20110726 1024 Global Commodities Related News.

Corn (Source: CME)
US corn futures ended lower on expectations that moderating weather conditions would benefit the crop. Weekend rains gave the corn crop a boost after a Midwest heat wave last week. Temperatures turn less threatening this week, according to meteorologists. Spillover selling from losses in crude oil adds pressure, traders note. Market participants were reducing risk amid concerns about lack of an agreement to raise the US debt ceiling. Commodity funds sold an estimated 10,000 corn contracts, a sizable amount. CBOT December corn slides 11c to $6.74 1/2 a bushel.

Wheat (Source: CME)
Wheat futures finished lower on spillover pressure from losses in corn and soy markets. Increasing expectations for Russia's grain exports added pressure, as they indicate there will be less demand for US wheat, traders say. Yet, prices finish above session lows due to late short covering. Market participants were buying back some previously sold positions at CBOT, traders note. CBOT September wheat slips 3 3/4c to $6.88 1/2 a bushel; KCBT September drops 9 1/2c to $7.70 1/2; MGEX September slumps 7 3/4c to $8.30 3/4

Rice (Source: CME)
Rice futures closed sharply higher on concerns about output. Hot weather in the southern US continues to stress the crop, heightening concerns about a sharp drop in plantings this year. Traders will assess crop-condition data from USDA in a weekly report due at 4 pm EDT. Last week, the good-to-excellent rating dropped one percentage point to 60%, and more declines are possible, traders say. CBOT September rice ends up 41 1/2c at $17.15 1/2 per hundredweight. The contract matched a nearly 3-year high hit two weeks ago.

Weather, Black Sea supplies in focus at grains meet
SINGAPORE, July 22 (Reuters) - Harsh weather in parts of Australia and the United States, rising wheat supplies from the Black Sea region and higher prices will take centre stage at a grains industry conference in Melbourne next week.
Hot and dry weather has threatened U.S. corn yields this week as the crop enters its crucial pollination stage, while lack of rain in some parts of eastern Australia is raising concern over high-protein wheat.

Food inflation in focus amid lofty crop price outlook
CHICAGO, July 25 (Reuters) - Grain prices will likely remain at elevated levels at the end of this year, a Reuters Poll showed, providing little relief to food prices while continuing to challenge policymakers battling to tamp down inflation.
Many analysts contend that the era of cheap food may well be over as rising crop production struggles to keep pace with soaring global demand, particularly from the mushrooming middle class populations of developing nations like China and India.

US spring wheat tour changes tack to count yields
CHICAGO, July 22 (Reuters) - The annual spring wheat tour that kicks off next week will be different from past years.
With the crop planted late due to rains and floods, volunteer scouts from the grain industry on the expedition this year will have to alter the way they calculate yields.

Egypt satisfied with Russia new crop wheat
MOSCOW, July 22 (Reuters) - Egypt's main state wheat buyer said on Friday he was satisfied with the quality of Russian new crop grain and saw no obstacles to Russian participation in future purchase tenders.
"The answer is 'yes' within the scope of what we have seen of the new crop," Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC), told Reuters when asked if he was satisfied with crop quality.

U.S. corn, wheat post falls on debt talks, forecast rain
SYDNEY, July 25 (Reuters) - U.S. corn futures fell two percent, while soybean and wheat futures fell around one percent, hurt by forecasts for rain this week in the heat-stricken U.S. Midwest and by concern over a seeming stalemate in U.S. debt talks.
"We're down across most of the risk assets today with oil being lower and that in turn is pushing corn and wheat lower while soybeans are also a bit weaker," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of
Australia.
Australia's GrainCorp buys GermanMalt, affirms guidance
SYDNEY, July 25 (Reuters) - Australia's GrainCorp  has agreed to buy GermanMalt GmbH & Co. for an enterprise value of 58 million euros ($83 million), in its first foray into the European market to help meet brewers' needs.
"The acquisition diversifies our earnings base and creates growth opportunities in the region," GrainCorp Managing Director Alison Watkins said in a statement on Monday.

