Worst Is Yet To Come From La Nina Weather Phenomenon - NASA (Source: CME)
Chances are high of a drought again next year in the U.S. corn and wheat belt because the worst is still to come from weather phenomenon La Nina, William C. Patzert, climatologist at the National Aeronautics and Space Administration said. "Drought in the U.S. corn and wheat belt has the strong possibility of repeating itself," NASA's Patzert said. "After 22 December, the first day of winter, the main event kicks in. Classic La Nina impacts are during winter through spring." La Nina is a periodic climatic phenomenon that brings more rain to the western Pacific, and to a lesser extent, to the eastern Pacific. Climatologists and commodity analysts blamed La Nina for drought that ravaged the U.S. wheat crop and dryness across the U.S. corn belt earlier this year. Last summer was the hottest since the 1950s in the heart of the corn belt, including Iowa and Illinois. Although this year's La Nina is weaker than a year ago, the muted 2011-12 reoccurence will certainly have surprises, Patzert said.
"As winter officially begins, the cool sea surface temperatures are only 1.5 degrees Celsius below normal, compared to the 3 degrees Celsius cooling of one year ago," Patzert said. Texas and Oklahoma already this year have seen wheat, corn and cotton wither in the hot, dry weather. Cattle ranchers were also forced to shrink their herds because of the parched grazing lands. The harvest in Texas, the country's second-largest producer of high-quality, hard red winter wheat, dropped nearly 60% this year to a five-year low of 52 million bushels. Winter wheat is planted from late August through October and then harvested the following spring. Some serves as a feed for cattle, which graze on it. Sentiment toward commodities lying in the traditional path of La Nina has started to turn more bullish, as Chicago and European futures grain markets advanced this week on fears over crop conditions in South America. Agritel, in line with NASA views, warned that the most critical period was yet to come in January.
Corn (Source: CME)
U.S. corn futures settled at a 1-month high, extending the current uptrend for the 5th consecutive day. Traders continue to add risk premium to prices, fearful that hot, dry weather in Argentina and Brazil will lead to smaller South American crops, analyst say. Investors are worried that the worst weather in yet to come, and that could lead to higher US export demand and place increased pressure on already tight projected US inventories, said PFG Best analyst Tim Hannagan. Larger-than-expected weekly export sales added some fresh support to buoy prices. CBOT March corn ended up 1c at $6.17 1/2/bushel.
Wheat (Source: CME)
U.S. wheat finished higher, fueled by short covering as traders attempt to reduce risk exposure before the Christmas holiday and end of year. Wheat is vulnerable to short-covering rallies because speculators have a large net short position in the market. The absence of fresh fundamental news keep wheat traders eyeing corn prices, as both markets compete in the livestock feed industry, analysts say. CBOT March wheat end up 4 3/4c to $6.21 3/4/bushel, MGEX March, up 2c to $8.43 3/4, and KCBT March end up 1 1/2c to $6.72 1/2.
Rice (Source: CME)
U.S. rice futures end lower as the market pulls back from recent gains despite broad commodity strength. The market had climbed the previous five days, helping to stop the downward momentum that has sent the market tumbling in recent months. Weak demand hangs over the market. Other commodities, including corn, wheat and soybeans, rallied. CBOT Jan. rice ends down 10c, or 0.7%, to $14.05 per hundredweight. The market held above Wednesday's lows.
Soy eases from 4-wk top on Europe funding doubts
SINGAPORE, Dec 22 (Reuters) - U.S. soy slid 0.7 percent, snapping five straight sessions of gains as broad weakness in global markets, fed by doubts over funding of European banks, weighed on agricultural futures.
"The euro is under pressure on concerns over the European situation, which is having some negative impact on the agricultural markets," said Ker Chung Yang at Phillip Futures in Singapore.
German wheat sowings for 2012 crop up 2 pct
HAMBURG, Dec 22 (Reuters) - German winter wheat sowings for the summer 2012 crop have been expanded by 2.0 percent on the year to 3.233 million hectares, the German national statistics agency said on Thursday.
Winter grain sowings of all types have been expanded by 3.2 percent on the year to 5.516 million hectares, the agency said in its first estimate of grain plantings for the 2012 harvest.
EU wheat not competitive for export -Toepfer
HAMBURG, Dec 21 (Reuters) - European Union wheat and barley are still uncompetitive on global export markets despite the euro's recent weakness, Germany's largest grain trading house Toepfer International said on Wednesday.
"EU wheat is not competitive compared to exports from Argentine, Ukraine and Russia," Toepfer said in a market report.
