Corn (Source: CME)
US corn futures finish lower as the market pulls back from a five-week high. Prices retreat on profit-taking after the most-active December contract, which represents the crop that will be harvested this autumn, climbed more than 22% since the beginning of the month on supply concerns. Weather conditions remain unfavorably hot and dry for the developing crop. "The overall market sentiment is we've lost some production potential already," says Shawn McCambridge of Jeffries Bache. CBOT December corn drops 9 1/2c to $6.77 3/4 a bushel.
Wheat (Source: CME)
US wheat futures close higher as weakness in the dollar supports prices. Soft dollar fuels expectations for increased export demand, as it makes US commodities look more attractive to foreign buyers. Yet, the decline in USD won't make up for a gap in prices with wheat from the Black Sea region, traders say. Russian and Ukrainian exporters offer wheat at a sharp discount and are expected to steal more business from the US. CBOT September wheat rises 3 1/2c to $6.97 a bushel; KCBT September jumps 16c to $7.94; MGEX September gains 19 3/4c to $8.52 3/4.
Rice (Source: CME)
US rice futures finish solidly higher on concerns about lower-than-expected output. Unfavorably hot, dry weather in the US exacerbates worries about reduced production potential following this year's sharp drop in plantings, analysts say. Strength in the wheat market and weakness in the US dollar add support, they note. Firm wheat prices boost rice because both grains are global food staples, while the declining dollar makes US grains more attractive to foreign buyers. CBOT September rice gains 22c to $16.77 1/2 per hundredweight.
Goldman stumbles in commodities, takes on more risk
NEW YORK, July 19 (Reuters) - Goldman Sachs on Tuesday blamed its commodities trading desk for much of the massive drop in trading profits in the second quarter, even after its own analysts correctly called for a pull-back in prices.
In a sign of how an abrupt slump in commodities and energy prices caught out many big players, Goldman said it had "significantly lower results" in its commodities and mortgage businesses.
Investor Q2 outflow from commodities $3.9 bln-Barcap
LONDON, July 19 (Reuters) - Investors worried about global growth and risky markets pulled out $3.9 billion of net investments in commodities in the second quarter, the biggest global outflow in over six years, Barclays Capital said on Tuesday.
"A shaky growth environment and the ratcheting up of financial market risks has hit returns and reduced investor appetite for commodities recently," a research report by Barcap said.
Wall Street banks' quarterly commodities trading risk
NEW YORK, July 19 (Reuters) - Goldman Sachs Group Inc said Tuesday its commodities trading risk rose only slightly in the second quarter as it faced uncertain and less-liquid markets.
VaR is an industry measure for how much of a bank's money is at risk on a day for trading a particular asset class.
U.S. corn, wheat rise for 2nd day as heat threatens crops
SINGAPORE, July 20 (Reuters) - Chicago wheat rose 1.5 percent and corn gained around 1 percent, both rising for a second straight day, on concerns over hot weather in the United States that is threatening crops.
"Commodity and equity markets are doing well because of positive U.S. housing data and there are expectations that the debt issues will be resolved," said Ker Chung Yang, analyst at Phillip Futures in Singapore.
Argentina says eyes corn exports to China next year
BEIJING, July 20 (Reuters) - Argentina, the world's second-largest corn exporter after the United States, hopes to be able to export corn to China by 2012 after it completes a market access agreement with the world's second-largest economy, a government official said on Wednesday.
Argentina's Agriculture Minister, Julian Dominguez, who is in China on a trade visit, told reporters that he hopes to wrap up the market access agreement with China by the year end.
India to add 6.5 mln T grain storage space this year
NEW DELHI, July 19 (Reuters) - India aims to raise grains warehousing capacity about 10 percent by March 2012, the head of its storage agency said on Tuesday, as it tries to ensure its record 65 million tonnes of stocks do not rot.
Warehouses in India, the world's second-biggest rice and wheat producer, are overflowing after five bumper harvests and some grains are stored under tarpaulin, risking decay.
India produces record grains output in 2010/11
NEW DELHI, July 19 (Reuters) - India notched record grains output in the crop year ending June, helped by last year's well distributed monsoon rains, a top farm ministry official said on Tuesday and also predicted a record harvest for the second straight year in 2011/12 as well.
