Commodities Decline as Speculation of Slower Growth Curbs Materials Demand (Source: Bloomberg)
Commodities slumped, paced by wheat and zinc, on speculation that slowing manufacturing will curb demand for raw materials. The Standard & Poor’s GSCI index of 24 commodities fell 0.5 percent to 671.02 at 2:31 p.m. New York time after dropping as much 0.8 percent. Zinc retreated as much as 2.9 percent in London, and wheat fell the most in two months on signs that demand for U.S. supplies is slowing. The GSCI slumped below its 200-day moving average, signaling further declines. Euro-area manufacturing contracted more than initially estimated in August while Chinese manufacturing growth stayed near a 29-month low, purchasing managers’ indexes showed. Similar gauges for Sweden, the U.K., South Korea and Taiwan all indicated contraction.
Corn (Source: CME)
US corn futures closed with steep losses as traders take profits ahead of three-day US holiday weekend. They had money to take off the table after most-active December corn reached contract highs earlier this week. The contract ended up 15% for the month, looking "way overbought," says John Kleist of ebottrading.com. CBOT December corn slides 29c to $7.38 1/2 a bushel. The exchange will close Monday for Labor Day.
Wheat (Source: CME)
US wheat futures finished sharply lower as traders book profits following strong gains last month. Traders took money off the table ahead of the three-day holiday weekend and after CBOT wheat approached a three-week high earlier this week. Prices were up since early August. Spring wheat futures at MGEX suffer milder losses due to concerns about a poor harvest. CBOT December wheat drops 30 1/2c to $7.61 a bushel; KCBT December loses 23c to $8.72 and MGEX December stumbles 14 1/2c to $9.32.
Rice (Source: CME)
US rice futures finished flat, avoiding sharp losses that hit other grain markets. Concerns about tightening global inventories underpin prices, as traders worry about government policies keeping rice at home in Thailand and India. Rice farmers are holding on to their supplies in Thailand, the world's top exporter, as they wait for the government to increase the price at which it buys the grain in November. CBOT November rice rises 2c to $17.96 1/2 per hundredweight.
US wheat down 0.8 pct, corn dips on weather outlook
SINGAPORE, Sept 1 (Reuters) - Chicago wheat lost ground, falling 0.8 percent, while corn and soy slid around half a percent as the agricultural markets took a breather on forecasts of rains in key U.S. producing regions after a strong rally last month.
"I think today's fall has to do with rain and also there is profit-taking as well after the sharp move higher," said Abah Ofon, an analyst with Standard Chartered Bank in Singapore.
Libya set to ramp up grains purchases - trade
LONDON/HAMBURG, Aug 31 (Reuters) - Libya is set to step up commercial purchases of wheat and flour in the coming weeks although western sanctions imposed on ousted leader Muammar Gaddafi and worries over port security will hinder the pace of shipments, trade and shipping sources say.
The country's interim council, trying to heal scars left by Gaddafi's 42-year rule, is keen to assert its grip and relieve hardship after six months of war. Libya was a big importer of food before fighting interrupted supply chains.
German farm ministry sees grain crop down 6 pct
HAMBURG, Sept 1 (Reuters) - Germany's 2011 grain crop of all types is likely to fall by 6 percent on the year to around 41 million tonnes, Germany's agriculture ministry said on Thursday.
German grain has suffered from a springtime drought followed by repeasted harvest-time rain, it said.
Linn Group cuts US corn yield forecast to 149.1 bpa
CHICAGO, Aug 31 (Reuters) - The Linn Group, a Chicago-based commodity research and brokerage firm, on Wednesday lowered its forecast of the 2011 U.S. corn yield to 149.1 bushels per acre, from 152.1 early this month.
The firm cut its estimate of U.S. 2011 corn production to 12.391 billion bushels, from 12.775 billion previously.The estimates fell below the U.S. Department of Agriculture's current corn yield forecast of 153.0 bushels per acre and production forecast of 12.914 billion bushels.
Relief from heat for US Midwest, Plains crops
CHICAGO, Aug 31 (Reuters) - Cooler temperatures and some light rainfall are expected from the weekend through next week in most of the U.S. Midwest and Plains crop regions, an agricultural meteorologist said on Wednesday.