China May Halt Buying of Corn Until Price Falls to $5 a Bushel, Yigu Says (Source: Bloomberg)
China, the second-biggest corn consumer, may import more of the grain if global prices fall 19 percent to about $5 a bushel, a level that is significantly below domestic prices, said Yigu Information Consulting Ltd. China’s corn supply is sufficient after a record harvest and the government may import to boost stockpiles only if there is a “clear price advantage,” said Feng Lichen, general manager of Yigu, China’s largest corn information portal. Corn, used as an ingredient in feed and in ethanol, has plunged 20 percent since Aug. 31 on high global grain supplies and concerns that Europe’s deepening debt crisis and a slowing global economy may sap demand. Morgan Stanley on Dec. 13 lowered its price forecasts for agricultural commodities including corn because of rising supplies.
Ukraine sees 11/12 grain export capped at 23 mln T
KIEV, Dec 21 (Reuters) - Ukraine's grain exports are unlikely to exceed 22-23 million tonnes in the 2011/12 season despite a record harvest because of aggressive exports from neighbouring Russia, Ukraine's Farm Minister Mykola Prysyazhnyuk said on Wednesday.
"We have lost time in the first months of this season, allowing Russia to earn a lot (from exports) without competition from our side," Prysyazhnyuk told Reuters in an interview.
January USDA report may reignite the corn market: Maguire
-- Gavin Maguire is a Reuters market analyst. The views expressed are his own. To get his real-time views on the market, please join the Global Ags Forum. --
CHICAGO, Dec 22 (Reuters) - With spot corn prices more than 20 percent off their early September highs and trading volumes stunted as investors and businesses wind down activity for the year, it is tempting to consider the corn market rally that saw prices more than double between mid-2010 and mid-2011 to be well and truly over
But with emerging crops encountering challenging growing conditions in South America, and the USDA looking likely to make a further downward adjustment to the U.S. corn yield for the 2011/12 crop, the corn market may start 2012 with a bullish bang that could set it on course to remain the crop to watch as a new U.S. planting season gets underway in the spring.
Corn, Soybeans Rise to One-Month Highs on Argentina Dry Spell; Wheat Gains (Source: Bloomberg)
Soybeans capped the longest rally since July and corn rose to a one-month high on speculation that hot, dry weather is hurting crops in South America. Wheat gained for the fifth straight session. As much as 40 percent of Argentina’s corn-growing region will remain under stress for at least two weeks because overnight rains were lighter than expected, the Commodity Weather Group LLC said in a report. In Brazil, a quarter of the corn and soybean crops will remain under stress after showers in the next four days, the private forecaster said. “The market is adding some weather premium because the crop potential is declining in South America,” Jason Ward, a market analyst for Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “The corn and soybean crops are entering the most important period for determining yields.”
Soybean futures for March delivery rose 0.7 percent to close at $11.7175 a bushel at 1:15 p.m. on the Chicago Board of Trade, the sixth straight gain and the longest rally since July 15. The price earlier touched $11.775, the highest since Nov. 18.
Corn Crop Heads for Sixth Record Year to Feed 1 Billion Cows: Commodities (Source: Bloomberg)
Farmers will reap a record corn crop for a sixth consecutive season in 2012, slowing a slump in stockpiles of livestock feed as global meat demand approaches a quarter of a billion metric tons. Production will rise 4.8 percent to 867.5 million metric tons in 2011-12, curbing the drop in inventories to 0.8 percent, the smallest decline in three years, the U.S. Department of Agriculture estimates. With harvests expanding from Argentina to China, prices will fall as much as 31 percent to $4.305 a bushel in Chicago trading next year, according to the median of 24 analyst estimates compiled by Bloomberg News. Corn prices doubled in the past two years as farmers failed to keep up with meat consumption that expanded 62 percent in a generation. Stockpiles fell in eight of the past 12 years and are down 34 percent since 2000, contributing to a surge in world food costs. Growers are now planting the most corn ever and more feed will come from a projected record wheat harvest.
For want of a seed, a corn crop at risk
CHICAGO, Dec 22 (Reuters) - Illinois farmer Dave Ebert intends to drive nearly five hours early next year to buy thousands of pounds of a specialized, high-yield corn seed he needs to sow a bumper crop this spring. Dealers near his farm in Gilman are already sold out.
In Iowa, the top corn-producing state, Bret Davis -- a farmer who also sells Monsanto's DEKALB brand -- says he has not been able to get his hands on enough corn seed for his customers or himself. He'll rely on a mix of existing varieties in sowing his 1,600 acres, lacking the new, high-quality seeds.
