Speculative Wagers on Agriculture Surge to a Five-Month High: Commodities (Source: Bloomberg)
Speculators increased bets on higher agricultural prices to a five-month high on mounting concern that a South American drought will curb supplies of soybeans, corn and sugar at a time of record global demand. A measure of speculative positions across 11 farm goods jumped 26 percent to 607,721 futures and options in the week ended Feb. 28, U.S. Commodity Futures Trading Commission data show. Corn bets increased the most in eight weeks, and sugar holdings climbed to the highest since August. Wagers on higher soybean prices rose to a five-month high. Hedge funds and other speculators are the most bullish on commodities since September as sanctions on Iran over its nuclear program disrupt oil supplies and weather damages crops in South America. Producers were already struggling to keep up with demand from a global population that surpassed 7 billion people last year, with consumption now boosted by signs that economic growth is accelerating.
“Weather and the perception of damages to supply” have pushed prices higher, said Osvaldo Canavosio, the New York-based head of emerging markets and commodities research at Man Investments USA LLC, which manages about $11.2 billion of assets. “There’s been a continuing pattern of the rest of the world outside the U.S. being an important driver of supply-and- demand dynamics.”
Commodities Cap Biggest Weekly Drop Since January on Oil, Silver, Cotton (Source: Bloomberg)
Commodities fell, capping the biggest weekly decline since mid-January, as easing tensions in the Middle East sent oil lower and a stronger dollar eroded the appeal of raw materials. The Standard & Poor’s GSCI Spot Index of 24 commodity futures dropped 1.2 percent to settle at 704.37 at 4 p.m. in New York, led by declines in silver, energy products and cotton. The gauge fell 1.6 percent for the week, the biggest slump since the five days ended Jan. 13. Crude oil, the most heavily weighted commodity on the GSCI, tumbled the most since December, after Saudi Arabia said a pipeline fire wasn’t the result of sabotage. The commodity surged as much as 3.3 percent yesterday, and settled down 2 percent today at $106.70 a barrel on the New York Mercantile Exchange.
“Any hint of an oil disruption or more unrest in the Middle East has been helping to push oil prices higher, and when traders overreacted like they did yesterday to a story that proved false, then we’re going to see these corrections,” Sal Gilbertie, the president and chief investment officer of Teucrium Trading LLC, said by telephone from Santa Fe, New Mexico.
Corn (Source: CME)
US corn futures end mixed Friday, with spillover support from higher soy and wheat futures offsetting profit taking pressure. The absence of fresh news to support higher prices encouraged traders to reduce some risk for most of the day, with the negative influence of a firmer US dollar and general weakness across commodities attracting sellers, analysts say. Active soy/corn spreading aided the declines, as investors anticipate farmers will plant corn acres at the expense of other crops like soybeans this year. CBOT May corn ended up 1c at $6.55/bushel.
Wheat (Source: CME)
U.S. wheat futures rally, ending higher amid short-covering and strength in soybeans. Spec funds' big net short position making the market prone to short-covering bounces, analysts say. World supplies are abundant, limiting the upside, although Iran's purchase of US wheat Thursday was seen as positive. CBOT March wheat ends up 11 1/2c to $6.70 3/4 a bushel, MGEX March wheat closes up 13 3/4c to $8.27 3/4.
Rice (Source: CME)
US rice futures end higher, managing to stabilize after Thursday's declines on what analysts call end-of-week positioning. The market continues to draw pressure from poor export demand but is finding support from the need to keep prices attractive to avoid farmers shifting rice acreage to other commodities this year. CBOT May rice ends up 1.8% at $14.50 1/2 per hundredweight.
Wheat falls for 2nd day, soy dips after 9-session rally
SINGAPORE, March 2 (Reuters) - U.S. wheat and corn lost more ground as investors booked profit from recent gains, although the fall in wheat is being cushioned by Iran's first purchase of U.S. wheat in three years.
"Grain markets are overbought and we are seeing a little bit of correction as there is not much fundamental support at the moment," said Lynette Tan, an analyst with Phillip Futures in Singapore.
