Commodities Drop to 10-Month Low as Slowing Global Growth May Crimp Demand (Source: Bloomberg)
Commodities fell to a 10-month low on increasing concern that stagnant global growth will crimp demand for metals, energy and agriculture. The Standard & Poor’s GSCI Spot Index dropped 5.38, or 0.9 percent, to close at 585.62, after touching 580.22, the lowest since Dec. 1. The gauge tumbled 12 percent in the third quarter, the most since the final quarter of 2008. Global equities slumped on concern that Europe’s debt crisis will worsen and derail expansion. The GSCI Index has lost more than 20 percent since reaching an almost three-year high in April as slowing growth reduced the chances of shortages for raw materials. Money managers cut bets on a commodity rally 26 percent in the week to Sept. 27, the most in almost three years, government data show.
Goldmans Slashes Grain Price Estimates On USDA Stocks Data (Source: CME)
Goldman Sachs downgraded its grain price forecasts, after higher-than-expected U.S. stocks data last week eased fears of a shortfall of corn supplies. Grain analyst Damien Courvalin slashed his estimates for Chicago corn prices over the next three- to six-months to $6.15 a bushel from $7.35/bu and to $5.50/bu from $7.00/bu over the next year, citing data from the U.S. Department of Agriculture showing inventories "well above our and consensus expectations." For wheat, he lowered estimates from $7.50/bu, $7.90/bu and $7.50/bu to $6.40/bu, $6.50/bu and $6.00/bu on the back of both lower-than-expected corn prices and consensus-beating wheat stocks. Grain prices plummeted Friday after the USDA stunned markets by pegging domestic corn inventories at 1.128 billion bushels as of Sept. 1--23% higher than a forecast released a fortnight ago by a different division of the USDA and well above market forecasts of below 1 billion bushels.
Significantly, stocks of wheat, a key corn feed substitute, also came in well above market expectations at 2.15 billion bushels, implying that recent high prices had started to reduce demand more than many had predicted. "We expect these higher 2011-12 corn beginning stocks to more than offset our forecast for lower new-crop corn production and allow for both stronger demand and higher ending stocks than we had previously expected," said Courvalin in a note. Meanwhile the "the recent record-high wheat-to-corn price correlation will likely decline" as higher supplies encourage less substitution, he said. The data was also bearish enough for Courvalin to downgrade Goldman's top bullish call, soybeans. He cut his price forecasts from $13.75/bu, $14.00/bu and $14.00/bu over the next three, six and 12 months to $12.60/bu, $13.00/bu and $13.00/bu respectively.
But he said that he expected soybean prices to outperform corn as "the tightening of the soybean balance relative to the corn balance will likely intensify the competition for U.S. acreage next spring," while the La Nina weather pattern this spring could present further world production risks.
Corn (Source: CME)
US corn futures end flat, finding stability after earlier plunging near a 10-month low. The exhaustion of fund-inspired liquidation and commercial bargain-hunting buying provided support to buoy prices, analysts say. However, global economic worries tied to Greece's unresolved debt issues and harvest-related selling applied pressure to cap advances, analysts add. Market was oversold, after adequately digesting Friday's unexpected government stocks report revealing larger-than-expected inventories. CBOT Dec corn finished unchanged at $5.92 1/2/bushel.
Wheat (Source: CME)
US wheat futures end mixed, with Chicago wheat bouncing in a recovery from last week's sharp declines. Signs of stability in neighboring grain futures attracted buying, but Minneapolis spring wheat futures were unable to sustain any price strength, as traders adjusted prices to catch up with the losses seen in other markets late last week, analysts say. However, spring wheat futures did move significantly off initial lows, pick up the buying that buoyed other grain markets. CBOT Dec wheat end up 10 1/4c at $6.19 1/2/bushel, MGEX Dec wheat finished down 7c at $8.85 1/4, and KCBT Dec wheat end down 2c at $7.02.
