Corn (Source: CME)
US corn futures end lower on favorable spring weather and technical pressure. Unusually warm weather is prompting early fieldwork for farmers and talk of planting already. Earlier planting seen as setting the stage for better yields, and could prompt farmers to plant more corn than initially expected. "You just can't spin this weather being bullish the markets," says Prime Ag Consultants analyst Chad Henderson. Traders also note corn/soybean spread trading, as soy climbed on the day. They add that declines the past three days could signal a reversal in market direction. CBOT May corn ends down 5 1/2c to $6.42 a bushel.
Wheat (Source: CME)
U.S. wheat futures end lower on favorable crop weather and ample supplies. Rains and warm weather across the Plains seen as benefitting both the winter and spring wheat crops, analysts say. Also, while corn has a bullish near-term supply story and soybeans has a supportive longer-term supply story, wheat has neither, says Western Milling analyst Joel Karlin. Traders add that wheat is in a precarious position technically with prices falling the past three days. Weaker corn prices this week adding pressure. CBOT May wheat ends down 6 1/4c to $6.36 1/4 a bushel, KCBT May wheat closes down 5 1/2c to $6.75 and MGEX May wheat ends down 1/2c to $7.98 3/4.
Rice (Source: CME)
US rice futures end lower, stumbling in unison with other grain futures. Rice continues to draw pressure from concerns about lagging demand, with weakness in corn and wheat helping offset support from concerns US rice acreage is poised to decline at the expense of more profitable crops, analysts say. CBOT May rice finished 2c lower at $14.34 1/2/hundredweight.
U.S. corn, wheat, soy edge back after fund liquidation
NEW DELHI, March 21 (Reuters) - U.S. corn and soybean futures inched back after posting their biggest daily declines since January a day earlier, triggered by fund liquidation of long positions, with wheat following them higher.
"Today's gain is just a rebound from last night's sell-off and going forward, I see some downside, but a limited one," said Jonathan Barratt, chief executive of BarrattBulletin, a commodity research firm based in Sydney.
As winter becomes spring, another summer-like day in much of U.S.
CHICAGO, March 20 (Reuters) - Much of the United States basked in another day of unseasonably warm weather on Tuesday as one of the mildest winters on record gave way to a balmy spring and possibly a hot summer that could cause difficulties for crops.
On what meteorologists consider the first day of spring, record highs were set in dozens of central and eastern cities, from International Falls, Minnesota on the Canadian border to Lexington, Kentucky in the south,
No deal yet to end Argentine grain truckers strike
BUENOS AIRES, March 20 (Reuters) - A strike by Argentine truckers disrupted the flow of corn and soybeans to the country's main ports for a second day on Tuesday after union leaders failed to reach a deal with the government.
The protest to demand higher pay began early on Monday, just as exporters needed to haul freshly harvested soybeans to port.
Canada's Viterra puts Glencore in grain's top tier
LONDON/WINNIPEG, Manitoba, March 20 (Reuters) - Glencore , already the world's No. 1 diversified commodities trader, has agreed to buy Canada's largest grain handler in a C$6.1 billion ($6.2 billion) deal that will shake up an industry that has thrived on surging global demand for food and fuel.
Glencore will acquire Viterra Inc and then sell off some parts to Canada's Richardson International and Agrium Inc . By divesting some grain elevators, mills and farm-supply dealers, the Swiss-based trader aims to allay concerns that Ottawa might block the deal on national sovereignty or competition grounds.
Noodles to push Indonesia wheat demand up 5 pct y/y
JAKARTA, March 20 (Reuters) - Demand in Asia's top wheat importer, Indonesia, will rise by at least 5 percent a year over the next decade, an industry group said on Tuesday, as growing wealth prompts more consumers to switch to noodles and away from the staple rice.
Last year, Southeast Asia's largest economy used more than 6 million tonnes of wheat, including 5.3 million tonnes of wheat and 679,000 tonnes of wheat flour imports, Franciscus Welirang, chairman of the Indonesian Wheat Flour Mills Association (Aptindo), told Reuters.
India's Grain Stocks Sufficient To Continue Exports To 2014 -Food Minister (Source: CME)
India's Food Minister K.V. Thomas said that the country has sufficient grain stocks to continue rice and wheat exports while also implementing a food security program at least until 2014. The minister's comments come ahead of a ministerial panel meeting scheduled for Monday to review supply and demand of foodgrains and other agricultural commodities against a backdrop of bumper crops and brimming stockpiles. At the same time, the government has unveiled an ambitious food security program aimed at giving 70% of the population access to grain subsidies. "We intend to implement the Food Security Law by the year-end," Thomas told reporters on the sidelines of a conference. A debate on the proposed law in parliament is likely to be completed over the next few months, he said. The program would guarantee 7.0 kilograms a month of highly subsidized wheat, rice and coarse grains to each member of families that are designated as needy-- and at least 3.0 kilograms per member of families that are somewhat better off.