Russia sees little change in wheat output, exports
BELOKURIKHA, Russia, March 2 (Reuters) - Russia's Agriculture Ministry expects wheat output to rise slightly in the 2012/13 crop year to 57 million tonnes from 56.2 million tonnes during the current crop year, Deputy Agriculture Minister Sergei Sukhov told Reuters on Friday.
At the same time, exports will decline slightly to 20 million tonnes from 21 million tonnes, he said, adding that closing stocks are likely to be 1/3 lower this year at 12.5 million tonnes and lower still next year at 9 million tonnes.
Ukraine grain exports fall 25 pct in Feb, cold blamed
KIEV, March 2 (Reuters) - Ukraine's grain exports fell by about 25 percent to 1.7 million tonnes in February from 2.26 million in January, Ukrainian grain lobby UAC said on Friday, after officials said severe cold had hit transportation.
UAC said in a statement the volume had included 1.3 million tonnes of corn, 340,000 of wheat and 40,000 of barley. Ukraine exported 1.8 million tonnes of corn, 366,000 of wheat and 68,000 of barley in January.
Russia to export 1.5-2.0 mln T of grain in March
BELOKURIKHA, Russia, March 2 (Reuters) - Russia will export 1.5 million to 2.0 million tonnes of grain in March, a senior agriculture ministry official told reporters on Friday.
The country has exported a total of 20.6 million tonnes of grain since the start of the 2011/12 year, Deputy Agriculture Minister Sergei Sukhov said on the sidelines of a grains conference in the Altai region of Siberia.
Iran buys US wheat despite nuclear tensions
WASHINGTON, March 1 (Reuters) - Iran has made a rare purchase of U.S. wheat in an effort to build food stockpiles as the United States and Europe implement tough new sanctions to contain Tehran's nuclear ambitions.
The U.S. Agriculture Department reported on Thursday that Iran bought 120,000 tonnes of U.S. wheat -- enough to fill two large cargo ships.
EU awards 92,000 U.S. wheat imports under quota
PARIS, March 1 (Reuters) - The European Union this week awarded licences to import 92,000 tonnes of U.S. wheat under its reduced-tariff import quotas for grains, official data showed on Thursday.
The award follows another for 66,000 tonnes of U.S. wheat import licences earlier this month and comes after traders reported deals to import U.S. wheat into Spain, possibly in a switch from Ukrainian wheat due to winter transport snags.
French seed group Vilmorin tests GM maize in Europe
PARIS, March 1 (Reuters) - French seed group Vilmorin is testing genetically modified maize in Europe, despite widespread hostility in the region to GM crops, as it expects the benefits of such varieties eventually to lead to their acceptance, the company said.
Vilmorin has folded its GM maize research into a joint venture with German peer KWS SAAT , and the partners could market their own GM varieties as soon as 2014, Chief Executive Emmanuel Rougier said on Thursday.
India cuts subsidy on most fertilizers for 2012/13
NEW DELHI/MUMBAI, March 1 (Reuters) - India will cut by a fifth the subsidy it gives to phosphate and potash-based fertilisers in 2012/13, the government said in a statement on Thursday, its latest step aimed at patching up its widening fiscal deficit.
Subsides to diammonium phosphate (DAP) and muriate of potash (MoP) fertilisers will be slashed by 27.4 percent and 10 percent respectively. But it left out urea, the most used crop nutrient that accounts for the bulk of the government's spending on fertilisers.
Brazil To Sell 700,000 Tons Of Corn Stocks In Domestic Market (Source: CME)
SAO PAULO (Dow Jones)--Brazil's government said Friday it plans to sell up to 700,000 metric tons of public corn stocks in the domestic market to offset the effects of a drought that has dented the summer crop in southern states. "The measures are a way for the government to supply the market's shortage of the product and help the sector, which faces difficulty due to the smaller crop caused by weather factors," the Agriculture Ministry said in a press release. Authorities plan to sell up to 500,000 tons of the grain via auctions in the southern states of Rio Grande do Sul and Santa Catarina, which have suffered most from the ongoing drought, as well as Rio de Janeiro, Espirito Santo and Minas Gerais states. The auctions are targeted at buyers of animal feed for Brazil's poultry, hog, beef and dairy industries. The government plans to sell the remaining 200,000 tons of corn directly in Rio Grande do Sul and Santa Catarina, at a fixed price of 21 Brazilian reais ($12.18) per 60-kilogram sack.