Bumper crops have meant overflowing warehouses in India, the world's second-biggest rice and wheat producer, and some grains are stored under tarpaulin, exposing the stocks to decay in the country with an estimated 450 million people living below poverty. The country is set to add 6.5 million tonnes of storage space by the end of this financial year.
Corn getting stressed by high heat
Well above normal temperatures during the day and night will put extreme stress on corn during the next 3 to 5 days, especially on reproductive corn and plants that are shallow rooted due to the heavy spring rains. Some relief from the high heat is possible by the weekend. Some showers may occur next week.
Very hot temperatures over the next few days will boost the harvest of the winter wheat crop, but the heat will stress the spring wheat crop in the northern Plains as it forms heads.
Italy 4-month soft wheat, maize imports up- Anacer
MILAN, July 19 (Reuters) - Imports of soft wheat and maize into Italy, a major grain buyer in Europe, rose in the first four months of 2011, driven by bigger supplies from Austria, France and Hungary, Italian cereals body Anacer said on Tuesday.
Imports of soft wheat rose to 1,598,412 tonnes in the first four months of 2011 from 1,541,518 tonnes in the same period of 2010, Anacer said in a statement.
Wheat Gains Most in Week as Export Demand May Rise on Dollar Drop, EU Rain (Source: Bloomberg)
Wheat futures rose for a second straight day on speculation that demand will increase for U.S. supplies as the dollar drops, while prospects diminish for crops in Europe. The dollar fell for a second-straight day against a basket of six currencies, boosting the appeal of U.S. grain exports. Crops in the European Union, which produces a fifth of the world’s wheat, have already been reduced by spring drought and now face harvest delays and declines in quality because of excess rains this month, according to French farm adviser Offre et Demand Agricole. “If rains would continue to persist, that would be a bad thing” for global wheat supplies, Jason Britt, the president of brokerage Central States Commodities Inc. in Kansas City, Missouri, said by telephone. “The weaker dollar is something that is obviously a net positive” for U.S. exports, he said.
Rice Prices Up 70% Make Asian Inflation Tough (Source: Bloomberg)
Asian cuisine may be too much of a good thing for some of the region’s central banks as policy makers grapple with the challenge of responding to spikes in the cost of staples from rice and pork to onions and chilies. Pork prices jumped 57 percent in June in China, leading Premier Wen Jiabao to vow to curb inflation even as growth slows. Rice, the staple food for more than half of the world population, has surged about 70 percent in the past year. A wider variety of diet and greater purchasing power for non-food items leave wealthier nations less vulnerable to food-cost spikes. Food makes up more than 30 percent of inflation indexes on average in Asia, compared with about 15 percent in Europe and less than 10 percent in the U.S., according to Rabobank Groep NV. The sensitivity of their economies to swings in meat and vegetable costs means emerging-market policy makers need to raise interest rates more to stem inflation when global agriculture prices soar.
Agricultural Groups Scramble To Save Critical Reports (Source: CME)
Producers of cotton, wheat flour and livestock feed are searching for ways to avoid losing Census Bureau reports critical to their industries that are slated to be discontinued due to budget cuts. A coalition of agricultural trade associations is slated to meet Wednesday with the top economist of the U.S Department of Agriculture to discuss attempts to save the reports issued by the Census Bureau. Time is running out to find a solution, as some of the reports will be stopped after next month. The trade groups--including the North American Millers' Association, the American Soybean Association and the National Cotton Council--hope the USDA will start reporting some of the data in its releases. That looks unlikely, however, as the department has budget problems of its own. "There's no real magic bullet here. Everyone's facing tight budgets," USDA Chief Economist Joe Glauber said. The Census reports include data on U.S. production of wheat flour and consumption of cotton.