Rains bring relief to Argentine wheat -gov't
BUENOS AIRES, July 22 (Reuters) - Rains brought much-needed moisture to Argentine wheat growing areas this week, the government said in its weekly crop report on Friday.
Argentina, a leading wheat grower, exports most of its crop to neighboring Brazil. Dry weather was stressing young plants in southern parts of the Buenos Aires province, the top wheat-growing region.

Speculators bullish on CBOT corn, soybeans
CHICAGO, July 22 (Reuters) - Large speculators raised their net long stake in Chicago Board of Trade soybean and corn futures and options for the second week in a row as a heatwave descended upon the U.S. Midwest, stressing the developing crops and casting a bullish spell on grain markets.
The Commodity Futures Trading Commission's weekly Commitments of Traders report showed that the noncommercial traders, a category that includes hedge funds, nearly doubled  their net long stake in soybeans to the biggest level in almost three months.

Indonesia importing 500,000T Vietnam rice to bolster stocks
HANOI/JAKARTA, July 22 (Reuters) - Indonesia will sign a major contract to buy 500,000 tonnes of Vietnamese rice and is monitoring domestic output for further  imports, state procurement agency Bulog said on Friday, in a move to maintain healthy stockpile and cool food prices.
But the deal has pushed up domestic prices in Vietnam during the peak harvest period, which would keep inflation at a high level, traders in Ho Chi Minh City said.

Russia Grain Union Sees 2011 Harvest At 89 Mln-92 Mln Tons (Source: CME)
Russia is likely to harvest 89 million-92 million metric tons of grain this year, Grain Union Vice President Alexander Korbut said at a press briefing in Moscow. Korbut said the situation in the fields was developing favorably. The country's south expected a good harvest, the Black Earth regions would likely to have a higher harvest than last year, and Siberia would harvest the same amount of grain as last year. The Wheat harvest, according to Korbut, is expected at 58 million tons. Deputy Prime Minister Viktor Zubkov said July 14 the Russian government now expected this year's grain harvest at 90 million tons, up from 85 million tons as estimated earlier. Last year's harvest fell to 60.9 million tons from 97.1 million tons in 2009 due to the summer drought.

Kazakhstan Sees 2011 Grain Harvest At 14.5-15M Tons, Up On Year (Source: CME)
Kazakhstan is likely to harvest this year 14.5-15 million metric tons of grain, up from the 12.2 million tons harvested in 2010, Agriculture Minister Asylzhan Mamytbekov said, as quoted by the agriculture ministry's press service. The agriculture ministry said in mid-March Kazakhstan would plant grain for this year's harvest on 15.9 million hectares, 500,000 hectares less than last year, which would enable the country to harvest sufficient amount of grain to satisfy domestic requirements and to export seven million metric tons of grain the 2011-2012 marketing year, compared with six million tons in the previous marketing year.

Corn, Soybean Prices Drop Most in Three Weeks on Beneficial U.S. Weather (Source: Bloomberg)
Corn and soybean futures slumped the most in three weeks on speculation that rain and cooler weather will bolster crop development in the U.S., the world’s biggest producer. Some northern Midwest fields and parts of the South got as much as 4 inches (10 centimeters) of rain in the past three days, Commodity Weather Group LLC said in a report. Commodity prices eased after Congress and President Barack Obama failed to reach a deal to raise the U.S. debt ceiling. “Cooler and wetter weather in the central U.S. brought temporary relief to heat-stressed crops,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The saga of U.S. debt- ceiling talks encourages traders to reduce risk exposure.”

