La Nina Weakens; Indicators Near Neutral (Source: CME)
Indicators of a La Nina have continued to steadily shift toward neutral, suggesting the climate event in the Pacific Ocean is weakening, the government's Bureau of Meteorology said. Sea surface temperatures in the tropical Pacific Ocean have continued to warm from lower-than-average temperatures, and the bureau's Southern Oscillation Index has fallen to a neutral value, the bureau reported in a weekly tropical climate note. The SOI recorded a neutral value of +0.7 in the 30 days ended Feb. 26, falling from +8.0 in the 30 days ended Feb. 18. Sustained positive values above +8 may indicate a La Nina event.
"Although both oceanic and atmospheric indices show signs of weakening, La Nina is still having a strong influence across the Pacific," the bureau said. La Nina events usually bring above-normal rainfall and below-normal daytime temperatures from winter through summer across eastern and northern Australia as well as an increased risk of tropical cyclones in northern Australia during the cyclone season, which runs from November through April. Cloudiness near the international date line continues below average, and easterly anomalies in the trade winds continue over the western and central Pacific, the bureau said. Rainfall across Australia over this last week followed the usual La Nina pattern, with above average rainfall across much of the northern and eastern parts of the country, it said.
The bureau also warned the risk for tropical cyclone formation and above average rainfall will increase in the second week of March.
Corn Shipments From India Seen Missing Forecast on Pests, Rebounding Rupee (Source: Bloomberg)
India, Asia’s biggest corn exporter, may ship less grain than predicted this year after Vietnam rejected some cargoes because of pests and the rebounding rupee boosted prices, according to a traders’ group. Sales in the year that began on Oct. 1 will trail the 3 million metric tons estimated in November, said Pravin Dongre, president of the India Pulses & Grains Association. The country exported 2.5 million tons in 2010-2011, he said in a phone interview in Mumbai. Futures lost 11 percent in the past year in Chicago as record global corn production cut demand for the livestock-feed ingredient from the U.S., the largest producer and exporter. Vietnam may boost imports from South America and Ukraine after turning back a couple of Indian cargoes, citing the presence of live khapra beetles, an insect that destroys grain, Dongre said. “Earlier if there were 10 buyers, then 10 shippers were willing to export to Vietnam,” said Dongre. “With this issue, shippers are very hesitant.”
Corn (Source: CME)
US corn futures rally amid near-term supply concerns and broad strength in grains. Front-month corn has now fully rebounded from losses suffered after the government's bearish Jan 12 grain report, climbing to a seven-week high. Although traders wary of the potential for a huge 2012 crop, tight existing supplies and optimism about export demand are fueling gains. Meanwhile soybeans, which hit a 5-month high, and wheat, which rallied on short-covering, add to the strength. CBOT March corn ends up 9c to $6.53 1/2 a bushel, Dec corn up 6 1/2c to $5.63 1/2.
Wheat (Source: CME)
US wheat futures surge, ending at 3-week highs as a broad rally in grains prompts short-covering. Traders attribute the extent of wheat's gains to the large net short position held by speculators. Gains in soybeans, driven by exports and South American drought, as well as in corn, are prompting traders to cover their short positions in wheat, traders say. They say wheat's fundamentals remain questionable, but with front-month CBOT prices on the verge of topping their 200-day moving average, more upside is possible. CBOT March wheat ends up 16 1/2c to $6.62 1/4 a bushel, March KCBT wheat up 14 1/2c to $6.99 1/2, March MGEX wheat up 11 1/2c to $8.02 1/4.
Rice (Source: CME)
US rice futures end slightly lower in tight, range-bound trade. Rice declines to join in a broader rally in grains and soybeans, as poor export demand for rice continues to hang over prices. Worries about U.S. acreage limiting the downside. CBOT March rice ends down 3c to $14.17 per hundredweight.
Soy gains after touching 5-month high; wheat, corn dip
NEW DELHI, Feb 28 (Reuters) - Chicago soybeans rose extending gains after a fresh five-month high struck in the last session on buoyant demand from China, the world's top importer of the commodity.