They also estimate soybean meal and soybean oil production and how much soybean oil is being used to produce biodiesel. Within the USDA, federal forecasters use the data to calculate monthly supply and demand estimates that can have a dramatic impact on prices for agricultural commodities. Analysts warn loss of the data will add to volatility in agricultural markets. "We're very keen on having these reports continue," Glauber said. Industry groups will likely need to step up to cover more of the costs themselves if they want to save the reports. The millers association had a cost-sharing agreement with the Census Bureau to publish a quarterly report on flour production, contributing about $23,000 to $25,000 a year. But President Mary Waters said the group could not afford the estimated $80,000 to keep the report alive on its own. The data is important, she said, because it tracks flour consumption that indicates to millers and bakers what bread products they should produce.
"Any gap in reporting would be really harmful," Waters said. Industry members, however, were pessimistic about the chances for saving the reports due to budget cuts. The reports are headed for extinction this summer and fall, with the soy data going away after August.
Monetary Policy Not Driving High Ag Commodity Prices - Economist (Source: CME)
A steep climb in agricultural commodities in the past year has been driven by supply and demand factors, not monetary policy, the U.S. government's chief economist said. Prices for a variety of commodities, from corn to livestock, have risen sharply in the past year, stoking fears of food inflation in the U.S. and around the world. Critics of the Federal Reserve's monetary policy have said its bond-buying program, known as quantitative easing, has helped drive those gains, sending investors into risky assets such as equities and commodities. U.S. Department of Agriculture Chief Economist Joe Glauber said he's seen several studies on the influence of monetary policy, including quantitative easing, but that "I don't think I've seen convincing evidence that it's had much impact. "I think there are a lot of fundamentals in these markets than can explain why prices have been so high," he told reporters at a conference at the Kansas City Federal Reserve on agriculture.
Grain prices started to soar last summer, after a severe Russian drought decimated the wheat crop there. Concerns have since spread to other markets such as corn, which has doubled in price during the past year amid relentless global demand and disappointing crops. Those increases have drove the cost of livestock production, sending cattle and hogs prices higher as well. Glauber said monetary policy does have some impact on the market, and that a weaker dollar has helped drive export demand for U.S. products. He added that an increase in the Fed's core interest rate would hurt U.S. farmland values, which have soared roughly 20% in many areas in the past year, but that he doesn't see a "large crash" in prices.
USDA: Zimbabwe 2011-12 Corn Output Seen +50% At 1.4 Mln Tons (Source: CME)
Higher plantings and better use of seeds and fertilizer are forecast to boost Zimbabwe's corn production by more than 50% in 2011-12, the U.S. Department of Agriculture's Pretoria attache said. Output is expected to reach 1.4 million metric tons, up from 900,000 tons the year before and more than double 2009-10 levels, the USDA said. Imports are expected to fall to 100,000 tons, down from 400,000 tons last season, to meet consumption of an estimated 1.5 million tons. Wheat output, however, is expected to continue its downward trend. The USDA's attache forecast wheat production in 2011-12 will fall more than 50% from the previous season as planted acreage almost halves. Much of this is down to the scarcity of long-term loans and high interest rates of between 14% and 30% making the crop unprofitable. Even a government facility of $10 million to assist farmers has not been enough to help, it said.
"Wheat area planted and production have been sharply declining over the last decade mainly due to low profit margins, funding challenges and unreliable power supplies," said the attache in a report. Wheat imports are expected to rise to 280,000 tons in 2011-12, up from 250,000 tons, it added.
Mexico Sugar Exports Triple From Previous Year (Source: CME)
Mexico's sugar exports have more than tripled from a year ago, continuing their advance toward a forecasted record. Mexico exported 1.24 million metric tons (1.37 million short tons) of sugar between October and June, up from 367,836 metric tons in the same period of the previous season, the Agriculture Ministry said. The sugar season in Mexico runs October through September. The increase in the current season's exports reflects the tastes of Mexico's largest customer, the U.S. Americans have been cutting back on high fructose corn syrup and using more sugar, while in Mexico the opposite is true. Mexico's sugar industry chamber has said exports are likely to reach 1.4 million tons this season, up from an initial forecast of 1.3 million tons. According to the national committee for the sustainable development of sugarcane, exports might even approach 1.5 million tons. Analysts said Mexico's rising exports may have a slight cooling effect on sugar futures.
