20110722 1006 Global Commodities Related News.

Corn (Source: CME)
US corn futures close down for a second-consecutive day as weather forecasts call for a damaging Midwest heat wave to ease. Temperatures will moderate this weekend and early next week, reducing stress on the corn crop, meteorologists predict. Yet, the market trimmed losses ahead of the close as MDA EarthSat Weather confirmed "extreme heat across the Midwest over the past several days has certainly stressed" the crop. Unfavorably hot weather is expected to return late next week and in early August. CBOT December corn slides 4 3/4c to $6.73/bushel.

Wheat(Source: CME)
US wheat futures suffer the heaviest losses in the grain markets as prices retreat following a 2-day rally. Profit-taking pressured wheat as demand is lackluster and supplies are considered ample. "The upside move on Wednesday in wheat was overdone, and we're now paying a price for it," says Mike Zuzolo of Global Commodity Analytics & Consulting. CBOT September wheat sinks 19 3/4c to $6.77 1/4 a bushel while KCBT September loses 19 3/4c to $7.74 1/4 and MGEX September drops 19c to $8.33 3/4.

Rice(Source: CME)
US rice futures close modestly higher as the market stabilizes after approaching a 3-year high last week. Concerns about lower-than-expected US plantings and a reduced supply outlook continue to underpin prices. Meanwhile, foreign demand for US rice pulled back last week, dropping 1% sequentially and 26% from the prior 4-week average for the week ended July 14 at 57,400 tons, according to the USDA. CBOT September rice gains 8c to $16.85 1/2 per hundredweight.

U.S. corn, wheat up on crop weather, dollar
HAMBURG, July 20 (Reuters) - Chicago wheat rose over 1 percent on Wednesday while corn and sobeans also gained on concerns hot weather in the United States threatened crops.
"Wheat and corn prices have been profiting from a weaker  U.S. dollar, higher risk appetite and expectations that the  dispute about the US debt limit will be solved soon," Germany's  Commerzbank said on Wednesday. "On the fundamental front, hot  and dry weather in many parts of the U.S. has been supporting  prices."

Russia sees grain export at 18 mln tonnes-Ifax
MOSCOW, July 21 (Reuters) - Russia sees grain exports of 18 million tonnes in 2011-12, Interfax news agency cited Agriculture Minister Yelena Skrynnik as saying on Thursday.
"We shall return our position on the world grain market," Skyrnnik was quoted as saying. "This year export will total 18 million tonnes."

Australia rain outlook mixed for wheat: weather bureau
SYDNEY, July 21 (Reuters) - Australia's key wheat growing regions are facing average or below average rainfall in the three months to October, the weather bureau said on Thursday, indicating some threat to crops during the critical growing period.
Grain regions in western New South Wales, northwestern Victoria and south western parts of Western Australia states are all seen receiving below-average rain while other grain areas are seen getting average precipitation.

U.S. crops and cattle stressed by hellish heat
CHICAGO, July 20 (Reuters) - Mother Nature is hell this week, especially for American farmers and ranchers.
A heat wave has descended on U.S. cropland and pastures, with no relief expected until the weekend.

Rainstorms sweep over dry western Canada crops
WINNIPEG, Manitoba, July 20 (Reuters) - Storms rolled over moisture-starved crops in Saskatchewan and Manitoba on Wednesday, but the reprieve from a major heatwave had a mixed impact, industry sources said.
Parts of southeastern Saskatchewan received 63.5 mm of rain (2.5 inches) in 30 minutes early Wednesday morning, before the storm dumped 35 to 50 mm (1.4 to 2 inches) in southwestern Manitoba around Brandon, according to Environment Canada.

Ukraine raises 2011 grain crop fcast to 47 mln T
KIEV, July 20 (Reuters) - Ukraine's Farm Minister Mykola Prysyazhnyuk said on Wednesday the ex-Soviet republic was likely to harvest about 47 million tonnes of grain this year compared to the previous estimate of 45 million tonnes.
"Taking into account the results of the first half of the field works we could expect that the total grain crop may reach no less than 47 million tonnes," Interfax-Ukraine news agency quoted Prysyazhnyuk as saying.

