its corn acreage is on par with that of the U.S., yields in China are much lower, implying more potential for China to raise yields, Standard Chartered noted.
However, the bank's concerns were raised earlier this month by an environmental expert with the European Union-China River Basin Management Program, who said that current levels of water use aren't sustainable, indicating that a search for higher yields would have to rely on other inputs. Lars Skov Andersen, a deputy team leader for the program and a director for global environmental consultancy COWI, told reporters at a conference in Beijing that China could lose about 30% of its agricultural output in five years if current rates of groundwater drawdown continue unabated. In the bank's note, Ofon and Lee said global crude palm oil and oilseed demand has slowed this year due largely to a deceleration in Chinese demand caused by policies designed to restrain inflation. However, "the consequent drawdown of China's domestic stocks will result in additional import demand in the third and fourth quarters," especially if China's price caps on edible oils are removed, the bank said.
Meanwhile, speculation arose last week in U.S. markets that China was pursuing a further purchase of 1 million tons of corn, following a dip in Chicago corn prices earlier in June.
Thai Rice Exports May Fall Sharply If A New Government Shifts Policy (Source: CME)
Thailand's rice exporters are making fewer export offers due to uncertainty over government policy, as prices may rise sharply and shipments could fall by as much as 50% if a new government starts buying the grain at above-market rates, a senior industry executive said. Ahead of general elections to be held July 3, the Pheu Thai Party, a strong contender to form the next government, has promised to buy unmilled rice, or paddy, from growers at THB15,000 ($485) a metric ton, compared with current prices below THB10,000/ton. If the government starts buying rice from growers at such high prices, export offers for milled rice will skyrocket to $840/ton, free-on-board, Chookiat Ophaswongse, managing director of major Thai exporter Huay Chuan Rice Co., said. Thailand, the world's largest rice exporter, is now offering 5% broken white rice around $520/ton, free on board.
Chookiat, a former president of the Thai Rice Exporters' Association said traders are refraining for making offers for shipment dates in two-three months, as they would normally, and have pending commitments for shipments in July of only around 500,000 tons. Thailand has been consistently exporting around 1.0 million tons of rice a month for several months now, and Chookiat said exports in the first half of the year are likely to reach around 6.2 million tons. "We were heading for a record level of exports this year due to bumper production, competitive rates and strong demand, but aren't sure now due to the prevailing uncertainty." He said the Democrat Party--head of the current coalition government--has also promised to raise the price for paddy guaranteed to the farmers by THB1,000/ton to THB12,000/ton, but the program subsidizes market rates by payment of the differential in cash, rather than requiring high government outlays for direct procurement.
The government is currently holding around 2.0 million tons of rice, and if it offers to buy grain from growers at prices well above market levels, its inventories will soar to more than 8.0 million tons, Chookiat said. One reason for Thailand's strong export performance in rice this year has been the narrowing gap with prices of rice from Vietnam, world's second largest exporter, he said. In the first half of last year, Vietnamese rice was priced around $100/ton lower than Thai grain, but in recent months they have been sold almost at par with each other. The gap between the two has started to widen again, however, with Thai 5%-broken white rice now costing $50/ton more than the same grade of Vietnamese rice, Chookiat said. If a local rice procurement policy is announced after the elections, the gap could widen further, causing buyers to turn to Vietnamese rice instead, he said.
Uganda To Build 70 Warehouses To Improve Commodity Storage (Source: CME)
The Ugandan government will build at least 70 warehouses nationwide this year as it seeks to improve post-harvest handling facilities that have been largely blamed for compromising the quality of its agriculture commodities, the minister of trade and industry said. The government will build at least 10 warehouses in various regions each with the capacity to hold at least 5,000 metric tons of crops, according to Amelia Kyambadde. A further 60 each with capacity of 1,000 to 2,000 tons will be built in rural districts, she said. They will each be able to store a range of crops. "These facilities are also aimed at improving the Warehouse Receipt System which enables farmers to sell directly to final buyers instead of middlemen," she said. Under the United Nations-sponsored Warehouse Receipt System, a farmer deposits his produce in a warehouse and is issued with a receipt. The receipt can act as collateral to enable the farmer to access a bank loan as he waits to sell his commodities at competitive market prices.
