Funds Boost Bullish Commodity Bets on Outlook for Economic-Stimulus Plans (Source: Bloomberg)
Funds increased bullish bets on raw materials for a fourth straight week, the longest series of gains this year, on speculation that economic-stimulus programs will lift demand for metals, grains and energy. In the week ended Sept. 6, speculators raised their net- long positions in 18 commodities by 0.2 percent to 1.28 million futures and options contracts, government data compiled by Bloomberg show. That’s the highest level since June 14. Funds became bullish on copper for the first time in three weeks, and wagers on a gold rally increased for the first time since early August. Last week, Federal Reserve Chairman Ben S. Bernanke said policy makers this month will discuss tools they may use to help the recovery, and President Barack Obama proposed a $447 billion plan to spur job growth. The Standard & Poor’s GSCI Index of 24 commodities has surged 27 percent in the past year as the Fed kept U.S. borrowing costs near zero percent and bought Treasuries in a bid to stimulate growth.
Commodities Slide Worldwide on Global Growth Concerns, Led By Crude Oil (Source: Bloomberg)
Commodities dropped for a second day amid mounting concern the faltering economic recovery in the U.S. and Europe will curb demand for raw materials. The Standard & Poor’s GSCI Index of 24 commodities fell as much as 2.6 percent in New York, the most in more than three weeks, as investors sold all but the safest assets. Coffee traded at a two-week low, gasoline had its biggest decline in five weeks and West Texas Intermediate crude retreated the most in a week. Gold rose for a second day. Three German officials said today that Chancellor Angela Merkel’s government is preparing plans to shore up banks in the event that Greece can’t pay its debts. European Central Bank President Jean-Claude Trichet said yesterday policy makers cut their growth forecasts for this year and next. U.S. President Barack Obama, in an television address yesterday, called on Congress to pass a $447 billion plan to boost employment after hiring by U.S. companies stalled last month.
Corn (Source: CME)
US corn futures close higher as traders buy back previously sold positions on expectations federal forecasters will cut harvest and inventory outlooks in reports Monday. The reports are "going to be friendly almost no matter what," predicts John Kleist of ebottrading.com. Yet, traders also will look to see whether the USDA cuts demand estimates due to high prices. Reduced usage estimates could take the sting out of a smaller output forecast. CBOT December corn rises 2 1/2c to $7.36 1/2 a bushel.
Wheat (Source: CME)
US wheat futures finish weaker as traders worry about soft demand. Weekly export sales of 512,200 tons were slightly above traders' expectations, but nearly half the sales were to "unknown destinations." Deals with unknown buyers are more likely to be cancelled than those to named buyers, notes John Kleist of ecbottrading.com. Foreign demand for US wheat in general has suffered from increased competition from Russia. CBOT December wheat drops 8 1/4c to $7.29 3/4 a bushel while KCBT December loses 13 1/2c to $8.32 1/2 and MGEX December slips 1c to $9.07 1/4.
Rice (Source: CME)
US rice futures close limit up as India's return to the global export market fails to end supply concerns. Prices climb ahead of USDA reports Monday that could trim the outlook for US rice output due to hot weather that stressed the crop last month, analysts say. Gains were a turnaround from a setback Thursday fueled by India's decision to resume rice exports in a limited capacity. CBOT November rice closes up the 50c daily limit at $18.33/hundredweight. The limit temporarily expands to 75c Monday.
US corn, wheat rebound after selloff, trade cautious
SINGAPORE, Sept 9 (Reuters) - U.S. corn and wheat futures bounced back, rising around half a percent on bargain hunting following a selloff triggered by India's move to export grains.
"Funds sold commodities last night as there was a bit of liquidation, it feels like the market has lost a little bit of upward momentum this week," said Brett Cooper, a senior manager of markets at FCStone Australia.
India allows exports of 2 mln T each of rice, wheat
NEW DELHI, Sept 8 (Reuters) - India will allow unrestricted exports of two million tonnes each of wheat and common rice, as bulging stocks offer political room for overseas sales which could depress global rice prices but make little dent in wheat supplies.
"We will stop exports once shipments reach 2 million tonnes each," Food Minister K.V. Thomas said after a meeting of a ministerial panel. He said there will be no minimum export price for rice. Wheat has no floor price for exports.
