Corn (Source: CME)
US corn futures finished lower, but pare losses ahead of the close of trading as lingering concerns about crop damage from hot, dry weather this summer helped the market rebound. The USDA next week will likely follow the lead of private forecasters by cutting its output estimates and is expected to lower its rating for the crop in a report due later Tuesday. As of the rating update, Alan Brugler of Brugler Marketing & Management says traders didn't want "to be leaning the wrong way if it's a bigger drop than expected." CBOT December corn ended down 4 1/4c at $7.55 3/4 a bushel.
Wheat (Source: CME)
US wheat futures fell, pressured by the rising US dollar and concerns about waning demand. The stronger currency makes US grains less attractive to foreign buyers at a time the country already faces increased competition for wheat sales from the Black Sea region. Egypt, typically the world's top wheat importer, issued a tender to buy wheat after the close of trading, traders say. The country has been buying Russian wheat recently and snubbing the US. CBOT December wheat closed down 15 1/2c at $7.60/bushel while KCBT December dropped 14 1/2c to $8.65 1/2 and MGEX December declines 11c to $9.31 3/4.
Rice (Source: CME)
Rice futures finished weaker with wheat, corn and soybeans as rising US dollar makes US commodities less attractive to foreign buyers. Traders were reducing risk in commodity and equity markets due to worries about a global economic slowdown. Rice market showed little reaction to private firm Informa pegging US output at 185M hundredweight, down from USDA's August estimate of 188.1M. CBOT November rice slides 25c to $17.97 1/2/hundredweight
US corn, wheat slide over 1 pct on Europe worries
SINGAPORE, Sept 6 (Reuters) - U.S. corn and wheat futures slid around 1 percent while soybeans lost 1.4 percent amid fears that worsening Europe's sovereign debt troubles could trigger a full-blown banking crisis.
"Losses in the Chicago grain and oilseed complex are following the risk activity that we saw in London and European markets," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia.
Thailand sees higher rice output, despite floods
BANGKOK, Sept 6 (Reuters) - Thailand, the world's biggest rice exporter, was expected to produce more rice in the current 2011/12 crop despite being hit by storm and floods in the past few months, a senior agriculture official said on Tuesday.
"The latest forecast after floods showed that we could produce 25.1 million tonnes of paddy from the major crop which is due to be harvested in November," Apichart Jongsakul, head of the Office of Agriculture Economy, told Reuters.
French maize crop seen set for record yield
PARIS, Sept 5 (Reuters) - The maize grain harvest in France is expected to produce a record average yield of around 10 tonnes per hectare, technical institute Arvalis said on Monday.
High expected yields reflected early sowing and regular rain during the second half of the growing season, Jean-Paul Renoux, Arvalis' head of maize, told Reuters.
Britain's wheat crop quality seen above average
LONDON, Sept 5 (Reuters) - Initial results suggest Britain's wheat crop is better quality than last season and the three-year average, the Home-Grown Cereals Authority (HGCA) said on Monday issuing provisional results of a cereal quality survey.
The results from 18,000 wheat samples collected up to August 31 show specific weights, Hagberg falling numbers and protein content all above last season.
Ukraine grain crop at 34.9 mln T from 74 pct areas
KIEV, Sept 5 (Reuters) - Ukrainian farms have harvested 34.9 million tonnes of grain from 74 percent of the sown area as of September 5, the Agriculture Ministry said on Monday.
The ministry said in a report the grain yield averaged 3.03 tonne per hectare against 2.48 tonne at the same date in 2010.
Russia grain crop up on year with 56 pct harvested
MOSCOW, Sept 5 (Reuters) - Russia harvested 64.6 million tonnes of grain by bunker weight by Sept. 1, up from 43.3 million tonnes a year ago and 64.4 million tonnes by the same date in 2009, Agriculture Ministry data showed on Monday.
Grain has been harvested from 24.8 million hectares, or 56.3 percent of the harvesting area of 44.1 million hectare, the ministry said in a statement.
Informa Cuts US Corn, Soybean Outlooks (Source: CME)
Informa Economics made another cut to its outlook for the U.S. corn and soy harvests due to poor weather, according to traders. The closely-watched crop forecaster lowered its estimate for the corn harvest to 12.711 billion bushels from 13.353 billion bushels forecast in August and 13.759 billion bushels projected in July, traders said. The firm cut its yield estimate for the crop to 151 bushels an acre from 158 bushels an acre in August and 162.5 bushels an acre in July, they said. The forecasts remai higher than recent estimates from other forecasters. Brokerage firm Allendale on Tuesday pegged the corn harvest at 12.466 billion bushels, with an average yield of 147.7 bushels an acre, while INTL FCStone last week projected farmers will harvest 12.35 billion bushels of corn, with an average yield of 146.3 bushels an acre. Grain traders are paying close attention to private estimates due to uncertainty about the impact of hot, dry weather on the corn crop.
