Commodity Shipping Jumps to Highest This Year as Price Rout Spurs Demand (Source: Bloomberg)
The cost of hauling coal, iron ore and grains by sea rose to its highest this year as a five-month rout in raw-material prices spurred demand from consumers seeking to build stockpiles. The Baltic Dry Index, a measure of charter costs for four classes of vessel, gained 1.6 percent to 2,032 points today, according to the London-based Baltic Exchange, which publishes rates for more than 50 maritime routes. The gauge advanced to the highest since December. Daily returns on capesizes, the biggest component of the index, jumped 2.2 percent to $28,483, a sixfold increase from the end of February. The Standard & Poor’s GSCI gauge of 24 commodities tipped into a bear market last month after dropping more than 20 percent, on mounting concern that slowing growth will erode the chances of shortages. The price of iron ore, the biggest commodity carried by ships in the Baltic Dry Index, fell 13 percent since February, based on prices in China, the largest consumer of the raw-material used to make steel.
Corn (Source: CME)
US corn futures finished slightly higher on support from outside markets. Yet, prices trimmed gains after touching an early high of $6.18 1/2 a bushel as external support faded during the session. Rich Nelson of Allendale says the corn market's inability to sustain strong gains shows prices may continue to struggle to advance. Some traders step to sidelines due to Columbus Day holiday and uncertainty about USDA crop reports due Wednesday. CBOT December corn rises 5c to $6.05.
Wheat (Source: CME)
US wheat futures closed up, with MGEX continuing to post the strongest gains as farmers hold tight to supplies. They are not selling spring wheat following the recent harvest due to disappointment over low prices for the good-quality crop. Weakness in the US dollar adds support to the grain markets. Yet, some traders take a step back ahead of USDA crop reports due Wednesday. CBOT December wheat gains 4c to $6.11 1/2 a bushel; KCBT December wheat edges up 1 1/2c to $6.86; MGEX December jumps 14 3/4c to $9.34 1/4.
Rice (Source: CME)
US rice futures close at a three-month low, bucking the firmer trend in commodities and equities. Prices continued to pull back after approaching a three-year high last month. The September rally factored in concerns about crop damage in the US, traders say, noting the harvest is bringing fresh supplies in from the fields. Harvest was already 65% complete a week ago, according to USDA. CBOT November rice drops 11c to $15.51 1/2 per hundredweight.
US soy at 1-week top on Euro zone debt deal hopes
SINGAPORE, Oct 10 (Reuters) - U.S. soybean futures rose to a one-week top, while wheat recovered after five straight weeks of losses on optimism as Europe's two biggest economies, France and Germany, promised a package by month-end to solve the euro zone's debt crisis.
"There is improved risk appetite with efforts being made in Europe to solve the debt crisis and also there was good news from the U.S.," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore. "The harvest of corn and soybeans is progressing well which may add some pressure."
Philippines may change 2012 rice imports in Nov
MANILA, Oct 10 (Reuters) - The Philippines could announce any changes to its plans to import up to 500,000 tonnes of rice in 2012 as soon as November, depending on the final report on crop damage from two recent typhoons, Agriculture Secretary Proceso Alcala said on Monday.
The country has no plans of going back to the market before the end of this year to buy rice for 2012's requirements, he told reporters after a meeting of the NFA Council, the government body that approves rice importation.
Kazakh 2011 grain crop seen at 22-23 mln T -AgMin
ASTANA, Oct 10 (Reuters) - Kazakhstan expects a grain crop of 22 million to 23 million tonnes by clean weight this year, Agriculture Minister Asylzhan Mamytbekov said on Monday, which would set a post-Soviet record for the Central Asian country.
"We are forecasting a grain harvest of 22 million to 23 million tonnes by clean weight," Mamytbekov told a government meeting. The ministry said on Friday that harvesting was complete on 90 percent of the sown area.