Argentine wheat outlook dims due dryness - exchange
BUENOS AIRES, Sept 8 (Reuters) - Much of Argentina's wheat belt is getting dry, with frosts hampering the healthy development of 2011/12 crops in some northern areas, the Buenos Aires Grains Exchange said Thursday.
Argentina is one of the world's biggest wheat suppliers and farmers are expected to produce 13.5 million tonnes this season, down from 15 million in the 2010/11 crop year, according to the U.S. Department of Agriculture (USDA).
Argentine corn plantings seen up 10 pct - Rosario
BUENOS AIRES, Sept 8 (Reuters) - Argentina's 2011/12 corn area is expected to expand 10 percent from last season to 4.3 million hectares, Rosario grains exchange said on Thursday.
Argentina, the world's No. 2 corn supplier after the United States, produced an estimated 22 million tonnes in the previous harvest, according to the latest estimate from the U.S. Department of Agriculture (USDA).
EU cleared 415,000 tonnes wheat exports this week
PARIS, Sept 8 (Reuters) - The European Union this week granted export licences for 415,000 tonnes of soft wheat, the biggest award since the start of the 2011/2012 season on July 1, official data showed on Thursday.
European exports in the new season have been curbed by the return of Russia to export markets after it had banned grain exports in August 2010 in response to a drought that ravaged its crops.
Monsanto says corn rootworm resistance not spreading
KANSAS CITY, Mo., Sept 8 (Reuters) - Monsanto Co. is working with a "handful" of farmers to rein in problems with corn pests that appear to be growing resistant to the company's popular corn seed product that is genetically engineered to protect against insect damage.
Recent news reports of resistance problems in top corn-producing states of Iowa and Illinois have fueled investor concerns. The company is already struggling to address weed resistance problems related to its herbicide-tolerant genetically altered crops.
India's monsoon rains 39 pct above normal in past week-sources
NEW DELHI, Sept 8 (Reuters) - India's monsoon rains were 39 percent above normal in the week to Sept. 7, strengthening from 18 percent above average in the previous week, two sources at the weather office said on Thursday.
The monsoon rains were three percent above average since the start of the June-September season, in line with the weather office's latest forecast of a normal monsoon in 2011.
For Grocers, Pricing Becomes More Perilous (Source: CME)
Supermarket chains, many of which face a 4% rise in food costs this year, are being forced to reconcile raising prices with potentially losing shoppers to rivals who hold the line. In this balancing act, chains including Whole Foods Market Inc., Safeway Inc. and Supervalu Inc. say they are trying to make promotions more effective, be mindful of where they raise prices and work out better deals with vendors. "I'm not sure consumers want us raising prices much more from here, and I think we've got to start holding a tough line [with vendors] from this point forward," Whole Foods Chief Executive Walter Robb told analysts Wednesday, during part of a two-day Goldman Sachs retail conference. According to the Bureau of Labor Statistics, grocery store prices have jumped 5.4% during the past 12 months and that is hitting consumers while they are still concerned about job security, housing and gas prices.
"The vast majority of shoppers still feel threatened about their jobs. You see that all reflected in consumer confidence," Safeway Chief Executive Steven Burd said Wednesday. "Our expectation is the economy will remain relatively flat, and as it recovers, it will recover slowly." Mr. Burd said it is more important than ever for supermarkets to keep up with competitors' discounts, "because if people try in the short-term to take market share, and you don't react, they will continue to pick away at you." Supervalu Chief Financial Officer Sherry Smith said that Supervalu, like other chains, has raised some prices to offset some of the inflation this year. "Overall, we've been passing on price increases, we've been seeing resiliency in the customer, and we also see a rational environment out there in that retail is passing it on generally as a whole," Ms. Smith said. However,
Supervalu is also trying to lower its price perception to be more in line with competitors, making it difficult to keep up with rising inflation. As a result, Supervalu has been careful of where it raises prices to match inflation, and where it just takes the hit, as it found that some areas, within the dairy, meat and perishables categories, are more sensitive to price increases. Whole Foods' Mr. Robb said supermarkets have to push back with vendors, asking them to explain where those cost increases are coming from before agreeing to them. Mr. Burd said sometimes packaged-food companies, such as Kraft Foods Inc., will issue more promotions during periods of price inflation, as an alternative to the supermarkets having to roll back prices and cover the cost themselves.
