Corn (Source: CME)
US corn futures finish sharply lower as heavy selling by commodity funds extends into a third day. Commodity funds sold an estimated 21,000 contracts, pushing prices down 12% from Friday's record high. "Right now, it's, 'Get me out,'" says Sid Love, analyst for Kropf & Love Consulting. The Senate's vote to repeal an ethanol subsidy "helps explain continued fund-liquidation," according to Global Commodity Analytics & Consulting. Market participants fear demand for the grain will drop. CBOT July corn falls 24 1/4c to $7.01 1/2 a bushel.
Wheat (Source: CME)
US wheat futures end at a three-month low on spillover pressure from the steep slide in corn prices. The sell-off drags down wheat as both grains are used for livestock feed. Producers will increasingly feed wheat to their animals following today?s slide as they seek alternatives to pricey corn, predicts Alan Brugler of Brugler Marketing & Management. The drop in wheat prices "creates the seed for the next rally," he says. CBOT July wheat drops 35 1/4c to $6.73 1/4 a bushel; KCBT July loses 21 1/4c to $7.98; MGE July sinks 36 3/4c to $9.00 1/4.
Rice (Source: CME)
US rice futures drop to a 1-month low amid spillover pressure from a 5% drop in wheat. That weighs on rice as both grains are global food staples. The grain markets came under broad pressure from selling by commodity funds and jitters about demand, analysts note. Meanwhile, weekly export sales of US rice for delivery before August dropped to 13,200 metric tons, a marketing-year low and an 81% tumble from the prior four-week average. CBOT July rice drops 1.4% to $14.00 1/2 per hundredweight.
U.S. corn steady after slide to 1-mth low, wheat ticks up
SINGAPORE, June 16 (Reuters) - U.S. corn futures were steady on Thursday, after being hammered down nearly 8 percent this week to a 1-month low on improved crop weather in the United States and concern that less grain will be used as a feedstock for ethanol production.
"For the time being, the weather looks okay, this is going to be the focus as corn and soybean crops progress in the United States," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne. "The rains of course caused delays in planting but ultimately the moisture will be beneficial for crop yields as we go forward."
German farmers see 7.9 pct fall in 2011 grain crop
HAMBURG, June 16 (Reuters) - Germany's 2011 grain crop of all types is likely to fall 7.9 percent on the year as dry spring weather has damaged crops, the German Farm Cooperatives Association said on Thursday in its new harvest forecast.It forecast the crop to fall to 40.8 million tonnes from 44.3 million tonnes in 2010.
This is slightly up on its previous estimate of 40.7 million tonnes in May following recent rain which provided limited relief to parched crops.
French analyst cuts EU grain crop views due drought
PARIS, June 16 (Reuters) - French analyst Strategie Grains on Thursday sharply cut its forecast for this year's grains crops in the European Union due to renewed dry conditions in the Western part of the bloc in May and despite recent rainfall.
Soft wheat saw the largest reduction, at 6 million tonnes, with the estimate of the 2011 crop lowered to 125.6 million tonnes, now 1 percent below last year's 126.6 million tonnes.
Caucasus farmers optimistic ahead of wheat harvest
MOZDOKSKY DISTRICT, June 15 (Reuters) - Farmers in the North Caucasus are cautiously upbeat as they prepare for next month's harvest that will determine whether Russia can reprise its role as a key player on world markets after last year's export ban.
The region, and neighbouring southern districts, accounted for 45 percent of Russia's wheat crop last year, and milder weather near the Black Sea means they are traditionally the first to hit the market.
Showers for US Midwest raise farmland flood risk
CHICAGO, June 15 (Reuters) - Daily showers were forecast for the U.S. Midwest through the weekend, raising the risk of more farmland to flood along the Missouri River, a forecaster said on Wednesday.
"It's going to keep pressure on the Missouri River -- the Missouri, mid-Mississippi, Illinois river basins are continuing to be affected by the heavy to moderate rainfall," said Mike Palmerino, forecaster with Telvent DTN weather service.
'Cheap' wheat may find feed demand lacking: Gavin 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, June 15 (Reuters) - The recent surge in corn prices to above the price of Chicago wheat for the first time since 1996 has spurred expectations of a wave of demand
switching away from corn to wheat, specifically in the livestock feeding industry which has the capability to accommodate varying levels of both grains in animal diets.
