Corn (Source: CME)
US corn futures end slightly higher on spillover strength from wheat and crop worries. Declining yield expectations, fueled this week by a major crop tour, are underpinning the market. Corn was lower early in the session but rebounded as wheat rallied 1% higher. Still, many traders say the market's upside seems limited in the short-term because prices are already high, which is hurting demand. Traders also wary about another slide in financial markets Friday, depending what the Federal Reserve chairman says in a speech. Sept corn ends up 1/2c to $7.32 1/4. Dec corn, which failed to set a new contract high for the first time in four days, ends up 1/2c to $7.43 1/2.
Wheat (Source: CME)
US wheat futures rally on fund-buying and short-covering. Traders who think the corn market's upside is limited are looking for opportunities in wheat instead, an analyst says. "From a fundamental perspective, it's a strange move," says Shawn McCambridge, senior grains analyst for Jefferies Bache. Notes that weekly export sales were low and that buyers have been choosing Black Sea wheat over US. However, some analysts see strong world demand, even if it's for Russian wheat, as ultimately supportive. CBOT Sept wheat ends up 8 cents, or 1.1% to $7.57 1/4 a bushel. KCBT Sept wheat closes up 1.5% to $8.47 3/4 and MGEX wheat up 0.9% to $9.34 3/4.
Rice (Source: CME)
U.S. rice futures end lower for the third day in a row, as the market retreats from a 2 1/2-year high but remains rangebound. Market had surged this summer on U.S. crop worries, but traders say damage is priced in. Prices remain above last week's low of $16.38 1/2. Sep CBOT rice closes down 10 1/2c to $16.74 1/2.
More Rain Forecast For Germany; Fears For Wheat Quality (Source: CME)
Germany's harvest season will continue amid unsettled weather conditions with more rainfall and cloud forecast for the next five days, raising concerns about the quality of the wheat crop, market participants said. Jim N. R. Dale, senior risk meteorologist at British Weather Services, said that Western Europe needs a weather pattern change that can block high pressure in order to ensure dry weather can last. Excess rain in northeastern and eastern Germany and Poland, as well as abundant precipitation in central Europe, has hampered harvesting this year. Parts of North East Germany have received as much as 200 millimeters of rain in two weeks. Astrid Rewerts, head of plant production at farmers association Deutscher Bauernverband, or DBV, said the wheat harvest isn't yet complete due to bad weather and harvesting conditions in the north and north-east of Germany.
Delays to harvesting in Germany because of heavy rainfall mean only 82% of the country's wheat crop is expected to be of milling quality in 2011-12, analyst Strategie Grains forecasts. Joe Vaclavik, senior grains broker at MF Global said that Germany should be harvesting wheat now, but the conditions are too wet. "Rains helped the crop initially, but are now delaying the harvest and quality is rapidly deteriorating," Vaclavik said. Germany's grain harvest is likely to fall 12% on the year to around 39 million metric tons, driven by extremely unfavorable weather during the entire harvesting season, DBV said Thursday. The association expects the wheat harvest to fall around 12% on the year, to around 21 million tons. U.K. trade house Gleadell said continued rainfall across Germany is resulting in a greater percentage of wheat being used for feed quality--this contrasts with Ukraine, where the proportion of milling wheat in this year's crop has been increased to 70%, from last month's estimate of 60%.
US wheat slides for 2nd day, Canadian f'cast weighs
SINGAPORE, Aug 25 (Reuters) - U.S. wheat futures fell more than 1 percent losing more ground as the market came under pressure from better-than-expected Canadian crop and forecasts of favourable weather in Australia's grain producing areas.
"I guess people are on the sidelines today as everyone is cautious before Bernanke's speech," said Lynette Tan, an analyst with Phillip Futures in Singapore. "It is also higher output forecast for the Canadian crop and some profit-taking after strong gains."
Australia weather bureau sees wetter conditions in grain belt
SYDNEY, Aug 25 (Reuters) - A wetter-than-normal normal spring is expected across the grain growing belt of Western Australia, which could boost the harvest in the country's top wheat exporting state that suffered crop withering drought last year.
There is also a good chance of rain across northern New South Wales and southern Queensland states in eastern Australia where a dry winter has left wheat crops struggling, according to a forecast from the Australian Bureau of Meteorology..
Vietnam 2011 rice exports could hit 7.5-8 mln T-report
HANOI, Aug 25 (Reuters) - Vietnam, the world's second-largest rice exporter after Thailand, could ship between 7.5 million and 8 million tonnes of the grain this year following an expected rise in its annual paddy output, a state-run newspaper reported on Thursday.