Farmers need to harvest a large crop to prevent low inventories from becoming significantly tighter. "Informa's corn yield at 151 wasn't down the tubes like everybody else," said Sid Love, analyst for Kropf & Love Consulting, an agricultural advisory firm in Kansas. Informa lowered its estimate for the soybean harvest to 3.061 billion bushels from 3.139 billion bushels in August and 3.203 billion bushels in July, traders said. It pegged the average yield at 41.5 bushels an acre, down from 42.5 bushels per acre in its August projection and 43.1 bushels per acre projected in July. In August, the USDA projected corn output at 12.914 billion bushels, with a yield of 153 bushels an acre, and soybean output at 3.056 billion bushels, with a yield of 41.4 bushels an acre. The government is slated to update its forecasts Monday. Informa's estimates represent what it expects USDA will report Monday and its outlooks for "final harvest at this juncture," according to the firm.
"Generally warm and dry conditions stressed the filling of both corn and soybeans," Informa said in a report. Informa also issued estimates for other crops. It pegged rice output at 185 million hundredweight, down from USDA's August estimate of 188.1 million hundredweight. Informa estimated cotton output at 17.467 million bales, up from USDA's August estimate of 16.55 million bales, and predicted the government will increase its estimate for cotton plantings by 930,000 acres to 14.66 million acres. Informa's estimate is "the highest number you're going to see" for cotton, said independent analyst Mike Stevens, who said most investors will likely pay more attention to Monday's USDA report. He added the Informa forecast was "not a market event." The USDA's monthly supply-and-demand report Monday is expected to have a bigger impact on the cotton market. Yet, even that number will be up for debate, as federal forecasters continue to assess the impact of Hurricane Irene and Tropical Storm Lee on crops.
IGC Launches Daily Index To Track Volatile Food Prices (Source: CME)
The International Grains Council has introduced a daily grains and oilseeds index, in a sign that the need for a reliable tool to track the current volatility in food prices continues to be extremely high. Food price inflation has been a key concern for most Asian governments and many are caught between the difficult choice of tightening monetary policy to rein in inflation and keeping it loose enough to sustain growth amid increasing signs of another global slowdown. The index was earlier published once every week. The increase in the frequency is a signal that market participants don't expect the current volatility in prices to abate anytime soon despite bumper grains and oilseeds production from recent crops, fuelled mainly by the higher returns enjoyed by farmers as prices remain stubbornly high. London-based IGC is an inter-governmental group for cooperation in grains trade.
According to its latest forecast, global grains production will rise 3.4% in 2011-12 to hit a record 1.81 billion metric tons but will still lag consumption marginally. That could mean continued volatility in prices as even a small supply disruption could tilt the balance in the market, forcing market participants to take cover. Weekly and monthly indices are useful, but don't account for day-to-day price swings that have become more significant of late, said IGC's senior economist, Darren Cooper. Of the many food indices in the public domain, very few are available on a daily basis, he noted. In addition to collecting and recording the prices, IGC takes a view on prices based on a plethora of information, Cooper said. IGC's index, which was launched in March this year, stood at 294 points on Sept. 1, a 3% increase since the launch, despite consistent gains in production across the globe.
Analysts attribute this to rising global demand, restrictions paced on exports by key producing countries such as India, sharp increase in government's support prices for local farmers in Thailand and unusually dry weather in the U.S., the world's largest exporter of agricultural commodities. The index provides a broad measure of food market conditions on a daily basis and is a useful tool if one wants a quick view of the current situation, Cooper said. IGC compiles futures and physical export prices for eight individual commodities--wheat, corn, rice, barley, sorghum, soybeans, soymeal and rapeseed--at 22 origins worldwide. Each commodity is assigned a weighting based on the five-year average of its globally traded volume. The weightings will be reviewed each January.