Canada says law to end grain monopoly coming soon
WINNIPEG, Manitoba - Oct 7 (Reuters) - Canada's Conservative government will pass legislation "very soon" to end the Canadian Wheat Board's monopoly on marketing western wheat and barley for milling or export, Prime Minister Stephen Harper said on Friday, strongly warning the board to get out of the way.
Harper, in Regina, Saskatchewan for the announcement for construction of Western Canada's first major durum-processing plant in years, said his government will introduce legislation shortly after next week's House of Commons break and pass it soon after. The monopoly would end as of Aug. 1, 2012.
Argentine rains aid some wheat battered by drought
BUENOS AIRES, Oct 7 (Reuters) - Heavy rains throughout Argentina's main agricultural area on Friday will speed corn sowing and bring relief to wheat fields, although some wheat plants have been irreparably damaged by drought, experts said.
A lack of precipitation last month delayed corn planting and battered wheat crops in Argentina. The South American grains powerhouse is a leading wheat exporter and the world's No. 2 corn supplier.
Slight drop seen in US corn crop; more stocks
CHICAGO, Oct 7 (Reuters) - The size of the U.S. corn crop should be down less than 1 percent from last month as a drop in harvested acreage will largely be countered by better yields, analysts polled by Reuters said ahead of a government report.
The U.S. Department of Agriculture's supply-demand report on Oct. 12 is likely to peg this year's U.S. corn crop at 12.471 billion bushels on a yield of 148.7 bushels per acre (bpa), according a Reuters survey of 27 analysts.
Kansas wheat acres seen rising despite drought
CHICAGO, Oct 7 (Reuters) - Wheat planting in Kansas this year may rise 1 to 3 percent from a year ago despite more than half of the top U.S. winter wheat state being under a severe drought, the head of a Kansas wheat group said on Friday.
Disappointing corn yields this year, especially in bone-dry southern areas of the state, may have some producers resisting the urge to set aside acres for corn planting next spring and they may instead revert back to wheat, Justin Gilpin, chief executive of the Kansas Wheat Commission, told the Reuters Global Ags Forum.
Cargill 1Q Income Sinks On Volatile Markets (Source: CME)
Cargill Inc. reported a 66% slide in first-quarter profit as volatile markets limited opportunities for the world's largest agricultural commodity trader, though revenue rose by a third. The U.S. conglomerate, whose activities range from grain handling and storage to meat packing and energy trading, said four of its five business units reported lower earnings compared with a year ago as it reported its second straight quarter of decline. Privately-held Cargill said it was focused on regaining momentum in earnings after reporting a record full-year profit for fiscal 2011. Listed rivals including Archer Daniels Midland Co. (ADM) and Bunge Ltd. (BG) seemed unaffected by Cargill's caution, with their stock caught in the broader bounce. "It was a tough quarter," Cargill Chief Executive Greg Page said in a statement. "With results down from recent levels, we're focused on regaining our earnings momentum."
The company, which posted record earnings in the fiscal year ended May 31, also saw earnings decline in the fourth quarter by 7%. Commodity markets have swung wildly in recent months as global economic uncertainty and currency fluctuations have prompted investors to move money in and out of commodities. This "risk, on, risk off" dynamic prompted a "disciplined approach to risk-taking," the company said in a release. During Cargill's first-quarter, which ended Aug. 31, spot-month Chicago Board of Trade corn futures soared to a record high of $7.99 3/4 per bushel, plunged to $6.15 and then rebounded to as high as $7.65 before the quarter closed. They have since plummeted again, falling below $6.
The suburban Minneapolis-based company's earnings were also hit by acquisition-related expenses and costs stemming from U.S. flooding, which increased freight costs and required it to take steps to protect the supply chain. Flooding throughout the northern Plains, particularly along the Missouri River, was a problem throughout the summer. For the quarter ended Aug. 31, Cargill, whose diverse businesses range from grain merchandising to meat processing to energy trading, posted a profit of $236 million, down from $693 million a year earlier. Revenue rose 34% to $34.6 billion. The year-ago results didn't include an additional $190 million in earnings from its majority investment in fertilizer producer Mosaic Co. (MOS), which the company sold in a deal completed in May.