But traders hoping for a surge in wheat demand from feeders may be disappointed, as limited wheat supplies in livestock-feeding regions, increased DDG supplies and ample pasture availability across the northern U.S. Plains may all serve to limit overall wheat use regardless of how 'cheap' it may get relative to corn.
UK rejects crackdown on commodity speculation
BOOTHBY GRAFFOE, June 15 (Reuters) - Britain does not believe speculators have played a central role in creating volatility in food commodity markets and sees little value in more regulation, farming minister Jim Paice told Reuters in an interview on Wednesday.
Nicolas Sarkozy, president of France which currently chairs the G20 group of developed nations, on Tuesday called for tighter controls on the speculators he blames for spiralling food and energy prices, spelling out reforms to put more trading under the thumb of regulators.
US House Approves Agriculture Spending Bill (Source: CME)
The U.S. House of Representatives voted to approve a $125.5 billion agriculture spending bill that includes controversial provisions to halt millions of dollars of payments to Brazil and bar the U.S. government from investing in new ethanol blender pumps. The bill that would fund the U.S. Department of Agriculture, Food and Drug Administration and Commodity Futures Trading Commission in fiscal year 2012 sparked Democrat outrage over cuts for a nutrition program that helps needy women and children. The Obama administration has sharply criticized the bill for underfunding efforts to beef up food safety initiatives and complained that it doesn't contain enough funds for the government to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. Spending on the USDA's Women Infants and Children program was lowered by $685 million in the bill, an action that Democrats warned would leave hundreds of thousands of people without needed assistance.
Republicans argued that there are contingency funds that would make sure no one would be left without needed aid. The bill contains a budget of $172 million for the CFTC in the 12-month period beginning Oct. 1, substantially less than the $308 million sought by President Barack Obama, and also less than the agency's current budget of $202 million. Rep. Scott Garrett (R., N.J.) added an amendment that would require regulators to delay certain new requirements for the over-the-counter derivatives trades for at least 12 months, while they collect data on those markets. House members also approved an amendment to the bill that halts U.S. payments to Brazil as part of a complex scheme that keeps Brazil from placing heavy duties on U.S. exports there. The U.S. government is now paying Brazil $12.275 million per month. Brazil won the right to impose the tariffs on U.S. goods during a World Trade Organization battle. Opponents of the amendment argued that cutting off the payments could start a trade war with Brazil.
Another amendment approved as part of the spending bill prohibits the USDA from funding the installation of new gas station pumps that can dispense fuel with higher ethanol content. The USDA is set to soon begin offering grants and loan guarantees for the installation of costly new "blender pumps" so drivers can purchase fuel with a higher ratio of corn-based ethanol. Most gasoline sold in the U.S. is 10% ethanol, but a growing fleet of flexible-fuel vehicles can run on an 85%-ethanol blend, or E85.
Global Farm Commodity Prices To Ease Through 2H - Rabobank (Source: CME)
Agricultural lender Rabobank expects global farm commodity prices to ease through the calendar second half, but they won't collapse as historical trends suggest is possible. Following every significant grains market rally since 1980 there has been a sharp and significant slump in prices with most corrections starting in July or August, the bank reported in a monthly outlook issued. The major coffee rallies in the past three decades have also turned sharply lower through the northern summer while cotton typically comes under pressure during this time of year, it said. "We don't expect a collapse in prices this time but we are forecasting an easing in prices" with the bank's modelling suggesting some bearish seasonality impact on markets will emerge in the calendar second half on a quarterly average basis, it said.
Macro uncertainties remain and fears of a slowdown in global and particularly Chinese economic growth are likely to weaken demand and moderate speculative interest in agricultural markets, the report said. But prices will be supported this year by ongoing production uncertainty and "incredibly tight" U.S. and global fundamentals, particularly for corn, cotton and sugar, though prices will slip from second quarter levels, it said. "There remains too many risks this time around for prices to collapse quickly back to long-run average levels," the bank forecast. With fundamental projections tight into 2011-12, favorable seasonal conditions will be needed through to harvest just to maintain current low stock to use levels, it said.
Agriculture Players Skeptical On G20 Food Transparency Plans (Source: CME)
Plans by the Group of 20 industrialized and emerging nations to create a global database on food production and stocks are unlikely to reduce price volatility, market analysts and traders said. Agriculture ministers are expected to announce next week the creation of the Agriculture Market Information System--or AMIS--an initiative designed to bring the same transparency to world agricultural markets as already exists in oil. But experts argue that even collating accurate data on inventories in major agricultural players like China and Russia will be virtually impossible, while few countries are likely to agree to share such data willingly. "It would not be in any of these countries' interest to let it be known in public how vulnerable that particular country is," said Bratin Sanyal, head of Asian equity investments for global bank ING based in Hong Kong.