Rice (Source: CME)
US rice futures end higher, recovering from last week's setback. The advances were fueled by ongoing concerns about US output and stability in across grain markets. CBOT Nov rice climbed 4c or 0.3% to $15.99 per hundredweight.
China's corn rush to redraw global food landscape
SINGAPORE, Sept 30 (Reuters) - When China abandoned its soybean self-sufficiency quest almost 20 years ago and started importing the oilseed feeding its hunger for livestock, it almost single-handedly transformed the industry. Today, it's poised to do the same for corn.
The world's most populous nation is expected to triple corn purchases next crop year and, by its own admission, become a significant importer by 2015, putting more strain on global food supplies at a time when inflation is gnawing away at economic growth and the population nears seven billion.
Corn at 9-1/2 month low on inventory surprise, economic gloom
SINGAPORE, Oct 3 (Reuters) - U.S. corn slid 1.5 percent to its lowest since December after suffering its biggest monthly decline in more than 15 years in September as larger-than-expected supplies continued to hammer the market.
"It is something the market had not expected as everyone was talking about tightening supplies, it was a surprise," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore.
US corn export dominance to bend, not break
CHICAGO, Sept 30 (Reuters) - For the first time in 40 years, U.S. corn exporters are not out-selling the rest of the world. Domestic ethanol is sucking up record crops.
Emerging suppliers like Brazil and Ukraine are taking export share, while traditional exporters like Argentina move to open new markets.
Russia may export 25 mln T grain in 2011-2012-lobby
MOSCOW, Oct 3 (Reuters) - Russia may export 25 million tonnes of grain in 2011-2012 and the country's grain crop may reach 93 million tonnes, Arkady Zlochevsky, the president of the Russian grain Union, the industry lobby, said on Monday.
"We will have an exportable surplus of 30 million tonnes but we'll manage to export around 25 million tonnes," Zlochevsky told journalists.
Philippines says typhoons damage nearly 450,000 T rice
MANILA, Oct 3 (Reuters) - Two powerful typhoons that hit northern Philippines in less than a week may have damaged more than 448,000 tonnes of paddy rice, prompting agriculture officials to hold an emergency meeting on Monday to discuss the country's rice supply situation.
The damaged crop was estimated to be equivalent to about 291,505 tonnes milled rice, and accounted for 6.9 percent of forecast national output of 6.5 million tonnes in the last quarter of 2011.
Argentine wheat still in need of rains - gov't
BUENOS AIRES, Sept 30 (Reuters) - Argentine wheat plants are badly in need of heavier rains despite scattered showers that helped speed corn plantings in some areas this week, the Agriculture Ministry said on Friday.
Argentina, a leading global wheat exporter and key supplier to neighboring Brazil, forecasts lower 2011/12 output of between 11 million and 13 million tonnes compared with 14.7 million last season due to recent dry weather.
Ukraine 2012 winter grain sowing 57 pct completes
KIEV, Sept 30 (Reuters) - Ukrainian farms have sown 4.7 million hectares of winter grains for the 2012 harvest or 57 percent of the expected area, the Agriculture Ministry said on Friday.
The ministry said in a statement the ex-Soviet republic sowed 5.04 million hectares of winter grains at the same date in 2010.
Ukraine trader HIB exports 450,000 T grain so far
KIEV, Sept 30 (Reuters) - Ukraine's major grain exporter HlibinvestBud (HIB) exported about 450,000 tonnes of wheat and barley in the first three months of the 2011/12 season, it said on Friday.
HIB, which plans to export 5 million tonnes of grain this season ,also said it had bought 3.0 million tonnes of grain from local producers for future exports.
Italy 2011 maize output seen up to 10.5-11.0 mln T
MILAN, Sept 30 (Reuters) - Output of maize in Italy, a major producer in Europe, is expected to rise to 10.5-11.0 million tonnes this year from 8.6 million tonnes in 2010 due to increased planted areas and strong yields per hectare, according to estimates by major Italian farmers' associations provided by their biggest group, Coldiretti, on Friday.