Drought Withers Smallest Hay Crop in Century (Source: Bloomberg)
The smallest U.S. hay crop in more than a century is withering under a record Texas drought, boosting the cost of livestock feed for dairy farmers and beef producers from California to Maryland. The price of alfalfa, the most common hay variety, surged 51 percent in the past year, reaching a record $186 a short ton in May, government data show. Hay and grass make up about half of what cattle eat over their lifetimes, so parched pastures are forcing ranchers to find alternative sources of feed, pushing some spot-market corn to the highest ever. Farmers in Oklahoma and in Texas, the biggest producer of hay and cattle, may harvest only one crop from alfalfa and Bermuda grass this year, compared with three normally, said Larry Redmon, a state forage specialist at Texas A&M University. Cattle that usually graze on fields through September or October are instead being sold to feedlots, where they are confined in pens and eat mostly corn.

USDA Leaves 2011 Food Inflation Forecast Unchanged At 3%-4% (Source: CME)
The U.S. government left its food price forecast for 2011 unchanged from a month earlier, but still 3% to 4% higher than last year due to high commodity prices and strong global food demand. The increased food prices are being led by meat, particularly beef, which is forecast 7% to 8% higher this year, and pork, which is forecast to climb 6.5% to 7.5%. Both forecasts are unchanged from a month earlier. Meanwhile, overall food inflation for 2012 was also left unchanged at 2.5% to 3.5%, the U.S. Department of Agriculture said in its monthly analysis of the federal government's consumer price index for food. By comparison, food prices climbed only 0.8% in 2010, the lowest increase since 1962, the USDA said. Prices at the grocery store and restaurants have been driven higher this year by surging grain prices, which increase the cost of meat production, as well as higher energy prices and a rebounding global economy.
While inflationary pressures are expected to hold steady or even diminish in 2012, the USDA said that retailers have yet to fully pass on cost increases to consumers. "Price levels in 2012 will hinge significantly on weather conditions in the American Midwest during the remainder of July and into August and September 2011," the government said in its report. Beef and pork prices hit record highs this spring, thanks to the higher feed costs and strong export demand. A severe drought in the Midwest would likely send the price of corn and soybeans surging, along with other commodities. Some economists have said the government's overall food inflation forecast of 3% to 4% this year is too conservative, as many elements within the food price index are higher. As of June, food prices were 3.7% above year-earlier levels. The USDA said June beef prices were 8.2% higher than a year earlier, while pork was 8.5% higher. June egg prices were 11.1% above a year earlier despite falling 1.3% during the month.
Beef prices are expected to climb another 6% to 7% in 2012, while pork is forecast to climb 4% to 5%. Fruit and vegetable prices in 2011 are forecast 3.5% to 4.5% higher. Processed fruits and vegetables, however, have not seen the same inflationary pressures, the USDA said. The government lowered its 2011 forecast for processed fruits and vegetables to 1.5% to 2.5%, the only category in the survey that changed from the prior month.

Sugar at contract high on Brazil outlook, coffee steady
LONDON, July 25 (Reuters) - Sugar futures rose to contract highs in early trade, supported by diminishing crop prospects from top producer Brazil, while coffee futures were steady, as risk averse investor sentiment weighed on the commodity complex. Cocoa was slightly lower, digesting Friday's sharp losses.
ICE raw sugar futures built on last week's gains, with October  hitting a fresh contract high of 31.68 cents a lb, as consistent downward revisions for production in Brazil underpinned prices.

India's 2010/11 cotton output revised to 32.5 mln bales
MUMBAI, July 25 (Reuters) - Cotton output in India, the world's second-largest producer, has been revised to 32.5 million bales for 2010/11 year ending in September against 31.2 million bales estimated earlier, A.B Joshi, chairman, Cotton Advisory Board (CAB), said on Monday.
Cotton sowing is lagging due to late arrival of monsoon rains in western India, but soon it will accelerate and in 2011/12 area may surpass the previous year's level, he said.

China 2011 cotton planting area seen up 5.5 pct -association
BEIJING, Jul 22 (Reuters) - China's cotton planting area this year is expected to rise 5.5 percent from 2010, a tad higher than earlier estimated, the China Cotton Association said on Friday.
Total cotton area in 2011 is estimated at 5.41 million hectares, up slightly from the association's forecast of 5.4 million hectares at the start of this month, it said in a statement published on its web site (www.china-cotton.org).