Cargill, like other U.S. agricultural exporters, has benefited from rising food prices and the expanding middle class in emerging economies such as China and India. Its agriculture services segment, which includes grain handling and storage, reported increased earnings in the quarter. But earnings fell in the grain origination and processing segment and its animal protein business. The company's food ingredients segment "nearly matched" a record performance last year, the company said. Cargill doesn't disclose earnings results within each segment. The company has emphasized that it has a strong balance sheet following the sale of the Mosaic stake, which was worth about $20 billion. Cargill recently made a series of acquisitions across Asia, North and South America, culminating in one of its largest ever takeovers--the EUR1.5 billion purchase of Dutch animal feed maker Provimi Group.
The company invested more than $3 billion in acquisitions and expansions in the prior fiscal year, a record for the company.
US Corn-Harvest Outlook Stabilizes (Source: CME)
Federal forecasters are expected to keep their projection for the U.S. corn harvest nearly unchanged after cutting it for two straight months due to damage from hot, dry weather. The U.S. Department of Agriculture in its monthly crop report will forecast the corn harvest at 12.492 billion bushels, down 0.05% from its September estimate, according to 23 analysts surveyed by Dow Jones Newswires. Estimates ranged from 12.342 billion bushels to 12.69 billion bushels. If the average prediction of analysts is correct, the crop will be just 0.4% larger than last year's harvest. The department is scheduled to release the monthly report at 8:30 a.m. EDT Wednesday (1230 GMT). The USDA also is expected to raise its estimate for inventories as of Aug. 31, 2012, when the crop year ends. Analysts on average predict supplies at 795 million bushels, up 18.3% from the USDA's September estimate. Estimates ranged from 646 million to 989 million bushels.
The jump in expected inventories would be driven by sizable supplies left over from the last harvest. The USDA surprised traders two weeks ago by estimating farmers and grain elevators had more corn than expected in storage before the latest harvest began at the beginning of September. Grain users are paying close attention to production and inventories after the most actively traded December corn contract set a new high in late August as analysts slashed their output forecasts. Prices have since pulled back 22% on jitters about the global economy and concerns the earlier supply cuts were too severe. The contract traded around $6.05 a bushel on the Chicago Board of Trade. The USDA is expected to forecast the corn yield at 148.9 bushels an acre, up 0.5% from its September estimate, according to analysts surveyed by Dow Jones Newswires. Estimates ranged from 147.2 bushels to 150.9 bushels an acre.
The ongoing corn harvest has uncovered yields that were better than previously expected, said Rich Nelson, director of research for Allendale, a commodities brokerage firm in Illinois. Harvest is thought to be about one-third complete. "It's very clear that corn and certainly soybean yields are a little better than expected," Nelson said. Traders also will be looking to see whether the USDA trims its estimate for how many acres will be harvested. They expect more farmers than usual may give up on land they planted because of damage from summer heat and from flooding in the northern Plains and along the Mississippi and Missouri rivers. The department in September estimated 84.4 million acres will be harvested, but Nelson estimated that number could drop by 500,000 acres. Other analysts projected deeper cuts, with the decline in acres offsetting their forecasts for larger-than-expected yields.
China Wheat Affected As Farmers Harvest Corn (Source: CME)
Wheat prices in China's major producing areas rose in the two weeks to Monday, as wheat sales slowed while farmers were busy with the corn harvest, forcing many flour mills to raise purchase prices. In Zhoukou, central China's Henan province, wheat prices rose 2% from two weeks earlier to CNY2,060 a metric ton. In Hengshui, Hebei province, prices rose 1% to CNY2,120/ton. Traders appear to have lost some interest in the wheat market and are shifting to more profitable corn, analysts said. Corn prices have increased around 30% in the last 12 months due to tight supply and strong demand, but have started to fall due to a record harvest, while the wheat prices have risen only 4%, government data showed. At the end of September, the National Development and Reform Commission raised the minimum purchase price of 2012 harvest wheat by 7-10% from a year earlier to CNY2,040 a metric ton, to encourage production.