Corn and wheat dropped after settling higher on Monday, partly influenced by a fall in crude oil prices that took Brent below $124.
La Nina continues to wane-Australia weather bureau
SYDNEY, Feb 28 (Reuters) - La Nina, a weather phenomenon linked to heavy rains in the Asia-Pacific region and South America and drought in Africa, continues to decline, but still hasn't lost its punch, Australia's weather bureau said on Tuesday.
"While La Niña is clearly on the wane, waters around Australia remain warmer than normal, maintaining the potential for increased rainfall over the continent," the Australian Bureau of Meteorology said.
US farmers get record $10 bln from crop insurance
WASHINGTON, Feb 27 (Reuters) - U.S. farmers collected a record $10 billion in crop insurance indemnities for their 2011 crops, said a trade group on Monday, calling insurance a sound safety net as Congress prepares to overhaul crop subsidies.
Five percent of claims on 2011 crops are outstanding, so the pay-out is likely to climb above the current $10.08 billion, said National Crop Insurance Services (NCIS). The payment record was $8.67 billion in 2008.
Canada Wheat Board seen gaining grain handling deals
WINNIPEG, Manitoba, Feb 27 (Reuters) - Canadian agriculture minister Gerry Ritz said on Monday he is confident the Canadian Wheat Board will strike agreements with grain handlers to allow it to start buying farmers' 2012 crops for future delivery.
A new federal law will strip the board's marketing monopoly for Western Canadian wheat and barley as of Aug. 1. The Wheat Board plans to continue buying and selling upcoming crops, even though farmers will be no longer be required to market their grain through the CWB.
Forecasters make deep cuts to Brazil grain outlook
LONDRINA, Brazil, Feb 27 (Reuters) - The outlook for soy production in Brazil darkened further on Monday after public and private forecasters cut their harvest outlooks for the world's No. 2 grower again from predictions provided in recent weeks.
A harsh drought in the south of the country has stressed this year's soy and corn crops, thanks in part to the prevailing La Nina weather conditions that have also parched grain producing areas in Argentina, raising concerns of global food shortages and rising grain prices.
Ukraine marine grain exports at 1.24 mln T Feb 1-24
KIEV, Feb 27 (Reuters) - Ukraine exported about 1.24 million tonnes of grain, mostly corn, in the first 24 days of February, Kiev-based consultancy ProAgro said on Monday.
It said Ukraine exported about 951,000 tonnes of corn and 266,000 tonnes of wheat. No figures for the same period of 2011 were immediately available.
Iran May Buy Wheat From India (Source: CME)
With western sanctions hitting supply from the U.S and Europe, Iran may buy up to 3 million metric tons of wheat from India through private deals, industry officials said. Once the two countries are able to find a way to get around restrictions on payment due to the sanctions, this deal could potentially open doors for the export of other food items to Iran, they said. "The payments by Iran could be in rupees...It is being worked out," one of the officials who didn't wish to be named, told Dow Jones Newswires. The value of the deals being discussed is estimated at $750 million to $900 million. One option being looked at is Iran using rupee payments received against oil exports to India to buy wheat and other food products from the latter. A delegation that includes representatives of Iran's central bank is expected in New Delhi this week to discuss the deals and the payment mechanism, a second official said. Iran has recently turned to Australia, Canada and Russia to buy wheat and corn to replenish stocks.
The success of any deal will hinge on the two establishing a payment mechanism as shipments of premium basmati rice and tea have been disrupted after sanctions were imposed. Another issue that needs to be sorted out is the port of delivery. "I think private traders in India would be willing to supply wheat to Iran, so long as they take delivery at Indian ports," said M.K. Dattaraj, former president of the Roller Flour Millers Federation of India. "Otherwise, logistics can get complicated." Besides wheat, Iran is also keen to buy edible oils, corn and sugar, an Indian official said. Wheat from India is likely to be shipped at a price of $300/ton free on board. Such an order could help Indian traders at a time when the country has plentiful supply after two bumper crops. Domestic exporters have also been struggling as high domestic prices make exports difficult. India has shipped no more than 550,000 tons wheat after an export ban was lifted in September.