Again, the intend ed buyers will be poultry, hog and cattle raisers, as well as agricultural cooperatives. Brazil is the world's No. 3 corn producer. The South American country's summer crop, which is currently underway, has been limited by scant rainfall since November. Analysts say the winter crop, harvested later in the year, should come in relatively strong thanks to an expected increase in planted acreage.
South Korea's Nofi Buys 126,000 Tons US Corn From STX -Traders (Source: CME)
South Korea's largest feed miller, Nonghyup Feed Inc., or Nofi, Friday purchased two cargoes totaling 126,000 metric tons of U.S. corn on cost and freight basis from STX Corp. (011810.SE), trading executives said. Nofi bought a cargo of 63,000 tons, for arrival by July 10, at $1.7197 a bushel premium over the July futures contract on the Chicago Board of Trade. It bought another cargo of the same volume, for arrival by July 20, at $1.7348/bushel premium over the July contract. CBOT July corn futures are currently trading around $6.53/bushel. "Nofi bought the cargoes on a premium basis rather than a flat price because it probably expect corn prices to decline as U.S. plantings start next month," said a Seoul-based executive with a global commodity trading company. South Korea, one of the world's biggest importers of feed grains, has purchased at least 2.35 million tons since Jan. 6, including 1.1 million tons of corn.
Soybean, Corn Futures Climb on Speculation China Will Boost U.S. Purchases (Source: Bloomberg)
Soybeans gained for a 10th straight session, and corn rose on speculation that China, the world’s biggest pork producer, will increase purchases from the U.S. to feed a growing hog herd and slow food inflation. Pork production in China, the top soybean importer, will climb to 51.6 million metric tons this year, up 4.2 percent from a year earlier, as the government increased insurance incentives for farms, a U.S. Department of Agriculture unit said yesterday. The China National Grain & Oils Information Center said on Feb. 29 that soybean reserves fell in recent weeks on increasing demand for animal feed. “Rising pork production in China probably means more soybean and corn imports from the U.S.,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “These are demand- driven rallies.”
Soybean futures for May delivery gained 0.8 percent to close at $13.33 a bushel at 1:15 p.m. on the Chicago Board of Trade, the highest price for a most-active contract since Sept. 21. The 10-session rally is the longest since July 15. The commodity climbed 3.6 percent this week, the third straight gain.
India Common Grade Rice Exports To Total Around 4 Mln Tons By Mid-March - Officials (Source: CME)
India's common grade rice exports--a ban on which was lifted in September--are likely to reach around 4 million metric tons by the middle of March. Although this is double the quantity that the government had originally cleared for exports, there is no plan to cap the shipments in view of a record crop, two officials said Friday. "We don't have any problem with exports for the next few months as stocks are comfortable," a food ministry official, who didn't want to be identified, told Dow Jones Newswires. Rice exports from India--the world's second-largest producer--have been moving briskly because of lower prices compared with top exporters Thailand and Vietnam. India exported 3.43 million tons of rice between Sept. 9 and Feb. 27, mostly to African countries, in an average price range of $370-$380 per metric ton, free on board, according to government data.
A ministerial panel is expected to review the policy for rice and wheat exports by the end of March, another food ministry official said, reiterating that no major policy changes are expected. India's rice output in the crop year that started on July 1, 2011, is estimated to rise to 7% from a year earlier to 102.75 million tons, according to agriculture ministry data. Indian rice exporters say Vietnam has lowered its prices substantially to compete with India.
INTERVIEW: Thai Exporters Selling Non-Thai Rice To Boost Sales (Source: CME)
Rice exporters in Thailand are increasingly shipping foreign-origin rice to meet their export commitments as domestic prices continue to remain high, a senior industry official said Friday. Thai exporters are shipping around 100,000 metric tons of non-Thai origin rice buyers, mainly in China and Malaysia, Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, told Dow Jones Newswires. Thai rice has become expensive for exporters as they have been priced out of the market by a generous government procurement program that offers growers sharply higher prices to boost farm incomes. While it has been commonplace for Thai rice trading companies to deal in small quantities of other origin rice, foreign origin rice now accounts for nearly 25% of the Thai rice exports. This is mainly coming from Pakistan, Vietnam and Cambodia, Chookiat said, adding exporters have also started trading rice from Myanmar in small quantities.