Once the law is implemented, Thomas said the total annual food subsidy bill is expected to rise to INR1.12 trillion ($22 billion), up from the current estimate of INR880 billion for 2012-13. The country will need 62 million tons of grains a year to implement the law. The country has benefited from two consecutive bumper foodgrain harvests, but experts have said that availability of grains to keep the program going over the long term may become problematic unless the country invests significantly more to improve yields. In the face of a shortage of warehouse space, India lifted a ban on wheat and rice exports in September after banning both for around three years as part of efforts to fight food inflation.
Nestle CEO: Emerging Markets Bolster Commodity Prices (Source: CME)
Emerging market demand continues to bolster commodity prices as well as Nestle SA earnings, the company's chief executive said, as the rising incomes of developing market consumers offset much of the slowdown in demand in Europe and North America. The world's largest food manufacturer by sales expects high-growth markets like Indonesia, India and China to take make up a larger and larger slice of Nestle's revenues in the coming years, said Paul Bulcke, chief executive officer of the company, during a visit to Indonesia. Although prices for some industrial metals have fallen recently as China's economy slows, prices for many other commodities, including agricultural goods, have continued to rise due to strong demand. This is likely to continue for the foreseeable future, Bulcke said.
"The demand is going up because 80% of the world's population is developing and emerging. They are going to eat more and better and that is good," he said. "In general, agriculture raw materials have come down for 50 to 60 years. Now the underlying trend is upward." Last year Nestle's net profit fell to 9 billion Swiss francs ($9.87 billion) from CHF34 billion a year earlier. The 2010 figure included a CHF25 billion gain from the sale of Alcon eye-care business. The company's sales fell 10% to CHF84 billion. The tough year would have been worse if not for growth in emerging markets. An increasing amount of Nestle's growth is coming from emerging markets, Bulcke said. The company already makes about 40% of its revenues in emerging markets and expects that percentage to climb. Last year its revenues grew 13% in developing economies but only 4.5% in developed economies, he said.
"They are creating a new middle class and they are developing fast, while you look at the developed countries and they are slowing because of the debt crises," he said. The maker of such brands as Kit Kat candy bars, Purina pet food and Haagen-Dazs ice cream continues to expand operations in emerging countries. In Indonesia it has invested close to $1 billion over the last 10 years in its own facilities and those of its suppliers. It is currently in the middle of a $200 million upgrade of a factory near Jakarta to produce more infant food, milk powder and Milo chocolate malt mix for the growing middle class in Southeast Asia's largest economy.
Nestle is developing and customizing its products, designing them for specific emerging-market consumers. Its Nescafe instant coffee brand has more than 180 different blends around the world. It adds iodine to its soup stock in some parts of Africa where consumers don't get enough iodine. In Indonesia it sells products for as little as 1,000 rupiah, or 11 U.S. cents, to target the less affluent consumer, and it fortifies some of its milk powders with iron because many Indonesians have iron deficiencies, said Arshad Chaudhry, president of PT Nestle Indonesia. "The opportunity is everywhere," Chaudhry said. Last year Nestle's bottom line was also hurt by the weakening of the greenback. Bulcke said he hopes to see a stronger U.S. dollar soon as a weaker one bites into Nestle's earnings, which are consolidated in Swiss francs. He said any further decline in the U.S. currency could also hurt global growth.
"The dollar is really very weak historically" against most currencies, he said. "That could start to unbalance some normal [functioning] in the world economy. Some recovery would be good."
General Mills: Consumer Demand Will Stabilize In Coming Months (Source: CME)
General Mills Inc. expects that the sharp volume declines food makers have struggled with recently in the U.S. will moderate in the coming months as shoppers get used to new higher prices. "As we, in the months ahead, lap all the pricing we took and our merchandising level moderate...we believe that consumer demand will stabilize and will moderate," General Mills Chairman and Chief Executive Ken Powell said during the company's third-quarter earnings call. The combination of stabilizing volume, higher prices and continued strong results outside the U.S. are expected to keep General Mills sales' growth strong in the fourth quarter. But higher costs will once again cause margins to contract, though less so than in the third quarter. The maker of Cheerios cereal and Progresso soups reported a slight drop in third-quarter earnings, as higher costs pushed down profit margins and U.S. sales volumes fell. Shares were down 1.3% in recent trading to $38.25.