"As far as areas is concerned, we can confirm the earlier estimate of more than 1 million hectares. As far as production is concerned, the estimate is between 10.5 million tonnes and 11.0 million tonnes. Yields are very good this year and we have a big increase in production," Coldiretti's grain specialist Paolo Abballe told Reuters.
Thailand's Rice Policy Already Causing Ripple Effects (Source: CME)
It's not yet in effect, and yet Thailand's controversial new rice policy is already having some unintended consequences. Farmers are reported to be hoarding crops, while some buyers overseas are shifting to consuming more noodles instead of rice, a phenomenon that could have long-term effects on the global rice market if it continues. In the run-up to national elections earlier this year, Thailand's Puea Thai party promised the government would buy un-milled, or paddy, rice from growers at THB15,000/ton, or about 50% above the market prices then. Now in power, Puea Thai is gearing up to honor its election promise by Oct. 7. The government is likely to do this by arranging for rice to be bought by millers, instead of via direct state purchases. Sensing opportunity, growers and millers are hoarding rice to be delivered to the government program likely at a substantial profit once the program begins.
Moreover, with millers likely deputed to buy paddy from growers and store the grain on the government's behalf, a window has opened to pass off some of the old crop as this year's new crop at sharply higher prices, pocketing the government subsidy, Chookiat Ophaswongse, former president of Thai Rice Exporters Association told Southeast Asia Real Time. Industry calculations show higher procurement prices would mean the export price of 5% broken Thai rice should be around $830/ton. Growers and millers have seen prices of 5% broken rice move from $500/ton to above $600/ton since early July, so it makes sense to hoard. Ironically, the Thai policy will also push up the country's rice inventories despite a bumper crop. Last week, the London-based International Grains Council revised lower its forecast of Thailand's rice exports in 2012 by 9% to 8.0 million tons, as high government procurement prices slow shipments.
The world's largest rice exporter's shipments will likely be 20% lower compared with 2011, the IGC said. The impact has been felt beyond national borders. Export prices in neighboring Vietnam have also risen by $80-$100/ton. Exporters have washed out trades or renegotiated earlier contracts at higher prices. Indonesia, the world's largest rice importer this year, is grappling with high inflation and consumers are changing dietary habits to keep a check on the monthly food bill. In one of those changes, the country is undergoing a shift in consumption towards noodles from rice, and the trend may accelerate as prices of rice rise, a senior research analyst with Standard Chartered Bank, Nirgunan Tiruchelvam told Southeast Asia Real Time. Noodles are made from wheat, which can be imported at less than $350/ton compared with rice prices above $550/ton.
Those ripple effects are examples of how government policies sometimes unwittingly increase rather than control food prices. Rice is the world's most widely-consumed staple food. Almost half of the world's rice exports are accounted for by Thailand and Vietnam, which have had a string of bumper crops, but to no avail as far cooling prices is concerned. Indeed, the world is heading for the second successive year of record rice production. International Grains Council forecasts show 2011-12 production at 461 million metric tons, up 2.2% on year. Carry-over stocks in five major exporters - Thailand, Vietnam, Pakistan, India and the U.S. - are projected to hit a record 33.2 million tons. Yet, prices are still rising. In the past year when prices of wheat, corn and oilseeds rose to multi-year highs, rice was an exception. Not anymore. Export prices in Thailand and Vietnam, have risen by up to 25% since the start of July.
All this is happening when India, with government stocks of 22.7 million tons – nearly as much as the annual global trade of 32 million tons - is expecting another bumper harvest this month onwards. Indian supply can be a cooling factor in rice prices, but the government there has allowed exports of only two million tons from the open market, for now. With governments refusing to let markets function freely, it may take more than a good crop to make rice cheaper. It may become a classic case of rice, rice everywhere, not a grain to eat.