Market participants expected the increase, as wheat planting costs have increased more than 15% this year due to sharply rising labor costs, fertilizer and diesel prices, they said. The higher minimum won't have a significant impact on wheat prices, since it is in line with market expectations, the Zhengzhou Grain Wholesale Market said. But farmers will be more reluctant to sell their inventories, as they expect higher prices in the coming months, traders said. Farmers are still holding about 30-40% of wheat output.
India Sees 2011-12 Wheat Output At 86 Mln Tons (Source: CME)
India's wheat output in the current crop year is expected to be a record 86 million metric tons, Farm Secretary P.K. Basu said. "If there is no terminal heat or rust problem, there is no reason why we can't achieve a record production," Basu told reporters. India achieved an all-time high wheat production of 85.93 million tons in the last crop year ended June 30. Wheat is sown during October-November and harvested from March-April. Cotton exports in 2011-12 are likely to top last year's level of 7.0 million bales because of higher production, Basu said.
Flooding Thai Hits Rice, Rubber Exports (Source: CME)
Widespread flooding that has hit inland transportation in Thailand has slowed or delayed the shipment of several thousand tons of rice and natural rubber, two key agricultural exports from the country, industry participants said. With rains expected to continue, the situation is expected to worsen in the next two weeks before flood waters start receding, they said. Some shipments are delayed because roads are cut off and trucks can't move rice from warehouses to ports, said Korbsook Iamsuri, president of the Thai Rice Exporters Association. The waterways used to transport grain to ships have also become unusable in many cases because of higher-than-normal tides which reduce headroom under bridges, she said. Heavy and widespread rainfall affected natural rubber production in northern and north-eastern Thailand, delaying shipments of raw material from these areas, said a senior executive of major rubber producer Thai Hua. The northern region accounts for upto 15% of Thai rubber output.
If flooding spreads to the southern parts of the country later this month, as some have predicted, the total area affected could rise to 70%, said Pongsak Kerdvongbundit, managing director of Von Bundit Ltd., Thailand's largest manufacturer of natural rubber. He said prolonged heavy rains in northern and central Thailand over the last month and an active La Nina weather phenomenon that usually causes flooding in parts of Asia-Pacific point to serious risk of further flooding that could hit Bangkok and Laem Chabang ports in the near future. Thailand usually exports more than 200,000 tons natural rubber a month but that was expected to fall to 195,000 tons in October according to the Association of Natural Rubber Producing Countries. Fears of a global economic slowdown and slow demand during China's week-long holidays were cited as reasons for the expected drop in exports. If flooding hits exports in a major way, this number could be much lower, traders said.
With export numbers expected to fall, the limited supply may push up prices again, said Pongsak. The benchmark March natural rubber futures contract on the Tokyo Commodity Exchange settled 2.6% higher Friday at Y316.1 a kilogram and most traders expect prices to remain well above Y300/kg this month. The impact of flooding has been felt more by the rice producers, said Avtar Sandu, manager for Asian commodities at Phillip Futures Ltd. Several rice traders said their warehouses have been hit by floodwater, making it difficult to estimate the overall damage immediately. Thai rice millers are estimated to hold at least 2.0 million tons of rice from the previous crop. Thailand exported an average 1.0 million tons rice each month in the first half of 2011 but monthly shipments are likely to drop to 700,000 tons to 800,000 tons in the next few months due to high domestic prices and delayed shipments.
Sugar, coffee rise, eyes on debt promise
LONDON, Oct 10 (Reuters) - ICE sugar, coffee and cocoa futures advanced in early trade, alongside gains in other commodities, buoyed by plans by the German and French leaders to tackle the euro zone debt crisis.
Raw sugar futures rose, largely tracking gains in other commodity markets, supported by tight supplies of Brazilian raw sugar, although expectations of big northern hemisphere crops will limit gains.