Thai 5% broken, polished white rice is currently offered around $530/ton compared with Vietnamese rice at $415/ton and Pakistani rice at $460 a ton respectively. Thai rice exports fell below 400,000 tons in January, or less than 40% of the usual average of more than 1.0 million tons as importers have turned to cheaper suppliers. Thailand has long commanded a large presence in the global premium long grain fragrant rice market due to its popular Jasmine grades but Chookiat said even in this segment the country is now facing stiff competition. Thai exporters are supplying cheaper Jasmine rice from Vietnam and Cambodia to their customers in countries such as Malaysia, he said. To cut costs due to the global economic slowdown, many restaurants are turning to cheaper Jasmine grades. Thai Jasmine grades are currently offered around $900-$1,100/ton, FOB compared with Cambodian offers of $800/ton and Vietnamese offers of $600 a ton.
Vietnam, which earlier used to produce less than 300,000 tons of Jasmine rice, produced 500,000 tons in 2011 and may produce 800,000 tons this year as growers find it more remunerative. Chookiat said Thai rice traders are also supplying 5% broken white rice from Pakistan and Vietnam to their long-standing customers in China. Myanmar's 5% broken 'Emata' white rice which is available around $450/ton, FOB is another grade which Thai exporters plan to trade in large volumes this year, he said. Chookiat said supply of Thai rice for exports will continue to be tight because the government has extended its procurement program to the second crop to be harvested in April. The government has so far bought around 8.0 million tons of un-milled rice from a total October-January harvest of at least 20 million tons, Chookiat said.
Coffee Crop in Indonesia Seen Climbing to Highest in Three Years (Source: Bloomberg)
The coffee harvest in Indonesia, the third-biggest grower of the robusta variety used in instant drinks and espressos, may climb to the highest level in three years, potentially capping an 11 percent rally. Production may increase 20 percent to 10 million bags this year from 8.3 million a year earlier, according to the median estimate in a Bloomberg survey of seven exporters, two traders and a roaster. That’s the most since 2009, according to U.S. government figures, and more than the 9.1 million bags predicted by Volcafe, a unit of ED&F Man Holdings Ltd. Robusta futures jumped to a five-month high in February as Vietnamese growers, the biggest, held back supplies. The harvest from Indonesia starting in April may ease a shortage, limiting gains and containing costs for Nestle SA (NESN), maker of Nescafe and Nespresso. Prices may drop as low as $1,700 a metric ton from $2,012 as supplies start flowing, said INTL FCStone Inc.
“The tightness in the robusta market will be here for at least another month,” said Oscar L. Schaps, managing director of global soft commodities at INTL FCStone in Miami. “The recent rise will attract more exports from Vietnam.”
ICE sugar steady, focus on Brazil harvest
LONDON, March 2 (Reuters) - ICE raw sugar futures were steady in early trade , supported by concerns over a possible delay in the centre-south Brazilian harvest.
Brokers said the presence of a major receiver should be supportive for sugar futures.
Indonesia's Feb Sumatra coffee bean exports fall 69 pct
BANDAR LAMPUNG, Indonesia, March 2 (Reuters) - Robusta coffee bean exports in February from Indonesia's main growing area in Sumatra slumped 69 percent to 5,452.23 tonnes from a year earlier, government trade data showed on Friday.
Indonesia shipped 17,504.98 tonnes of robusta in the same month a year earlier. February shipments also fell 13.5 percent from January's export figure of 6,306.41 tonnes.
Cotton 1012-13 stocks-to-use seen highest since 1990s-ICAC
March 1 (Reuters) - Global cotton output will exceed consumption again next year despite low prices and could result in the largest stocks-to-use ratio since the late 1990s, an international farm group said on Thursday.
The International Cotton Advisory Committee secretariat said in a monthly report that global cotton stocks, seen at a record 13 million tonnes in 2011/12, could rise by 11 percent in 2012/13.