S.Africa's 2011 wheat crop seen at 1.7 mln T -Agri min
JOHANNESBURG, July 20 (Reuters) - South Africa is seen harvesting 1.7 million tonnes of wheat in the 2011 season, compared with 1.4 million tonnes in the previous season, the agriculture minister said on Wednesday.
Tina Joemat-Pettersson said a plant survey of farmers conducted in April this year showed that wheat plantings for the 2011 production season would be about 600,000 hectares, up from last season's plantings of 558,100 hectares.

Russia Lifts 2011-2012 Grain Export Forecast To 18 Mln Tons(Source: CME)
Russia is likely to export 18 million metric tons of grain in the 2011-2012 marketing year, and not 15 million tons as was forecast earlier, provided the country harvests between 85 million-90 million tons of grain, Agriculture Minister Elena Skrynnik said in Moscow as quoted by the ministry's press service. Deputy Prime Minister Viktor Zubkov said July 14 the Russian government now expected this year's grain harvest at 90 million tons, not 85 million tons as was estimated earlier. Last year's harvest fell to 60.9 million tons from 97.1 million tons in 2009 due to the summer drought.

Wheat Drops Most This Month as U.S. Exports Fall, Russian Supplies to Gain (Source: Bloomberg)
Wheat futures fell the most this month on signs that demand is easing for supplies from the U.S., the world’s largest exporter, as competing producers boost output and offer lower prices. Net U.S. sales to foreign buyers in the week ended July 14 fell 22 percent from a week earlier to 403,528 metric tons, the fewest since the end of May, the Department of Agriculture said today. Russia may export 18 million tons in the year that started July 1 after halting shipments during a drought last year, the country’s agriculture minister said. This year’s crop may be 48 percent larger than 2010. “Russian business is more competitive than us,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said in a telephone interview. “That’s not good, because we have so much wheat, that we need to export some.”

Soybeans May Open Higher on U.S. Export Sales; Corn May Fall; Wheat Steady (Source: Bloomberg)
What follows are opening calls for U.S. grain and oilseed markets.
-- Soybean futures may open 1 cent to 3 cents a bushel higher on the Chicago Board of Trade on increased U.S. export sales, Mark Schultz, the chief analyst for Minneapolis-based Northstar Commodity Investment Co., said in a telephone interview. Soybean-meal futures may open up $1 to $2 for 2,000 pounds, and soybean-oil futures are expected to open steady to down 0.1 cent a pound.
-- Corn futures are called to open 2 cents to 5 cents a bushel lower in Chicago as rain in Iowa and Nebraska, two of the three biggest U.S. producers, may ease the risk of crop damage from a heat wave, while forecasts show less-threatening conditions in parts of the Midwest during the next two weeks, Schultz said.
-- Wheat futures may open 1 cent a bushel lower to 1 cent higher on the CBOT, the Kansas City Board of Trade and the Minneapolis Grain Exchange as a weaker dollar reduces the cost of supplies from the U.S., which today reported exports last week were 36 percent below the average of the previous four weeks, Schultz said.

As Cotton Unravels, Clothing Makers Revisit Pricing (Source: CME)
After hitting historic highs this spring, cotton prices are plunging, the result of higher production and lower demand. It's an about-face for clothing makers that spent the last year grappling with higher costs and how much, if any, could be passed along to consumers. Now, retailers are wondering if the lower cotton prices, off 53% since their March 4 peak, will last or if the rollercoaster ride will continue. "There's never been this kind of volatility in cotton-- ever," Eric Wiseman, chief executive of VF Corp., the world's largest apparel company, said. Lower cotton prices won't show up in merchandise on store shelves until late spring of next year. But over the next few months, clothing companies will have to decide whether they can continue to charge more for their cotton T-shirts and denim jeans, allowing them to widen profit margins, or to pull back and give consumers a break.
VF, maker of Lee and Wrangler jeans, hopes its price increases will stick. "In an ideal world, we'll be able to hold the current prices and recoup the gross margin we've lost," Wiseman said. The swing in cotton prices has been particularly evident over the past year. Propelled by bad harvests in Asia and robust demand, cotton more than doubled between last July and March's $2.1515 a pound peak price, the highest in the 140 years that the commodity has traded on an exchange. The surge late last year forced companies to decide among raising prices, taking a hit on margins or re-engineering their products to use lower-cost fabrics or less embellishment, said Christian Callieri, a principal in A.T. Kearney's consumer and retail practice. Fabric can account for as much as 60% of the cost of a garment. But since spring, cotton prices have retraced their gains as signs of falling demand emerged. Cotton prices have lost 37% so far this month.
In its latest monthly report, the U.S. Department of Agriculture cut its estimate of U.S. cotton exports by 8% to 12 million bales for the marketing year ending July 31, 2012. For the year ending July 31, U.S. exports are estimated to reach 14.5 million bales. Brands that specialize in value-priced, cotton merchandise like T-shirts and jeans are the most vulnerable to price volatility because raw material costs make up a greater percentage of their total cost. The pressure is particularly acute for underwear makers, including Hanesbrands Inc., Fruit of the Loom Inc. and Jockey International Inc. Hanesbrands has raised prices already this year and plans to do so again in the fourth quarter. Chief Executive Rich Noll said the company is in talks with its retailers on how to handle pricing for the second half of 2012. One likely option would be to increase the number of items in a package-- adding a pair of underwear, for example-- while keeping the higher ticket price.
"In essence, you have offset the fact that cotton has come down," Noll said. Many foreign mills that had purchased cotton during the price run-up are now rushing to cancel the contracts, figuring they can no longer afford the prices now that there is less demand, according to cotton merchants. China, the world's largest cotton consumer, reported a 32% year-on-year drop in its cotton imports in June, confirming market fears over weak demand.