Rain delays Vietnam's coffee maturing, harvesting
HANOI, Oct 10 (Reuters) - Recent rains in Vietnam's Central Highlands coffee belt has delayed cherries from maturing and discouraged farmers' drying, dashing market expectation of the early arrival of fresh beans, traders said on Monday.
Traders fear the rains could overstay late this month, disrupting harvesting in the world's second-largest coffee producing nation after Brazil, given forecasts of late ending of the rainy season and more storms.
Brazil Sept green coffee exports down 15 pct on yr
BRASILIA, Oct 7 (Reuters) - Brazil exported 2.56 million 60-kg bags of green coffee in September, down from the 2.99 million bags shipped in the same month a year ago, the Council of Green Coffee Exporters, Cecafe, said on Friday.
Brazil's 2011 smaller off-year harvest is now finished and the world's top coffee producer will be running down stocks from that crop until next year's expected larger on-year harvest starts in May.
Mexico see less sugar exports next season-cane union
MEXICO CITY, Oct 7 (Reuters) - Mexico's cane workers union said on Friday the country's sugar exports will fall 30 percent next season from a record high this year after bad weather hit crops, affecting trade to the United States.
Mexico ships most of its sugar to its northern neighbor under a free trade deal and this year will only export around 1 million tonnes, Carlos Blackaller, the head of the national cane workers union told Reuters in an interview.
Uganda Sept coffee exports rise 50 pct yr/yr
KAMPALA, Oct 7 (Reuters) - Uganda exported 340,378 bags of coffee weighing 60-kg each in September, up from 169,728 bags in the same month last year, a source at the Uganda Coffee Development Authority (UCDA) said on Friday.
The rise was due to good rains and to exporters clearing warehouses of old stock to make room for the new crop.
Russia may export 200,000 T sugar in 2011/12-minister
MOSCOW, Oct 7 (Reuters) - Russia may export up to 200,000 tonnes of white beet sugar between July 1, 2011 and June 30, 2012, Agriculture Minister Yelena Skrynnik said on Friday.
"Exports have already reached 50,000 tonnes. The export forecast is up to 200,000 tonnes," she said in a statement.
Ivorian record cocoa crop yields 1.48 mln T
ABIDJAN, Oct 7 (Reuters) - Plantations in top grower Ivory Coast supplied a record 1,477,855 tonnes of cocoa to the West African nation's ports during the 2010-11 season that just ended, up from 1,242,293 tonnes the previous season, according to data from the Bourse du Cafe et Cacao (BCC) obtained by Reuters on Friday.
The performance comes despite a post-election conflict in Ivory Coast that killed thousands of people and temporarily halted exports, and adds to a banner West African crop bolstered by ideal growing conditions.
US coal consumption down 13 pct last week - Genscape
Oct 7 (Reuters) - U.S. coal consumption fell 13 percent last week and was down 7 percent from the same week a year ago, according to power industry data monitor Genscape.
Coal use swings up and down seasonally, and varies from week to week and region to region, depending on electricity demand to run air-conditioners or power heaters.
EURO COAL - Prices weaken slightly, banks sell swaps
LONDON, Oct 7 (Reuters) - Prompt physical coal prices weakened slightly by around 25-50 U.S. cents a tonne on Friday and look set for a continued slow drift lower, traders and utilities said.
Coal prices have been largely disconnected from fundamentals for many months - the lack of buying interest from end-users in Europe and India ought to be reflected in lower prices, major coal exporters and end-users said.
Italy 2011 biodiesel output seen down 18 pct-industry
MILAN, Oct 7 (Reuters) - Biodiesel output in Italy, a major producer in the European Union, is expected to fall some 18 percent to about 600,000 tonnes this year hit by surging inflows of cheaper imports, a senior industry official said on Friday.
Italian biodiesel makers, who use mostly imported raw materials including palm oil and rapeseed, have been hit hard in the past couple of years by cheap imports which sometimes cost less than the raw materials, industry experts have said.
Brent firms on euro debt steps, U.S. data
LONDON, Oct 10 (Reuters) - Brent crude futures gained ground after France and Germany said they would come up with a plan to contain the euro zone crisis, but details will not emerge until the end of the month.