Kazakhstan Harvests 22.7M Tons Grain To Oct. 3 (Source: CME)
Kazakhstan harvested 22.7 million metric tons of grain to Oct. 3 on 14 million hectares, or 86.8% of the total area to be harvested, with the average yield of 1.62 tons a hectare, the agriculture ministry reported. On the same date last year, the harvest was reported at 13.325 million tons on 15.243 million hectares with the average yield of 0.87 tons a hectare. The ministry said Sept. 22 Kazakhstan was likely to harvest this year 25 million metric tons of grain. In 2010 because of drought Kazakhstan's grain harvest was 12.2 million tons. The country exported in the 2010-2011 marketing year 5.9 million tons of grain.
ICE coffee hits 8-month low as commodities slide
LONDON, Oct 3 (Reuters) - ICE coffee, cocoa and sugar futures all slid in early trade, weighed by broad-based selling in crude oil and other commodity markets linked to a stronger dollar and global economic woes.
Arabica coffee futures fell to the lowest level in more than eight months, joining the retreat in commodity markets.
Indonesia's Sept Sumatra coffee exports fall 70.6 pct y/y
BANDAR LAMPUNG, Indonesia, Oct 3 (Reuters) - Indonesia's robusta coffee bean exports from the main growing area in southern Sumatra fell 70.6 percent in September to 10,435.05 tonnes from the same month a year earlier, government trade data showed on Monday.
Indonesia is the world's fourth-largest coffee producer after Brazil, Colombia and Vietnam, and the world's number two robusta coffee producer after Vietnam.
India Oct-Sept'11 coffee exports jump 33 pct-board
Oct 3 (Reuters) - Coffee exports from India jumped 33 percent to 358,278 tonnes in the coffee year to September, helped by shipments to Italy and Germany, the 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.
Indonesia Sulawesi Sept cocoa exports plunge 60.8 pct y/y
JAKARTA, Oct 3 (Reuters) - Indonesia's cocoa bean exports from the main growing island of Sulawesi dropped 60.8 percent to 7,388.28 tonnes in September from 18,849 tonnes a year earlier, industry data showed on Monday.
Indonesia, the world's third-largest cocoa producer after Ivory Coast and Ghana, accounts for around 10 percent of the world's output.
Indonesia's cup of cocoa woes could cheer world market
SINGAPORE/JAKARTA, Sept 30 (Reuters) - A plunge in Indonesia's cocoa exports spotlights a flagging battle against disease and adverse weather, but the country's supply disruptions could allay fears of another global surplus and stem a seven-month slide in prices.
Although the outlook for world grindings may be clouded by the threat of recession, shrinking output in third-largest cocoa producer Indonesia will help balance the market in the next crop year after supply exceeded demand by 450,000 tonnes this year.
Egypt's Alcotexa sells 965 T cotton in past week
CAIRO, Oct 2 (Reuters) - Egypt's Alexandria Cotton Exporters' Association (Alcotexa) committed to sell 965 tonnes of cotton in the week which ended on Oct. 1, an Alcotexa official told Reuters on Sunday.
The sales comprised 540 tonnes of Giza 88 and 425 tonnes of Giza 86.
Brazil's northeast starts crushing bigger cane crop
SAO PAULO, Sept 30 (Reuters) - Brazil's northeast has begun crushing its 2011/12 cane crop, which is expected to be one of the largest ever, the head of the region's sugar cane industry association, Sindacucar, said on Friday.
The region, which usually accounts for 10 percent of the Brazilian cane output, is expected to harvest 66 million tonnes of cane, up from 63 million tonnes last season.
World coffee body's chief targets emerging consumers
LONDON, Sept 30 (Reuters) - The new head of the International Coffee Organization (ICO) wants to bring new impetus to promoting the drink in Asia and other emerging markets, notably those that produce coffee themselves, he said on Friday.
"We have (producing) countries that are showing growth in coffee consumption, like Indonesia, Mexico and India, and I want to see this growing more and more," Roberio Oliveira Silva told Reuters in an interview less than 24 hours after being appointed ICO executive director by the International Coffee Council.
ICO sees tight global coffee market in 2011/12
LONDON, Sept 30 (Reuters) - Global coffee consumption should outstrip production in 2011/12, leading to a "tight situation" with supplies, outgoing International Coffee Organization acting Executive Director Jose Sette said on Friday.