Food Market Regulation Not Viable - FAO (Source: CME)
Commodity market regulation is not a viable long-term option to combat the fundamental problems affecting the world agricultural sector, a senior executive of United Nations' food body said Tuesday. Ann Tutwiler, deputy director-general of the Food and Agriculture Organization, said this year's surge in food prices has been driven by a "mismatch between supply and demand" that will only be solved by increasing investment in agriculture. The Organization of Petroleum Exporting Countries "doesn't even do a great job of managing oil prices and they are dealing in a non-renewable resource," she told Dow Jones Newswires. "Market regulation, to regulate prices, I just don't think is a viable option over the long term." How far financial speculators are responsible for swings in commodities prices has become a topic of hot debate this year after food prices spiked to record highs for the second time in four years, sparking protests across the Arab world and other developing countries.
French President Nicolas Sarkozy, who blames speculative investors for the sharp rise, placed regulation at the top of the agenda for his leadership of the Group of 20 nations, but as yet no political consensus has been reached on how to better manage volatile commodity markets. "I don't see any way that the [agricultural] sector is not going to be vulnerable to external commodity markets but it's about how you manage that," said Tutwiler. In June, agriculture ministers for the G20 gathered here for an unprecedented meeting to address food price volatility. Although they put forward no concrete proposals to improve regulation, they did announce plans to create a global system to monitor crop production and stock levels, to be overseen by the FAO. Critics say in countries like China or Russia--both of which play an increasingly important role in world agricultural markets--monitoring output is virtually impossible due to the disparate nature of production.
But Tutwiler said the FAO has both the resources and expertise to build such a system. "The reality is that we know, because we have satellite that can tell us how much people are producing," she said. "We have a lot more access to information than governments often have that doesn't get used as it's not reported through government channels." Her comments come as agricultural experts have gathered at the Organization for Economic Cooperation and Development in Paris to develop a more sustainable agricultural production system. Fundamental to the debate is how to meet growing world food consumption--the FAO predicts output will need to rise 70% by 2050 to meet demand--without contributing to climate change. Tutwiler said that improving technology will be key to improving output in the future and all possibilities, even the controversial topic of genetically modified crops, shouldn't be taken off the table.
"Technology is the only way we've increased production over the past 50 years and it's the only way we're going to do it in the future," she said. "With the challenges we're facing in terms of food production I don't think we should reject any particular technology out of hand."
Pacific Neutral But La Nina Possible In 2011 (Source: CME)
A return to a La Nina climate event is still possible this year, but for now most oceanic and atmospheric indicators of such events are around neutral levels, the government's Bureau of Meteorology reported Tuesday. The latest weekly data showed some sea surface temperatures are cooler than normal, the coolest since February but still within neutral thresholds, while trade winds are slightly stronger-than-normal in the western Pacific and cloudiness near the International Date Line has been below-average for the past two weeks, the bureau reported. "Both of these indicators and the cooling of the ocean, are consistent with the possibility of La Nina developing later in the year," the bureau said in a weekly tropical climate note. That said, most international climate model forecasts of El Nino and La Nina events show neutral conditions are likely to continue into the southern hemisphere spring, it said. The bureau's Southern Oscillation Index measured +5.3 in the 30 days ended Sept. 4, up from +2.1 in August.
Sustained positive values above +8 of the SOI may indicate a La Nina, while sustained negative values below -8 may indicate an El Nino. Values between about +8 and -8 generally indicate neutral. Typically, El Nino conditions result in below-average rainfall over much of eastern Australia while La Nina results in above-average rainfall over most of the continent.
Soybean Futures in Chicago Gain by 0.2% to $14.2475; Corn, Wheat Advance (Source: Bloomberg)
Soybeans for November delivery rose 0.2 percent to $14.2475 a bushel on the Chicago Board of Trade at 9:11 a.m. Melbourne time. Corn for December delivery advanced 0.2 percent to $7.5725 a bushel. December-delivery wheat gained 0.4 percent to $7.6275 a bushel.
Corn, Soybeans, Wheat Drop on Signs Weaker Economy Will Curb Crop Demand (Source: Bloomberg)
Corn, soybean and wheat futures fell on speculation that Europe’s sovereign-debt crisis will hinder the global economy, reducing demand for food, livestock feed and fuel made from crops. The Standard & Poor’s GSCI Index of 24 raw materials dropped as much as 2.1 percent, and global equity markets fell. Josef Ackermann, the chief executive officer of Deutsche Bank AG, said that market conditions remind him of late 2008, which preceded the deepest global economic slump since the 1930s. The U.S. is the world’s top exporter of corn, soybeans and wheat. “Increasing European debt problems depressed commodity demand,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Fear and a lack of confidence in governments to address their debt problems and revive economies are reducing speculative buying.”
