Corn (Source: CME)
US corn futures end sharply lower as traders take profits in the nearby contract after last week's 12% surge. Market participants unwind spread trades in which they had bought July corn and sold December, which rose 6% last week. Commodity funds contributed to the slide by selling an estimated 16,000 contracts, a healthy amount. Meanwhile, traders continue to watch weather forecasts as rains are expected to keep planting slow this week. Conditions look more favorable next week. CBOT July corn drops 20 3/4c to $7.33 1/4 a bushel while December corn slips 8c to $6.62 1/2.
Wheat (Source: CME)
US wheat futures crumble on profit-taking and hopes that rains will relieve dryness in Western Europe. Traders take money off the table after the front-month contract climbed 16% at the CBOT last week. Concerns about global supplies eased as rains were expected to fall in Germany and France. EU wheat futures weakened as well, losing 1.4% in Paris. CBOT July wheat dropped 2.9% to $7.79 3/4 a bushel, KCBT July slides 2% to $9.12 and MGEX July declines 1.2% to $9.88 3/4.
Rice (Source: CME)
US rice futures edge higher on concerns about floods reducing output. Crop losses are a hit, as farmers reduced rice plantings 17% from last year in favor of other crops. The American Farm Bureau Federation on Monday estimated 40% of the US crop was impacted by Mississippi River flooding. In Arkansas, 300,000 acres of rice, representing 21% of the state's crop, were affected, according to the group. CBOT July rice rises 5c to $15.13 per hundredweight.
Corn, Wheat, Soybeans Drop on Bets Demand Will Slump Following Rallies (Source: Bloomberg)
Corn futures fell the most in almost two weeks and wheat declined on speculation that demand may slow from importers, processors and investors after prices jumped last week. Soybeans also dropped. About 35.8 million bushels of corn were inspected for export in the week ended May 19, 5 percent less than a week earlier, while wheat inspections were little changed, the government said yesterday. Last week, wheat and corn futures both surged 11 percent on signs that wet weather in the U.S. delayed planting and may hurt crop yields.
Corn steady on planting progress, wheat up marginally
NEW DELHI, May 24 (Reuters) - Chicago corn futures were steady after a U.S. government report showed some progress in planting in the world's biggest exporter, while wheat rose 0.3 percent as dry weather in China and Europe continued to support the market. "We can see some progress in planting has been made but it is still slow," said Ker Chung Yang, an investment analyst at Phillip Futures in Singapore.
China 2011 corn output seen up 2.4 pct at record 181.5 mln T
BEIJING, May 24 (Reuters) - China's 2011 corn output will rise 2.4 percent from a year earlier to a record 181.50 million tonnes due to increasing acreage, China National Grain and Oils Information Center, a government grain think tank, said on Tuesday in its first forecast of the 2011 harvest.
Output of soybeans, which compete with corn for acreage, will fall 7.9 percent to 14 million tonnes, 1.2 million tonnes down from 2010, as the soy acreage shrinks 6.8 percent to the smallest area since 1999, CNGOIC forecast.
Floods swamp 3.6 mln ac US farmland;farm group
WASHINGTON, May 23 (Reuters) - Nearly 3.6 million acres of farmland in the Mississippi River valley, including 40 percent of U.S. rice area, have been affected by spring flooding, said the largest U.S. farm group on Monday.
The figure was larger than earlier reports of 3 million acres of flooded farmland and amounts to 1.1 percent of land usually planted in the two dozen principal U.S. field crops.
Corn planting seen 80 pct complete, narrowing deficit
CHICAGO, May 23 (Reuters) - U.S. farmers have nearly caught up to their traditional pace of corn planting after a third week of good weather, but growers may struggle to seed their last few acres due to cold and wet conditions, analysts said.
The U.S. Agriculture Department's weekly crop progress report on Monday afternoon is expected to show that farmers had planted 80 percent of their anticipated corn acreage as of May 22, based on an average of estimates given by 10 analysts. Last week the harvest was 63 percent completed.