Uganda, Africa's largest robusta coffee grower is also a major producer of tea, cotton, grains and cereals. Low farmgate prices have in the past been blamed for discouraging farmers from cultivating certain crops in Uganda, according to industry officials. According to the U.N. World Food Program, the bulk of Uganda's food products like corn and grains do not meet the standards demanded by international buyers, mainly due to poor post-harvest and storage facilities. Last year, the country lost at least 20% of corn due to poor storage facilities following a bumper harvest. The country has since been hit by food shortages, which have accelerated inflation sharply over the past seven months, hitting 16% last month, the highest levels since 1994. The food crop inflation rate rose to 44% in May from 29% in April, triggering nationwide anti-government protests.
China among headaches for G20 grain database
PARIS, June 28 (Reuters) - A global grain database unveiled last week will struggle to raise transparency in food commodity markets as China and other emerging countries prove reluctant to reveal their actual supply needs in key staples.
The Group of 20 leading economies launched a scheme to gather figures on supply and demand of staple grains as part of measures to tackle food price volatility agreed at a first-ever meeting of G20 farm ministers.
Sugar rebounds to 3 month high, coffee steady
LONDON, June 28 (Reuters) - ICE raw sugar and Liffe white sugar prices rebounded to hit a three-month high on Tuesday, as dealers awaited an update on Brazil's harvest from the country's cane industry association, due later in the session.
* Raw sugar futures on ICE bounced higher, with July retaining a premium over October , ahead of the spot contract's expiry on Thursday.
Australia's 2011/12 sugar exports start despite weather woes
SYDNEY, June 28 (Reuters) - Australia's major exporter of raw sugar, Queensland Sugar Ltd (QSL), has kicked off its export programme for the current marketing year on a solid note despite weather induced setbacks last year, the firm said on Tuesday.
This season's first sugar exports left Townsville in Queensland, Australia's major sugar cane growing state, last week. The load of about 27,000 tonnes of raw sugar was destined for New Zealand, QSL said in a report.
Brazil coffee areas turn cold but no frost -Somar
BRASILIA, June 27 (Reuters) - Minimum nighttime temperatures will tumble in the next few days in Brazil's coffee areas but a mass of polar air will not cause a crop-damaging frost, forecaster Somar said on Monday.
A combination of a cold front and mass of polar air are making nights chillier in main growing zones in the world's top coffee grower but a southwesterly wind will act as a barrier to shield farms from the brunt of the chill.
Burundi 2011/12 coffee crop to fall 13 pct -regulator
BUJUMBURA, June 27 (Reuters) - Burundi's 2011/12 coffee output is expected to drop 13 percent from the previous season, partly due to the cyclical nature of the crop and ageing trees, the industry regulator said on Monday.
Regulator ARFIC said production is seen reaching 21,000 tonnes, down from 24,000 tonnes obtained in the 2010/11 crop.
Brent above $106 as Greek debt plan eases risk of contagion
SINGAPORE, June 28 (Reuters) - Brent traded above $106 a barrel on Tuesday, rising for a second straight session, after a radical French proposal to roll over Greek debt strengthened the euro and eased concerns of the debt crisis spreading across Europe.
"The market is slightly optimistic thanks to comments from the French President last night," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
Crude Oil Rises for Second Day on Greek Vote Optimism, U.S. Stockpile Drop (Source: Bloomberg)
Oil traded near the highest in four days in New York on speculation U.S. crude supplies dropped for a fourth week and steps by the Greek government to prevent a debt default will bolster Europe’s economy.
Japan May aluminium shipments rise 0.8 pct yr/yr
TOKYO, June 28 (Reuters) - Japanese shipments of aluminium products rose 0.8 percent in May from a year earlier to 166,885 tonnes, industry data showed on Tuesday, helped by a recovery in some production after the destructive March earthquake.
May shipments climbed from a year earlier for the first time in three months and also gained 1.9 percent from 163,805 tonnes in April, data provided by the Japan Aluminium Association showed.
Global iron ore swaps volume seen swelling to 80 mln T in 2015
SINGAPORE, June 28 (Reuters) - Global volume of iron ore swaps may jump to 80 million tonnes by 2015, around four times last year's level, as interest in the hedging tool rises, an industry official said on Tuesday.
