Hedge Funds Hike Bullish Commodity Bets (Source: Bloomberg)
Hedge funds increased bullish bets on commodities by the most since August on mounting optimism the global economy will avoid another recession, boosting prospects for raw-materials demand. Money managers raised combined net-long positions across 18 U.S. futures and options by 12 percent to 737,647 contracts in the week ended Oct. 18, Commodity Futures Trading Commission data show. Wagers increased most in energy and agriculture, led by heating oil, gasoline, coffee and soybeans. The Standard & Poor’s GSCI gauge of 24 commodities has climbed 9.2 percent in October, on track for the biggest monthly advance this year, as European leaders moved closer to resolving the region’s debt crisis. Reports last week showed U.S. housing starts jumped to the highest since April 2010 and manufacturing unexpectedly accelerated, increasing investor confidence that the world’s largest economy isn’t tipping back into recession.
Corn (Source: CME)
US corn futures end slightly higher as weakness in the US dollar supports prices, as does gains in other commodities ranging from wheat to oil to equities. Yet, the market felt some pressure from the advancing harvest. The USDA, in a weekly report due at 4 pm EDT, is expected to estimate the corn harvest is nearly 75% complete, up from 47% a week ago. Some farmers say they are selling their crops to take advantage of recent gains in prices. CBOT December corn edges up 1 3/4c to $6.51/bushel.
Wheat (Source: CME)
Most US wheat futures finish higher on broad buying of commodities and equities. Optimism about progress in solving the euro zone's debt crisis encouraged traders to increase risk across assets, with some buying back previously sold positions in wheat. Traders estimate commodity funds bought an estimated 2,000 contracts, a modest amount, but "the biggest thing is you've got some fund investment coming in here," says Alan Brugler of Brugler Marketing & Management. CBOT December wheat climbed 10 1/2c to $6.42 1/2 a bushel and KCBT December gained 12c to $7.35. MGEX pulled back after recent gains, with the December contract slipping 2c to $9.17 1/4.
Rice (Source: CME)
US rice futures settle limit up, finishing at a 1-month high, on concerns about flooding reducing exports from Thailand. Losses at the world's top rice exporter would tighten global supplies, sending prices higher. CBOT November rice jumps the 1-day 50c maximum at the CBOT, with the November contract finishing at $16.90 1/2 per hundredweight. The daily limit will temporarily expand to 75c Tuesday.
Wheat Board can thrive in open market - Viterra CEO
WINNIPEG, Manitoba, Oct 21 (Reuters) - Canada's biggest grain handler, Viterra Inc , is willing to work with the Canadian Wheat Board in an open market system and thinks the board can thrive without its marketing monopoly, Chief Executive Mayo Schmidt said on Friday.
Ottawa intends to pass legislation by the end of 2011 to end the Wheat Board's 69-year-old grain monopoly as of August 2012, allowing Western Canada's farmers to sell wheat and barley for milling or export directly to grain handlers.
Wheat up 1.3 pct, soy rebounds on EU optimism
SINGAPORE, Oct 24 (Reuters) - U.S. wheat rose more than 1 percent, gaining for a third straight session, while corn was up 0.9 percent as European leaders moved closer to a plan to resolve the region's debt issues at a weekend meeting.
"The dollar is under pressure and overall commodities are a bit firmer, it seems to be macro driven," said Brett Cooper, a senior manager of markets at FCStone Australia.
Australia's wheat harvest cranks up, record exports likely
SYDNEY, Oct 24 (Reuters) - Australia is on track to reap a near-record wheat crop in 2011/12 thanks to benign weather in the country's top grain exporting state of Western Australia, analysts and traders said on Monday.
The world's fourth largest shipper of the grain could export as much as a record 21 million tonnes in the marketing year to September 2012, said Andrew Woodhouse, an advisor at commodities trading firm Advance Trading Australasia.
South America 2012/13 rice export to fall 20 pct
HO CHI MINH CITY, Oct 21 (Reuters) - Paddy rice exports from four South American producers in the 2012/2013 trading season would fall around a fifth from this year to a combined 2.4 million tonnes, after shipments tripled in the current season, a senior agricultural researcher said on Friday.
The net paddy export by Argentina, Brazil, Paraguay and Uruguay to countries outside the Mercosur economic block would fall from 3.05 million tonnes traded in the current 2011/2012 season, Bruno Lanfranco of the National Agricultural Research Institute of Uruguay said.