"A system Friday through Sunday should bring from 0.25 to 0.75 inch to 85 percent of the Midwest and from 0.10 to 0.75 inch in the Plains with about 70 to 75 percent coverage," said Drew Lerner, meteorologist for World Weather Inc.
Ukraine grain exports at 963,000 T Aug 1-27
KIEV, Aug 31 (Reuters) - Ukraine grain exports totalled 962,800 tonnes in August 1-27 against about 1.3 million in the same month a year earlier, analyst UkrAgroConsult said on Wednesday.
The consultancy said in a statement that the volume included 511,600 tonnes of barley, which was exported mainly to Saudi Arabia and Israel, and 437,400 tonnes of wheat, exported mainly to the European Union and Syria, amongst other grains.
Ukraine trader HIB exports 300,000 T grain Jul-Aug
KIEV, Aug 31 (Reuters) - Ukraine's major grain exporter HlibinvestBud (HIB) had exported about 300,000 tonnes of grain in the first two months of the 2011/12 season covering about 30 percent of the total Ukrainian exports this period, it said on Wednesday.
HIB, which plans to export 5 million tonnes of grain this season ,also said it had bought 1.0 million tonnes of grain from local producers for the future exports.
GMO Soy Seed Sales To Argentina Approved (Source: CME)
Germany's Bayer AG has received approval for its strain of genetically modified soybeans in Argentina, clearing the way for sales to one of the world's top soy producers. Argentina approved the Liberty Link soybean technology, which involves transgenic seeds resistant to the herbicide glufosinate-ammonium, according to the company. Bayer CropScience is now moving to obtain approval for seeds with multiple transgenic traits, generally a formality in Argentina, which is one of the world's leading supporters and producers of genetically modified agricultural goods. Liberty Link will be combined with stacked traits and launched in Argentina "in the forthcoming years," the company said in a statement. Argentina is the world's leading exporter of soyoil and meal, and ranks third behind the U.S. and Brazil in soybean exports. Virtually all of Argentina's soybeans incorporate U.S. grain giant Monsanto Co.'s (MON) technology, which makes soybeans resistant to the herbicide glyphosate.
Monsanto introduced the seeds to Argentina over a decade ago, but it failed to get a patent and has struggled to collect royalties since. Monsanto is now on a push to get farmers to voluntarily sign an agreement to pay royalties in exchange for access to the company's second generation of modified soy seeds, which it says may boost yields by 10% to 15%. Meanwhile, Bayer is hoping to cash in on the spread of a host of weed varieties which have developed resistance to glyphosate, after years of repeated spraying across Argentina's farmlands. "Weed resistance is evolving rapidly, driving the need for sustainable solutions like new herbicide tolerance traits, especially in soybeans," Bayer said. "The Liberty Link trait will deliver an important and effective weed management tool as an alternative to using glyphosate herbicides in genetically modified soybeans which are currently grown on 18 million hectares in Argentina."
Ukraine Grain Export Duties Challenged (Source: CME)
Ukraine's farmers are barely making profits on their grain due to government export tariffs, the local European Business Association said Thursday in an open letter urging the removal of the duties. The EBA's Grain and Oilseeds Committee, which represents 17 of the country's largest agricultural companies, said in a letter to Prime Minister Mykola Azarov that the duties imposed this year are sapping Ukraine's export potential. "As a result of export duties enforcement product prices of Ukrainian grain on world agricultural markets increased, giving birth to the sharp decline of grain exports volume," said the EBA. "The introduction of export duties from 1 July 2011 adversely affected farmers who are actually working on the verge of loss as the domestic prices tend to fall constantly," said the EBA. Kiev imposed duties on all grain shipments in July after lifting export quotas put in place during 2010.
