Commodities Advance, Paring Quarterly Decline After German Vote on Fund (Source: Bloomberg)
Commodities advanced, paring the biggest quarterly drop since 2008, as German lawmakers approved an expansion of the European bailout fund, easing concern that the debt crisis will escalate. The Standard & Poor’s GSCI index of 24 raw materials climbed 0.5 percent to settle at 606.79 at 3:47 p.m. New York time, led by an agriculture rally. Sugar and hogs posted the biggest gains since July, and crude oil closed above $82 a barrel. The dollar dropped against the euro. The lower house of Germany’s parliament granted the bailout fund powers to buy bonds in secondary markets, enable bank recapitalizations and offer precautionary credit lines. The GSCI has slumped 9.3 percent since the end of June, the most since the fourth quarter of 2008, on speculation that a European default would lead to recession, curbing commodity demand.
Corn (Source: CME)
US corn futures stage a small recovery from recent losses, with gains limited by expectations USDA will increase its old-crop supply estimate. Analysts, on average, expect the government in a crop report tomorrow will peg Sep. 1 inventories at 962M bushels, up 4.6% from earlier this month. They suspect livestock producers cut feedings due to high corn prices. Talk of better-than-expected harvest results helps keep a lid on prices, with Price Group's Jack Scoville predicting gains will stay "fairly limited." CBOT December edges up 1 3/4c to $6.32 1/2 a bushel.
Wheat (Source: CME)
Spring wheat futures soar at MGEX, leading a rally in grain prices on expectations USDA will cut its output forecast Friday. The government, in an annual crop report, is projected to slice its estimate for the spring wheat harvest due to stressful summer heat and spring rains that prevented planting. The USDA's previous output estimates "are higher than what's actually out there," says Harlan Klein, a farmer in North Dakota. MGEX December wheat closes up 34 1/4c to $8.95 1/2 a bushel; CBOT December gains 15 1/2c to $6.54 1/4; KCBT December rises 13 1/4c to $7.40.
Rice (Source: CME)
US rice futures tumble as export sales stay weak for the third consecutive week. Sales of 32,900 tons for week ended Sept 22 were poor even though prices have pulled back recently. Losses buck a stronger trend in grain markets that carried wheat, corn and soybeans higher. Still, some analysts see potential for a turnaround. US harvest results "have not been spectacular so far," says Jack Scoville of Price Group, noting "there's a chance USDA could be forced to cut production" in October. CBOT November rice slides 20c to $16.08/hundredweight.
Soy at 10-month low; wheat, corn fall on economic woes
SINGAPORE, Sept 29 (Reuters) - U.S. soy slid to a new 10-month low, while corn lost more ground to drop to its lowest in three months as Europe's debt crisis continued to hammer the commodity markets.
"I think the market is falling due to the economic pessimism. We still see that macroeconomic uncertainty is outweighing the fundamentals," said Lynette Tan, a grains analyst at Phillip Futures in Singapore.
India's monsoon rains begin to weaken in retreat
NEW DELHI, Sept 29 (Reuters) - India's monsoon rains were 33 percent below average in the week to Sept. 28, the weather office said on Thursday, as the four-month rainy season begins to retreat after a normal spell this year, boosting output prospects for crops such as rice and cane.
Monsoon rains have been two percent above average since the start of the June-September season, in line with the weather office's forecast of a normal monsoon in 2011. In the past week it was 29 percent above normal.
Russia harvests 86.4 mln T grain by Sept 28 -AgMin
ORENBURG, Russia, Sept 29 (Reuters) - Russia harvested 86.4 million tonnes of grain by bunker weight by Sept. 28 from 37.3 million hectares, or 84.6 percent of the harvesting area, Agriculture Ministry data showed on Thursday.
In the same period of 2010, when the country was hit by a severe drought, farmers harvested 58.2 million tonnes of grain from 30.7 million hectares, while by Sept. 28, 2009 the crop was 86.2 million tonnes reaped from 35.6 million hectares.