Sugar May Tumble Below 20 Cents on Surplus, F.O. Licht Says (Source: Bloomberg)
Raw sugar may drop to less than 20 cents a pound by year-end as global supply exceeds demand for a second season in 2012-2013, according to F.O. Licht GmbH, which said that lower prices may spur restocking by importers. The commodity dropped for the first time in nine days in New York. The surplus may counter support that sugar gets from higher oil prices, according to Christoph Berg, managing director at the Ratzeburg, Germany-based researcher who’s covered the market since 1994. Sugar, which hasn’t traded below 20 cents since September 2010, snapped the best run since November of that year. Lower prices would cut expenses for users such as soft- drinks maker Coca-Cola Co. (KO), which has also predicted global surpluses, while helping to extend a decline in world food costs. Sugar may trade between 20 cents and 25 cents on rising supply in the Northern Hemisphere and prospects for a good 2012-2013 crop in Brazil, HSBC Holdings Plc said in a report on Feb. 17.
“We currently see a fair price, possibly some weakness in the second half,” Berg said in a phone interview before an industry conference that began in Bangkok today. “We’re talking more about sugar prices falling to 20 cents, possibly below.”
Global sugar surplus at 9 mln tonnes in 2011/12-Olam
BANGKOK, Feb 28 (Reuters) - The global sugar surplus is forecast to be 9 million tonnes in the current 2011/12 crop and could drop to 5-7 million tonnes in 2012/13, Olam Europe senior analyst John Stansfield said on Tuesday.
The forecast for 2011/12 was unchanged from the one given by Olam in a Dubai meeting on Feb. 7.
Thailand sees steady growth in sugar output of 5 pct per year
BANGKOK, Feb 28 (Reuters) - Thai sugar production is forecast to rise by around 5 percent per year over the next five years and reach 12 million tonnes by around 2017, a senior official at the Office of Cane and Sugar Board (OCSB) said on Tuesday .
"We aim to have steady growth of around 5 percent per year. Let's say we should produce more than 10 million tonnes of sugar annually from now on," the OCSB's secretary-general, Prasert Tapaneeyangkul, told Reuters.
Surging sugar output, demand outlook in focus at Bangkok meet
BANGKOK/SINGAPORE, Feb 27 (Reuters) - An expected surge in global sugar production, a possible correction in prices and Brazil's move to revive the country's ethanol sector will take centrestage at an industry conference in Thailand this week.
The Bangkok conference organised by analyst F.O. Licht will look at demand trends at a time when rising output from producers in Asia and Europe could lead to a global surplus of more than 5 million tonnes in the current crop year.
No cocoa damaged in ADM's Pennsylvania plant fire
NEW YORK, Feb 27 (Reuters) - A weekend fire in an Archer Daniels Midland Company cocoa processing plant in Pennsylvania did not cause any damage to cocoa supplies, a company spokeswoman said on Monday.
"There was no tangible property damage or impact on production from the incident," said Jessie McKinney, spokeswoman for ADM told Reuters in an email.
Ethiopia exports up by 21 pct despite coffee slump
ADDIS ABABA, Feb 27 (Reuters) - A surge in gold, oil seeds and livestock exports lifted Ethiopia's total export revenue by 21 percent in the six months to December versus the year-ago period, offsetting a slump in coffee earnings, trade data showed.
Prime Minister Meles Zenawi told parliament last month he expected the country's economy to grow by more than 11 percent this fiscal year driven by a boost in agriculture production.
Where was the smart oil money a few months ago?
--Robert Campbell is a Reuters market analyst. The views expressed are his own.--
NEW YORK, Feb 27 (Reuters) - Anyone who has ridden the momentum in the oil market this year is probably looking good, at least in the short term, but the options market suggests few big investors were well positioned before the rally took off.