Algeria Jan-Sept wheat imports up 36 percent
ALGIERS, Oct 23 (Reuters) - Algeria's soft and durum wheat imports reached 5.72 million tonnes in the first nine months of 2011, customs data showed, a 35.9 percent increase on the same period last year.
Soft wheat imports rose to 4.43 million tonnes from 2.97 million tonnes in the January-September period of 2010, while durum wheat purchases were 1.28 million tonnes, up from 1.23 million tonnes.
Ukraine winter grain sowing 92% complete -ministry
KIEV, Oct 21 (Reuters) - Ukrainian farms have sown 7.45 million hectares of winter grains for the 2012 harvest as of Oct. 21, or 92 percent of an initial forecast of 8.15 million hectares, the ministry said on Friday.
It said in a statement the sown area included 6.15 million hectares of winter wheat (94 percent of the forecast), 986,000 hectares of winter barley (80 percent of the forecast) and 322,000 hectares of winter rye (95 percent of the forecast).
Kazakh harvest 99 pct complete, on track for record
ASTANA, Oct 21 (Reuters) - Kazakhstan, expecting a record post-Soviet grain crop, has threshed 28.2 million tonnes of grain by bunker weight with 99 percent of the harvesting campaign complete, the Agriculture Ministry said on Friday.
The ministry said in a statement the average yield as of Oct. 21 was 1.77 tonnes per hectare, or 0.88 tonnes per hectare better than during last year's drought-hit harvest.
Thai Floods Are Driving Rice Prices (Source: CME)
Global rice prices may move up further in the next few months as flooding in Thailand continues to affect the crop and damage existing inventories. Importers are looking for alternative supply, but the perception gaining ground is that despite cheaper rice available from sources such as India and Pakistan, they won't be able to do without any supply from Thailand and Vietnam. The two control more than half of the rice moving in global trade. Vietnamese prices have moved up in tandem with Thailand's, hitting three-year highs with more expected. The price for a ton of Thai 5% broken grade rice, currently about $600, free-on-board -- up 20% since the start of the second quarter -- is forecast to hit $700 to $800 by the end of the year. The damage due to floods is worse than was initially feared. The loss is the equivalent of around three million metric tons of milled rice, or 20% of the country's main rice crop, said Jeremy Zwinger, chief executive of the Rice Trader, a California-based consultancy.
Supply for exports will be further limited by a government program that will buy most of the rice from farmers at 15,000 baht ($485) a ton, around 40% above market rates for unmilled rice. Rice, the world's most widely consumed staple food, is Asia's leading food crop. Food prices were a major factor in accelerating inflation around Asia earlier this year, and even where overall inflation has slowed, food-price pressure remains. China's consumer price index in September was up 6.1% from a year earlier, compared with August's 6.2% -- but food prices were up 13.4%. Wholesale food inflation in India hit double digits in the week ended Oct. 8, with prices up 10.6% from a year earlier. While floods are hitting Thailand, dry weather in the U.S. has cut production there, which normally accounts for more than 10% of the global rice trade.
Indonesia, the world's largest importer of rice, may buy directly from government agencies in India and Pakistan, said Mohammad Ismet, an adviser to Bulog, the country's procurement agency. Angelito Banayo, administrator of the Philippines National Food Authority, echoed that sentiment -- though the Philippines has long-term supply agreements with Thailand and Vietnam. Indian rice is running about $150 a ton less than Thai rice. With Thai and Vietnamese prices rising, India has already become a significant global supplier, offering rice in a recent Iraqi tender and to the United Nations' World Food Program. Officials have said India will export at least two million tons of ordinary rice over a period of four to six months. Pakistan is also expected to export an additional one million tons of rice in the marketing year starting Nov. 1, said Fuad Hamid Garib, director at Garibsons Ltd., one of the country's leading rice exporters.
Such sales notwithstanding, importers including sub-Saharan Africa will still need 12 million to 15 million tons of rice from Thailand and Vietnam in the next year, perhaps at sharply higher prices.