ICE sugar, coffee futures rise early, cocoa dips
LONDON, July 21 (Reuters) - Sugar futures edged up in early trade  as the market continued to derive support from lower-than-expected production in Brazil, while coffee prices rebounded from the prior sesssion's six-month lows
ICE raw sugar futures rose in early trade,  boosted by slightly weaker dollar and a diminished outlook for sugar production in top grower Brazil.

Brazil cane output seen sluggish until 2013
BRASILIA, July 20 (Reuters) - Brazil's cane sector will fail to achieve a badly-needed rise in output until at least 2013 as aging cane plants produce less and newly-planted areas take time to mature, a senior industry analyst told Reuters.
The urgency of investment in renewal of cane plants has been brought home to mills in the world's top sugar producer with an industry forecast of a production fall for the first time in years as under-investment bites into yields.

Solar Earnings Mirage Brings Muddy Waters Concerns to China’s Panel Makers (Source: Bloomberg)
Investors are starting to doubt profit estimates for China’s solar manufacturers as concerns about accounting practices first spotted at a forestry company spread nationwide. Directors leading audit committees quit LDK Solar Co. on July 18 and at its rival Trina Solar Ltd. (TSL) on July 12. Moody’s Investors Service on July 11 cited “accounting risks” at five Chinese companies including LDK. Muddy Waters LLC, a Hong Kong researcher, on June 2 accused Sino-Forest Corp. (TRE) of inflating its timber production. Those events widened doubts about the solar industry, which already was struggling with falling demand and prices, said Shawn Kravetz, chief executive officer at Esplanade Capital. Eight Chinese companies in the 17-member Bloomberg Large Solar Index have declined 13 percent since the Muddy Waters note, depressing share valuations to less than half the average Hong Kong’s benchmark share index.

Oil Climbs for Fourth Day on Optimism Over U.S. Economy, Greek Debt Crisis (Source: Bloomberg)
Oil climbed for a fourth day and headed for a fourth weekly gain as investors bet fuel demand will rise amid improving manufacturing growth in the U.S. and optimism Europe will contain its debt crisis. Futures gained as much as 0.5 percent after climbing 0.7 percent yesterday. Manufacturing in the Philadelphia area rebounded in July from its first contraction this year while European officials said Greece will receive new aid. Prices also rose after the International Energy Agency said it won’t extend a release of oil supplies. “The Philly Fed numbers fed into underlying hopefulness about the economy,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “It looks like Europe has come to an agreement about Greece, and with that prospects for the region’s economy and fuel demand will improve.”

Crude-Oil Futures Tops $100 a Barrel in N.Y. for First Time Since June 10 (Source: Bloomberg)
Crude oil rose in New York to more than $100 a barrel for the first time since June 10. Crude for September delivery rose as much as $1.96, or 2 percent, to $100.10 on the New York Mercantile Exchange.

Oil Rises to One-Month High on Manufacturing Index, Europe Debt Optimism (Source: Bloomberg)
Crude oil rose to a one-month high in New York after manufacturing in the Philadelphia area rebounded and on reports European Union officials have come up with a plan for the region’s debt crisis, bolstering the euro. Futures advanced 0.7 percent as the Federal Reserve Bank of Philadelphia’s general economic index rose to 3.2 from minus 7.7. Euro-area leaders may accept a temporary Greek default and ease the terms on bailouts to cash-strapped nations. Prices also rose after the International Energy Agency said it won’t extend a release of oil supplies.

