Corn (Source: CME)
US corn futures end lower amid outside market pressure and lackluster export sales. A negative US jobs report cast a gloomy outlook for the economy, which would not help demand. Analysts add that weekly export sales remain disappointing. The market pulled back after two days of strong gains on crop concerns. While those concerns persist, weather in many areas where the crop has been planted is favorable. Amid the losses the Dec contract, which reflects new crop supplies, gained on July for the second straight day. July CBOT corn ends down 12 1/2 cents, or 1.6%, to $7.54 per bushel and Dec corn slips 8 3/4 cents to $6.86 1/4.
Wheat (Source: CME)
US wheat futures finish higher on projections for increased demand from livestock producers. Global wheat feeding is expected to rise after CBOT prices traded nearly even with corn Thursday. Wheat typically holds a premium to corn. "You can't come in here and say US corn looks cheap," says Chad Henderson, analyst for Prime Agricultural Consultants. MGEX spring wheat, meanwhile, surged on wet weather delaying planting in the US northern Plains. CBOT July wheat rose 4c to $7.73 3/4 a bushel, KCBT July gained 5 1/4c to $9.14 1/4 and MGEX July soared 41c to $10.60 1/2.
Pork Complex (Source: CME)
US lean hogs end mixed amid mostly firm cash prices and worries about demand. Gloomy economic outlook, fueled by disappointing May jobs report, loomed over the market. Packer margins are negative, though supplies are still relatively tight, analysts say. A rally in cattle also offered support. June CME lean hogs close up 0.150c to 89.225 cents/pound. July CME lean hogs end down $0.125 to 87.850.
U.S. wheat rises for 2nd day; corn, soy steady
SINGAPORE, June 3 (Reuters) - U.S. wheat rose 0.6 percent on track for a second day of gains supported by doubts that exports from the Black Sea region can cover shortfalls expected from adverse weather hurting crop prospects in the United States, Europe and Canada.
"It is probably Russia, which is now talking about putting tariffs on exports to keep control over domestic prices," said Paul Deane, agricultural commodity strategist at ANZ.
Wheat Fields Wilt in Drought as Parched Earth Spreads From China to Kansas (Source: Bloomberg)
The worst droughts in decades are wilting wheat fields from China to the U.S. to the U.K., overwhelming Russia’s return to grain markets and driving prices to the highest levels since 2008. Parts of China, the biggest grower, had the least rain in a century, some European regions are the driest in 50 years and almost half the winter-wheat crop in the U.S., the largest exporter, is rated poor or worse. Inventory is dropping 8.8 percent, the most in five years, Rabobank International says. Prices will advance 20 percent to as high as $9.25 a bushel by Dec. 31, a Bloomberg survey of 14 analysts and traders shows.
Commodity Bubbles Caused by Speculators Need Intervention, UN Agency Says (Source: Bloomberg)
Commodity markets need international oversight, more transparency and intervention to deflate bubbles because increasing speculation means prices are no longer driven by supply and demand, the United Nations said. Increased investment in commodity markets has encouraged “herding behavior” and creates bubbles, the UN’s Conference on Trade and Development said in a report published today. Anticipation of the global economic recovery played a “disproportionate role” in higher commodity prices, it said.
Bangladesh grain imports to hit record 5.5 mln year to June
DHAKA, June 3 (Reuters) - Bangladesh's imports of wheat and rice are set to reach a record 5.5 million tonnes in the year to June, against 3.0 million tonnes in year ago, a senior food official said on Friday.
The previous highest import of grains was in 1998 when Bangladesh bought 5.4 million tonnes following a devastating flood that destroyed crops in the field.
Lifting Of Russian Grain Export Ban Seen Having Minimal Impact On Canada, US (Source: CME)
Russia is set to reopen its grain export market July 1, sparking fears that some business will be lost in Canada and the U.S., but the impact may be minimal as the country likely won't export large amounts. "Last year's crop was a historic disaster, and whatever [Russia] had left they had to keep for themselves," said Tim Hannagan of PFG Best in Chicago. He said the announcement is psychologically bearish to the market because it creates more competition for business in exporting countries like Canada and the U.S. However, he said he believes the worst of situation in terms of North American prices is over. "Russia said, 'Sure, we will go along with the World Trade Organization and open up our door, but it doesn't mean we are going to sell a whole lot,'" Hannagan said. "They still have to produce a large chunk of grain to replenish stocks after last year. They won't be a major supplier." Hannagan said the way it is looking right now, stocks will not be on the high end of the spectrum once again this year.