The per-share earnings fell at the midpoint of a range disclosed last month, when General Mills warned that weak volume in the U.S. would weigh on profits. Overall sales, however, were slightly higher than Wall Street analysts expected for the period, helped by stronger growth overseas. General Mills also backed its full-year view given last month. Food makers industrywide have been under pressure as budget-conscious U.S. consumers push back against price increases aimed at offsetting rising commodity costs. In General Mill's U.S. retail segment--its largest top-line contributor--sales were up 3.8% from a year earlier to $2.61 billion, a gain driven by higher prices, which added 9 percentage points. Volume, however, sliced 5 percentage points of sales growth for the segment. General Mills's top performers in the division were cereal and snacks, which both posted higher volume.
The clear laggard, however, was Yoplait yogurt, whose sales fell 3%. In the U.S., Yoplait has been slumping as it has lost share to Greek yogurt brands like the closely held Chobani, which has been growing at triple digit rates. That has hurt Yoplait's established product lines like regular and light yogurt. Yoplait is trying to capture its fair share of the market for Greek yogurt--known for its thicker texture and higher protein content--with Yoplait Greek. But some analysts questions whether the product has enough power to compete against Chobani and some other brands that are dominating the category. Powell said that the company in June plans to unveil a comprehensive new lineup of yogurt products, including in the Greek segment. "Clearly, our goal is to stabilize and return the entire Yoplait business to growth," he said. For the quarter ended Feb. 26, General Mills reported a profit of $391.5 million, or 58 cents a share, compared with a year-earlier profit of $392.1 million, or 59 cents a share.
Stripping out acquisition costs and other items, earnings fell to 55 cents a share from 56 cents a year earlier. The company's downbeat February forecast called for earnings of 54 cents to 56 cents a share. Net sales rose 13% to $4.12 billion, a jump the company said was helped by its Yoplait yogurt acquisition. Analysts expected $4.07 billion in revenue, according to a survey conducted by Thomson Reuters. Gross margin narrowed to 36.6% from 39.2%, reflecting higher input costs and other factors. The international segment's sales were up 51% from a year earlier to $1.04 billion, leading to a 40% jump in the segment's operating profit.
Soybean Futures Rebound on Speculation China to Boost Purchases (Source: Bloomberg)
Soybeans rose for the first time this week on speculation that reduced output in South America will force Chinese importers to buy more from the U.S., the world’s largest grower. China imported 3.83 million metric tons of soybeans in February, up 65 percent from a year earlier and the most for the month since before 2004, the Customs General Administration said today. Processors may increase purchases for delivery from July to October after Chicago futures tumbled yesterday, grain.gov.cn said today in a report. “Prices probably have found a level that will stimulate new Chinese purchases from the U.S.,” Jim Gerlach, the president of A/C Trading Co. in Fowler, Indiana, said in a telephone interview. “A jump in Brazilian soybean-export prices yesterday, when U.S. prices fell, makes U.S. supplies more attractive to Chinese buyers.”
Soybean futures for May delivery rose 0.7 percent to close at $13.55 a bushel at 1:15 p.m. on the Chicago Board of Trade, after dropping 1.6 percent yesterday, the most since Jan. 30. The oilseed has gained 14 percent in the past two months as hot, dry weather reduced crops in Brazil and Argentina, the two biggest producers after the U.S. The U.S. was the largest exporter in the year that ended Sept. 30, according to government estimates. The U.S. crop was valued at $35.8 billion in 2011, second behind corn, government figures show.
China May Have 20 Million Ton Corn Deficit by 2020, Center Says (Source: Bloomberg)
Corn demand in China, the second- biggest consumer, may outstrip domestic production by as much as 20 million metric tons by 2020, boosting imports, a government policy researcher said. The use of corn to produce biochemical products is growing rapidly and may make China a “large corn importer” so as to meet demand, according to Cheng Guoqiang, deputy director of the Development Research Center of the State Council. China’s increased reliance on imported corn may help drive up food prices and spur investment in agriculture. Imports in the 2012-2013 marketing year beginning Oct. 1 may rise to 8.9 million tons from estimated 6.6 million tons this year, Shanghai JC Intelligence Co. said March 19. “With food demand set to rise irrespective of prices, insufficient corn supply will become routine,” Cheng said in slides prepared for a conference in Boao today. Bumper domestic harvests won’t ease the supply deficit, he said.
Rising domestic corn prices will prompt farmers to switch to corn while cutting planting of soybeans and cotton, Cheng said. Annual corn demand for industrial use has increased to 45 million tons to 50 million tons from 38 million tons in 2008, he said in the slides.