Indonesia says India's NALCO in talks to invest in smelter
JAKARTA, July 21 (Reuters) - India's state-run National Aluminium Co Ltd (NALCO)  is in talks to invest in an aluminium smelter in Indonesia's Kalimantan province, an official at Indonesia's investment agency said on Thursday.
Indian firms are also interested in investing in geothermal power, railways and cement production in Southeast Asia's biggest economy, the official said, declining to give names of companies or potential investment figures.

China leads June global steel output to new record
LONDON, July 20 (Reuters) - Global steel production rose again in June, led by record crude output in China, and U.S. steelmakers also made more, despite slow growth in the world's largest economy, data showed on Wednesday.
But production may ease later this year as steelmakers, facing softer demand in the last few months, could reduce output to defend profitability, some analysts said.

China steel output to keep record pace on building frenzy
SINGAPORE/SHANGHAI, July 21 (Reuters) - China's steel production could maintain its breakneck pace in the second half of 2011 as a construction boom buoys demand, putting it on track for another record year despite the government's credit curbs.
China, which makes nearly half the world's crude steel, is expected to produce at least 700 million tonnes this year as mills cash in on rising prices, with apparent consumption up nearly 9 percent so far in the first six months.  

Copper Futures Fall Most in Four Weeks as Manufacturing Declines in China (Source: Bloomberg)
Copper futures fell the most in four weeks on signs that demand is dwindling in China, the world’s largest metal user. Preliminary data showed a gauge of Chinese manufacturing slid to a 28-month low this month. The final report is due Aug. 1. Copper prices have dropped 5.9 percent from a record $4.6575 a pound in February as China raised borrowing costs to cool inflation, and debt woes in Europe and the U.S. threatened the global economy. “China has been struggling with tight credit for some time,” Julien Garran, an analyst at UBS AG in London, said in a telephone interview. “We’ve also got Europe deteriorating and slowing demand in the West, as well as in other emerging markets. For us, that means the fundamentals are turning down.”

China June refined copper imports up 19.7 pct on month
HONG KONG, July 21 (Reuters) - China's monthly imports of refined copper rose 19.7 percent in June from a 30-month low seen in May, due to improved arbitrage and the arrival of contracted spot metal.
China, the world's top copper consumer, imported 178,638 tonnes of refined copper in June, the highest since March 2011 and up from May's 149,235 tonnes.

China June implied copper demand rises on imports, output
HONG KONG, July 21 (Reuters) - China's apparent demand for refined copper rose 9.9 percent in June from a month earlier after falling 2.1 percent in May, but demand was down 2.3 percent from a year earlier, Reuters calculations based on official Chinese data showed on Thursday.
Average daily net imports in June rose 40.6 percent from the previous month due to a 23.7 percent rise in imports and a 84.3 percent fall in exports.

Copper market sees surplus in Jan-May 2011-WBMS
LONDON, July 20 (Reuters) - The global copper market had a surplus of 74,100 tonnes in the January to May 2011 period compared with a surplus of 54,000 tonnes for the whole of last year, the World Bureau of Metal Statistics said on Wednesday.
"Global consumption for January to May 2011 was 7.878 million tonnes and the 2010 calendar year total was 19.13 million tonnes," WBMS said in a release.

METALS-LME copper falls for 2nd day on soft China data
SINGAPORE, July 21 (Reuters) - London copper dropped for a second day on Thursday, erasing early gains, as poor manufacturing data at top copper consumer China countered optimism about progress in resolving debt woes in Europe and the United States.
China's factory output shrank in July for the first time in 12 months, according to HSBC's flash PMI data, reflecting the impact of Beijing's tighter monetary policy and slack global demand.

PRECIOUS-Gold hovers around $1,600/oz; euro zone summit eyed
LONDON, July 21 (Reuters) - Gold held near $1,600 an ounce on Thursday, supported near this week's record highs by caution ahead of a key euro zone summit and as concerns persisted over talks to raise the U.S. debt ceiling, a necessary move to avoid a default.
However, it struggled to make fresh gains as appetite for risk improved after Germany and France reached a common position ahead of the summit, at which leaders will try to agree on a second bailout package for debt-laden Greece.