"This year's production [in Russia] has to be much better, but they are not off to a good start, like a lot of other areas," he said. "I wouldn't expect to see a lot of selling out of there." Wheat values on the Chicago Board of Trade lost nearly 8% during the first two trading days of the week, but Hannagan said that the fact dry areas of the U.S. and western Europe had received rains had just as big of a part to play in the decline as the opening of Russian exports did. Bruce Burnett with the Canadian Wheat Board said there wouldn't be too big of a drop in price, because the market had been expecting this to happen.
China drought raises questions about climate change
LAKE HONGHU, China June 3 (Reuters) - China's drought along its biggest river, the Yangtze, is for some scientists a demonstration of how global warming could increasingly disrupt the complex dance of air flows, rains and waterways that feeds dams and farming heartlands.
"I think there is a link to climate change," Liu told Reuters. "In recent years, the trend seems to be that China's south, which generally has abundant water, has experienced more drought and extremes in weather.
FOB Gulf Grain-Wheat premiums hold amid muted demand
CHICAGO, June 2 (Reuters) - Export premiums for U.S. wheat at the U.S. Gulf Coast were steady on Thursday amid slow farmer selling and limited export demand, traders said.
U.S. wheat to face stiff competition from less expensive wheat from the Black Sea region after Russia lifted its nearly year-old grain export ban.
Germany says may help Spain's farmers over E.coli
MADRID, June 2 (Reuters) - Germany will consider measures to compensate Spanish farmers for the loss of sales due to their produce being blamed for the outbreak of E.coli in Europe, a statement from Spain's presidential office said on Thursday.
German Chancellor Angela Merkel told Spanish Prime Minister Jose Luis Rodriguez Zapatero during a telephone conversation that she regretted the damage suffered by Spanish farmers and would seek a solution in accordance with European Union legislation, the statement said.
Killer E.coli strain described as deadliest yet
LONDON, June 3 (Reuters) - A virulent new strain of E.coli bacteria that has killed at least 17 people in Europe may be the deadliest yet in human history, health experts said.
Germany is at the centre of the outbreak, with more than 1,500 people ill from eating contaminated vegetables and salads, but the precise source of the new strain is not yet known.
Russia watchdog criticises EU over E.coli outbreak
MOSCOW, June 2 (Reuters) - Russia decided to ban imports of raw vegetables from the European Union because of inaction by EU regulators over a deadly E.coli outbreak, the head of Russia's consumer protection watchdog told Reuters.
"The kind of things that have been happening in the EU for a whole month do not even happen in African countries," Gennady Onishchenko, head of Rospotrebnadzor state agency, told Reuters by telephone.
U.S. wheat rebounds from early week declines
CHICAGO, June 2 (Reuters) - More rain forecast for spring wheat areas of the northern U.S. Plains, further delaying of this year's crop in key places such as North Dakota. Hot and dry weather in southern Plains to stress filling hard red winter wheat crop in southern Kansas.
Informa Economics estimated the 2011 U.S. winter wheat harvest at 1.421 billion bushels, the smallest in five years.
EU wheat firm on drought, Black Sea export doubts
MADRID, June 2 (Reuters) - Market activity in many countries was muted by the Ascension Day holiday.
"There's two questions we can't answer right now: what will be the impact of Russia (returning to export markets) and what will their crop be? Nothing is sure about their yields," a broker based in France said.
Formerly the world's third-largest wheat exporter, Russia announced at the weekend it would lift an export ban on July 1.
Drought grows more dire in Texas and Oklahoma
KANSAS CITY, Mo., June 2 (Reuters) - A devastating drought tightened its grip on Texas over the last week with more than half the state now suffering the most extreme level of drought measured by climatologists.
A report released Thursday from a consortium of national climate experts said over the last week, Texas saw the highest levels of drought - rated as "exceptional" - jump from 43.97 percent of the state to 50.65 percent of the state.
Duties Could Temper Impact Of Return Of Black Sea Grain (Source: CME)
Traders are becoming increasingly cautious over the size of exports from the Black Sea next season after the Central Bank of Russia proposed duties, and Ukraine downgraded its estimate for shipments. Central bank Chairman Sergei Ignatyev in Moscow proposed introducing a flexible system of duties, similar to those used for oil products, which can be adjusted every month depending on prices in international markets. Traders said any introduction of duties could curtail their competitiveness on the international market. One said his company is already using a more "conservative" purchasing strategy due to fears he won't be able to sell as much to international clients as originally hoped. Earlier this week Ignatyev said the resumption of grain exports, due to start July 1, poses the single greatest inflationary threat to Russia's economy. Annual inflation stood at 9.7% as of May 23 and rising prices are seen as a key issue in the elections due next year.
