20120507 1131 Global Commodities Related News.

Hedge Funds Bet Wrong Before Biggest Slump Since October (Source: Bloomberg)
Hedge funds raised bets on higher commodity prices for the first time in six weeks, just before the biggest three-day slump since October as U.S. jobs data fell short of expectations and European manufacturing contracted. Money managers increased net-long positions across 18 U.S. futures and options by 6.9 percent to 895,240 contracts in the week ended May 1, the biggest gain since Feb. 28, Commodity Futures Trading Commission data show. Bullish copper wagers surged sevenfold before prices fell for three days, and soybean bets reached the highest since at least June 2006 as the oilseed capped the biggest weekly loss since mid-January. The Standard & Poor’s GSCI Spot Index of 24 raw materials tumbled 4.9 percent in the three sessions ended May 4, the most since Oct. 4. Reports showed last week that services and manufacturing output shrank last month in the euro region and the U.S. added fewer jobs than forecast in April.
Open interest, or contracts outstanding, across commodities fell 2 percent in the seven se ssions through April 30, the longest slide since November, data compiled by Bloomberg show. “We had some soft data points along the edges that’s taken some of the steam out of the market,” said Kelly Wiesbrock, who helps manage $1.3 billion of assets for San Francisco-based hedge fund Harvest Capital Strategies. “It’s hard to know whether this is a just a little bit of a pause, or if this is something bigger.”

Market Recap: Wheat Futures (Source: CME)
Wheat futures finished mid-range with Chicago down 3 1/2 to 10 1/2 cents, Kansas City down 6 to 8 cents and Minneapolis split with nearbys slightly lower and deferred months slightly higher. Chicago wheat futures were sharply lower for the week. On tap next week is USDA’s Crop Progress/Condition Report Monday and its Supply & Demand Report Thursday. The first of these will reflect a well-advanced crop that is in much better shape than last year. The other report will likely reflect ample domestic and global supplies, opening the door for more pressure on wheat futures.

Wheat Market Recap Report (Source: CME)
July Wheat finished down 6 at 609 1/2, 11 1/4 off the high and 10 up from the low. December Wheat closed down 8 3/4 at 648. This was 8 1/4 up from the low and 13 1/4 off the high. July wheat closed 6 cents lower on the session and down 41 3/4 cents for the week. Weakness in outside market forces and a further sell-off in the other grains plus a sharp break in crude oil and the stock market helped to pressure the market into the mid-session with July wheat trading to a low of 599 1/2. A turn up in corn and a surge higher on old crop corn helped to spark a short-covering bounce off of the lows. Traders see a large production forecast for the US winter wheat production report for next Thursday as the weather remains favorable for high yields. Traders also view the fast start to the spring wheat season as a negative force. The early selling pushed the market down to a new contract low. KC wheat also pushed to new lows for the move and down to the lowest level for the nearby contract since July of 2010. Minneapolis wheat fell to new lows for the move with the nearby contract down to the lowest level since November of 2010. Algeria bought 120,000 tonnes of US hard red winter wheat for May shipment. India is exploring the possibility of exporting as much as 10 million tonnes of wheat from federal stocks to make room for the next crop. Stocks of wheat on April 1st were 53.3 million tonnes which is more than double the buffer stock requirement. Stocks are expected to rise to near 75 million tonnes by June 1st but total storage capacity is thought to be near 63 million. The weak tone from financial markets helped drag milling wheat futures in Europe down 1.76% for the session. July Oats closed down 4 1/2 at 340. This was 1/2 up from the low and 10 off the high.

Large specs may soon reverse their winter wheat stance
--Gavin Maguire is a Reuters market analyst. The views expressed are his own.--
CHICAGO, May 3 (Reuters) - Large speculators have lately built up their largest net short stance in the Kansas City wheat market in close to two years after crop-friendly growing weather throughout recent months looks set to result in a sizeable 2012 winter wheat harvest.
But those traders may be on the verge of reversing their stance. For the past five years they have consistently built long exposure to this market soon after harvest gets underway as softer prices increased demand. And given that cash wheat is already cheaper than cash corn in several key feed-demand centers, and that an early winter wheat harvest looks likely this year, this market's 'seasonal' bottom may come sooner than expected.

GRAINS-Wheat up for 2nd day on short-covering, soy firms
SINGAPORE, May 4 (Reuters) - Chicago wheat rose for a second day  with support from short covering, but the market is on track for its biggest weekly loss since February on expectations of near-record U.S. yields adding to ample global supply.
"I am looking for wheat to go down as a crop tour in the U.S. is finding record yields which will put pressure on the market," said Lynette Tan, an analyst with Phillip Futures in Singapore.

Healthy Kansas wheat seen having record yield
KANSAS CITY, May 3 (Reuters) - Kansas appears to be on track this year to produce its largest hard red winter wheat crop since 2003 with a record yield possible, said crop scouts on Thursday who had just completed this year's annual crop tour that found fields helped by a mild winter and a wet spring.
The crop, which got off to a shaky start in some parts of this leading hard red winter wheat state due to a devastating drought across the southern Plains, is expected to be 46 percent larger than last year's, adding to overflowing global supplies.