A Vietnam Food Association official made the export projection based on an Agriculture Ministry estimate that paddy output could rise to 41.6 million tonnes, the Vietnam Economic Times newspaper said, above a government forecast of a record high of 41.02 million tonnes.
Canada to reap more wheat, record canola
WINNIPEG, Manitoba, Aug 24 (Reuters) - Canada will produce more wheat and reap a record-large canola harvest in 2011 after summer heat helped late-planted crops recover, Statistics Canada said Wednesday in its first forecast of the year based on a farmer survey.
The government statistical agency pegged all-wheat production at 24.076 million tonnes, up nearly 4 percent from a year ago, and the canola harvest at a record-large 13.193 million tonnes, up 11 percent.
SovEcon trims Russia grain crop fcast to 87-88 mln T
MOSCOW, Aug 24 - SovEcon analysts have trimmed Russia's 2011 grain crop forecast to 87-88 million tonnes from 87-90 million tonnes, while keeping its 2011/12 export forecast at 20 million, the firm's chief executive and president said on Wednesday.
"As the harvesting campaign is moving to the Urals and Siberia, the yields are declining and average yields may prove to be close to those in 2009," CEO Andrei Sizov Sr. told a meeting of traders and corporate analysts.
Hurricane may hurt crops in D.Republic, Haiti -UN
MILAN, Aug 24 (Reuters) - Hurricane Irene may have damaged rice and maize crops when it hit northern areas of the Dominican Republic and Haiti on Tuesday, though no strong damage has been reported so far, the United Nations' food agency said.
The storm's heavy rains and strong winds could have hindered harvesting and planting activities in the northern parts of the Dominican Republic, where the main paddy growing areas are located, the Food and Agriculture Organisation (FAO) said on Wednesday.
Global '11-12 Corn Output View 849M Tons (Source: CME)
World corn production is expected to fall by 10 million metric tons to 849 million tons in 2011-12 due to sharp cuts in the U.S. crop forecast, the International Grains Council said Thursday. "But production prospects in the southern hemisphere have improved and the 2011-12 corn crop is still projected to be the largest on record at 849 million tons," the London-based body said. World wheat output is now forecast to hit 677 million tons, up by 3 millions tons on the previous estimate due to improving prospects in Europe, Russia and China. World grain production is expected to hit a record 1.81 billion metric tons in 2011-12, but will still lag increasing global consumption. "The substantial recovery in Black Sea region supplies will result in a major shift back to this origin, especially for wheat, with the downturn in U.S. corn exports also partly offset by expected record Ukraine shipments of this grain," it said.
CHICAGO, Aug 24 (Reuters) - Corn market bulls are bracing for continued price strength in new crop corn prices, judging by the recent surge in call buying in the options arena. Indeed, the amount of potential buying in place at key strike prices up to 25 percent above current corn price levels is greater than the entire U.S. corn inventories being projected to remain at year-end.
Australia New Crop Wheat Sales Hit 500,000 Tons (Source: CME)
Anticipating a bumper crop, Australia has already made advance sales of at least 500,000 metric tons of new crop wheat that will be harvested in the fourth quarter, a senior industry executive said. Exporters have sold several cargoes from the upcoming crop to buyers in Southeast Asia and the Middle East through both private deals and tenders, Tom Puddy, head of marketing with CBH Grain, one of Australia's largest grain co-operatives, said. He said this excludes several positions taken by multinational companies for the next Australian harvest, which are difficult to estimate. Traders had said in June that Australia had started selling new crop wheat when it was still being planted. Puddy said over the last two months, aggressive sales were made for November, December and January shipments. He said Western Australia's wheat output is likely to almost double to 8.0 million-9.0 million tons from 4.5 million tons in 2010-11, when it was hit by a drought.
Puddy pointed that unlike this year, a major part of the exportable surplus in the next marketing season that begins October, will be from Western Australia because the region's local wheat consumption is under 500,000 tons. He said once the supply situation stabilizes, exporters will work with wheat buyers in Japan and South Korea to revert to earlier blending standards. Due to unusually low wheat production in Western Australia this year, Japan and South Korea relaxed the standards for blending of Australian Noodle Wheat with Australian Prime Wheat. There is, however, some concern about potential future damage to the crop due to frost. "There are no reports of such damage so far but we are now heading into the frost season and few wheat growing areas are susceptible," he said. Puddy said drought conditions prevail in parts of New South Wales but any decline in output may be offset by return to normal production in Western Australia.