Sugar delays to ease as Santos port modernizes
SANTOS, Brazil, July 22 (Reuters) - Delays in sugar loading at Santos are expected to ease as Latin America's No. 1 port modernizes, port and shipping executives said on Friday.
Santos, Brazil's leading sugar port, has seen delays in sugar loading stretching to several weeks, before the peak of the harvest over the last two years. The delays in the world's top sugar producer and exporter have been a factor contributing to a rally in sugar futures prices to near four-month peaks.

Guatemala cuts rates on loans to help coffee farms
GUATEMALA CITY, July 22 (Reuters) - Guatemala is offering low-interest loans to coffee farmers to renew aging coffee trees and cushion farmers from lower coffee prices by promoting investment in plantations.
A special government fund for coffee farmers administered by the national coffee association Anacafe is cutting interest rates to 6.5 percent for small producers and 7.5 percent for large farms, Anacafe's president told a coffee conference in Guatemala this week.

Demand, India to dominate cotton market in 2011/12
NEW YORK, July 22 (Reuters) - Demand for cotton, which fell sharply after the market's historic rally, and Indian exports will rule fiber prices in the 2011/12 season (August/July), a chief executive said.
Joe Nicosia, president and chief executive of Allenberg Cotton Co, said the market will be closely looking at demand after record prices decimated demand and deflated prices in late spring.

Vietnam's July coffee exports drop 38.2 pct y/y-govt
HANOI, July 22 (Reuters) - Vietnam exported an estimated 55,000 tonnes, or 917,000 bags, of coffee in July, down 38.2 percent from the same month last year, the government said on Friday, in line with market expectation.
The lower volume following strong sales thanks to high prices earlier this year is another indication to add to trader assessments that Vietnam has been running out of stocks and that more delays or defaults could emerge.

India Lifts 2010-11 Cotton Output Estimate To 32.5 Mln Bales (Source: CME)
India increased its cotton output estimate for this crop year by 4.1% as farmers have started releasing held-over stocks, raising the prospects of more shipments from the world's second-largest producer and exporter. The country's cotton output is likely to be 32.5 million bales, up from an earlier estimate of 31.2 million bales, Textile Commissioner A.B. Joshi told reporters after the review meeting of the government-run Cotton Advisory Board. He said farmers had held back raw cotton stocks in anticipation of higher prices, but now want to offload them ahead of the new crop season. The country produced 29.5 million bales of 170 kilograms each in the last crop year that ended Sept. 30, 2010. India has already allowed shipments of 6.5 million bales this marketing year through September. The higher production estimate may further depress global prices. December cotton futures on the IntercontinentalExchange closed at 98.64c/lb Friday and are down more than 50% from the 2011 peak at $2.27/lb in early March.
Joshi said that in 2010-11, India's total cotton supply including imports and carryover stocks, is estimated at 37.05 million bales, while total demand is likely to fall to 31.8 million bales. "There are symptoms of slowdown in demand and some accumulation of yarns," he said. Earlier, the board estimated demand at 33 million bales and total supply at 35.75 million bales. Spinning mills in India are unable to sell their produce locally at a profit as prices have fallen sharply in the past four to five months after they bought their main raw material, cotton, at high prices. Local cotton prices have halved to about INR31,000/356 kg from INR62,500/356 kg in March with cash-strapped textile mills halting purchases. The board, which consists of representatives from government bodies, growers, industry and trade associations, also raised its stock estimate at the end of 2010-11 to 5.25 million bales from 2.75 million bales, said Joshi.
He said the recent progress of monsoon rains augurs well for cotton sowing in the past few days and the total area next year may overtake this year's acreage of 11.1 million hectares. Poor rains during early July raised concerns over sowing in the largest-producing state Gujarat, but since then the crop outlook has improved on a pick-up in rains. July is normally the crucial month for sowing as it gets more than a third of the seasonal rain. If availability rises, exports may be higher in 2011-12, Joshi said.