UN Expert: Contract Farming Is The Next "Land-Grab" (Source: CME)
Big business is driving a new form of "land-grabbing" by using long-term contracts to exploit smallholder farmers in the developing world, the United Nation's food expert will say. At the U.N. special assembly, Olivier De Schutter, the body's special rapporteur on the right to food, will call on governments to ensure poor farmers are not locked into unequal relationships with dominant companies. And while he agrees that the private sector will be a crucial source of much-needed investment in the sector, he told Dow Jones Newswires that the spate of projects run by companies like Nestle S.A. and Danone s.a. in the developing world should not be seen as a "panacea" for feeding the world. "Over the past few years, particularly since the food price crisis of 2008, we've seen a huge reinvestment in agriculture in which commodity buyers are trying to control the supply of the crops that they depend on," he said in an interview ahead of his annual U.N. presentation.
"But for farmers, this can be a way to make them highly dependent on the goodwill of one contractor. I hope [this report] will shift lines and overcome the ideological divide that contract farming is some kind of panacea." Investments by food importing countries in cheap farmland in the developing world has surged in recent years. A report by international aid group Oxfam last month found that 227 million hectares of land, an area the size of north-west Europe, has been leased or sold in the developing world--largely Africa--since 2001 and experts predict the trend will continue as food prices rise. Human rights groups say such schemes undermine the land rights of local people, push up food prices by using land to produce cash crops for export rather than for local markets and damage the environment. De Schutter argues that contract farming, in which farmers agree to supply large companies with particular crops at predetermined prices, often has the same affects.
He cited cases where farmers have fallen into debt as their contracts have forced them to buy expensive inputs like fertilizers from a single supplier, or grown cash crops only to find themselves unable to feed their families. In some cases, plantations have been divided up into smaller plots to ensure the buyers aren't forced to pay benefits to their growers. "Many farmers in developing countries are extremely suspicious of these kind of schemes," he said. Instead, he argues that governments must strengthen competition law to ensure no one company has a monopoly over a particular sector and farmers must improve their bargaining power through the creation of cooperatives or public-private partnerships. "We must empower smallholders to negotiate decent terms with buyers, and we must explore the most inclusive business models," he said.
High coffee price may tempt Vietnam; rubber bounces
SINGAPORE, Oct 24 (Reuters) - Gains in global coffee prices could tempt farmers in Vietnam, the world's largest robusta producer, to sell more beans this week as the crop progresses, while Tokyo rubber futures could find support from supply constraints, dealers said.
"Vietnam's sellers would be unable to keep coffee for too long because they have limited space in their warehouses, and there's a new crop coming in," said Lynette Tan, an analyst with Phillip Futures in Singapore.
Vietnam lowers Sept coffee export to 27,000 T-customs
HANOI, Oct 24 (Reuters) - Vietnam exported 27,000 tonnes (450,000 bags) of coffee in September, down 24.6 percent from a year ago, the customs department said on Monday, slightly below a government estimate last month of 30,000 tonnes.
The volume, also well below traders' estimates of between 60,000-70,000 tonnes, brought the cumulative January-September export volume to 997,000 tonnes, or 16.62 million 60-kg bags, up 8.4 percent from a year ago, the Finance Ministry-run Vietnam Customs said in a report.
Rain-damaged road delaying Colombian coffee
BOGOTA, Oct 21 (Reuters) - Torrential rains and landslides in Colombia have delayed some coffee getting to market with even more heavy rain expected in the coming months due to the La Nina weather phenomenon.
So far local prices have been unaffected, growers and exporters say. Even so, December arabica futures on the ICE exchange were up 5.5 percent at midday on Friday, an increase attributed in part to even worse rains in Central America that have damaged crops there.
Dry Sept to slightly boost Brazil cane quality
GUARUJA, Brazil, Oct 21 (Reuters) - Dry September weather in Brazil's center-south cane belt should slightly boost sugar output at the end of the current season approaches, Canaplan consultants said on Friday.
But the lack of rain will count as a negative factor against the performance of the next crop which needs good rains during the early stages of growth, said Caio Carvalho, Canaplan director on the sidelines of a cane event.
Russia unlikely to import raw sugar in 2011 -Zubkov
MOSCOW, Oct 21 (Reuters) - Russia, formerly the globe's third-largest sugar buyer, is unlikely to import more raw sugar this year as it expects record domestic beet sugar output, First Deputy Prime Minister Viktor Zubkov said on Friday.
"We will import no (raw) sugar this year. Probably. We will export," said Zubkov, who is in charge of the country's agriculture, at a teleconference on shipments of agricultural commodities.