Coffee, sugar fall after U.S. holiday
LONDON, Sept 6 (Reuters) - ICE coffee, sugar and cocoa futures fell early adjusting to Liffe markets after the U.S. Labor Day holiday, with expectations of a large Vietnamese robusta crop weighing on arabicas.
ICE arabica coffee futures fell in early trading as the market readjusted to Liffe after the closure of U.S. trading on Monday for the Labor Day holiday.
Vietnam Coffee-Sept exports seen up, discount widens
HANOI, Sept 6 (Reuters) - Vietnam's coffee exports could rise this month to meet loading demand under existing deals and supplies would be added with a bumper harvest expected to start next month, as the country grapples with shipment delays, traders said on Tuesday.
The Southeast Asian country's thinning coffee stock following strong sales in early 2011, which contributed to pushing domestic prices beyond London futures prices in recent months, have led to delays and defaults by exporters and raised concern among foreign buyers.
China's sugar arrivals seen at 600,000 T in Sept-trade
SINGAPORE, Sept 6 (Reuters) - More than half a million tonnes of sugar, mostly from Brazil, are expected to arrive in China in September as the country rebuilds stocks after a prolonged drought hit its main growing region, dealers estimated on Tuesday.
China's sugar demand could outpace output by more than 2 million tonnes in the year to September 2012 after the drought dried up supplies and forced Beijing to release stocks to cool record high prices, a Reuters poll showed.
Drought continues in China's southwest sugar area
BEIJING, Sept 6 (Reuters) - China's agriculture ministry said some 3.23 million hectares of crops were suffering from ongoing drought conditions in the country's southwest, the main sugar-growing region, with no letup in the dry, hot weather.
The ministry said the damage to grains was limited as of Sept. 5 and affected northern parts of the Guangxi region -- which accounts for 60 percent of China's sugar output -- eastern Yunnan province, most areas of Guizhou and parts of Chongqing and Sichuan.
Rains boost Ivorian cocoa, though disease a worry
ABIDJAN, Sept 5 (Reuters) - Good rains with average spells of sunshine last week in Ivory Coast's cocoa growing regions may strengthen the forthcoming 2011/12 main cocoa crop in western regions, farmers said on Monday.
But black pod fungal disease was spreading and threatening crops in the east, they said.
India's Oct-Sept 2 coffee exports jump 35.7 pct on year
MUMBAI, Sept 5 (Reuters) - Coffee exports from India during October-Sept. 2 jumped 35.7 percent on year to 335,315 tonnes, helped by increased shipments to Italy and Germany, the state-run Coffee Board said in a statement on Monday.
India, the world's fifth biggest producer, accounts for only 4.5 percent of the world's coffee output, but exports 70 to 80 percent of this. Italy, Russia and Germany are the top three buyers of Indian coffee.
Brazil 2011/12 key cane region sugar exports seen at 21.1 MLN T
NEW DELHI, Sept 6 (Reuters) - Brazil's 2011/12 sugar exports from its center-south region are likely to be 21.1 million tonnes, analyst Datagro said on Tuesday, down from its Aug. 9 forecast of 22.35 million tonnes as it also cut its output estimate for the key sugar area.
Mounting worries over lower output in Brazil and China helped benchmark New York prices scale a six-month high at 31.85 cents per lb on Aug. 24 and October raw sugar futures on ICE still remain within sight of that milestone.
Czarnikow sees sugar surplus 4-5 mln t 2011/12
LONDON, Sept 5 (Reuters) - Trade house Czarnikow's head of research Toby Cohen on Monday forecast a global sugar surplus of around 4-5 million tonnes in 2011/12.
"We're roughly in line with where most of the market is coming in at the moment, which is around a 4-5 million tonne surplus," Cohen told Insider television in an interview, coinciding with Czarnikow's 150th anniversary celebrations.
Brazil Secretary: 2011-12 Sugar Output Likely To Fall (Source: CME)
Sugar production in Brazil, the world's top producer, is likely to fall to 37.07 million metric tons in the crop year that started April 1, the country's national secretary of production and agroenergy said Tuesday. Brazil is estimated to have produced 38.17 million tons in 2010-11, Monoel Vicente F. Bertone told an industry conference. "We have droughts last year, and this year we have a lot of frosts," he said. The country's sugarcane output is likely to fall to 588.92 million tons in 2011-12 from 623.72 million tons, he added. Bertone said the production of ethanol in the South American country is also falling because of the lower availability of sugarcane. Sugar prices are rising faster than ethanol, which is tempting millers to produce more of the sweetener. Separately, Datagro president Plinio M. Nastari said Brazil's ethanol production in 2011-12 is expected to fall to 22.6 billion litres from 27.4 billion litres last year.