"The less sugar the U.S. has to buy from someone else, the better for price purposes," because there would be less competition for sugar, said sugar analyst Alex Oliveira of brokerage Newedge. Mr. Oliveira said the market's main concern right now is Brazil's disappointing sugar crop. Brazil is the world's largest producer of raw sugar by volume. Raw sugar for October delivery was up 0.8% at 29.04 cents a pound Wednesday on the IntercontinentalExchange. Futures have climbed about 40% from their lows in May, when data out of Brazil began to indicate a harvest that wouldn't meet expectations. Mexico produced 5.18 million tons of sugar this season, up 7% from the 2009-2010 season in spite of flooding and other weather problems. The harvest ended earlier this month. Most of the sugar came from Veracruz, which produced 1.89 million tons.
Production for next season doesn't look good. Although long-awaited rains began to fall recently, a dry spell that lasted for several months led the president of the National Union of Sugarcane Producers, Carlos Blackaller, to predict a 10% drop in output for the 2011-12 harvest.
Indonesia's 2011 coffee exports to fall a third
JAKARTA, July 19 (Reuters) - Coffee exports from Indonesia, the world's second-largest robusta producer after Vietnam, could fall about a third to 300,000 tonnes in 2011 as supply constraints lead to tight stocks at the end of the year, a senior industry official said on Tuesday.
Closing stocks at year end were estimated at 10,000 tonnes, down from a normal level of 60,000 tonnes as domestic consumption was also rising, said Rachim Kartabrata, executive director of the Indonesian Coffee Exporters Association. (AEKI)
Stabilise after risk aversion triggered losses
LONDON, July 20 (Reuters) - Sugar, coffee and cocoa futures on ICE were little changed in early trade , after falling earlier in the week as investor appetite for riskier assets diminished on the deepening euro zone and U.S. debt crises. ICE raw sugar futures edged higher, remaining at historically elevated levels, underpinned by uncertainty over the size of top producer Brazil's crop.
Indonesia 2011 white sugar output revised down to 2.58 mln T
JAKARTA, July 20 (Reuters) - Indonesia's white sugar production this year will reach 2.58 million tonnes, lower than a previous target of 2.7 million tonnes because of erratic weather, the Indonesian Sugar Council (DGI) forecast on Wednesday.
The output forecast is still above last year's 2.3 million tonnes.
Cocoa 2011/12 global deficit seen at 50,000 tonnes
LONDON, July 18 (Reuters) - Less favourable weather in West Africa and a return to the long-term decline in Ivory Coast production are expected to switch the global cocoa market into deficit in 2011/12, a Reuters poll showed on Monday.
World 2011/12 cocoa demand is expected to outstrip production by 50,000 tonnes, according to the poll's median forecast.
Vietnam should import more sugar to cool prices -govt
HANOI, July 19 (Reuters) - Vietnam should consider importing more sugar to cool a probable rise in prices in October/November when stocks fall due to strong consumption during a mid-autumn festival, a government report said on Tuesday.
Vietnam has imported 93,000 tonnes of sugar so far this year out of an annual quota of 250,000 tonnes, the report said. Industry officials have said high sugar prices have stopped importers buying more of the sweetener.
Crude Oil Climbs for Third Day as Shrinking U.S. Stockpiles Signal Demand (Source: Bloomberg)
Oil climbed for a third day in New York as investors bet that shrinking U.S. crude stockpiles indicate fuel demand will increase in the world’s biggest consumer of the commodity. Futures for September gained as much as 0.4 percent. The contract rose 0.6 percent yesterday after the Energy Department said inventories fell 3.73 million barrels to 351.7 million for a seventh week of declines. Analysts surveyed by Bloomberg News forecast a decrease of 2 million. Refineries operated at 90.3 percent of capacity, the highest in almost a year. “The crude number was very strong,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Refineries are operating at the highest rate this season, which suggests there is pretty strong demand somewhere. It looks like U.S. refineries are producing a great deal of fuel for export.”
Nickel mkt in 9,300 T deficit in Jan-May'11-INSG
LONDON, July 19 (Reuters) - The global nickel market was in supply deficit by 9,300 tonnes in the first five months of 2011, the latest monthly bulletin from Lisbon-based International Nickel Study Group (INSG) showed on Tuesday.