He said global coffee production in 2011/12 was seen around 129.5 million bags (60-kg) and consumption about 134 million bags.
Ivorian cocoa farmers upbeat on 2011/12 crop
SOUBRE, Ivory Coast, Sept 30 (Reuters) - Farmers in the heart of Ivory Coast's cocoa belt say they expect an abundant harvest in the new season, though production will not match the record 1.5 million tonnes of the season just ending.
Farmers in Soubre and Daloa regions, which account for about half of the country's production, said the current state of their crops has led them to expect total output of 1.3 million tonnes, close to a finance ministry forecast obtained earlier this week by Reuters.
U.S. coal consumption up 3 pct last week - Genscape
HOUSTON, Sept 30 (Reuters) - U.S. coal consumption rose 3 percent last week versus the week before but stayed unchanged from a year earlier, data from power industry data monitor Genscape showed.
Warmer weather spread last week in the populous East, WSI Corp weather service said. A slight uptick in nuclear plant outages boosted coal use despite cheapening natural gas.
Euro Coal-Prices stable, market eyes Korea
LONDON, Sept 30 (Reuters) - Prompt physical coal prices were again little changed on Friday, having moved minimally on a daily basis this week due to a lack of demand in Europe and Asia for spot coal.Few trades were reported.
"Prices have barely moved and there haven't been many bids or offers, it's been thin," one European trader said.
Record U.S. Gasoline Cargoes Seen Driving 17% Tanker-Rate Advance: Freight (Source: Bloomberg)
Record U.S. exports of gasoline and other refined oil products are poised to eliminate a glut of ships hauling the fuels next year, driving freight rates to a three-year high. Shipments in the first nine months were 24 percent higher than a year earlier, led by cargoes to Latin America, Energy Department data show. Costs to hire medium-range tankers, holding enough gasoline to fill about 800,000 cars, will gain 17 percent to $14,000 a day next year, according to the median of seven analysts surveyed by Bloomberg. U.S. crude-oil output in the first nine months rose 1.7 percent, the highest for the period since 2003. Gasoline demand fell 3.7 percent in July to the lowest for the month in 11 years. At a time when ships hauling crude and coal are forecast to lose money for at least another two years, product tankers may break even as early as 2012. Billionaire Wilbur Ross completed his first shipping investment last month, joining a group of investors buying a fleet of 30 fuel carriers.
Iraq sees oil output at 3 mln bpd by year-end
BAGHDAD, Oct 3 (Reuters) - Iraq's oil production will reach 3 million barrels per day (bpd) by the end of this year from its current output of 2.9 million bpd, the Iraqi oil ministry said on Monday.
The ministry said crude exports from the OPEC member are expected to reach 2.5 million bpd at the start of next year.
Brent tumbles more than $1 on euro debt fears
SINGAPORE, Oct 3 (Reuters) - Brent crude fell more than $1 to below $102 as growing fears of the euro debt crisis spreading to other parts of the region and dampening global oil demand weighed heavily on investors.
"We need to keep a close on demand... (but) I am not predicting a major demand slump," he told the Middle East Petroleum and Gas conference in Dubai, delivering a speech for UAE Oil Minister Mohammed bin Dhaen al-Hamli.
China output drives stainless steel to record -ISSF
LONDON, Sept 30 (Reuters) - Global stainless steel production hit a new all-time high in the first half of 2011 as output growth in China offset a slowdown in most other regions, data showed on Friday.
Stainless steel production hit a record 16.4 million tonnes in the first half of 2011, up 3.8 percent from the same period last year, according to data from the International Stainless Steel Forum (ISSF).
Analysts see downward pressure on iron ore, freight
LONDON, Sept 30 (Reuters) - Traders and analysts warn of downside risks for both iron ore and freight prices in the short-term, even though the cost of shipping iron ore to China unexpectedly spiked this month and iron ore miners are boasting of full order books.