Coal Exports From South Africa’s Richards Bay Climbed 28% in August (Source: Bloomberg)
Richards Bay Coal Terminal, Africa’s largest coal terminal, said August shipments rose 28 percent from a year earlier as prices for the fuel increased. Shipments from the east coast facility rose to 6.99 million metric tons from 5.45 million tons a year earlier, RBCT said in a statement published on its website today. Coal stocks dropped 5.4 percent to 4 million tons as of Aug. 31 from a month earlier. Terminal owners including Anglo American Plc (AAL), BHP Billiton Ltd. (BHP) and Xstrata Plc (XTA) saw coal prices jump 34 percent to an average $118.02 a ton in August from $88.15 a year earlier, according to IHS McCloskey data on Bloomberg.
Indian Oil says needs to raise gasoline prices
SINGAPORE, Sept 6 (Reuters) - State-run Indian Oil Corp said local gasoline prices need to be raised as revenue losses from selling the fuel at government controlled rates have widen more than seven-fold this month, head of finance P.K. Goyal said on Tuesday.
Revenue losses on gasoline sales now stand at about three rupees (6 U.S. cents) compared to about 0.41 rupees a litre in the fortnight ending Aug. 31 due to an increase in Singapore spot prices of the fuel, he said.
Brent crude rises over $111 on stimulus hopes
LONDON, Sept 6 (Reuters) - Brent crude oil rose above $111 per barrel on Tuesday as expectations of a U.S. economic stimulus outweighed fears of recession and worries over the euro zone debt crisis.
"Prices are being supported by hopes there will be another economic stimulus," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt. "But there is a big risk to the downside in this market. The economy is slowing and it is not clear how the United States will pay for another stimulus."
Iran restores fuel oil export vols from Oct-loading
SINGAPORE, Sept 6 (Reuters) - Iran's October fuel oil exports are expected to return to normal levels, with at least five low-density cargoes, totalling about 400,000 tonnes, scheduled for delivery into East Asia, traders said on Tuesday.
The National Iranian Oil Co (NIOC) has returned to full allocations of its straight-run 280-centistoke (cst) cargoes, for October-loading from Bandar Mahshahr to all its term buyers in both East Asia and the Middle East.
Oil Gains on Forecast Supply Drop; Weather System Builds in Gulf of Mexico (Source: Bloomberg)
Oil advanced from the lowest in more than a week in New York amid signs of shrinking crude stockpiles in the U.S. and speculation a storm building in the Gulf of Mexico posed a threat to supply in the world’s biggest consumer of the commodity. West Texas Intermediate gained as much as 0.7 percent. An Energy Department report tomorrow may show inventories declined 2.25 million barrels last week as Tropical Storm Lee shut production in the gulf, a Bloomberg News survey of analysts showed. Another disturbance in Mexico’s Bay of Campeche has a 40 percent chance of becoming a tropical depression or storm, according to the National Hurricane Center. “When production is withdrawn the price will naturally want to rise,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “Unless there is significant damage to fields it won’t be long-term. We are looking for WTI to trade within the $80 to $90 range per barrel.”
Gold May Decline for a Second Day After Rally to Record Encourages Sales (Source: Bloomberg)
Gold may fall for a second day as some investors sell the metal to lock in gains and cover losses in other markets after the metal surged to an all-time high above $1,920 an ounce. Gold for immediate delivery traded at $1,874.47 an ounce at 7:31 a.m. in Singapore, after earlier shedding as much as 0.4 percent to $1,867.57. Bullion, which touched a record $1,921.15 yesterday, may also decline as the dollar climbed for a sixth time yesterday against a six-currency basket including the franc after the Swiss central bank set a ceiling on the exchange rate. Gold futures for December delivery were little changed at $1,874 an ounce, after touching an all-time high of $1,923.70 yesterday on the Comex in New York.
The move by the Swiss National Bank is ultimately “bullish for gold as it reduces the number of safe haven currencies available to investors,” James Steel, an analyst at HSBC Securities USA Ltd., wrote in a note. Still, “we expect high prices to deter jewelry and other noninvestment physical demand and to increase scrap supply. Further equity declines may lead to gold liquidation, should investors decide to raise cash.”