Whole Foods says it has become more sophisticated and specific with its promotional dollars lately to make them work. "It's not about how many items you have on sale, it's about which items and how compelling is the discount on the promotion," Mr. Robb said.
Indian Grain Exports To Drag Down Global Prices (Source: CME)
India's return to the wheat and rice export market after more than three years, will push down prices for buyers in Southeast Asia and Africa, trading executives and analysts said. The Indian Government has allowed exports of at least 2 million metric tons each of wheat and rice, relaxing a ban on shipments due to burgeoning stocks following a string of bumper harvests. There is an ample global supply of wheat but availability of high quality grades is tight because rains and heat damaged some crops in Australia and the U.S. Earlier this year, Pakistan's output helped fill the gap in cheaper milling wheat supply to Southeast Asia, the Middle East and even Africa, and now cargoes from India will be very useful, a Singapore-based executive with a global commodities trading company said. The real challenge for Indian exporters will be to secure the wheat supply locally, because a large part of the crop has already been procured by the government or consumed, and the next harvest doesn't begin until mid-February.
The physical prices of Indian export grade wheat rose sharply Friday as exporters scrambled to lock in supply. "The phones haven't stopped ringing since the government made the announcement, and the prices of some wheat grades in Gujarat and Rajasthan are up by INR400-INR600/ton," a Mumbai-based trading executive said. Some western India grades are selling for around INR11,800-INR11,900/ton, delivered at port, and after adding port expenses, can be offered around $280/ton, free-on-board, which is among the cheapest in the world, traders said. However, it is a fast-moving situation, and prices will likely continue rising, they said. Russian wheat is currently offered around $290/ton, FOB, while Australian Standard White is quoted at $310/ton. Rice buyers in Africa and the Philippines may cancel some earlier deals for more expensive Thai ordinary rice, due to India's resumption of exports, traders said.
India's entry will definitely weigh on Pakistan's rice export quotations and benefit buyers in Bangladesh, said Raja Lal Chand Essrani, president of Raja Brokers, a Karachi-based trading company. India will capture a significant portion of the parboiled rice export market from Thailand, former president of Thai Rice Exporters Association, Chookiat Ophaswongse said. Based on current local rates, India can export polished and sortex 5% broken parboiled rice for around $460-$470/ton, free-on-board compared with Thai offers of more than $650/ton, FOB.
Buenos Aires Cereals Exchange: Dry Weather A Risk To Wheat Crop (Source: CME)
Dry weather could start to damage Argentina's wheat crop unless rain comes to the rescue, the Buenos Aires Cereals Exchange said in its weekly crop report. "The majority of forecasts don't foresee rain except in isolated spots," the exchange said. Farmers planted 4.6 million hectares of wheat in the 2011-2012 season, the second smallest planting area dedicated to that grain in the last 10 years. Most of Argentina's wheat exports are sent to neighboring Brazil. The exchange kept its outlook for corn planting during this season unchanged at 3.5 million hectares. Argentina produced 21 million metric tons of corn during the 2010-2011 season.
Farmers have sewn 19.5% of an estimated 1.86 million hectares they are expected to plant with sunflowers, the exchange said. Argentina is the world's biggest exporter of soymeal and soyoil, ranks No. 2 in corn exports, No. 3 in soybeans, and is a leading exporter of wheat and sunflower seed oil.
Australian Government Says Foreign Ownership Of Farm Land Small (Source: CME)
The Australian government moved to ease community concerns about rising foreign ownership of farming land, saying only 5.8% is majority-owned by international investors. According to data compiled by the Australian Bureau of Statistics, a further 5.5% of farming land is majority owned by Australians and with some foreign interest. The report also showed 99% of Australian farming businesses are entirely Australian owned, while 88.6% of agricultural land in Australian was fully owned locally. "The Australian government understands the legitimate community concerns about foreign investment in agricultural land and businesses. At last we have some hard data about the true extent of foreign ownership of agricultural businesses, land and water," said Assistant Treasurer Bill Shorten. Shorten said Australia prizes foreign investment. "The policy debate surrounding Australia's agricultural land and businesses has raised a number of issues, often extending into areas outside foreign investment," he said.