But traders argue the taxes mean Ukrainian wheat is no longer competitive compared with Russian produce on international markets. Ukraine's grain export fell in July to 300,000 metric tons from 1.5 million tons in June as a result of the tariffs, the deputy head of the ministry's agricultural markets department Anatoly Razgon said last week. "We support the initiative of the Ministry of Agriculture and Food policy on amending the Law of Ukraine 'On Customs Tariff' and kindly ask to cancel export duties on some crops as soon as possible," said the EBA. Local dealers also say Ukraine's farmers are currently unwilling to sell as domestic prices have been kept low by the lack of exports. "We see that if Ukraine is lifting the export tax then the interior market prices will immediately adjust," said one trader. Yet while the Ministry of Agriculture and Food is pushing to have the quotas removed, people with knowledge of the matter say the Ministry of Finance continues to block the process.
Dealers now seem increasingly concerned the duties will be kept in place until the end of 2011. The export duty on wheat is 9% and no less than EUR17 a metric tons. On barley, the duty is 14% and no less than EUR23/ton. The duty on maize is 12% and no less than EUR20/ton.
Libya Turns To Russian Grain (Source: CME)
Libya's new government is already turning to Russian grain to meet food demand despite initial concerns that Moscow's support of the former regime could hamper its exports. Traders said international merchants like France's Soufflet and Glencore International PLC (GLEN.LN) are already moving to meet the needs of the desert country, which depends on imports for nine-tenths of its food supplies. Months of violence have caused serious upheaval to Libya's import routes and the regions that supply its limited food production around the war-torn eastern port of Benghazi. United Nations agencies, including the World Food Program, have distributed hundreds of thousands of tons of food to the country to stave off a humanitarian crisis. But the private sector is now stepping up its own efforts to meet demand.
Traders said Thursday the Russian unit of commodities giant Glencore chartered two shipments of 25,000 metric tons of wheat to the North African country from the Black Sea port of Novorossiisk on Saturday. A ship broker said a vessel named the Sea Dream Bulker arrived at Benghazi port after traveling via Turkey. Glencore's Russian unit, International Grain Co., declined to comment. But a manager at a major Russian grain exporter said he expected the company to remain a major supplier to Libya in the future, even though they had previously supplied the country under the deposed regime of Col. Moammar Gadhafi. "I think Glencore have a good position either with the old government in Libya and also with the new power over there," he said. "They represent Western capital so they should be welcomed."
A person at industry association the Russian Grain Union agreed, adding that 50,000 tons of Russian wheat had made its way to Libya in July through Egyptian and Tunisian traders. "Although the rebel leaders there said they would punish the countries that had been slow in recognizing their regime, including Russia, China and Brazil, Russian wheat is still cheap and can be delivered quickly," he said. To be sure, Libya is in dire need of food supplies. Guma El-Gamaty, the U.K.-based coordinator and spokesman for the National Transitional Council, said hundreds of thousands of tons of flour, oils and other foodstuffs from Turkey are being "unloaded as we speak" to provide aid for thousands of people. Abber Etefa, spokeswoman for the WFP, said they are "acting to avert a crisis."
Andree Dufois, managing editor of grains analyst Strategie Grains, said she expects the country's wheat imports to remain broadly in line with the 1.3 million tons imported in the 2010-2011 crop year, although any disruption to the country's milling sector could switch demand to wheat flour instead of grain. Traders agreed that much of this is likely to come from Russia, which has become an increasingly important supplier to Libya and other north African countries in recent years. The release of $6 billion in frozen assets from the Gadhafi regime held in Europe's banks is also easing the passage of food exports from other parts of Europe. A person at French grain tradehouse Soufflet said the company has signed a deal to supply 60,000 tons of wheat as humanitarian aid, with the shipment due to arrive "in a few days." He declined to comment on the price but dealers said the contract could be worth around $22 million.
Shipping companies too are tentatively moving back into the country after the European Union Thursday lifted its sanctions on Libyan ports. Brokers and people nearby said aid ships were unloading in Tripoli port and shipping companies, including the world's largest container shipper by volume, Maersk Line, and CMA CGM said they will resume full services into the capital as security improves. "The Group will continue obviously to ensure a high quality of service in Libya as soon as the situation is back to normal," GMA CGM said in a statement.