Australia may still produce at least 24 million tons wheat in 2011-12, close to the record 26 million tons this year, he said. Due to the record output last year, mostly in Eastern Australia, the country is sitting on a large stockpile most of which had been downgraded to feed grade after heavy rains and flooding earlier in the year damaged some of the crop. Puddy said Australia may still have around 7.0 million tons of wheat stocks by end-September, of which around 60% will be feed-grade.
Paraguay, Uruguay Consider Farm Taxes Amid High Grain Prices (Source: CME)
With grain prices near all-time highs, the governments of two major South American farming nations want to tap into the global commodities boom by taxing the farming sector. Argentina, the world's No. 3 soybean exporter, pioneered the concept of taxing the bonanza in the countryside by imposing a 35% levy on soy exports. The government expects to rake in $8 billion from that tax this year, up from $6.3 billion in 2010. Now Paraguay is looking to tax grain exports, while Uruguay is pushing for a property tax on farmland. Paraguay is the world's fourth-largest exporter of soybeans, which are the small landlocked country's largest source of foreign currency. Soy production hit 8.4 million metric tons this year, up from 3.6 million tons just five years ago as vast swaths of the country have been cleared for modern soybean cultivation using genetically modified seeds.
Paraguayan Senator Ramon Gomez Verlangieri of the government-allied Liberal Party has introduced legislation to impose a 6% tax on soybean, corn and sunflower-seed exports. The bill has the backing of President Fernando Lugo, but is opposed by farmers and business groups. The tax could raise about $160 million dollars a year at current prices, according to Paraguayan accounting association Contabilidad.com.py. In Uruguay, President Jose Mujica is steeling for a fight over legislation that would impose significant property taxes on farmland to increase government revenue and dissuade ownership concentration. Under the bill, landowners with 2,000 to 5,000 hectares (4,940 to 12,350 acres) of productive land would pay $8 per hectare each year, rising to $12 for holdings of between 5,000 and 10,000 hectares and $16 for holdings that exceed 10,000 hectares.
Uruguay's land prices have risen 25% a year on average during the past five years, according to the bill. At the same time more and more land has become concentrated in fewer hands, with 10% of the biggest landholders controlling 64% of the country's farmland, according to the government. But farmers are firmly against the tax. "Anything that limits or blocks [agricultural] investment is bad," Jose Bonica, president of the Uruguay Rural Society, told local television channel Teledoce. Uruguay's agriculture-based economy produced 1.5 million tons of soybeans during the 2010-11 season. Taxes are a sensitive issue in farming circles. Argentina's farmers broke into open revolt when the government tried to impose even higher export duties in 2008.
Wheat Rises as Dry Weather Threatens U.S. Winter Sowing; Corn, Soy Steady (Source: Bloomberg)
Wheat futures rose to a 10-week high on speculation that dry weather in the U.S. Great Plains will limit planting of the winter crop during the next two months. Corn and soybeans were little changed. The southern Plains may have “only a few scattered thundershowers” through Aug. 30, with most of the rain coming in northern areas, according to a Telvent DTN forecast. Much of southern Kansas, Oklahoma and Texas, the three biggest winter- wheat growers last year, are experiencing “exceptional” drought, the most severe rating on the U.S. Drought Monitor maintained by the University of Nebraska in Lincoln. “Wheat is underpinned by the hard, red winter-wheat- planting concerns,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting, said by telephone from Lafayette, Indiana. “The weather is looking very, very dry, and farmers are under crunch time for getting moisture replenished before planting fields in mid-September.”
ICE sugar slips off contract highs, coffee up
LONDON, Aug 25 (Reuters) - ICE sugar eased off contract highs consolidating recent gains, while arabica coffee was higher as chart-based buying continued to support the market. Cocoa prices were slightly lower as ample supplies weighed on the short-term outlook.
Raw sugar futures fell in early trading, with the market still vulnerable to sharp swings based on broader investor sentiment, while also remaining underpinned by Brazil's smaller-than-expected crop.
Brazil's Bahia cocoa mid-crop to beat forecast
SAO PAULO, Aug 24 (Reuters) - Cocoa arrivals in Brazil slowed slightly in the last week with the mid-crop now past the peak of the harvest, data from the Bahia Commercial Association showed, but Bahia output looks set to beat forecasts.