U.S. coal use up 4 pct from previous week-Genscape
HOUSTON, July 22 (Reuters) - U.S. coal consumption rose 4 percent in the past week, Genscape said on Friday, as hot weather drove demand for cooling.
But use of coal for the week ended Thursday fell 1 percent from the same week of 2010, the power industry data monitor said, as coal-to-gas switching increased.

Colombia's new coal port delayed til H2 2012-firm
PAIPA, Colombia, July 22 (Reuters) - Colombia's 30-million-tonne-a-year Puerto Brisa port has been delayed to the second half of 2012 for further discussions with local indigenous communities, its president said.
The world's No. 4 coal exporter expects to double coal output over the next decade, and coal players complain that the lack of access to quality infrastructure is cutting exporter profits and raising transport prices.

Crude Oil Falls a Second Day in New York on U.S. Debt Ceiling Stalemate (Source: Bloomberg)
Oil fell for a second day in New York as President Barack Obama warned that the nation’s burgeoning debt threatens to do “serious” damage to the U.S. economy, the world’s largest crude consumer. Futures dropped after Obama called on lawmakers to put politics aside to reach a deal on a “balanced approach” after Republicans and Democrats attacked each others’ plans for the lifting of the nation’s $14.3 trillion debt ceiling. An Energy Department report tomorrow may show U.S. crude stockpiles dropped for an eighth week, according to a Bloomberg survey. “It’s a sentiment impact where people suddenly decide they want to be in safe-haven type assets and away from risk type exposure and of course oil is a risk exposure,” said David Lennox, a resource analyst at Fat Prophets in Sydney, who predicts oil in New York will average $115 this year. “A stronger move will have to be predicated on the U.S. showing more signs of recovery and especially the U.S. consumer getting into their vehicles.”

UAE's EMAL gets approval for $4.5 bln investment
DUBAI, July 24 (Reuters) - Abu Dhabi-based Emirates Aluminium (EMAL) has received approval from its board for a $4.5 billion investment that will almost double the aluminium smelter's annual capacity, the company said on Sunday.
Capacity will rise to 1.3 million metric tonnes on completion of its planned phase II project, the state-owned firm said.

German aluminium output rising, outlook good-lobby
HAMBURG, July 25 (Reuters) - German aluminium output of 428,369 tonnes between January and May was up 5.3 percent from the same period a year earlier, industry association GDA said on Monday.
"The outlook for aluminium remains optimistic because customer industries are also continuing to develop positively," said GDA managing director Christian Wellner in a statement.

Iron Ore-Spot prices firm; traders wait for signs
SHANGHAI, July 25 (Reuters) - Spot iron ore prices stood steady on Monday as traders looked for clearer direction on the market at the beginning of the week, amid increasing reluctance to buy the raw material at rising prices and easing Shanghai rebar futures.
Steelmakers in the world's top producer China have been on track to replenish stocks for two weeks, buoyed by strong steel production and rising steel prices, while gains have slowed since last week as flat steel product mills have faced weaker demand and were thus reluctant to accept rising offers.

China imported iron ore stocks rise in week ending July 22
BEIJING, July 22 (Reuters) - Inventories of imported iron ore at major Chinese ports rose 610,000 tonnes this week to end Friday at a record 94.65 million tonnes, data from industry consultancy Mysteel showed.
Port stocks have now been rising for 11 consecutive weeks, with Chinese steelmakers still producing at close to record levels in order to take advantage of a nationwide cheap housing programme.

SSAB sees growing demand for niche steel products
STOCKHOLM, July 22 (Reuters) - Swedish steelmaker SSAB  beat second-quarter earnings forecasts, helped by demand for its specialist products in the United States and Europe, and said the recovery had further to run.
SSAB said it expected a dip in the third quarter due to maintenance stoppages, higher raw materials costs and uncertainty about the European economy, but the underlying trend remains strong.