Latest figures show world primary nickel consumption totalled 641,400 tonnes in January to May 2011.
Japan crude steel output up but yen strength weighs
TOKYO, July 20 (Reuters) - Japan's crude steel output inched up in June from May as carmakers raised production following a post-quake slump, but the yen's strength is hurting Japanese exports and clouding the prospects for further improvement in steel output, an industry body said on Wednesday.
Crude steel output totalled 8.88 million tonnes in June, down 1.8 percent from May, but up 1.5 percent on a daily production basis after adjustment for the number of days, the Japan Iron and Steel Federation said on Wednesday.
Asian steelmakers saw tough Q2; gains seen capped in Q3
SHANGHAI, July 20 (Reuters) - The double whammy of high input costs and weak demand is expected to have squeezed margins of Asian steelmakers in the June quarter, but the fall in profits could bottom out in the third quarter as seasonal demand picks up.
Analysts expect Asian steelmakers to post lower profits for April-June and the hardest hit will be Japanese companies as the devastating earthquake and ensuing power shortages hit demand for key consumers such as carmakers and shipbuilders.
China's Ji En Nickel to raise $928 mln via private placement
SHANGHAI, July 20 (Reuters) - China's Jilin Ji En Nickel Industry said on Wednesday that it aimed to raise up to 6 billion yuan ($928 million) via a private placement.
Ji En will issue up to 300 million A-shares and the proceeds will be used to fund its nickel laterite smelting project in Indonesia, the company said in a filing to the Shanghai Stock Exchange.
Iron Ore-China rebar futures at 2-month high, ore firm
SHANGHAI, July 20 (Reuters) - Shanghai rebar futures rose by around half a percent to their highest level in more than two months on Wednesday, bolstering iron ore prices as China's social housing construction programme continued to buoy investor confidence.
The most active October rebar contract on the Shanghai Futures Exchange reached 4,938 yuan ($764) per tonne during morning trade on Wednesday, its highest since May 4.
China July 1-10 daily steel output dips 3.1 pct
SHANGHAI, July 19 (Reuters) - Daily output of crude steel from Chinese mills fell 3.1 percent in the first 10 days of July to 1.955 million tonnes, data by the country's steel industry association showed on Tuesday.
The figure amounts to 713.6 million tonnes when calculated on an annual basis, nearly 14 percent higher than last year.
Credit Suisse expects aluminum prices to rebound in H2
BANGALORE, July 19 (Reuters) - Credit Suisse expects a rebound in aluminum prices in the second half of the year, saying the recent bearish price versus the rest of the metals complex is not justified.
Aluminum prices lost ground in June and were expected to drift lower on a seasonal softening in demand coupled with a possibility of supply surplus for another year.
China to add 1 mln tonnes of alumina capacity -NDRC
HONG KONG, July 20 (Reuters) - China will add 1 million tonnes a year of alumina capacity, the state planning agency said in a statement, adding to its status as world's largest producer.
The National Development and Reform Commission has approved Shanxi Tongde Aluminium Company's plan to build a 1 million-tonne-per-year alumina refinery in Baode county in Shanxi province in the north, a statement posted on the commission website showed. It did not provide the completion time.
Vietnam aims to start alumina production in September-report
HANOI, July 20 (Reuters) - Vietnam will produce the first alumina from a bauxite complex in the Central Highlands in September after months of delays caused by adverse weather, power shortages and slow equipment delivery, the official Vietnam News Agency reported on Wednesday.
The country's first alumina plant in Lam Dong province is now due to get its first product on Sept. 20, the report said, quoting Tran Duong Le, deputy director of the complex's management board.
Metorex H1 copper output up 1 pct to 26,562 T
JOHANNESBURG, July 20 (Reuters) - South African miner Metorex , the takeover target of China's Jinchuan group, said on Wednesday that first-half copper output rose 1 percent compared with the preceding six-months, while production of cobalt fell 6 percent.
Metorex said production of copper during the six months to the end of June rose 1 percent to 26,562 tonnes, while the production of cobalt fell 6 percent to 1,890 tonnes.