UK 2011 Wheat Harvest Up 3% On Year, Barley 2% Higher - Defra (Source: CME)
The U.K. 2011 wheat harvest totaled 15.3 million metric tons, up 3% on the year, the farm ministry said in its final figure for the year. "This is a result of a 2% increase in the wheat area to 2.0 million hectares combined with a 1% increase in the yield to 7.7 tons per hectare," the Department for Environment, Food and Rural Affairs said. "This small increase comes as farmers try to maximize their wheat areas to take advantage of better cereal prices." The ministry said that the English regions with the highest yields were in the North East, Yorkshire and the Humber. U.K. barley production in 2011 rose by 5% on year to 5.5 million tons, the farm ministry added. "This increase in production is mainly due to the 13% increase in the area of spring barley which more than compensates for the 6% reduction in the winter barley area," the ministry said. "The increase in the spring barley area is partly due to spring crops being planted in place of wheat after late harvested sugar beet."
Arabicas ease, above one-year low, sugar steady
LONDON, Dec 22 (Reuters) - ICE arabica coffee futures eased but traded above Monday's one-year low in early business, while raw sugar was little changed and cocoa edged down underpinned by a softer dollar.
Arabica coffee futures on ICE dipped in holiday-thinned volumes and traded above Monday's one-year low, underpinned by rising European stocks and a stronger euro.
Philippines cuts 2011/12 sugar output forecast by 7 pct
MANILA, Dec 22 (Reuters) - The Philippines lowered its estimate for 2011/12 raw sugar output by 7 percent to 2.24 million tonnes due to a decline in cane tonnage, the government said on Thursday.
The Southeast Asian country, however, is keeping its target of exporting more than a fourth of its downscaled crop estimate.
Cocoa flows from Brazil's Bahia faster than average
SAO PAULO, Dec 21 (Reuters) - Deliveries of cocoa to warehouses in Brazil's Bahia state kept up a swift pace in the last week at a time when the October-April main crop is usually beginning to decline, Bahia Commercial Association data showed.
Bahia-based cocoa analyst Thomas Hartmann said forecasts indicated that the final outturn of the main crop could reach 850,000 bags, the middle of a range of 800,000-900,000 bags projected at the outset of the main crop.
Brazil's '11/12 coffee crop biggest ever off-year
BRASILIA, Dec 21 (Reuters) - Brazil's now-finished 2011/12 coffee harvest produced 43.5 million 60-kg bags this year, government crop supply agency Conab said on Wednesday, a record for an off-year in the biennial up-and-down cycle in the world's top coffee producer.
Conab raised its previous estimate from September of 43.15 million bags due to higher-than-expected productivity of plantations towards the end of the harvest which runs from May to September.
Shipper dispute cuts Ghana cocoa exports - Cocobod
ACCRA, Dec 21 (Reuters) - A dispute over port fees slashed Ghana's cocoa exports to 33,000 tonnes in November from 90,000 tonnes in October, but talks are underway to resolve the impasse, the head of cocoa regulator Cocobod said on Wednesday.
"Our cocoa shipments are going out but at a slower pace because our major shippers are not loading due to differences between them and the port authorities," Tony Fofie, head of Cocobod, told a news conference.
Brent steady above $107; U.S. stocks, euro zone eyed
SINGAPORE, Dec 22 (Reuters) - Brent futures were steady above $107 a barrel, as investors weighed a sharp drop in U.S. crude stocks against persistent worries the euro zone debt crisis would curtail global oil demand.
"I was surprised by the size of the drawdown, which is helping support oil prices," said Ken Hasegawa, a derivatives manager with brokerage Newedge in Tokyo. "But there's still a lot of uncertainty over Europe."
Oil Heads for Biggest Weekly Gain in Two Months on U.S. Economic Reports (Source: Bloomberg)
Oil headed for its biggest weekly gain in almost two months in New York after U.S. economic reports indicated that growth in the world’s biggest crude consumer will accelerate. Futures were little changed today after advancing 0.9 percent yesterday as the reports showed U.S. jobless claims dropped to the lowest level since April 2008, leading indicators climbed more than forecast in November, and consumer sentiment improved this month. U.S. oil supplies fell the most in a decade last week, the Energy Department said Dec 23. Crude oil for February delivery was at $99.30 a barrel, down 23 cents, in electronic trading on the New York Mercantile Exchange at 7:46 a.m. Singapore time. The contract yesterday rose 86 cents to $99.53, the highest settlement since Dec. 13.
Chinese producers key to 2012 nickel prices
LONDON, Dec 21 (Reuters) - High-cost nickel producers in China will limit price moves in either direction next year, even while the market accelerates a move into over-supply as several new projects start up and demand falters.
Chinese producers of nickel in pig iron (NPI), a lower grade of nickel used to make stainless steel, will exert a major influence on the market as those with the highest costs turn output on and off swiftly according to their profit margins.
Japan 2012/13 steel, ethylene output outlook-IEEJ
TOKYO, Dec 21 (Reuters) - Japan's crude steel production will rise 2.8 percent to 110.55 million tonnes in the financial year starting in April if nuclear plants resume operations from next summer onwards, the nation's top energy forecaster said on Wednesday.