Malawi's maize output seen at 3.8 mln T this yr
LILONGWE, May 23 (Reuters) - Malawi is expected to harvest 3.8 million tonnes of maize this year, up from 3.5 million reaped in the previous year, despite some dry periods during the season, President Bingu wa Mutharika said on Monday.
Malawi introduced a fertiliser and seed subsidy programme in 2004 and since then has recorded consecutive bumper harvests of maize, the country's staple food.
Rice prices seen stable on weather, inventory - IRRI
MANILA, May 24 (Reuters) - World rice prices should remain stable around current levels into 2012 on improved output due to sufficient rainfall and with plentiful stocks, the International Rice Research Institute (IRRI) said on Tuesday.
Total 2011/12 global rice output was forecast to meet the projected demand of 460 million tonnes given favourable weather, senior IRRI economist Samarendu Mohanty said.
Heavy weekend rains, severe storms hit US Midwest
CHICAGO, May 23 (Reuters) - Episodes of rain across the U.S. Midwest this week will add to crop planting delays, especially in the eastern Corn Belt and northern Plains, a forecaster said on Monday.
"It is going to be difficult to plant corn in Ohio this week and soybean planting is going to be rather slow beltwide given weekend rains and more showers coming," said Mike Palmerino, forecaster with Telvent DTN weather service.
Drought in EU and U.S. stressing crops and farmers
PARIS/CHICAGO, May 20 (Reuters) - Drought from Paris, France to Paris, Texas has farmers and grain dealers looking upwards. The farmers are looking to the skies for rain and the dealers are wondering where rising grain prices are going to stop.
U.S. wheat prices are on their way to their biggest weekly gain and European benchmark wheat futures have jumped just under 30 percent in the past nine weeks as wheat belts on both sides of the Atlantic show signs of irreversible drought damage.
Goldman, Morgan Stanley Bullish on Commodities Boosting Oil Forecasts 20% (Source: Bloomberg)
Goldman Sachs Group Inc. (GS) and Morgan Stanley increased their forecasts for crude-oil prices by more than 20 percent, signaling a bullish outlook for commodities. Goldman, which correctly advised investors to sell oil and copper last month before a price slump, boosted its 12-month prediction for Brent crude to $130 a barrel from $107, analysts led by Jeffrey Currie said today in a report. Morgan Stanley raised its estimate by 20 percent to an average $120 this year and by 24 percent to $130 in 2012.
Goldman Ups Oil, Aluminum Forecasts, Cuts Corn, Soybeans (Source: CME)
Goldman Sachs has made a raft of changes to its commodity price forecasts as the markets settle down following a period of volatility, upping its crude, aluminum and nickel forecasts and trimming its corn, soybeans and live cattle outlooks. The bank, which recently turned more bearish on a number of commodities including crude and copper, said it remained structurally bullish on the oil sector and revised its three month WTI crude forecast up to $108 a barrel, from $100/barrel previously. Events in the Middle East and North Africa are having a "persistent impact" on the oil market, Goldman Sachs said, and this has been a prime driver of its increase in price targets for the sector. Soybeans, corn and live cattle were meanwhile cut, with the bank noting it is adopting a "tactical wait-and-see approach to developing weather conditions."
Soybeans traded on the Chicago Board of Trade were cut to $14 a bushel on a 3-month basis from $15/bushel previously, and to $14.75/bushel on both a six- and 12-month basis from $15.75/bushel previously. Goldman cut its CBOT corn price three-month forecast to $8/bushel and its Chicago Mercantile Exchange live cattle forecast to $0.95 a pound from $1.15/lb previously, basis three-months.