Average earnings for capesizes, which typically haul 150,000 tonne cargoes such as iron ore and coal, have risen to their highest level in nine months this month and miner BHP Billiton paid $12.45 a tonne to ship iron ore from Australia to China, the highest rate since November last year.
Oil Declines for Third Day on European Debt Crisis, Rising Crude Supplies (Source: Bloomberg)
Oil dropped a third day in New York as investors speculated that Europe’s debt crisis will slow the economy and curb fuel demand as crude supplies climb. Futures slipped as much as 2.2 percent today after falling to the lowest settlement in more than a year yesterday. European governments signaled investors may have to take bigger losses on Greek debt in a second aid package for the nation. U.S. crude inventories climbed for a second week, an Energy Department report tomorrow may show. Libya aims to raise production to more than 500,000 barrels a day by the end of this month. “We are seeing continuing pressure across the commodities complex from these concerns about the global growth prospect,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty Ltd. in Sydney. “The markets are universally bearish and we’re looking for reasons to sell and the oil markets are being affected by that.”
Iron Ore-Spot prices seen near 3-month lows, China off
SINGAPORE, Oct 3 (Reuters) - Spot iron ore prices are expected to steady near three-month lows this week with top importer China off for a week-long holiday after ending the third quarter nearly flat as Chinese demand slowed last month.
Slower steel demand in China, the world's biggest consumer and producer, drove Shanghai rebar futures down more than 11 percent in September, their biggest monthly loss ever.
Analysts see downward pressure on iron ore, freight
LONDON, Sept 30 (Reuters) - Traders and analysts warn of downside risks for both iron ore and freight prices in the short-term, even though the cost of shipping iron ore to China unexpectedly spiked this month and iron ore miners are boasting of full order books.
Average earnings for capesizes, which typically haul 150,000 tonne cargoes such as iron ore and coal, have risen to their highest level in nine months this month and miner BHP Billiton paid $12.45 a tonne to ship iron ore from Australia to China, the highest rate since November last year.
China output drives stainless steel to record -ISSF
LONDON, Sept 30 (Reuters) - Global stainless steel production hit a new all-time high in the first half of 2011 as output growth in China offset a slowdown in most other regions, data showed on Friday.
Stainless steel production hit a record 16.4 million tonnes in the first half of 2011, up 3.8 percent from the same period last year, according to data from the International Stainless Steel Forum (ISSF).
China 2012 base metals demand seen up, hinges on credit
HONG KONG, Sept 30 (Reuters) - China's base metals consumption growth rate could slow further next year as exports fall, even if Beijing starts to loosen monetary policy after the first quarter.
A possible debt crisis in developed countries and Beijing's credit tightening are the two major factors that could slow demand in the world's top consumer and producer of most base metals.
METALS-Copper falls for a fourth day; Shanghai shut
SINGAPORE, Oct 3 (Reuters) - Copper fell for a fourth session in a row on Monday, extending losses after suffering its worst quarter in nearly three years, as a firmer dollar and risks of an economic slowdown kept buyers at bay.
Three-month copper on the London Metal Exchange dropped 2.6 percent to $6,835 a tonne by 0403 GMT, after shedding 26 percent in the September quarter, its worst showing since the final three months of 2008.
PRECIOUS-Gold extends gains, equities drop on Europe debt fears
SINGAPORE, Oct 3 (Reuters) - Gold strengthened further on Monday as falling equities and lingering worries about a debt crisis in Europe drew investors to the precious metal, which posted its the biggest quarterly gain this year, but a firm U.S. dollar could still cap gains.
Stocks slipped in Asia and the euro fell on anxiety the euro zone's debt crisis will dampen global growth after the Greek government said it will miss a deficit target set just months ago in a massive bailout package.
Baltic index drops, China books more coal cargoes
LONDON, Sept 30 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell again for the fourth day on Friday as lighter bookings continued to trim gains made on the capesize market.
The main index fell by 14 points or 0.73 percent to 1,899 points.