"Asian countries are sitting on huge foreign exchange reserves and no-one ever makes it public what the composition of those reserves are. It's a good policy objective but whether it will ever be achieved I doubt it." Nicolas Sarkozy, president of France, has put improving food security at the top of his agenda for his leadership of the G20. World food prices surged to a record high in February, according to the United Nations, and the rising cost of staple foodstuffs was blamed for sparking the unrest in Arab countries this spring. Bruno Le Maire, the French agriculture minister, told a conference this month that he is confident that ministers will reach a consensus at the meeting on June 22-23 in Paris. And Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at the U.N.'s Food and Agriculture Organization, which will have the mandate to create a secretariat for AMIS, said it is "realistic" to expect an agreement.
"The ministers are not coming with pledges of billions of dollars, they're coming with recommendations," he said. "This initiative is strikingly more positive than anything [agreed by the G20] in the recent past." Yet farmers and traders active in Europe's grain markets were much more sceptical about whether such a system would actually be transparent or do anything to reduce market volatility. Jon Duffy, trading director of Frontier Agriculture, which is part owned by grain giant Cargill Inc, told a grain conference that it was "a lovely aim but I just don't think it's going to happen" due to the difficulty of procuring reliable information. Getting reliable data out of China, for example, is deemed nigh on impossible by many due to the size and disparate location of its stocks. Even the most accurate estimates are considered to have a 3.5% margin of error--equivalent to around 10 million metric tons of corn, for example.
Peter Kendall, president of the National Farmers' Union, however, said that large players like Russia, whose ban on grain exports last summer sparked the rally in prices, would have no interest in sharing information. "The big planned economies have a big self interest in not being as transparent as we would like," he said.
Agriculture Needs Global Regulation After Damaging Economies, Sarkozy Says (Source: CME)
Agricultural futures markets need global regulation because price swings are damaging producers and consumers, French President Nicolas Sarkozy said, a week before G-20 ministers meet to discuss global food supply. France, which heads the Group of 20 nations this year, will propose a market-information system similar to what already exists in oil, Sarkozy told a conference of farm groups in Paris today. The G-20 members account for 70 percent of agricultural land and 80 percent of world food trade, he said. Their farm ministers meet in Paris on June 22.
Wheat Futures Drop to Less Than $7 Per Bushel for First Time Since March (Source: CME)
Wheat for September delivery declined as much as 1.7 percent to $6.9625 a bushel on the Chicago Board of Trade, before trading at $7.0275 at 8:08 a.m. Singapore time. Corn for December delivery slipped 0.1 pecent to $6.5225 a bushel, while soybeans for November delivery were little changed at $13.4975 a bushel.
Wheat Futures Drop to Less Than $7 Per Bushel for First Time Since March (Source: CME)
Wheat for September delivery declined as much as 1.7 percent to $6.9625 a bushel on the Chicago Board of Trade, before trading at $7.0275 at 8:08 a.m. Singapore time. Corn for December delivery slipped 0.1 pecent to $6.5225 a bushel, while soybeans for November delivery were little changed at $13.4975 a bushel.
Coffee firms, stronger dollar caps upside; sugar dips
LONDON, June 16 (Reuters) - ICE coffee futures firmed in light early trade on Thursday under pressure from a stronger dollar, while raw sugar dipped consolidating below two-month highs underpinned by delays in Brazilian and Thai ports.
ICE cocoa futures eased under pressure from the firmer dollar, with upside limited by a steady flow of supplies from West Africa.
Brazil's crimson coffee crop to yield more milds
BRASILIA, June 15 (Reuters) - The lack of rain last year that seemed on track to harm Brazil's coffee crop has proven a blessing in disguise, as the evenly ripe crop that resulted helps raise output of sought-after wet-processed mild beans.
Importers will welcome any increase in mild coffee output after searching hard for it in Brazil in the months prior to the harvest as stocks ran low, while growers also benefit by pocketing a premium for milds of up to 70 reais ($44) a bag.