Russia 2011/12 sugar export seen at record 250,000 t
MOSCOW, March 1(Reuters) - Russia could export a record 250,000 tonnes of sugar in the 2011/12 season thanks to a record harvest which resulted in a surplus on the domestic market, a leading sugar market analyst said.
The Institute for Agricultural Market Studies estimated 180,000 tonnes had already been exported by the end of February.
"For the first time for at least 12 years we are talking about beet sugar (exports)," IKAR said, adding that the vast bulk of exports during that period were from cane raws processed in Russia under tolling schemes.
ICO cuts forecast for 2011/12 global coffee crop
LONDON, March 1 (Reuters) - The International Coffee Organization on Thursday cut its forecast for the global coffee crop in 2011/12 to 128.5 million 60-kg bags, down from a previous estimate of 130.9 million.
The downward revision partly reflected diminished crop outlooks in Vietnam and India where heavy rains are likely to affect output, the ICO said in a monthly update.
Kenya 2012 sugar production forecast to rise 13 pct
NAIROBI, March 1 (Reuters) - Kenya's 2012 sugar production is forecast to rise 13 percent to a potential record high buoyed by expected good weather and bigger factory crushing capacity, the industry regulator said.
The east African nation of 39 million people has an annual sugar deficit of around 200,000 tonnes, which is usually filled by imports from other producers in the region.
Indonesia's proposed fuel subsidy cut needs encouraging
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
SINGAPORE, March 2 (Reuters) - It's encouraging to see Indonesia taking tentative steps towards cutting its overly generous fuel subsidies, a move that will hopefully inspire other Asian nations to do the same.
While China grabs the headlines as the main driver of rising global oil consumption, demand in other Asian nations is also climbing in contrast to steady-to-lower usage in North America and Europe.
Euro Coal-Prices drop $1/T for 3rd day on poor demand
LONDON, March 1 (Reuters) - Prompt physical coal prices fell by $1.00 for the third consecutive day on oversupply and a lack of buying interest in Europe.
European DES ARA prices have come under more pressure than the FOB Richards Bay market because of flow of U.S. coal into Europe, the impact of the warmest European winter for 30 years, weak gas prices and key Asian buyers such as China largely staying out of the spot market.
India took 1.3 mln T SAfrica coal in Jan-exporters
LONDON, March 1 (Reuters) - Asia's share of South Africa's coal exports rose to 61 percent in January, or 2.8 million tonnes, from 56 percent the previous month, although total exports dropped sharply, exporters said.
South Africa exported a mammoth 8.1 million tonnes in December as producers rushed to ship the maximum possible before the close of the calendar year, but the amount fell to a more typical 4.5 million exports in January.
Brent falls below $126 as Saudi supply fears ease
SINGAPORE, March 2 (Reuters) - Brent crude futures slipped below $126 after surging 5 percent to an 11-month high a day earlier, as fears of a supply disruption from Saudi Arabia eased, calming nervous investors who now expect oil demand to fall in the next few weeks.
"Oil prices have overshot in the short-term, and with warmer temperatures as we move from winter to spring, oil demand could start to fall, starting in March," said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong. "Brent could fall back below $120 if Iran doesn't flare up."
Russia's Feb oil output stays at post-Soviet high
MOSCOW, March 2 (Reuters) - Oil output in Russia, the world's top crude producer, stayed at a post-Soviet monthly high of 10.36 million barrels per day (bpd) in February as companies tried to reap extra gains from high oil prices, the Energy Ministry said on Friday.
The same level was reached in January, while Russia's previous oil production record of 10.34 million bpd was hit in November and October.
CNOOC breaks ground for China's 1st floating LNG project
BEIJING, March 2 (Reuters) - China National Offshore Oil Corp (CNOOC) broke ground to mark the start of construction of the country's first floating liquefied natural gas (LNG) receiving and storage facility near the northern city of Tianjin, the top Chinese LNG importer said on late Thursday.
The project, with an investment cost of 5.7 billion yuan ($904.73 million), would be able receive 2.2 million tonnes of fuel or equivalent to 3 billion cubic metres per year when it starts operation next year, CNOOC said.