China to boost domestic corn output to meet demand -govt
BEIJING, Sept 29 (Reuters) - China, the world's second-largest corn consumer, said it will focus on raising domestic corn production to meet fast-rising demand and is testing use of genetically modified organism (GMO) technology to boost output, a senior government official said on Thursday.
In a bid to tame booming demand, Beijing will continue to control the use of corn by industrial processors, whose soaring consumption has helped exacerbate a corn deficit that has pushed corn prices to record highs despite record corn harvests.
Philippines' NFA head: Typhoon damage on rice worrisome
MANILA, Sept 29 (Reuters) - Damage to rice crops by Typhoon Nesat was worrisome and the Philippines cannot rule out the need to import rice soon to replenish its reserves, the head of the government's grain procurement agency said on Thursday.
Reports from local governments of heavily-flooded provinces showed a bigger crop damage than the Agriculture department's initial estimates, National Food Authority (NFA) Administrator Angelito Banayo told Reuters.
Estonia 2011 grain harvest up 16.6 pct on yr
TALLINN, Sept 29 (Reuters) - Estonia's preliminary grain harvest for 2011 reached 791,000 tonnes, up 16.6 percent from 2010, the statistics office said on Thursday.
The office said on its website that 96 percent of this year's crop was in as of Sept 15, with the harvest for winter planted cereal crops totaling 194,300 tonnes compared to 184,600 tonnes in 2010 and the spring planted cereals harvest up to 596,700 tonnes compared to 492,800 tonnes in 2010.
Better harvest weather soon for eastern US Midwest
CHICAGO, Sept 28 (Reuters) - Drier weather will soon move into the eastern U.S. Midwest corn and soybean region, boosting drydown of mature crops and speeding the harvest, an agricultural meteorologist said Wednesday.
"They've been plagued by showers for about the past week but there is a front moving in and it should begin drying down by Friday and continue through at least mid-week next week," said John Dee, meteorologist for Global Weather Monitoring.
Russian Domestic Wheat Prices Nudge Lower (Source: CME)
Russian domestic wheat prices nudged down last week, according to Andrey Sizov. Jr., managing director of Moscow-based think tank SovEcon. Domestic prices for third-grade milling wheat have fallen to 6,200 rubles a metric ton ($193.76), while fourth-grade milling wheat fell 1.6% to RUB6,100/ton ($191.4). Feed wheat and feed barley also fell 0.5% to RUB5,200/ton ($163.2). Despite the slightly lower prices, "export demand is pretty strong," Sizov Jr. said. "I think Russia will be able to export just below 4 million tons of wheat in September."
Argentina Crops Get Some Rain Relief, But More Needed -Exchange (Source: CME)
Argentina's developing wheat crop got some relief from scattered showers over the past week, but much of the crop still needs more rain, the Buenos Aires Cereals Exchange said in its weekly crop report. "The rain provided partial relief for the stressed condition of the crop," the exchange said. However, "the need for new rain is every time more pressing if average yields are to be obtained," the exchange said. Farmers are expected to start harvesting the first wheat fields of the season in the northern province of Salta in the coming days, according to the exchange. The agriculture ministry is expecting 2011-12 wheat production to total 11 million to 13 million metric tons, compared with the 15 million metric tons the U.S. Department of Agriculture pegged the 2010-11 crop at. Argentina is the world's third-largest soybean exporter, ranks second in corn, first in soymeal and soyoil, and is a leading exporter of wheat and sunflower seed oil.
Meanwhile, corn planting is advancing but is delayed in many areas as farmers hold off for more rain. So far, 13.3% of the 3.5 million hectares seen going to corn this season has been planted, down 12.7 percentage points from the progress made at this point last year, the exchange said. The exchange is expecting a storm front to roll in over the next days and soak most of the farm belt, but the driest areas in the west aren't expected to get enough rain. Farmers are worried that a developing La Nina weather system could bring drought this season, although specialists say those fears are likely overblown. The pattern should be similar to the recently finished 2010-11 season that was also affected by La Nina, according to the Buenos Aires Cereals Exchange's chief climatologist, Eduardo Sierra. Farmers and global grain markets are nervous as they worry over a repeat of the last strong La Nina year.