There is little doubt that forecasts months ago of up to 1.05 million bags from the main cocoa state Bahia will now be exceeded with six weeks left to run on the harvest, cocoa analyst Thomas Hartmann said in a weekly crop update.
Irene Prompting U.S. Northeast to Prepare for Biggest Hurricane Since 1985 (Source: Bloomberg)
New York, New Jersey and Delaware officials are preparing for the possibility of mass evacuations as Hurricane Irene threatens to wreak the most havoc in the Northeast since Hurricane Gloria in 1985. More than 65 million people, or one in five Americans, may be affected by the storm, which is forecast to snake from North Carolina to Maine in the coming days, according to data compiled by Bloomberg. Northeasterners may mimic the rituals of their counterparts in the Southeast, who have already begun fleeing coastal areas. New York City officials will decide tomorrow whether to call for the evacuation of low-lying areas, while New Jersey Governor Chris Christie, New York Governor Andrew Cuomo and Governor Martin O’Malley of Maryland declared states of emergency.
Crude Oil Futures Rise on Speculation of More Stimulus, Hurricane Threat (Source: Bloomberg)
Crude oil increased on speculation Federal Reserve Chairman Ben S. Bernanke will announce more stimulus and as Hurricane Irene threatened to shut refineries on the U.S. East Coast. Prices rose on anticipation Bernanke will announce a third round of quantitative easing at Jackson Hole, Wyoming, tomorrow. Irene is the strongest Atlantic storm to threaten the U.S. since 2005. The East Coast has 10 operating refineries that can process 1.21 million barrels of oil a day, accounting for 7.1 percent of the country’s capacity. “There’s a hard-to-defeat feeling that something fresh will be announced at Jackson Hole tomorrow,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “There’s an increasing focus on Irene and all the damage it can do to refineries along the East Coast. Gasoline is up a lot on this and pulling crude higher.”
Oil Falls, Trimming Weekly Gain, on Outlook for Economic Slowdown in U.S. (Source: Bloomberg)
Oil fell from a two-day high in New York, trimming the first weekly gain in five, as investors bet that signs of a slowing economy in the U.S. indicate fuel demand may falter in the biggest crude-consuming nation. Futures slipped as much as 0.6 percent before a report today that may show U.S. economic growth dropped in the second quarter and a speech by Federal Reserve Chairman Ben S. Bernanke. Hurricane Irene is threatening to shut refineries on the U.S. East Coast. Brent crude’s premium to New York futures widened for a second day. “All eyes tonight will be on global central bankers at Jackson Hole and in particular Fed Chairman Bernanke’s speech,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, said in a note today. The bank estimates oil will average $100 a barrel in the third quarter. “The major question for markets is whether Bernanke will indicate any further prospect of a policy stimulus.”
Brent oil rises above $110 on Fed optimism
LONDON, Aug 25 (Reuters) - Brent crude oil edged above $110 a barrel on Thursday, supported by a drop in U.S. inventories and investor hopes that the Federal Reserve may announce stimulus measures for the U.S. economy on Friday.
"The market is building up toward the Jackson Hole speech, and has found support from the draw in crude inventories this week and the durable goods orders in the U.S.," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas.
Cash Gold Declines After Global Equity Slump Prompts Rebound in New York (Source: Bloomberg)
Gold fell after rebounding in New York from its worst two-day drop since 2008. Global equities tumbled in Europe and the U.S., prompting demand for a haven. Bullion for immediate delivery declined 0.6 percent to $1,763.28 an ounce after gaining 0.8 percent yesterday. The metal dropped 7.3 percent in the two days through Aug. 24, the most since October 2008. “The market will probably be in hold mode until we have a listen to what Bernanke says this evening at Jackson Hole,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “I wouldn’t think traders would be too anxious to bet one way or the other at this point because I don’t think anyone really knows what he might say.”
Gold Rebounds as Equity Slump Revives Demand for Precious Metal as a Haven (Source: Bloomberg)
Gold rebounded in New York, halting the biggest decline since 2008, as slumping global equities revived the appeal of the precious metal as a haven asset. Global stock markets fell, sending the MSCI World Index of equities down as much as 1.4 percent, as French, Italian and Spanish regulators extended temporary bans on short selling introduced this month. Gold prices tumbled 7.1 percent in the previous two sessions, after gaining as much as 18 percent this month to an all-time high of $1,917.90 an ounce on Aug. 23. “Gold is making a comeback,” said Adam Klopfenstein, a strategist at MF Global in Chicago. “Flight-to-quality fears still persist, and gold is putting on its risk-aversion hat.”