Prices for fourth-grade milling wheat in Russia's southern exporting region have jumped $25-$35 to $220.70 a metric ton, according to Moscow-based think tank SovEcon, in the six days since Prime Minister Vladimir Putin said the ban on exports would be lifted. The Economic Development Ministry said the duties would be economically justified. But ministry officials are saying that they don't expect the resumption of grain exports to result in prices shooting up further or remaining consistently elevated as in the wake of the drought last year. "If an export tax is established, it will dramatically decrease the interior prices, which is in accordance to government policy of keeping the food inflation under control," said a Swiss grain trader with operations in Russia. "If the prices are increased further by means of farmers synthetically holding back sales, we feel that export taxes could become a serious topic.
In other words, the more the farmers want 7000 rubles [a ton], the more likely they will get 5000 in the end." Initially buoyant hopes for Ukraine's exports were also tempered this when the Agriculture Ministry lowered its export estimate for 2011-12 to 15-18 million tons from 19-20 million tons in case this year's harvest proved smaller than expected. Meanwhile, ratings agency Fitch cautioned that export restrictions in Ukraine in the form of duties, currently set at 9% on the customs value, but not less than EUR17 per ton on wheat, means the Black Sea may not return to international markets with the force some buyers are expecting.
Exports from the region, traditionally some of the cheapest in the world, are particularly important this season as weather problems are expected to severely hurt output from Europe and the U.S. "The removal of the ban in Russia does not necessarily mean there will be sufficient supply to offset losses in Europe and the U.S.," said Pablo Mazzini, senior director in Fitch's European Corporates team. But an official at industry body the Russian Grain Union said he remains hopeful the government will allow the free-flow of exports from July due to almost record high ending stocks in 2010-11 of 15 million tons. He forecast Russian exports at 17-18 million tons during 2011-12. "We must export the extra grain in order to prevent the domestic market getting overstocked, which would destroy farmers' motivation," he said.
Informa sees US winter wheat crop at 1.421 bln bu
CHICAGO, June 2 (Reuters) - Analytical firm Informa Economics estimated U.S. winter wheat production for 2011 harvest at 1.421 billion bushels, down from the firm's May forecast of 1.441 billion, trade sources said Thursday.
By class, Informa pegged U.S. production of hard red winter wheat at 764 million bushels and soft red winter wheat at 422 million bushels.
Argentina Farmers Plow Forward With Winter Wheat Planting (Source: CME)
Argentina's farmers are making good progress with the 2011-12 winter wheat planting, taking advantage of moist soil conditions to get seeds into the ground. To date, 22.5% of the 4.95 million hectares seen going to wheat have been planted, up six percentage points from the same point last season, the Buenos Aires Cereals Exchange said in its weekly crop report. Planting in the northern fields is reaching its end, while recent showers have slowed planting in the center of the farm belt. Planting is set to kick off in the significant wheat areas at the south of Buenos Aires province with more rain expected over the next week which will continue to improve conditions, the exchange said. The government made its first forecast for wheat planting this week, pegging area at 5 million hectares, up from 4.4 million hectares planted last season. The Agriculture Ministry based its estimate on increased phosphorous imports.
From January to April, imports of this key fertilizer rose 65% on the year to 348,181 tons, the ministry said. Argentina is a major wheat producer, with last season's crop yielding 15 million metric tons. It is also a leading wheat exporter, with most shipments heading to neighboring Brazil. Meanwhile, the soy harvest is nearing completion, with 95.5% of the crop brought in from the fields so far, the exchange said. Production is seen at 49.2 million metric tons, the second largest crop on record. Argentina is the world's third largest soybean exporter and leads soymeal and soyoil shipments. The corn harvest is 73.7% complete, with production seen at 20 million metric tons, the exchange said. Argentina is the world's second largest corn exporter.
India's monsoon on track as weekly rains rise
NEW DELHI, June 2 (Reuters) - India's monsoon rains were 12 percent above normal in the week to June 1, the weather office said on Thursday, after hitting the southern coast two days ahead of expectations, with coffee and rubber crops potentially benefiting.
Weather department sources said they were still expecting normal progress for the monsoon.