Canada Is Taking Aim At Its Wheat Monopoly (Source: CME)
For 70 years, a lone trading desk in Canada's prairie region quietly has held sway over the price of wheat and, in effect, how much consumers pay for everything from a loaf of bread to a bowl of pasta. But those days are numbered. The Canadian Wheat Board is poised to lose its monopoly grip on the country's wheat sales. Canada's Conservative Party captured a parliamentary majority this past spring, and newly elected government officials took that as a mandate to end the wheat board's reign. The ripple effects from eliminating -- or even weakening -- the board's power would be widespread. Wheat prices, which already have experienced extreme highs and lows over the past three years, could become more volatile, some analysts say.
The move could be a boon for consumers, say analysts. Prices for Canadian wheat could fall more than usual at harvest time next summer if the board is eliminated. Wheat prices are a big input cost for food manufacturers, which recently have raised their own prices in response to higher commodity costs. Among Western countries, the board, which is backed by laws that essentially make it the only seller of Canadian farmers' wheat and barley, is one of the last bastions of direct state control. If eliminated, for the first time in three generations, thousands of farmers, mostly in the western provinces of Alberta, Saskatchewan and Manitoba, would be selling wheat and barley on their own. Canadian farmers' appetite to take on the risks that come with navigating global grain markets is set to become more apparent on Friday, when the results of their vote on whether to maintain the board are scheduled to be released.
The vote, however, is nonbinding, and Canadian officials say they will push ahead with plans to eliminate the wheat board regardless of the outcome. Canadian Agriculture Minister Gerry Ritz said in an interview that such legislation could be introduced this fall and could win passage by the end of this year. The Conservative Party has enough votes in the legislature to pass laws as it sees fit. "The bottom line for us is the freedom for western Canadian farmers to make the choice as to who, when and how much they sell their product. That should never be trumped by any other entity," Mr. Ritz said. Based in Winnipeg, the Canadian Wheat Board plays a particularly important role in the global wheat trade. For now, it is the sole representative of Canada, which consistently ranks among the world's top four exporters. The single desk controls around 14% of global wheat exports, including about half the world's exports of durum wheat, which is used to make pasta.
While the end of the board isn't expected to alter significantly Canada's wheat output, it is likely to force Canadian farmers to catch up with their U.S. counterparts, who have been navigating volatile markets for decades. "The Canadian farmer has been used to a 'single desk' for so long," said Dan Basse, president of AgResource Co., an agricultural consultancy in Chicago. "He'll have to learn marketing very fast." Whether the arrangement is best for farmers has been long debated in Canada's western grain belt stretching from Manitoba into parts of British Columbia. "For years, the Canadian Wheat Board has been the most divisive issue in western Canadian agriculture," said Kevin Bender, a farmer and president of Western Canadian Wheat Growers, which advocates for an open market. The third-generation grower on the eastern edge of the Canadian Rockies wants the freedom to sell his grain to whomever he wants. Mr. Bender said farmers can capture better returns on their own by having open markets they can time.
U.S. elevators just over the border often offer prices higher than those paid through the board, he added. Yet, farmers who favor the board, including its current chairman Allen Oberg, contend the benefits far outweigh the cross-border price differences that can emerge. By controlling the whole crop, the board has considerable power in global commodity markets to ensure Canadian farmers get the best price. Farmers also get an up-front payment that is backed by the government, and the board doesn't aim for a profit, so more money goes back to farmers than under an open-market system. Without their own facilities, farmers may have to sell the bulk of the grain as new supplies are coming in from the fields, pressuring prices, said Mr. Basse of AgResource. Exchanges anticipate that Canadian farmers will turn to futures markets in full force once the wheat board goes away, and they and grain handlers already are jockeying for the expected new opportunities.
ICE cocoa edges up, consolidates after fall
LONDON, Sept 9 (Reuters) - ICE cocoa futures edged up as the market began to stabilise after falling sharply this week while raw sugar was also slightly higher.
Cocoa futures on ICE were marginally higher as the market looked to consolidate after its biggest three-day tumble in four months.
India extends unrestricted cotton exports beyond Oct 1-official
NEW DELHI, Sept 9 (Reuters) - India will continue with unrestricted cotton exports in the new marketing year beginning Oct. 1, Trade Secretary Rahul Khullar told reporters on Friday.