World can replace oil lost to Iran sanctions -US
WASHINGTON, March 1 (Reuters) - Global oil producers appear to have enough spare capacity to make up for Iranian exports curtailed by tough new sanctions, U.S. Energy Secretary Steven Chu said on Thursday.
Chu said it was important that sanctions be used to crimp Iranian oil sales to ensure Tehran does not develop nuclear weapons, despite the release of an Energy Information Administration report this week that showed supplies are tight.
India cancels Iran oil shipment due to sanctions
NEW DELHI/SINGAPORE, March 2 (Reuters) - India's largest shipping company was forced to cancel an Iranian crude oil shipment last month because its European insurers refused to provide coverage for the vessel on the grounds of tightening sanctions on the OPEC member, industry sources said.
The European Union announced new sanctions in January prohibiting European insurers from indemnifying ships that carry Iranian crude and oil products anywhere in the world.
Iran starts paying Indian exporters in rupees
NEW DELHI, March 1 (Reuters) - India's exporters have begun receiving the first rupee payments from Iran, Indian government and trade sources said on Thursday, kicking off a mechanism to skirt Western sanctions which have made doing business with Tehran tougher.
About $3 billion in Iranian import arrears have accumulated since December 2010 when a previous payment conduit was closed under pressure from Washington, which is using sanctions to try to stop Tehran's contentious nuclear programme.
France seeks more emergency stocks of oil products
PARIS, March 1 (Reuters) - France's emergency oil stocks agency aims to buy more products on the market by July 1, after purchasing 350,000 cubic metres of diesel in February, to conform with an EU directive requiring members to increase inventories, the head of the agency said.
Jean-Marc Tenneson, who heads the CPSSP agency, said he had calculated in December that France needed to raise its stocks by 600,000 tonnes by July 2012 but he now thought the figure would be lower as consumption has dropped.
Oil Rebounds From Weekly Loss on Iran Tension, Enbridge Pipeline Shutdown (Source: Bloomberg)
Oil rose from a three-day low in New York after President Barack Obama said the U.S. may use military force to stop Iran from developing a nuclear weapon, and Enbridge Inc. (ENB) shut a pipeline in Illinois. Futures climbed as much as 0.6 percent, rebounding from the firstly weekly loss in four. Israeli Prime Minister Benjamin Netanyahu meets Obama in Washington today for talks on Iran’s nuclear program. London-traded Brent’s premium to West Texas Intermediate narrowed after Enbridge closed the pipeline, following a vehicle collision and fire at a pumping station. Oil prices rallied March 1 after a reported pipe explosion in Saudi Arabia that was later denied. “You can always gauge how nervous the market is” after news of a pipeline closure, said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “That’s the jittery nature of the market at the moment. Iran is still a wildcard.”
Oil for April delivery gained as much as 59 cents to $107.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.20 at 12:26 p.m. Sydney time. The contract fell 2 percent to $106.70 on March 2, the lowest since Feb. 28. Prices slipped 2.8 percent last week and are 1.7 percent higher the past year.
Iron Ore-Shanghai rebar gains, but demand outlook shaky
SINGAPORE, March 2 (Reuters) - China steel futures rose for a fifth time in six sessions on Friday, reflecting some optimism demand in the world's biggest consumer may revive, although it remains uncertain just how significant that pickup would be.
That uncertainty has prompted caution among buyers of iron ore, steel's raw material, with sellers holding off on further price increases for imported cargoes in China.
China's iron ore imports seen at 730 mln T in 2012-industry ministry
SHANGHAI, March 1 (Reuters) - China, the world's top iron ore buyer, is expected to see import growth for the steelmaking raw material ease this year on weaker steel demand and slower economic growth, the Ministry of Industry and Information Technology (MIIT) said.
But iron ore imports are expected to hit a fresh record in terms of volume, reaching 730 million tonnes this year, after rising 8.2 percent to 686 million tonnes in 2011, the ministry said in a statement on Wednesday.
Baltic sea index up, panamax rates turn higher
March 1 (Reuters) - The Baltic Exchange's main sea freight index tracking rates for ships carrying dry commodities rose on Thursday as firmer rates in most of the dry bulk segment offset weaker capesize rates.
The overall index that reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels rose 13 points or 1.73 percent to 763 points, its highest since January.
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