Middle East Food Harvests At Risk From Alien Weed (Source: CME)
Food harvests in Iraq and Syria are at risk from infestations of an invasive alien weed, the United Nations' food body said, warning that the deadly plant could spread to other countries if unchecked. More than 60% of Syria's crops have been hit by silverleaf nightshade, a relative of the tomato originally hailing from tropical America, where it is damaging olive, cotton and wheat crops. A similar mass infestation has been reported in northwest Iraq and there are concerns that other countries could be at risk after the weed was spotted at sites in Lebanon and Jordan, the Food and Agriculture Organization said. "This particular type of weed competes aggressively with crops for nutrients whilst its deep root system dries down soil moisture," Gualbert Gbehounou, FAO Weed Officer, said a statement. Likely spread through untested shipments of agricultural products, silverleaf nightshade poses a particular threat to biodiversity in these Middle Eastern countries because it has no natural predators.
The FAO said it is implementing a project to assist farmers manage and prevent further spread of silverleaf nightshade in all four countries by enforcing crop rotation with competitor plants and encouraging governments to review their regulatory environments. "We want to introduce an integrated weed management approach, which means we will not focus on herbicides," said Gbehounou.
House Panel Proposes Cuts For USDA Spending In FY 2012 (Source: CME)
The House Appropriations Committee unveiled a proposal to slash federal funding for the U.S. Department of Agriculture in fiscal year 2012 with cuts in spending for agriculture research, conservation programs, food safety and other areas. The spending proposal of $17.3 billion in the bill also includes the budgets for the Food and Drug Administration and the Commodity Futures Trading Commission. That's $2.7 billion less than FY 2011. "As is the goal of all our Appropriations bills this year, this legislation reflects hard decisions to cut lower priority programs, reduce spending in programs that can be scaled back, and target funds where they are needed most so that our nation continues on the path to fiscal recovery," Kentucky Representative and Committee Chairman Harold Rogers said. Agriculture research at the USDA is slated for one of the biggest cuts: $354 million.
"While trimming spending, this funding level will continue to support important and high-priority research on devastating crop diseases, emerging chemical and biological threats, food safety, and water quality," the committee said Monday. The committee said the USDA's Food Safety Inspection Service will be able to continue ensuring the safety of the U.S. meat supply despite a proposed spending cut of $35 million. USDA Secretary Tom Vilsack has opposed previous proposals to cut food safety spending, saying that most of the funds there go to salaries of meat inspectors. "For our part, the Agriculture Subcommittee has sought to begin making some of the tough choices necessary to right the ship," Rep. Jack Kingston (R., Ga.) said Monday. "We have taken spending to below pre-stimulus, pre-bailout levels while ensuring USDA, FDA, CFTC and other agencies are provided the necessary resources to fulfill their duties."
The House spending proposal seeks just $2.2 billion for the FDA in 2012, down from $2.5 billion this year. CFTC Commissioner Bart Chilton said Monday that any spending cuts to the agency would be a mistake. "I'm greatly concerned about the House Agriculture Appropriations draft bill for FY 2012 that would essentially reduce the CFTC budget," Chilton said. "In my view, this is penny-wise and pound-foolish." Federal spending for the CFTC, an agency led by five commissioners that regulate commodity futures and option markets, would be shaved next year by $30 million, according to the House proposal.
China's CNGOIC Raises 2011 Grain Production Forecasts (Source: CME)
China raised its output projections across major grain categories for the year, with corn production leading the way with a forecast 2.5% rise, the state-backed China National Grain and Oils Information Center said. The agency's May forecast indicates that policy efforts to maintain or increase self-sufficiency in grains - corn, wheat, rice and tubers - while allowing for more imports of oilseeds, such as soybeans and rapeseed, are having the intended effect. Corn output is projected to see by far the largest increase among the key grain categories, rising to 181.5 million metric tons, the CNGOIC said. Wheat and rice output will grow more modestly, it said, with wheat production likely rising 0.3% to 115.5 million tons and rice output growing 0.9% to 197.6 million tons. The higher output projection for corn comes after a sustained period of government sales of the yellow grain in a bid to restrain downstream inflation.