India to review sugar exports on March 26
NEW DELHI, March 20 (Reuters) - A ministers' panel will review sugar exports on March 26, a government source said on Tuesday, raising hopes of more overseas sale of the sweetener from the world's second-biggest producer that could put pressure on global prices.
India, the world's largest consumer of sugar, has already allowed 2 million tonnes of sugar exports in the year from Oct. 1 and expects output to far outstrip demand.
Brent heads towards $125 on US stocks draw, soft dollar
SINGAPORE, March 21 (Reuters) - Brent crude edged towards $125 a barrel, pulling back from sharp losses a day earlier, as a surprise drawdown in U.S. crude stocks and a weaker dollar offset the prospect of a ramp up in supply by top exporter Saudi Arabia.
"The lower stocks are giving support to the market, but the Saudi comments will put a short-term cap on the oil price, and ease fears of supply issues emanating out of Iran," said Ben Le Brun, market analyst with OptionsXpress in Sydney.
Japan wants Iran crude imports cut 10-20 pct -Idemitsu
TOKYO, March 21 (Reuters) - The Japanese government probably wants Idemitsu Kosan to continue cutting Iranian crude imports as before, which is by 10 to 20 percent a year, the oil refiner's chairman said on Wednesday, a day after the United States exempted the Asian nation from financial sanctions.
Each oil firm in Japan that buys Iranian oil has been in separate talks with the government on curbing oil imports from the Middle East nation, but the government has not instructed them to attain a detailed percentage figure for cuts.
China Feb oil product stocks up 1.81 mln T on mth
BEIJING, March 21 (Reuters) - China's refined fuel inventories rose 1.81 million tonnes in February against a month earlier, and were up 960,000 tonnes compared with a year earlier, the National Development and Reform Commission said on Wednesday.
The commission said most of the increase was in diesel.
Japan trade min: crude oil supply problem unlikely
TOKYO, March 21 (Reuters) - Japan is unlikely to face major crude oil supply problems now that Washington has exempt the country from financial sanctions as it has cut purchases of Iranian crude oil, Trade Minister Yukio Edano said on Wednesday.
"We welcome the decision," Edano told a news conference. "I believe (crude oil) supply will not become a major issue."
Iraq's southern oil exports jump in March
LONDON, March 20 (Reuters) - Iraq's oil exports from its southern ports have jumped by 150,000 barrels per day (bpd) in March, according to shipping data tracked by Reuters, a sign Baghdad is on the way towards boosting shipments to a post-war record rate.
Exports from the Basra oil terminal, Khor al-Amaya, and a new Gulf outlet have averaged 1.81 million bpd in the first 19 days of March, the data showed, up from about 1.66 million bpd in February.
Oil Declines as Emergency Crude Stockpile Release Studied (Source: Bloomberg)
Oil declined from the highest close in two days in New York after France said that industrialized nations are considering releasing strategic crude stockpiles to counter rising prices. Futures fell as much as 0.4 percent after the French Industry Minister Eric Besson said the country is “studying with its partners all possible options” including the release of oil reserves. Prices have advanced this year on concern sanctions aimed at halting Iran’s nuclear program will disrupt crude exports. West Texas Intermediate rose yesterday after government data showed an unexpected drop in U.S. supplies. “All the powers that be now are trying to get oil prices down,” Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney, said in a Bloomberg Television interview. “The bulls and the bears are quite evenly matched because when it gets low we see Iran coming up, when it gets high, we see the Fed, the U.K. and Saudi Arabia coming out saying they can placate any concerns.” Oil for May delivery slid as much as 46 cents to $106.81 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.05 at 11:37 a.m. Sydney time. It gained $1.20 yesterday to $107.27, the highest close since March 19. Front- month prices are 8.3 percent higher this year.
Gold May Gain as a Weaker Dollar Spurs Investment Demand (Source: Bloomberg)
Gold rose on speculation that demand will increase when jewelry shops end a five-day shutdown tomorrow in India, the world’s largest buyer, and as Federal Reserve Chairman said higher oil prices may stoke inflation. Jewelers are protesting tax increases the government announced last week that may raise retail-gold prices by 6.3 percent. There may be pent-up demand from the closures, Edel Tully, an analyst at UBS AG in London, wrote today in a report. Rising fuel prices “create at least short-term inflation pressures,” Federal Reserve Chairman Ben S. Bernanke said today during congressional testimony. “We will see a rise in demand in the short term because of India coming back to the market,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “Bernanke’s statements were gold friendly.”
Gold futures for April delivery rose 0.2 percent to settle at $1,650.30 an ounce at 1:37 p.m. on the Comex in New York. The metal, which reached an eight-week low of $1,634.70 on March 14, has rallied 5.3 percent this year.
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