The world's second biggest grower and exporter of cotton had allowed in July unrestricted exports of the fibre for the remainder of the current season due to abundant availability of stocks.
Ukraine Agmin upgrades 11/12 sugar output fcast
KIEV, Sept 8 (Reuters) - Ukraine's Agriculture Ministry on Thursday revised up its forecast for the 2011/12 white beet sugar production slightly to 2.1-2.2 million tonnes from the previous estimate of 2.0-2.1 million due to a higher sugar beet harvest.
Ukraine produced 1.55 million tonnes of white sugar from sugar beet in 2009/10.
US ethanol output bumps higher, exports strong
KANSAS CITY, Mo., Sept 8 (Reuters) - U.S. ethanol production rose slightly in the last week but stocks decreased as export demand for the corn-based alternative fuel increased.
The Energy Information Administration said on Thursday that U.S. ethanol production totaled 896,000 barrels per day in the seven days to Sept. 2, up 8,000 barrels per day from the previous week.
EU to delay action on biofuels' indirect impact
BRUSSELS, Sept 8 (Reuters) - The European Union's top climate and energy officials have agreed to delay by up to seven years rules that would penalise individual biofuels for their indirect climate impacts, details of the deal showed.
The political compromise is designed to protect EU farmers' incomes and existing investments in the bloc's 17 billion euro-a-year ($24 billion) biofuel sector, while discouraging new investments in biofuels that do nothing to fight climate change.
China Aug refinery runs 2nd-lowest this year
BEIJING, Sept 9 (Reuters) - China's refinery throughput grew at a modest 4.5 percent on the year in August to about 8.66 million barrels per day, the second-lowest daily processing rate this year due to regular plant shutdowns and refinery accidents.
This is the third straight month that China has operated its refineries at levels below the norm since late 2010, capping demand growth in the world's second-largest oil user at rates slower than the double-digit pace seen earlier in the year.
Oil Drops a Third Day on Europe Concern; Gulf Storm Threat to Output Eases (Source: Bloomberg)
Oil slid for a third day in New York as investors bet demand for fuel may falter amid signs European policy makers are struggling to contain the region’s debt crisis. Gulf of Mexico producers resumed production as the threat of storms eased. Futures slipped as much as 1.3 percent as speculation that Germany is preparing for a Greek default sent the euro lower against the dollar, limiting the appeal of commodities. About 6 percent of oil output remains shut after Tropical Storm Lee passed, compared with 27 percent a week ago. Nate weakened to a depression as it moved further inland over Mexico, according to the U.S. National Hurricane Center. “Oil futures fell back in response to the negative mood dominating the U.S. and Europe,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, said in a note today. The euro “continues to come under pressure as Europe’s troubles remain in focus,” he said.
China’s Nickel Import Demand ‘Surging’ as Macquarie Says It’s More Bullish (Source: Bloomberg)
Nickel import demand in China is “surging” because of a shortage of nickel pig iron, Macquarie Group Ltd. said, citing unidentified sources. Nickel pig iron, usually a cheaper alternative to refined nickel, is now more expensive, Macquarie said in a report dated Sept. 12. A trading company in China may be building nickel stockpiles to start a nickel exchange-traded fund, Macquarie said, citing reports without identifying the authors. “These factors make us more bullish about the nickel price outlook in the short run, even though we maintain a forecast of a large 2012 surplus,” Macquarie said.
Gold Declines for Second Day as European Debt Concern Sends Dollar Higher (Source: Bloomberg)
Gold fell for a second day as concern about a potential Greek default drove the dollar higher and some investors sold the metal to cover losses in other markets amid concern the European debt contagion is worsening. Gold for immediate delivery declined as much as 0.7 percent to $1,842.25 an ounce, and traded at $1,847.70 at 9:29 a.m. in Singapore, erasing an earlier gain of 0.4 percent. It reached a record $1,921.15 an ounce on Sept. 6. Bullion priced in euros and Swiss francs advanced to all-time highs today. The Dollar Index, which tracks the greenback against six U.S. trading partners, climbed for a third day to its strongest in more than six months as investors sought safe assets. December-delivery bullion in New York, which sometimes moves inversely to the dollar, shed as much as 0.8 percent to $1,844.60 an ounce before trading at $1,850.30 an ounce.