Russia's Grain Snarled In Backlog (Source: CME)
Russia has halted grain cargoes snaking their way from the fields to a key port, underscoring doubts about the reliability of the country's supplies. The move comes two months after Russia lifted a ban on grain exports and gives U.S. wheat growers the chance to reclaim their edge in the global market. This week, Russia's railway authority banned further shipments of grain to the Black Sea port of Novorossiisk because a bottleneck of more than 3,500 railcars, about 40 trains, had clogged an entire branch of the network. Normally, a line of 10 trains is waiting to be unloaded. The stoppage began on Saturday. On Wednesday, local railway managers said it is likely to last another five or six days. Demand for Russia's grain has surged since the export ban expired on July 1, putting heavy pressure on the country's creaking Soviet infrastructure. Buyers have been eager to snap up cheap Russian wheat, snubbing U.S. exporters, whose grain comes with a higher price tag.
Any snag in Russian grain exports "bodes well for other exporters, including the U.S.," said Mike Krueger of Money Farm, a commodities brokerage in North Dakota. Stronger demand for wheat from the U.S. would support benchmark prices on the Chicago Board of Trade. Although U.S. wheat futures trade near three-month highs, traders say the recent intense competition in the export market has weighed. The most actively traded wheat contract, for December delivery, on Wednesday closed 0.1% higher at $7.915 a bushel on the CBOT. September wheat fell 0.7% to $7.4525. Buyers like Egypt, the world's top wheat importer, quickly returned to procuring wheat from Russia after the export ban was lifted. Egypt is now Russia's largest customer and its purchases account for the bulk of grain waiting at Novorossiisk to be loaded onto ships.
Prior to the ban, grain dealers said Russian exports were expected to reach a near-record 3 million metric tons in September, outstripping the monthly capacity of all the country's southern ports. Exporters had placed orders to deliver 500 to 600 railcars a day -- double the amount the port could handle, according to Russia's railway authority. "It has taken everybody in the industry off guard that they are so aggressively selling," said Dan Manternach, wheat analyst for Doane Advisory Services, an agricultural advisory firm. The U.S. Department of Agriculture forecasts Russia's wheat exports will more than quadruple this year to 16 million tons. Hiccups in Russia's transportation system could convince foreign buyers to shift grain purchases to the U.S., particularly if the rail jam persists longer than expected, Mr. Manternach said. The U.S. is the world's top grain exporter and stepped in last year to fill the vacuum created by Russia's export ban.
Wheat Futures Decline Most in Three Weeks in Chicago as U.S. Exports Slump (Source: Bloomberg)
Wheat futures fell the most in three weeks on signs that demand for U.S. supplies is slowing. U.S. exporters sold 369,162 metric tons of wheat in the week ended Aug. 25, trailing analyst expectations and 64 percent less than the same week last year, the Department of Agriculture said today. Prices touched a three-month high on Aug. 29. The dollar climbed to the highest in almost three weeks today against a basket of six currencies, making commodities priced in the greenback more expensive for importers. “We’ve been losing a little bit of demand as these prices have gone up,” Dewey Strickler, the president of Ag Watch Market Advisers, said by telephone from Franklin, Kentucky. “What has hurt things in the grains is the fact that the dollar is up a little. That’s probably the case today.” Wheat futures for December delivery fell 30.5 cents, or 3.9 percent, to settle at $7.61 a bushel at 1:15 p.m. on the Chicago Board of Trade, capping the biggest drop since Aug. 8.
Corn, Wheat Futures Fall Most in Two Weeks in Chicago; Soybean Prices Drop (Source: Bloomberg)
Corn and wheat fell the most in two weeks on the Chicago Board of Trade, and soybeans declined. Corn futures for December delivery dropped 8.5 cents, or 1.1 percent, to $7.59 a bushel at 9:36 a.m. in Chicago, heading for the biggest decline since Aug. 18. Wheat futures for December delivery slipped 19.25 cents, or 2.4 percent, to $7.7225 a bushel on the CBOT. A close at that price would mark the biggest drop since Aug. 18. Soybean futures for November delivery declined 11.5 cents, or 0.8 percent, to $14.46 a bushel in Chicago.
LIBYA SET TO RAMP UP GRAINS PURCHASES - TRADE
LONDON/HAMBURG, Aug 31 (Reuters) - Libya is set to step up commercial purchases of wheat and flour in the coming weeks although western sanctions imposed on ousted leader Muammar Gaddafi and worries over port security will hinder the pace of shipments, trade and shipping sources say.