EU to be net sugar importer despite reform
BRUSSELS/LONDON, Oct 21 (Reuters) - A plan to abolish European Union sugar production limits would lead to a modest increase in output and softer EU beet sugar prices, but the bloc would still remain a net importer for three years or longer.
The latest reform plan announced on Oct. 12 would end the EU's system of national sugar production quotas and minimum beet prices from 2015, not in 2016 as had been suggested in earlier drafts of the reform plans.
Euro Coal-Dec S.African trades at $109.75/T
LONDON, Oct 21 (Reuters) - Prompt physical coal prices were stable on Friday after having fallen through the week by over $5 a tonne due to weak demand in Europe and Asia, as a rise in oil prices provided some support.
Traders in particular returned with a more bearish outlook from the annual Coaltrans conference earlier in the week.
China's 2011 net coal imports seen about 150 mln T-body
SHANGHAI, Oct 21 (Reuters) - China's net coal imports are expected to rise 3 percent to around 150 million tonnes this year, the country's coal association said on Friday, adding that overall domestic supply and demand was expected to be balanced in the coming winter.
The projected import growth would mark a significant deceleration from the previous year, however. Net coal imports by the world's top coal consumer and producer in 2010 were 145.8 million tonnes, or a jump of 40 percent from 2009.
China energy chief says winter gas market seen in balance
BEIJING, Oct 24 (Reuters) - China's natural gas supply and demand in the winter-spring season will generally be in balance, but supply will be strained if low temperatures last longer than expected and gas demand from power generation surges, the country's energy chief said.
With a steady increase in output and imports, gas supplies will increase nearly 20 percent in the winter-spring season from a year ago, Liu Tienan, a deputy head of the powerful National Development and Reform Commission (NDRC) and head of National Energy Administration, told a gas conference on Friday.
China's daily LNG imports at record high in September
BEIJING, Oct 24 (Reuters) - China's imports of liquefied natural gas (LNG) averaged 38,286 tonnes per day in September, the highest daily rate since China started to ship in the fuel in 2006, data from the General Administration of Customs of China showed on Monday.
Last month's imports of the super-chilled gas increased nearly 17.5 percent from a year earlier to 1.15 million tonnes, second only to the monthly record high of 1.18 million tonnes in July.
Japan Sept crude oil import volume down 4.4 pct y/y
TOKYO, Oct 24 (Reuters) - Japan's crude oil imports fell 4.4 percent in September from the same month a year earlier, while liquefied natural gas imports rose more than 10 percent for the fifth straight month as gas-fired power generation has surged following the March earthquake, the Ministry of Finance said on Monday.
The decline in crude oil imports came as factors such as reconstruction after the massive quake and tsunami, and rising demand for direct-burn crude for power generation, have yet to offset slowing oil demand from a sluggish economy.
Brent, U.S. oil up on China data, EU optimism
SINGAPORE, Oct 24 (Reuters) - Brent neared $111 a barrel and U.S. crude climbed above $88.50 as optimism over a solution to the euro zone's debt crisis and stronger Chinese manufacturing data drummed up investor confidence.
"A key reason why prices are trending higher is that the (Chinese) number was positive. The market was worried that there would be another number below 50," said Melbourne-based Natalie Robertson of ANZ bank.
Oil Rises a Third Day on Economic Growth Outlook; Brent Premium Narrows (Source: Bloomberg)
Oil rose for a third day in New York as investors bet that signals of economic growth indicate fuel demand will increase. Brent’s premium to U.S. prices narrowed for a third day. Futures climbed as much as 0.5 percent after yesterday surging 4.4 percent to the highest settlement in almost 12 weeks. A satellite survey showed inventories at Cushing, Oklahoma, the delivery point for West Texas Intermediate crude, fell 760,000 barrels last week. A report today may show U.S. consumer confidence rose a second month. European leaders may agree tomorrow on a blueprint to tame the region’s debt crisis. “Risk appetite for commodities has sharply improved,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note. “Trade was heavy for U.S. crude, flipping the curve structure into backwardation for the first time since 2008, as market participants took direction from positive developments in Europe and the U.S. and priced-in for tighter supplies.”
Europe steel output growth to slow in 2012 -Eurofer
LONDON, Oct 21 (Reuters) - Growth of Europe's steel production will slow in 2012 along with activity in the steel-using sectors, Eurofer, the European steel producers association, said on Friday.
Steel production in Europe will rise by almost 6 percent in 2011, and then growth will slow to 2.6 percent in 2012, Eurofer forecast.