"The desire for China to rebuild grain stocks through corn imports remains high," ANZ Bank said in a research note. "Since July 2009, China is estimated to have released 44 million tons from temporary and strategic reserves." In March, state stockpiler China National Grains Reserves Corp. stepped into the market to buy 1 million tons of U.S. corn as global prices fell. "This is one of the first examples of what will become increasingly common and paving the way for a new dynamic in global grain markets - China 'buying the dip' in 2011 and beyond," - ANZ said. While projected declines in China's corn output may have been contained by rising corn productivity, "this will not, however, dissuade the market of a potential increase in China's corn imports in the coming season, given China's relatively low corn stocks-to-use ratio," said Standard Chartered analyst Abah Ofon.
Based on U.S. Department of Agriculture data, Ofon estimated this ratio, an indicator of how much corn China held in store as a proportion of its consumption, at around 35.7% in 2010-11, down sharply from 85% in 2000-01. "There have been tangible stock draw-downs this season, and we believe a number of importers will be looking to restock their silos," Ofon wrote in a note. Corn imports in April nearly doubled on year, data from the General Administration of Customs showed this week, even as imports in other grain categories fell on the back of weaker demand in China. Sinograin, as the state stockpiler is known, has no current plans to import more corn, spokesman Cheng Bingzhou told Dow Jones Newswires, but state traders said China may re-enter the market if U.S. corn prices fall again. Meanwhile, higher prices have helped boost domestic acreage in most categories. Corn acreage this year will likely rise 2% to 33.1 million hectares, while rice acreage may rise 0.8%, the CNGOIC said.
Wheat acreage may fall 0.3% to 24.3 million hectares, largely due to a smaller spring-planted crop, the agency said. Among oilseeds, domestic output and acreage were likely to continue falling, it said. Soybean production this year may slip 7.9% to 14 million tons, while rapeseed output may fall 2.2% to 12.8 million tons. While soybean imports slumped in April, Ministry of Commerce forecasts show soybean imports may recover this month, as trading companies continued to import the commodity to take advantage of favourable financing options linked to such imports, mainly for construction-related financing purposes. Port stocks of soybeans have reached near-historic levels of about 7 million tons.
US Needs To Follow Through With Food Aid Pledge -US Official (Source: CME)
The U.S. has been too slow in following through with the funds it has pledged for international food and agriculture aid, a U.S. Treasury Department official said. Lael Brainard, under secretary for international affairs at the U.S. Treasury Department, said the funds are sorely needed to support the Global Agriculture and Food Security Program, a new multinational antihunger fund that launched last year. "Without greater progress on our pledge, it is difficult for the United States to convince other development partners to contribute, although I can assure you we are trying," Brainard said at a symposium held by the Chicago Council. "That's why it will be critical for Congress to fund the [Obama] administration's request for $308 million in fiscal year 2012." The Global Agriculture and Food Security Program so far has awarded grants to Bangladesh, Haiti, Rwanda, Sierra Leone and Togo for programs the countries designed to better feed their people through improved farming practices.
Congress approved $100 million for the fund for fiscal 2011, and that brought the total U.S. contribution up to $167 million, Brainard said, but the U.S. funding is still well short of the $475 million the country pledged. The fund got its origin from a decision first made by the Group of Eight highly industrialized nations at a 2009 summit to combat hunger by steering $22 billion in aid toward improving farming around the world. A component of that pledge became the Global Agriculture and Food Security Program. The U.S., Canada, South Korea, Australia, Spain and the Bill & Melinda Gates Foundation have all pledged millions of dollars to the fund, but only the U.S. and South Korean governments haven't completely matched their pledges with funds, according to an accounting released April 30 by the Global Agriculture and Food Security Program. Bill Gates, who spoke at the symposium, lauded the fund, to which his foundation has donated about $25 million, but he also warned that it is underfunded.
"One year ago, I joined with Treasury Secretary Tim Geithner and the finance ministers of Spain, Canada and South Korea to launch the Global Agriculture and Food Security Program," Gates said. "Unfortunately, a great model and proven success is no guarantee of federal funding."