The country's interim council, trying to heal scars left by Gaddafi's 42-year rule, is keen to assert its grip and relieve hardship after six months of war. Libya was a big importer of food before fighting interrupted supply chains.
ICE coffee, sugar ease as commodities retreat
LONDON, Sept 1 (Reuters) - Arabica coffee and raw sugar futures on ICE eased in early trade, tracking a setback in a wide range of commodity markets including grains and base metals.
Arabica coffee futures were lower with the market seen technically overbought after rising for 17 straight sessions.
Brazil coffee may be at risk from La Nina dryness
BRASILIA, Aug 31 (Reuters) - Brazil's coffee belt may face more weather risks in the coming weeks if rainfall is erratic, as some forecasters fear, during the critical flowering phase that will define next year's crop.
The forecasters have ruled out further frosts for the region. Rains due in September could be erratic with signs a drought-provoking La Nina is forming, forecasters said. That could dent next year's output as trees now have low soil moisture reserves to rely on.
Swiss trade urges action on Vietnam coffee defaults
LONDON, Aug 31 (Reuters) - The Swiss Coffee Trade Association plans to alert Swiss and Vietnamese authorities to defaults on coffee contracts by local Vietnamese exporters, which have cost the coffee industry millions of dollars, the president of the association said on Wednesday.
"We will be asking Vietnamese authorities to only allow companies that respect contractual terms to be in business," said Nicolas Tamari, president of the Swiss Coffee Trade Association and director-general of Sucafina, a Geneva-based coffee trading house.
Insecurity, lack of workers may hit Ivorian cocoa
ABIDJAN, Aug 31 (Reuters) - The scarcity of migrant workers and continued insecurity in Ivory Coast's main cocoa growing areas may hit the size and quality of the up-coming main crop harvest, farmers said on Wednesday.
The top grower's cocoa industry is usually awash with migrant workers but many fled their homes during months of post-election violence this year and have not yet returned. Many others say it is not safe to work in the fields.
Brent below $114 as Europe manufacturing slows
LONDON, Sept 1 (Reuters) - Brent crude fell below $114 a barrel on Thursday as European data showed a sharp slowdown in manufacturing, raising fears of slower economic growth and a decline in fuel demand.
"The main thing putting pressure on oil this morning is the really bad PMI (Purchasing Managers' Index) readings in Europe," Olivier Jakob from Petromatrix said. "We have an contraction overall in Europe in the PMIs; this is confirmation that the economy is slowing down."
Crude Oil Erases Decline as Tropical Depression Forms in Gulf of Mexico (Source: Bloomberg)
Oil erased its decline in New York after a tropical depression formed in the Gulf of Mexico, shutting production platforms. Crude for October delivery was unchanged at $88.93 a barrel in electronic trading on the New York Mercantile Exchange after earlier falling as much as 31 cents. The contract yesterday climbed 12 cents to settle at the highest level in four weeks as the weather system developed. The tropical depression has shut nearly 6 percent of the region’s oil output and could approach the southern coast of Louisiana this weekend, according to the National Hurricane Center. The system, about 225 miles (360 kilometers) southwest of the Mississippi River mouth, is traveling northwest at 6 miles per hour and may strengthen into a tropical storm before reaching Louisiana’s coast Sept. 3, the Miami-based center said in an advisory issued before 8 p.m. East Coast time.
Russia, China to discuss oil debt -Transneft source
MOSCOW, Sept 1 (Reuters) - Russia and China are set for new talks over disputed debt for Russian oil as Moscow struggles to secure lucrative gas contracts with the world's top energy user, a source at Russia's Transneft told Reuters on Thursday.
Russian oil pipeline monopoly Transneft and Russia's top crude producer Rosneft started pumping oil to China in January via the first stage of the East Siberian-Pacific Ocean (ESPO) pipeline after receiving $25 billion in loans from Beijing.
Oil floating storage off Malaysia given reprieve on eviction
SINGAPORE, Sept 1 (Reuters) - Seven floating oil storage facilities offshore Southern Malaysia have been given a two-week reprieve from eviction as required by a government notice that expired a day ago, industry sources said on Thursday.