China Sept steel output at 2011 low -Worldsteel data
LONDON, Oct 21 (Reuters) - Annualised global steel output fell in September to its lowest this year in top producer China as a gloomier economic growth outlook made buyers cautious and weakened demand, according to a Reuters calculation based on World Steel Association data.
Annualised global steel production however, rose in September as many steel mills boosted activity after the summer slowdown in the northern hemisphere.
Industrial Metals Soar Most in Three Years on European Talks, China Demand (Source: Bloomberg)
Industrial metals in London jumped the most in three years, led by copper and nickel, as European governments moved closer to containing the region’s debt crisis and manufacturing rebounded in China, the world’s top consumer. European leaders outlined plans to aid banks and ruled out borrowing unlimited amounts from the European Central Bank to boost a rescue fund. Chinese manufacturing may expand in October, ending the longest contraction since 2009, according to a preliminary purchasing-managers’ index. “Most markets seem to be relieved by the progress made over the weekend by European leaders,” Edward Meir, a senior commodity analyst at MF Global Holdings Ltd. in Darien, Connecticut, said in a report. Industrial metals are “also teeing off somewhat disproportionately” on Chinese manufacturing, he said.
Iron Ore-Spot may extend losing streak, but China PMI gives hope
SINGAPORE, Oct 24 (Reuters) - Spot iron ore prices are likely to stretch losses this week after falling last week by the most since July 2010, on slack demand from top importer China as mills wait for prices to drop further before returning to the market.
But a sharp rise in China steel futures, which tracked gains in other commodities after manufacturing data eased fears about a hard landing in the world's second-biggest economy, raised hopes iron ore prices could see a slower pace of decline.
Japan eyes cutting long-term iron ore buys-Nikkei
TOKYO, Oct 23 (Reuters) - Japan's major steel makers are seeking to reduce purchase volumes from more expensive long-term iron ore contracts and are looking at buying more from the cheaper spot market instead, the Nikkei business daily said on Sunday.
Spot iron prices have slid to their lowest in a year and are set to post their biggest weekly decline in 15 months as demand from top importer China remains thin, fuelling expectations prices could drop further.
Gold Gains Second Consecutive Session as Commodities Jump on China Data (Source: Bloomberg)
Gold rose for a second straight session, tracking gains in others commodities, as renewed optimism for growth in China boosted prospects for raw-material demand. The Standard & Poor’s GSCI Index of 24 raw materials climbed as much as 2.7 percent after reports showed China’s manufacturing may rise in October for the first time in four months. Gold also advanced on concern that U.S. monetary policy aimed at shoring up growth will spur inflation. Federal Reserve Vice Chairman Janet Yellen said on Oct. 21 that a third round of large-scale securities purchases may become warranted to boost the economy. “Optimism about Chinese growth is pushing all commodities higher, including gold,” Fred Schoenstein, a trader at Heraeus Precious Metals Management in New York, said in a telephone interview. “Some people are also looking at it as a safe-haven investment.”
Car Carriers Profit From Record Global Demand as Shipping Slumps: Freight (Source: Bloomberg)
Ships capable of hauling 4,000 cars across the world’s oceans may make the most money next year since the global recession as production reaches a record and demand from emerging markets swells cargoes. Shipments will rise 10 percent to 12.7 million vehicles in 2012, more than twice the fleet’s expansion, according to ABG Sundal Collier ASA, an investment bank in Oslo. Rates for the 550-foot vessels will gain 36 percent to $15,000 a day, RS Platou Markets AS estimates. Wilh. Wilhelmsen ASA, Europe’s biggest owner of the ships, will boost profit for at least two more years, analyst estimates compiled by Bloomberg show. Global car sales will rise 8.5 percent to 80.7 million in 2012, according to researcher JD Power & Associates. Demand is being led by developing nations, which will expand 6.1 percent next year, compared with 1.9 percent for advanced economies, the International Monetary Fund predicts. For owners of car carriers, that means profit at a time when freighters hauling commodities are losing money.
Baltic index slips, China iron ore demand watched
LONDON, Oct 21 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, turned negative on Friday, although the larger capesize market remained supported by healthy iron ore and coal exports to China.
Brokers said growing vessel supply, which was outpacing commodity demand, was set to cap dry bulk freight rate gains in the coming months, with economic uncertainty adding to headwinds.