That marks a recovery from a projected 2.9 percent decline in the current financial year ending next March, the Institute of Energy Economics said in its annual outlook.
Taiwan October crude imports up 12 pct from September
Dec 22 (Reuters) - Taiwan's October crude imports rose 12 percent to their highest volume this year, as the country purchased more crude from Kuwait, Angola and Iran, government data showed on Wednesday.
Taiwan bought 28.6 million barrels of crude in October, up from the previous month's 25.4 million barrels.
Copper Traders Most Bullish in Two Months on Demand Outlook: Commodities (Source: Bloomberg)
Copper traders are the most bullish since October as global inventories at a two-year low add to signs that demand is improving. Sixteen of 28 analysts surveyed by Bloomberg expect the metal to advance next week, the first positive outlook in three weeks and the highest proportion since Oct. 14. Global copper stockpiles monitored by exchanges in London, Shanghai and New York fell 23 percent since March and this month were at the lowest level since October 2009, Bloomberg data show. European copper demand will rebound after this quarter and prices will climb 26 percent in the next 12 months, Goldman Sachs Group Inc. said Dec. 20. The European Central Bank awarded a record 489 billion euros ($638 billion) to euro-area banks for three years on Dec. 21 to keep credit flowing amid a debt crisis that helped wipe more than $10 trillion from the value of equities since May and pushed copper down 22 percent this year.
Japan Nov rolled copper output down 10.4 pct yr/yr
TOKYO, Dec 22 (Reuters) - Japan's output of rolled copper product plunged 10.4 percent from a year earlier to 65,030 tonnes in November on a seasonally adjusted basis, due to sluggish demand from chip and electronics sectors, an industry body said on Thursday.
That marked the fifth-consecutive month of year-on-year declines, though it was also a 1 percent rise from October, the Japan Copper and Brass Association said.
Refined copper deficit 170,000 T in Jan-Sept - ICSG
LONDON, Dec 21 (Reuters) - The world refined copper market was in deficit of 170,000 tonnes in the first nine months of the year, compared with a deficit of 429,000 tonnes in the same period a year earlier, an industry report showed on Wednesday.
The International Copper Study group (ICSG) said in its latest monthly bulletin that the global copper market was in a production deficit of 13,000 tonnes in September, but with seasonal adjustments production showed a surplus of 18,000 tonnes on the month.
China Nov refined copper imports second highest ever
HONG KONG, Dec 21 (Reuters) - China's refined copper imports jumped by nearly half on the year in November to reach the second-highest on record, as an open arbitrage between London and Shanghai bolstered a trend of increased imports for financing.
Refined copper shipments into the world's top consumer of the metal have risen continuously for the past six months, driven in part by investors buying copper and other metals for use as collateral for short-term loans.
METALS-Copper slips after 2 days of gains on doubts over ECB move
KUALA LUMPUR, Dec 22 (Reuters) - London copper slipped on Thursday, following two days of gains, on investor concerns that the latest round of European Central Bank loans to banks were insufficient to help pull the euro zone out of a two-year-old sovereign debt crisis.
"People are willing to buy in small batches for nearby contracts but they don't want to be carrying stocks if credit is tight," said Nick Trevethan, a Singapore-based senior metals strategist at ANZ Bank.
PRECIOUS-Gold inches down as Europe debt worries persist
SINGAPORE, Dec 22 (Reuters) - Gold prices inched down in thin trade on Thursday as investors remained sceptical of the euro zone's ability to tackle its debt crisis after the European Central Bank's latest moves to keep credit flowing in the region.
"We will probably be trapped in the range of $1,575 and $1,650 until the year-end," said a Hong Kong-based dealer, "The market is still focused on the euro zone -- if there will be new agreement, if the euro zone economy will slide next year, etc."
Gold Drops as U.S. Jobless Claims Slow, Investors Reduce Holding of ETFs (Source: Bloomberg)
Gold declined in New York for the third time in four days on signs of a strengthening U.S. job market and a drop in holdings by exchange-traded fund investors. Applications for unemployment benefits unexpectedly dropped last week to the lowest since April 2008, the government reported today, boosting the dollar and reducing demand for gold as an alternative asset. Holdings in bullion-backed ETFs fell for a fifth day to the lowest level since Nov. 16, as investors sold the metal to cover losses in other markets, data compiled by Bloomberg show. “The jobless numbers were better than expected, and we’re seeing the dollar strengthen again,” Dennis Cajigas, a senior market strategist at Zaner Group in Chicago, said in a telephone interview. “The U.S. economy is starting to find some traction. The ETF numbers are also a factor.”
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