During the 2008-09 season, the expected rains in January never came, leaving crops baking in the fields during the hot summer. As much as a third of the crops were lost. La Nina is seen bringing dry weather through September, but relatively wet conditions from October through the first half of November. Another long dry stretch is expected from November through the first two weeks of January, when rain levels should return to normal. La Nina refers to cooling of the equatorial Pacific Ocean that usually brings dry weather to the farm belts of Argentina, Uruguay, Paraguay and the south of Brazil. El Nino is the opposite, with warming ocean temperatures and heavier-than-normal rainfall.
Wheat Advances as Dry Weather on U.S. Plains May Reduce Winter Planting (Source: Bloomberg)
Wheat gained, reversing earlier losses, on speculation that persistent dry weather in the U.S. southern Great Plains will curb planting of the winter crop and reduce production. Little or no rain has fallen in parts of Kansas, Oklahoma and Texas, the biggest producers of winter varieties, in the past 30 days, National Weather Service data show. Plants won’t develop fully and roots won’t be able to establish in the dry soil. Scant precipitation is expected in the next week, Telvent DTN senior agriculture meteorologist Joel Burgio wrote in a report. “Little, if any, significant rain is projected for the central and south plains during at least the next seven days,” Burgio wrote. “We may see some increase in shower activity during the eight- to 10-day period, but mostly for north and east areas.”
India Acreage Of Winter Pulses Likely To Rise On Weather, Price (Source: CME)
Indian farmers are likely to sow pulses in up to 10% more area this winter compared with a year earlier on favorable weather and attracted by higher prices, compensating a drop in output during the summer season, industry executives and analysts said. The output of summer-sown pulses is estimated to fall to 6.43 million metric tons from 7.12 million tons last year. Total production of pulses was at a record 18 million tons in 2010-11. In 2010-11, total area under winter-sown pulses was about 15.7 million hectares, while output was about 11 million tons. "During the Kharif [summer] season, monsoon was delayed in some areas and later there were excess rains in other areas," said Bimal Kothari, vice president of the India Pulses and Grains Association. "That's why the [summer-sown] crop was affected." The excess rains in the later part of the June-September monsoon season will keep soil moisture longer, and this will likely encourage farmers to plant the crop in more areas, he added.
India, where 60% of the farmland is rain-fed, received 2% more rainfall than average so far this monsoon season, according to the weather department. Sowing of winter pulses normally starts during October and they are harvested from February. Chickpea, or chana, is the main winter-sown pulse in the country, accounting for half the total pulse output. Vedika Narvekar, a senior analyst at Angel Commodities, said the area for the winter crop may increase between 5% and 10%. Maharashtra, Rajasthan, Madhya Pradesh, Karnataka and Andhra Pradesh are the main Indian states growing pulses. A rise in the price of chickpea is likely to attract more farmers, said Sunil Sawla of M.M. Agrichem Pvt. Ltd., a Mumbai-based pulses trading company. Chickpea prices have jumped nearly 60% over a year to about INR3,500 per 100 kilograms.
Yields are also likely to improve due to conducive weather, Sawla said.
China 2011 Grain Output Likely A Record, Above 550 Mln Tons (Source: CME)
China's grain output will likely exceed 550 million metric tons this year, setting the country on course for an eighth consecutive record harvest, the Ministry of Agriculture said. China's harvest is closely watched as it is an indicator of the nation's import trends and self-sufficiency. "Drought conditions were quite heavy especially in the south and west, but [a record harvest] is likely due to increased acreage, record yields and rising output in most other regions," Vice Minister Chen Xiaohua told reporters. China produced 546.4 million tons of grains in 2010. Both per-hectare average yields and overall grain production will likely set records this year, while ongoing corn and rice harvests show good quality, Chen said.