Oil Near Two-Day High After U.S. Economic Reports; Heads for Weekly Drop (Source: CME)
Oil traded near a two-day high in New York after reports showed U.S. housing starts rose more than forecast in May and fewer Americans filed applications for unemployment benefit, signaling fuel demand may increase. Futures were little changed after climbing 0.2 percent yesterday as the Labor Department said jobless claims fell by 16,000 to 414,000 in the week ended June 11. Work began on 560,000 houses at an annual pace, up 3.5 percent from the prior month and exceeding the 545,000 median forecast of economists surveyed by Bloomberg News, Commerce Department figures showed. Oil prices are down 4.3 percent this week.
Senate Votes to End Tax Break for Ethanol (Source: CME)
The U.S. Senate voted to eliminate a tax credit and a tariff that subsidize ethanol production, providing the strongest signal yet that Congress will curtail subsidies for corn-based biofuel. The 73-27 vote exceeded the 60-vote threshold needed to advance the measure as part of an economic development bill. The underlying legislation isn’t likely to become law, so the vote mostly indicated that it will be difficult for ethanol supporters to extend the 45-cent-a-gallon tax break and the 54- cent-a-gallon tariff beyond their scheduled Dec. 31 expiration.
ALUMINIUM-Major market developments in May
LONDON, June 15 (Reuters) - Aluminium lost ground in May after initial strength but will draw support near term from tight physical supplies and the fact that prices are close to the break-even costs of Chinese aluminium smelters.
"We're not bullish on aluminium, but the physical market is quite tight and the downside will be supported by the marginal costs of Chinese producers," said Macquarie Bank's Jim Lennon.
NICKEL-Major market developments in May
LONDON, June 15 (Reuters) - Nickel prices were under pressure for much of May and still look vulnerable to further weakness as near-term demand worries dominate.
Demand from the key stainless steel industry is easing for seasonal reasons, but more than would normally be expected.
"Stainless producers have announced cuts and maintenance closures in Europe and Asia. The third-quarter seasonal dip looks like it's coming a bit early," said Macquarie Bank's Jim Lennon.
Copper in London Climbs by 0.5%, Heads for First Weekly Advance in Three (Source: CME)
Copper climbed for the first time in three days on optimism that China’s demand is improving, tempering concern about Europe’s fiscal crisis. The metal for three-month delivery on the London Metal Exchange rose as much as 0.5 percent to $9,105.50 a metric ton, and last traded at $9,105 by 8:04 a.m. Singapore time. It is up 1.9 percent this week, set for its first weekly advance in three weeks.
Premiums for spot copper to China seen up
HONG KONG, June 16 (Reuters) - Premiums for spot copper may jump by a quarter once the third-month arbitrage window opens between the London Metal Exchange and Shanghai, which could hasten deliveries of LME stocks in Asia to China, industry sources said on Thursday.
The arbitrage window between the benchmark three-month LME copper and the third month in Shanghai closed in the fourth quarter of 2010, cutting imports to the world's top copper consumer this year.
S.Korea to import 12,000 t/y copper from Mexico Boleo
SEOUL, June 16 (Reuters) - Korea Resources Corp (KORES) said that it would import 12,000 tonnes of copper a year from Mexico's Boleo mining project from 2013 for 23 years, as ground was broken on the project three years after an investment deal on it was signed.
The company said in a statement that a total of 1.4 trillion won ($1.29 billion) would be invested through the first half of 2013 to produce the metals from the second half of the year.
METALS-Copper slides on higher dlr, demand fears
LONDON, June 16 (Reuters) - Copper prices slid on Wednesday as the dollar rose and fears of weak growth and demand prospects from the United States, the world's largest economy, hit investor sentiment.
Aluminium touched a two and a half week low of $2,545 a tonne and nickel tumbled to $21,780 a tonne, its lowest since last November. Both metals came under pressure on concerns about an oversupplied market.
PRECIOUS-Gold falls as dollar gains from Greek crisis
LONDON, June 16 (Reuters) - Gold fell on Thursday after the U.S. dollar hit a three-week high against the euro as concern escalated over the impact of the Greek debt crisis on the euro zone, knocking commodities.
The Greek prime minister said he would form a new government, while euro zone finance ministers conceded that an agreement over a second international bailout for Athens would take longer than expected.
Gold Climbs for Third Day on Demand for Haven From Beleaguered Currencies (Source: CME)
Gold rose for the third straight day as volatility in the currency markets boosted demand for the precious metal as an alternative investment. The euro fell to a three-week low against the dollar on speculation that Greece’s sovereign-debt crisis will worsen as talks over another aid package stalled. The greenback has dropped 12 percent in the past year against a basket of major currencies. Gold priced in British pounds rose to a record today.