The projected volume represents nearly 13 percent of China's iron ore imports of more than 618 million tonnes last year.
Iron ore contracts may be priced daily in 3-5 yrs-TSI
SINGAPORE, June 28 (Reuters) - Majority of iron ore supply contracts may shift to monthly pricing from a quarterly system within the next 18 months and deals could eventually be priced on a daily basis in three to five years, an industry official said on Tuesday.
Vale , Rio Tinto and BHP Billiton -- which together control more than two-thirds of the global seaborne iron ore market -- last year orchestrated a shift from a 40-year-old system of fixing prices once a year to a more flexible quarterly scheme.
China daily crude steel output down 0.67 pct in mid-June - Custeel
SHANGHAI, June 28 (Reuters) - Daily output of crude steel in China between June 11 and 20 fell 0.67 percent from the previous 10 days, industry website Custeel.com said on Tuesday, citing data from the China Iron & Steel Association (CISA).
According to CISA estimates, average daily steel output during the 10 days in mid-June was 1.955 million tonnes, down 120,000 tonnes from the preceding period.
Japan May aluminium shipments rise 0.8 pct yr/yr
TOKYO, June 28 (Reuters) - Japanese shipments of aluminium products rose 0.8 percent in May from a year earlier to 166,885 tonnes, industry data showed on Tuesday, helped by a recovery in some production after the destructive March earthquake.
May shipments climbed from a year earlier for the first time in three months and also gained 1.9 percent from 163,805 tonnes in April, data provided by the Japan Aluminium Association showed.
Copper up on hopes for Greece austerity plan approval
SHANGHAI, June 28 (Reuters) - Copper edged up on Tuesday on increasing confidence that the Greek parliament will pass an unpopular austerity plan, which lifted the euro against the dollar.
"Copper prices continue to move in a directionless and volatile way today. Investors are mainly trading based on developments in the euro debt crisis," said Shanghai Dongzheng futures trader Du Xiao Hua.
China end-users seek more bonded copper on yuan cash squeeze-trade
HONG KONG, June 28 (Reuters) - Chinese producers of semi-finished copper products are keen to use letters of credit to buy bonded copper in Shanghai because they do not have cash to buy metal in the yuan-denominated spot market, traders said on Tuesday.
Chinese firms typically are required to make loan payments before the end of June, cutting into their cash resources. But Beijing's tight credit policy has made this year's seasonal cash squeeze more serious than previous years.
METALS-Copper gains, eyes on Greece
LONDON, June 28 (Reuters) - Copper edged up on Tuesday as an agreement by French banks to rollover Greek debt boosted the euro but caution remained ahead of Greece's vote on austerity measures later in the week.
Three-month copper on the London Metal Exchange (LME) traded at $9,005 a tonne by 0930 GMT from $8,970 at Monday's close.
Gold inches up on weak dollar, Greece bailout hopes
SINGAPORE, June 28 (Reuters) - Spot gold edged higher on Tuesday, snapping a three-day losing streak, as the dollar weakened on hopes that Greece's parliament will pass an austerity plan to avoid a sovereign debt default later this week.
"Gold is facing more downside pressure in the short run, as the dollar is still looking strong in the face of the euro zone debt crisis," said Hou Xinqiang, an analyst at Jinrui Futures in China.
PRECIOUS-Gold edges above $1,500/oz as euro, oil recover
LONDON, June 28 (Reuters) - Gold rose back above $1,500 an ounce in Europe on Tuesday, recovering in line with oil prices as hopes that Greece's debt crisis may be contained tempered risk aversion, and after the euro regained some ground.
Prices remain rangebound, however, as traders seek clarity on the euro zone debt crisis and the subsequent direction of the euro. Gold is closely linked to foreign exchange moves, as it is often traded as a currency.
Gold Advances for First Time in Four Sessions as Weak Dollar Spurs Demand (Source: Bloomberg)
Gold gained for the first time in four sessions in New York as a weaker dollar spurred demand for the metal as an alternative investment. The dollar declined versus the euro after ECB President Jean-Claude Trichet said policy makers are in “strong vigilance mode,” signaling they intend to raise interest rates next week. “Today, it’s definitely the U.S. dollar that helps the gold price,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt.
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