The average grain yield will likely rise by 4.9 kilograms per mu, equivalent to 73.5 kilograms/hectare, compared with the 2009 record, Chen said. Early rice yields rose 1 kg/mu, or 15 kg/hectare, compared with 2009, while autumn grain yields were also expected to top 2009 levels, he said, without providing actual 2009 yield figures. Production in the northeast, China's key agricultural belt, will likely account for more than 70% of the total this year, offsetting losses in the south and west, Chen said. Chen acknowledged that grain prices have risen sharply in some areas, attributing it on higher demand, cost of production and global conditions, but he added the government's policies will likely sustain "stable, reasonable" price growth. Among major grain categories, corn prices have risen most sharply--by 33% in the major processing province of Shandong.
Chen said the government will focus its policy response on improving domestic corn output and continue to exercise control over consumption by corn processors. Global attention has shifted to expectations that China will likely boost corn imports as its domestic stockpiles dwindle to take advantage of recently reduced global corn prices. Chen downplayed such speculation, noting that China's corn imports have fallen on year in the first seven months. China imported 1.6 million tons of corn last year, breaking a 15-year streak of net exports. In August, its corn imports reached the highest monthly volume since last October. The China Feed Industry Association said last week that by 2015, China will likely face a 15 million-ton shortfall in domestic corn output versus consumption. Chen said that the government is still studying whether genetically modified crop technology "is the route to take" to boost corn output.
India contracts to sell 400,000 T new season soymeal
MUMBAI, Sept 28 (Reuters) - India, Asia's top soymeal exporter, has so far struck deals to export 400,000 tonnes of new season soymeal, down by almost half the amount it usually sells around this time, due to uncertainty over demand and falling prices, a senior trade official said on Wednesday.
"People are not sure about prices. Everyone is going very cautiously and slow on exports front due to volatile prices," Rajesh Agrawal, chief co-ordinator at the Soybean Processors Association of India, a top trade body, told Reuters.
Sugar, coffee bounce in technical correction
LONDON, Sept 29 (Reuters) - ICE sugar and arabica coffee futures bounced higher in early trade on Thursday, in a technical correction after turning lower, as markets focused on moves to resolve the euro zone debt crisis.
ICE arabica coffee futures rose from oversold positions, with dealers eyeing dry weather in Brazil, where the wet season which is key to trees flowering is due to start.
Cosan begins covering Santos sugar terminal
SAO PAULO, Sept 28 (Reuters) - Cosan, The world's largest sugar exporter, has begun building a long-awaited rain shield over a bulk sugar terminal in Brazil's main port of Santos, the company's CEO said on Wednesday.
The cover, which is expected to be fully operational in April 2012 -- the start of the next Brazilian cane season -- should boost the flow of sugar through Cosan's terminal by allowing it to load in rainy weather.
Brazil could add 200 mln T cane in 2 yrs-Cosan
SAO PAULO, Sept 28 (Reuters) - Brazil could add 200 million tonnes of cane to its crop in two seasons, simply through the recovery of existing cane yields, the chief executive of the country's largest sugar and ethanol producer Cosan said on Wednesday.
Yields in Brazil have fallen dramatically this year due to aging cane fields that are overdue for replanting and unfavorable weather conditions during the crop development.
Brazil cocoa crop to ease back after 2010 surge
BRASILIA, Sept 28 (Reuters) - Brazil's main crop cocoa harvest, which officially starts next week, will be of a fairly typical size but fall far short of last year's stellar harvest, local cocoa analyst Thomas Hartmann said on Wednesday.
Hartmann, who is based in Brazil's top cocoa state Bahia and has worked in the sector for four decades, said pod counter estimates showed the state would produce 800,000-900,000 60-kg bags compared with 1.26 million bags in 2010's main crop.