Copper Slides From Three-Month High as U.S. Existing-Home Sales Decline (Source: Bloomberg)
Copper fell from a three-month high after existing home sales unexpectedly declined in the U.S., the world’s largest user of the metal after China. Sales of previously owned homes dropped to a 4.77 million pace, the lowest in seven months, the National Association of Realtors said today. The median projection in a Bloomberg News survey called for a gain to 4.9 million. Builders are the biggest copper users in the U.S. Stockpiles monitored by the London Metal Exchange gained for the fifth time in six days. “The housing data basically stopped the rally for the time being,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview today. “We are starting to see supply building up at the LME.”
METALS-Copper dips on dollar; supported by supply, demand
LONDON, July 20 (Reuters) - Copper fell on Wednesday on a firm dollar, but tight supplies and good demand prospects kept the metal within sight of a record high and helped counter investor concerns over a euro zone debt crisis.
Three-month copper on the London Metal Exchange fell 0.37 percent to $9,791 a tonne by 0935 GMT, less than 4 percent below the record high of $10,190 it hit in February. It touched $9,873.50 in the previous session, its highest since April 11.
PRECIOUS-Gold dips on hopes for progress on debt talks
LONDON, July 20 (Reuters) - Gold eased further on Wednesday from the previous day's record high, as hopes for a positive outcome to Thursday's euro zone summit and signs that talks on raising the U.S. debt ceiling were progressing took some heat out of the market.
Spot gold was down 0.1 percent at $1,586.56 an ounce at 0913 GMT. U.S. gold futures for August delivery were down $13.90 an ounce at $1,587.20.
Gold Futures Fall for Second Day as Haven Demand Ebbs After Euro Rebounds (Source: Bloomberg)
Gold futures fell for the second straight day on optimism that policy makers in Europe are moving closer to resolving the region’s debt woes, cutting demand for the precious metal as a haven. The euro gained against the dollar as European Union officials prepared to meet tomorrow to seek a solution to the region’s fiscal crisis. Gold pared gains as John Taylor, the founder of FX Concepts LLC in New York, the world’s largest currency hedge fund, said the price will surge to $1,900 an ounce by October. “A lot of the flight-to-quality money is coming out of gold,” Adam Klopfenstein, a market strategist at Lind-Waldock, a broker in Chicago, said by telephone. “There haven’t been any flare-ups in the euro zone.”
Newedge Sees Gold at $1,800 in 2011, Silver at $70 by March on Asia Demand (Source: Bloomberg)
Gold prices will surge to $1,800 an ounce by the end of this year, and silver will soar to $70 an ounce by March as physical demand climbs in Asia and investors seek a haven asset, Newedge USA LLC said. “Gold is an excellent hedge in troubled times” as European and the U.S. leaders struggle to resolve debt woes, Mike Frawley, the global head of metals, said yesterday in an interview in New York. Demand for gold and silver will be “very strong long-term from Asia, and the economic trend in the West is improving,” he said. The gold forecast indicates a 13 percent rally from current levels. The metal climbed to a record $1,610.70 on July 19. The silver estimate means prices will jump 77 percent from yesterday’s closing price. Newedge, based in New York, was the biggest futures-commission merchant by a measure of customer assets on deposit as of May.
Baltic dry rates drop despite record congestion
LONDON, July 19 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, shed three quarters of a percentage point on Tuesday despite port congestion hitting a year-high.
The renewed fall means the index has fallen for six straight sessions to its latest settlement of 1,330 points, down 0.75 percent since Monday.
Dry freight congestion hits year-high - ICAP
LONDON, July 19 (Reuters) - Dry freight bulk vessel congestion at Australian, Brazilian, Indian and Chinese ports has risen to its highest level since the beginning of the year and is now equivalent to over 10 percent of the entire bulk fleet, ICAP brokerage said on Tuesday.
"The combined congestion of the dry bulk fleet at Australian, Brazilian, Indian and Chinese ports has risen above 59 million deadweight tones. This is the highest level we have seen since January and is equivalent to nearly 11 percent of the entire dry bulk fleet, marginally greater than the year-to-date average of 10.25 percent," ICAP said in a research note.
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