The market, as a whole, on Nov. 30 was clearly far more worried about a dramatic sell-off in oil prices than a rally, particularly a rally with the catastrophic narratives that are accompanying this month's surge in oil prices.
Sanctions risk rerun of oil's 2011 flash crash
--John Kemp is a Reuters market analyst. The views expressed are his own.--
LONDON, Feb 27 (Reuters) - Soaring oil prices and the loss of exports from South Sudan, Syria and Iran pose awkward questions for investors and policymakers.
Last year, a similar surge following the outbreak of the Libyan civil war eventually resulted in the flash crash on May 5 and the decision to release emergency stocks by the United States and other members of the International Energy Agency (IEA) on June 23.
Brent slips below $124 after rally, supply woes support
SINGAPORE, Feb 28 (Reuters) - Brent crude futures extended losses and slipped below $124, snapping a surge that threatened to hurt the global economy while concerns over supply from the Middle East helped stem the slide.
"People were worried about the quick move in prices - they just sped up too fast," said Tetsu Emori, a fund manager with Astramax Co. in Tokyo.
Crude Trades Near One-Week Low on Demand Concern; Heads for Monthly Gain (Source: Bloomberg)
Oil traded near the lowest in almost a week in New York as investors bet that rising crude stockpiles in the U.S. signal faltering demand in the world’s biggest consumer of the commodity. Futures were little changed after tumbling the most in five weeks yesterday, paring the first monthly gain in three. Oil inventories climbed 521,000 barrels last week, the industry- funded American Petroleum Institute said after the settlement. A government report today may show supplies gained 1.1 million barrels, according to a Bloomberg News survey. U.S. orders for durable goods dropped in January by the most in three years, figures from the Commerce Department showed. Oil for April delivery was at $106.57 a barrel, up 2 cents in electronic trading on the New York Mercantile Exchange at 10:41 a.m. Sydney time. The contract yesterday slipped $2.01 to $106.55, the lowest close since Feb. 22 and the biggest drop since Jan. 20. Prices are 8.2 percent higher this month and up 9.9 percent in the past year.
Brent oil for April settlement dropped $2.62, or 2.1 percent, to $121.55 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to New York-traded West Texas Intermediate was at $15. It reached a record of $27.88 on Oct. 14.
Copper Futures Advance to Two-Week High on Greek Aid, Confidence Gains (Source: Bloomberg)
Copper rose to a two-week high as German legislators approved a second bailout for Greece, and U.S. and European gauges of economic confidence rose more than expected, pointing to improving growth and metals demand. German Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning lawmakers that pushing Greece out of the euro would risk “incalculable” damage. Confidence among U.S. consumers jumped in February to the highest level in a year, the Conference Board said today. The European Commission in Brussels said an index of executive and consumer sentiment climbed for a second month. “Europe is going to do what they can to protect the euro, and there are signs that Greece is starting to live up to their agreements in holding back on spending,” Harry Denny, a broker at Hoboken, New Jersey-based PVM Futures Inc., said in a telephone interview. “The U.S. economy has shown tremendous stability, and that’s adding momentum” in copper-price gains, he said.
Gold Leads Precious Metals Rally on Investor Demand for Dollar Alternative (Source: Bloomberg)
Gold advanced to a three-month high and silver posted its biggest gain in eight weeks as investors bought precious metals as an alternative to a weakening dollar. Platinum and palladium also rose. The dollar fell for the third time in four sessions against a basket of currencies and the euro rose to a three-month high as the European Central Bank prepares to allot a second round of three-year loans to help the region’s banks tomorrow. The MSCI All-Country World Index of stocks climbed as a gauge of U.S. consumer confidence jumped to a one-year high. “The euro is stronger against the dollar and that’s one of the major supportive factors” for gold, Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by telephone. Higher equities are “also supportive” for commodities, including gold, he said.
Gold futures for April delivery advanced 0.8 percent to settle at $1,788.40 an ounce at 1:30 p.m. on the Comex in New York, after climbing to $1,792.70, the highest level for a most- active contract since Nov. 14.