Cocoa could defy bearish outlook with brief rally
LONDON, Sept 28 (Reuters) - Cocoa prices have the potential to rise for a short period in coming weeks, even while analysts predict a record 2010/11 surplus, as speculators move to cover a record short position.
West Africa is awash with cocoa after a bumper 2010/11 crop, which along with improving crop prospects for 2011/12 has helped drive New York cocoa futures down almost 30 percent from their 32-year high in March.
Brazil cocoa mid-crop nears end above forecasts
BRASILIA, Sept 28 (Reuters) - Cocoa deliveries to warehouses in Brazil's top cocoa state Bahia, slowed sharply in the past week but the May-September mid-crop will close out at the end of the month with total output well above initial forecasts.
Data from the Bahia Commercial Association showed that arrivals in the week to Sept. 25 from the state totaled 29,625 60-kg bags, down from 37,775 bags in the previous week.
India releases 1.75 mln T non-levy sugar for Oct
MUMBAI, Sept 28 (Reuters) - India has made available 1.75 million tonnes of non-levy sugar for October, higher than 1.7 million tonnes it had released for September, in expectation of higher demand during festival season, the government said in a statement on Wednesday.
Non-levy, or free-sale sugar, is sold by millers in the open market, but the quantity each mill can sell is fixed by the federal government on a monthly basis.
Crude Oil Rises in New York; Poised for Biggest Quarterly Drop Since 2008 (Source: Bloomberg)
Oil rose in New York, paring the steepest quarterly drop since 2008, as investors speculated U.S. fuel demand will increase on signs that the economy of the world’s biggest crude consumer is expanding faster than previously estimated. Futures climbed a second day after reports showed U.S. gross domestic product last quarter beat economists’ estimates and jobless claims dropped more than expected. West Texas Intermediate’s discount to European Brent oil narrowed for a sixth day. The U.S. contract has fallen 13 percent since June 30 on concern economic growth will slow. “The data out of the U.S. is supportive,” said Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney. “Volatility continues for the oil market. I don’t expect it to push through $85 in a hurry regardless of what happens in Europe.”
Copper Rout Outpaces Analysts Focused on Production Shortages: Commodities (Source: Bloomberg)
The biggest rout in copper since the global recession drove analysts to cut their price forecasts by 16 percent in a week as mounting concern about growth eroded expectations for supply shortages. The metal may drop as much as 10 percent to $6,500 a metric ton by Dec. 31, according to the median in a Bloomberg survey of 16 analysts and traders. Their estimate was $7,773 a week ago. Speculators in U.S. futures are making the biggest wager on declining prices in more than two years, U.S. government data show. Barclays Capital cut its forecast for the shortfall in global supplies four times since April and Deutsche Bank AG is anticipating a surplus as early as next year.
Commodities tumbled into a bear market this month, dropping 21 percent since April, on concern that slowing growth will curb demand for raw materials. Prices had more than doubled since the beginning of 2009 as surging consumption led by emerging markets created shortages in everything from corn to copper to crude. As many as 5,000 merchants will gather in the British capital from Oct. 3 for London Metal Exchange week, an annual event during which supply contracts are discussed.
Gold Fibonacci Signaling Rebound From September Slump: Technical Analysis (Source: Bloomberg)
Gold, heading to biggest monthly decline since 2008, may rally 8.2 percent by the end of this year, according to technical analysis by Paul Kavanaugh, a senior analyst and broker at PFGBest. The precious metal may rise to $1,750 an ounce, based on Fibonacci analysis, Kavanaugh said yesterday in a telephone interview from Chicago. After plunging as much as 20 percent from a record $1,923.70 on Sept. 6, gold has climbed above the 50 percent resistance level of $1,541.50 and will have to top $1,631.70 before reaching the target price, he said. “This correction was needed and was healthy, but gold is now poised to climb up,” said Kavanaugh, who used technical analysis in early July to correctly predict that cotton would slump below $1 a pound. “If you liked it at $1,900, you have to love it at $1,600.”