ICE sugar, coffee up; steadies after choppy week
LONDON, June 3 (Reuters) - ICE sugar prices were higher in early trade as strong physical demand supported the market, while coffee also edged up, as the markets steadied after recent volatile sessions.
Below are highlights for the sugar, coffee and cocoa markets: ICE raw sugar futures rose as strong nearby demand, combined with port congestion at major exporters Brazil and Thailand, buoyed prices. The market has seen volatile trading this week with swings of over 3 percent in recent sessions.
Ukraine sugar output to jump in 2011 - producers
KIEV, June 2 (Reuters) - Ukraine's white sugar production is likely to jump by 40 percent to 2.1 million tonnes in 2011 after farmers boosted sugar beet sowing area, the head of national sugar union Ukrtsukor said on Thursday.
Mykola Yarchuk told reporters that farms had boosted the sowing area to 540,000 hectares this year from 480,000 in 2010.
India sugar falls for 2nd day runnning on weak demand
NEW DELHI, Jun 2 (Reuters) - India is likely to produce 24.2 million tonnes of sugar in 2010/11, higher than local demand of about 22-23 million tonnes.
The Indian government has approved exports of 339,187 tonnes of sugar as part of planned 500,000 tonnes of overseas sales, government sources said on Thursday.
Coffee faces greatest Brazil frost threat since 2000
BRASILIA/NEW YORK, June 3 (Reuters) - From droughts to floods to hurricanes, commodity traders have been roiled by a record dose of almost every variety of inclement weather under the sun, save one -- a coffee-curdling frost in Brazil.
But this year, just as global stocks of coffee beans dwindle to their lowest since records began, Brazil's number may be up.
Shell, Cosan Formally Launch Brazil Biofuels JV Raizen (Source: CME)
Royal Dutch Shell PLC's ambitious foray into renewable energy was formalized as the Anglo-Dutch major and Brazilian sugar and ethanol group Cosan Industria e Comercio SA put the seal on their $12 billion Raizen biofuels joint venture. Announced in February 2010, Raizen pairs the hydrocarbons giant with the world's biggest producer of ethanol from sugar cane in a move the companies said combines Shell's expertise and technology in advanced biofuels with Cosan's experience in the commercial production of low-carbon biofuels. "We are building a leading position in the most efficient ethanol-producing country in the world," said Shell Chief Executive Peter Voser. "Low-carbon, sustainable biofuels will be increasingly important in the global transport fuel mix." Earlier this year, the companies agreed that Cosan will keep its sugar retailing business separate from the ethanol venture. Shell said in August it will inject some $1.6 billion into the joint venture.
The joint venture starts off with a net debt of 4.94 billion Brazilian reals. Last month, the companies established an exchange rate of 1.6287 Brazilian reais per U.S. dollar, which will apply to payments to Shell and for investments by Cosan. The venture is still under review by Brazilian antitrust regulator Cade. Raizen will produce and sell over 2 billion liters a year of ethanol made from Brazilian sugar cane, the companies said, adding that it will distribute biofuels and over 20 billion liters of other industrial and transport fuels annually through a combined network of nearly 4,500 Shell-branded service stations.
China copper imports seen up as Shanghai stocks fall
HONG KONG, June 3 (Reuters) - Shanghai bonded warehouse copper fell more than a quarter from April as the arbitrage between Shanghai and LME prices improved and China's spot copper demand rose in May, which could drive up imports in June and July, traders and analysts said on Friday.
High bonded stocks have weighed on demand for spot imports from the world's top copper consumer this year. But the stocks may have fallen by about 200,000 tonnes from April to between 350,000 and 500,000 tonnes currently, traders and analysts estimated.
METALS-Copper cuts gains after weak U.S. data
LONDON, June 3 (Reuters) - Copper cut gains on Friday after U.S. payrolls data came in well below forecasts and fuelled concerns about the health of the U.S. economy.
Three-month copper on the London Metal Exchange was at $8,960 a tonne at 1304 GMT from Thursday's close of $8,920.
PRECIOUS-Gold hits high as dollar falls after U.S. data
LONDON, June 3 (Reuters) - Gold hit session highs on Friday as the dollar tumbled on disappointment with a monthly jobs report from the United States, which showed the economy created far fewer jobs than expected.
Spot gold touched a peak of $1,546.39 a troy ounce. It was bid at $1,544.20 at 1314 GMT from $1,532.55 an ounce late in New York on Thursday. The precious metal hit a record high of $1,575.79 on May 2.