"It remains to be seen how markets react to this latest weekend pronouncement, as at some point, words will need to be replaced by concrete action," MF Global analysts wrote in a note on Monday.
Saudi keeps Nov crude supply to Asia at full volume
SINGAPORE, Oct 10 (Reuters) - Saudi Arabia, the world's top crude exporter, will supply full contracted volumes of crude oil in November to at least four Asian term buyers, steady with October, industry sources familiar with the matter said on Monday.
The steady supply comes as the OPEC kingpin raised the official selling price (OSP) for at least two grades to record highs after a strong trading month for November cargoes.
Shell begins partial restart of Singapore refinery
SINGAPORE, Oct 10 (Reuters) - Royal Dutch Shell Plc is restarting the largest crude distillation unit at its Singapore refinery less than two weeks after the plant was shut because of a fire, three industry sources with direct knowledge said on Monday.
The drive to partially restart the 210,000-barrels per day (bpd) CDU, one of three at Shell's largest plant capable of processing 500,000 bpd of crude, is due to strong margins for base oils and lubricants. It will also yield light distillates, sufficient to keep its chemical complex running at reduced rates, they said.
Oil Trades Near Two-Week High on European Debt Pledge, U.S. Growth Outlook (Source: Bloomberg)
Oil traded near the highest price in more than two weeks in New York as investors speculated Europe will contain its debt crisis and a recession will be avoided in the U.S., the world’s biggest crude-consuming nation. Futures were little changed after advancing for a fourth day yesterday in the longest winning streak since August. Stocks, commodities and the euro rallied after the leaders of France and Germany pledged to deliver a plan to stem the debt crisis, while reports this week may show U.S. retail sales rose the most in six months in September. Some oil exports from Kuwait may be blocked by a strike, a union official said. “Momentum-based selling appears to be slowing for commodities, with crude oil taking the lead,” Mark Pervan, Melbourne-based head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today. “Crude benchmarks jumped in the hopes that there is enough political intent in Europe to resolve the debt crisis. Supply side factors supported prices.”
Most Oil Tankers Idled Since ’80s Still Won’t Buoy Charter Rates: Freight (Source: Bloomberg)
Owners of supertankers, losing money for a sixth consecutive quarter, will probably idle the most ships in more than two decades as they contend with a glut that drove charter rates to the lowest in at least 14 years. The combination of too many ships and slowing demand growth for oil means that about 6 percent of the fleet will be anchored in a year from almost none now, according to the median in a Bloomberg survey of eight brokers and analysts. That may not be enough to end the slump. Forward freight agreements, traded by brokers and used to bet on transport costs, anticipate rates no higher than $13,819 a day through 2013.
Frontline Ltd., the biggest operator of the vessels, says it needs $29,800 to break even. The Hamilton, Bermuda-based company will report its biggest annual loss in 12 years in 2011, analysts’ estimates compiled by Bloomberg show. While owners can cut operating costs to as little as $2,000 a day from $12,000 by anchoring ships, it also means no income, said Andreas Sohmen- Pao, chief executive officer of the oil and gas shipping unit of BW Group Ltd., which is idling three vessels.
Iron Ore-Shanghai rebar falls after China holiday
SINGAPORE, Oct 10 (Reuters) - Shanghai steel futures dropped half a percent in cautious trading on Monday as Chinese investors returned after a week-long holiday uncertain whether demand would pick up strongly.
That suggests the prices of iron ore may dip further this week with Chinese mills seeing no need to stock up on the steel raw material, although continuously tight supplies out of No. 3 supplier India should keep losses in check.
China daily crude steel output dips 2.3 pct in mid-Sept
SHANGHAI, Oct 10 (Reuters) - China's daily crude steel output fell 2.3 percent to 1.919 million tonnes in the second ten days of September from the preceding ten days, data from the China Iron & Steel Association showed.
China's medium- and large-sized steel mills produced an average daily 1.630 million tonnes of crude steel in the same period, down 2.3 percent from early September.