Sugar, coffee rise early as commodities rebound
LONDON, May 24 (Reuters) - ICE sugar, coffee and cocoa futures rose in early trade, boosted by a rebound in crude oil and many other commodity markets after Monday's setback. ICE raw sugar was higher, clawing back some of the prior session's losses.
Ivorian rains boost cocoa, disease a worry-farmers
ABIDJAN, May 23 (Reuters) - Good rains interspersed with hot weather last week in Ivory Coast's cocoa growing regions are boosting the cocoa mid-crop, farmers said on Monday, but a lack of cash to pay for pesticides raised disease concerns.
Cocoa farmers in the bush said rains were adequate for the growth of a healthy April-September mid-crop as high moisture triggered new flowers that would turn into small pods in coming weeks and increase the size of the crop.
Crude Oil Rises as Dollar Slips, Goldman Sachs Boosts Brent Price Forecast (Source: Bloomberg)
Oil rose in New York as the dollar declined, boosting commodities’ appeal as an alternative investment, and Goldman Sachs Group Inc. and Morgan Stanley increased their price outlooks for crude. Futures jumped 1.9 percent as the dollar slipped from a nine-week high against the euro after German business confidence unexpectedly stayed near a record in May. Goldman Sachs and Morgan Stanley raised their estimates for Brent oil futures, saying the conflict in Libya is eating into OPEC spare capacity.
Copper market deficit at 60,000 T for Jan-Feb-ICSG
LONDON, May 24 (Reuters) - The world copper market had a 60,000 tonne deficit in January to February compared with a surplus of 119,000 tonnes in the same period last year, an industry report showed.
The International Copper Study Group (ICSG) said in its latest monthly bulletin late on Monday that world refined copper output in January-February was 3.028 million tonnes and consumption was 3.088 million tonnes.
Japan Apr steel output drop not as deep as expected
TOKYO, May 23 (Reuters) - Japan's earthquake hit steel production in April but not by as much as was expected, which, with demand hit more, stirred concern over too much supply.
Crude steel output reached a higher than expected 8.42 million tonnes, down just 7.6 percent or 694,000 tonnes from March, The Japan Iron and Steel Federation said on Monday.
China April rare earth exports down 53 pct y/y, values top $120,000/t
BEIJING, May 23 (Reuters) - China's exports of rare earths fell by more than half in April from a year previously, detailed Customs data showed on Monday, despite headline official data that indicated a rise of 46 percent.
China exported 1,819 tonnes of rare earths in April, figures supplied to Reuters by China's General Administration of Customs showed, a 53 percent decline from April 2010 and a 12.6 percent slip from the volume exported in March.
METALS-Copper up on softer dlr, debt worries mute gains
LONDON, May 24 (Reuters) - Copper rose on Tuesday, recovering with a weaker dollar, but worries over European sovereign debt contagion and Chinese demand suggest gains could be short-lived. Three month copper on the London Metal Exchange traded at $8,937 at 0939 GMT. The metal closed at $8,795 a tonne on Monday when it fell by some 3 percent to a one-week low.
"Fundamentally, are things much better? No. I would expect things to remain under pressure for the next few months but right now (the complex) is taking a breather," analyst Daniel Brebner of Deutsche Bank said.
PRECIOUS-Gold hits two-week high on euro debt worries
LONDON, May 24 (Reuters) - Gold rose to a two-week high on Tuesday as concerns about a spreading EU debt crisis fuelled safe haven buying, while a softer dollar provided support. Spot gold hit $1,521.80 a troy ounce, its highest since May 11. It was bid at $1,520.59 an ounce at 0944 GMT from $1,516.05 late in New York on Monday.
Portugal and Ireland would be at risk of multi-notch credit downgrades, pushing their ratings into junk territory in the event of a default by Greece, Moody's EMEA chief credit officer told Reuters.