Fortescue backs drive to monthly iron ore pricing
PORT HEDLAND, Australia, July 25 (Reuters) - Fortescue Metals , Australia's third-largest iron ore miner, on Monday backed a drive led by larger rivals BHP Billiton   and Rio Tinto   to introduce monthly pricing for international sales, saying it would add transparency and benefit buyers and sellers.
"The shorter the pricing, the greater the transparency," Fortescue Chief Executive Neville Power told Reuters on Monday, adding that if pricing did go monthly industry-wide, "it would be a positive outcome."  

Strike at Chile's Escondida drags into fourth day
ANTOFAGASTA, Chile, July 25 (Reuters) - A strike at the world's biggest copper mine, Chile's Escondida, entered a fourth day on Monday with no sign of a solution to the latest labor dispute fueling global supply fears.
Union leaders at the mine -- majority-owned by BHP Billiton  -- say bosses have refused to resume talks, while unionists at state giant Codelco and other private mines have threatened to join the protest if strikers are sacked.

METALS-Copper cushioned by dollar, fundamentals
LONDON, July 25 (Reuters) - Copper came under selling pressure on Monday as investors fretted about debt default in the United States, but the resulting lower dollar and strong supply and demand fundamentals helped cushion losses.
Aluminium  used in transport and packaging touched $2,611.75, its highest since June 15 as London Metal Exchange inventory data signalled higher demand.

PRECIOUS-Gold hits record with U.S. debt talks deadlocked
LONDON, July 25 (Reuters) - Gold prices hit record highs on Monday after negotiations to lift the U.S. debt ceiling hit stalemate over the weekend, raising fears over a possible default and boosting the appeal of bullion versus U.S. assets like Treasuries and the dollar.
Democrats and Republicans in Congress are bitterly divided over plans to cut the U.S. deficit, a necessary move before the debt ceiling can be raised.

Gold Surges to Record as U.S. Debt Impasse Threatens Default, AAA Rating (Source: Bloomberg)
Gold futures climbed to a record $1,624.30 an ounce as U.S. lawmakers failed to reach an agreement on raising the federal debt limit, boosting demand for the metal as a haven investment. Republicans and Democrats are preparing separate plans to raise the debt limit to avoid a default as early as Aug. 2. Greece’s credit rating was cut three notches by Moody’s Investors Service. Europe’s debt woes drove gold to all-time highs in euros and pounds last week. “Gold is feeding off the uncertainty of the debt negotiations,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Gold is in a ‘can’t lose’ situation with the debt negotiations because regardless of the outcome, the dollar is going to suffer.”

Gold hits record, oil slides on U.S. debt impasse
SINGAPORE, July 25 (Reuters) - Gold surged to a record high and oil and other commodities fell investors flocked to safer assets with time quickly running out for U.S. lawmakers to reach a debt deal, raising the prospects for a disastrous default.
"A lot of it is undoubtedly fear from traders on concerns about the U.S. Treasuries and the dollar outlook," said Ben Westmore, commodities economist at National Australia a Bank.

Capesizes hurt Baltic index, panamaxes firm
BANGALORE, July 22 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell for an 11th straight session on Friday as a firm panamax market could not make up for weakness in the capesizes.
The index, which gauges the cost of shipping commodities including iron ore, cement, grain, coal and fertiliser, fell 2 points, or 0.15 percent, to 1,323 points. The index has traded this year between 1,300 and 1,500 points as ship oversupply outpaces demand to ship commodities.

Drybulk weakness may lead to covenant pressure -Wells Fargo
July 22 (Reuters) - Fundamental weakness will likely drive continual cash flow erosion and covenant pressure within the dry bulk shippers, Wells Fargo Securities said, and lowered its rating on four stocks.
The shipping sector has been hit hard in the last two years as demand to ship commodities has lagged the supply of vessels.