The reprieve for the converted Very Large Crude Carriers (VLCCs), which have a capacity to hold up to about 1.9 million tonnes of crude and fuel oil, off Pasir Gudang port could be extended to a month, as had been requested by the owners of the facilities, they added.
Global miners seen keeping iron ore prices steady in Q4
MANILA, Sept 1 (Reuters) - Global miners will keep iron ore contract prices mostly steady in the fourth quarter with spot prices stabilising on firm Chinese demand and tight supplies, Reuters calculations showed.
Based on Platts index prices for June to August, which top iron ore miners like Vale and Rio Tinto use in fixing fourth-quarter contract prices, the 62-percent grade averaged $175.63 a tonne, cost and freight, down marginally from $176.96 in March-May.
Iron ore emerging as Asia's industrial demand gauge
SINGAPORE, Aug 31 (Reuters) - Iron ore could soon become a leading economic indicator in emerging markets such as China, since the absence of speculative froth makes the sandy steelmaking raw material a better gauge of demand than industrial metals like copper.
With the uses of steel nearly as diverse as copper, from manufacturing to construction and power, the volume of iron ore consumed by developing economies shows whether their industrial expansion is on track or if they are curbing fixed-asset investment amid weakness in key export markets in the West.
BarCap buys stake in metals warehouse firm
LONDON, Aug 31 (Reuters) - Commodities heavyweight Barclays Capital has bought a stake in a small metals warehouse, a source said, as the bank scrambles to catch up with rivals by securing a foothold in the profitable storage business.
The UK bank, a major player among commodity investors but not as large in the physical markets, has bought into UK-based Erus Metals Ltd, a little-known metals firm seeking approval to join the network of warehouses monitored by the London Metal Exchange's (LME), a source with knowledge of the matter told Reuters.
Chile Collahuasi sees copper output 500,000 T 2011
SANTIAGO, Aug 31 (Reuters) - Chile's giant Collahuasi copper mine expects to produce around 500,000 tonnes of copper this year, with output stabilizing around 600,000 tonnes in coming years as it seeks to implement an expansion plan, the operator's chief executive said on Wednesday.
Collahuasi, the world's No.3 copper mine and jointly owned by global miners Xstrata and Anglo American ,, produced 504,000 tonnes of copper in 2010, when output was hit by a month-long strike. The mine accounts for around 3 percent of global mined copper output.
Copper Little Changed at $9,136 a Ton After Slumping on Weak China Orders (Source: Bloomberg)
Copper in London traded little changed at $9,136 a metric ton after declining yesterday for the first time in seven days after export orders slid in China, the world’s biggest consumer of the metal.
METALS-LME copper down; China export orders fall weighs
SHANGHAI, Sept 1 (Reuters) - LME copper fell 0.7 percent on Thursday, weighed down by a fall in China's export orders and wider concerns about the global economy ahead of Friday's key U.S. employment data.
But supply disruption threats and the possibility of further quantitative easing in the United States may limit losses.
PRECIOUS-Gold steady after U.S. data; eyes on Fed
SINGAPORE, Sept 1 (Reuters) - Spot gold held steady on Thursday, as investors weighed the possibility of further easing moves by the U.S. Federal Reserve after better-than-expected manufacturing and labour market data.
After recent data showed plunging consumer confidence, Thursday's batch of numbers suggested a strong rebound in demand for manufactured goods in July and increasing hiring from private employers, easing fears the economy would slip back into recession.
Gold Futures Drop After U.S. Manufacturing Unexpectedly Expands (Source: Bloomberg)
Gold fell for the first time in three days after a report showing unexpected growth in U.S. manufacturing bolstered optimism in the economy and eroded demand for the precious metal as a haven asset. The Institute for Supply Management reported its factory index was at 50.6 last month, topping analyst estimates’ of 48.5. Prices also fell as the dollar headed for the biggest gain in two weeks against a six-currency index. Prices touched a record $1,917.90 an ounce on Aug. 23 amid escalating debt woes in the U.S. and Europe. “The manufacturing data is putting some pressure on gold, and a stronger dollar is not helping matters,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “We will probably see some consolidation at current levels.”