Market Recap: Corn Futures (Source: CME)
Bull spreading was the theme of the week, as old-crop futures responded to stepped-up demand and firming basis, while new-crop futures focused on the swift planting pace and beneficial rains across the Corn Belt. For the week, May corn ended 9 1/4 cents above last week's close, with December corn down 14 1/2 cents. Country and Gulf basis levels spiked this week to reflect continued strong demand and tight supplies of old-crop. As a result, traders look for USDA to trim 2011-12 carryover in next Thursday's Supply & Demand Report.

Corn Market Recap for 5/4/2012 (Source: CME)
July Corn finished up 5 3/4 at 620 1/4, 5 3/4 off the high and 16 1/4 up from the low. December Corn closed down 5 1/4 at 524 1/4. This was 9 1/4 up from the low and 5 1/2 off the high. July corn closed 5 3/4 cents higher on the session and managed to close just 5 1/4 cents for the week. A bearish tilt to outside market forces with a firm US dollar and a sharp break in the stock market combined with the weather outlook was enough to keep selling pressure on the corn market early today to drive the market lower. The Midwest looks to receive more rain for the next several days and then a cooler and dry trend for the middle to late part of next week. This is seen as bearish as the crops already planted will receive good moisture and the drier trend next week will allow for a resumption of plantings. Funds were noted sellers again today and the December corn pushed down to the lowest level since March 17th. The strong cash markets and a lack of deliveries against the May corn so far sparked a strong rally in May corn to pull the other months higher late in the day and even December corn pulled up off of the early lows. May corn pushed to the highest level since March 19th. Decatur Illinois cash is bid at 42 cents premium to the July. Private exporters reported the sale of 240,000 tonnes of optional origin corn to Mexico and 116,000 tonnes to South Korea for the 2012/13 season. July Rice finished up 0.02 at 15.205, equal to the high and 0.225 up from the low.

SOFTS-ICE sugar, coffee edge up early, cocoa flat
LONDON, May 4 (Reuters) - ICE raw sugar futures edged up in early trade with prices underpinned by oversold indicators and expectation physical demand may pick-up after a fall in prices to a one-year low earlier this week, dealers said.
Raw sugar futures on ICE  were slightly higher.

India seen exporting 4 mln T sugar this year
NEW DELHI/SINGAPORE, May 3 (Reuters) - India might export only another 1 million tonnes of sugar now New Delhi has freed up overseas sales given unattractive prices, bringing total shipments to 4 million tonnes this year in an over supplied global market, trade and government sources said.
India, the world's top consumer and the No.2 producer behind Brazil, freed up sugar exports on Wednesday due to strong production and low local prices, sending New York futures to one-year lows on fears of a flood of exports.

Brazil cane crush starts slow in rainy harvest
BRASILIA, May 3 (Reuters) - Cane crushing in world top sugar producer Brazil reached 4.74 million tonnes by April 15, cane industry association Unica said on Thursday, behind the 6.99 million tonnes crushed by this time last year due to a late start to the harvest.
Sugar output of 152,000 tonnes was behind the 214,000 tonnes produced by this time last year as a result. The 2012/13 crop started officially on April 1 and analysts are hoping for a moderate recovery after last year's disappointing crop.

India proposes setting up sovereign fund to buy coal assets abroad -min
NEW DELHI, May 4 (Reuters) - India's coal ministry has proposed setting up a sovereign wealth fund to buy coal assets abroad, Coal Minister Sriprakash Jaiswal said on Friday.
Coal accounts for more than half of India's power generation and will be required for 85 percent of the 76,000 megawatts additional capacity targeted in the next five years.  

Euro Coal-Prices stabilise after 5 days of falls
LONDON, May 3 (Reuters) - European coal prices stabilised on Thursday as two-year low levels earlier in the week led to some fresh buying by utilities and traders.
Prompt South African prices recovered slightly, having traded on Wednesday at the lowest level since October 2010 at $97.00 FOB Richards Bay.

OIL-Brent steady above $116; set for steepest weekly fall since Dec
SINGAPORE, May 4 (Reuters) - Brent crude held above $116 per barrel on Friday ahead of a key U.S. payrolls report, with the benchmark poised for its steepest weekly fall since December due to concerns over the health of the global economy and easing supply disruption fears.  
"What we are seeing today is prices trading in a tight span, in a holding pattern, ahead of the jobs data," said Victor Shum, senior partner at oil consultancy Purvin & Gertz.

Oil Falls to Four-Month Low on European Votes, U.S. Jobs (Source: Bloomberg)
Oil fell to the lowest level in more than four months after European elections stoked speculation austerity efforts will be derailed and weaker-than-expected jobs data underscored concern the U.S. economy may falter. Futures slumped as much as 3.2 percent to the lowest intraday price since December 20, extending a 4 percent drop on May 4 after U.S. payrolls rose by the least in six months. Euro- region services and manufacturing output contracted in April, a purchasing managers index showed. Crude also slid after France elected Socialist Francois Hollande as president and Greek voters flocked to anti-bailout parties. “It’s a confluence of factors dragging oil markets lower,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “Weaker-than-expected jobless numbers and weak services PMI clearly rattled markets as did the Greek and French election results.”
Crude for June delivery plunged as much as $3.15 to $95.34 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.56 at 12:41 p.m. Sydney time. The contract decreased $4.05 to $98.49 on May 4, the lowest close since February 7. Prices slipped 6.1 percent last week, the biggest weekly drop since September.

Iron Ore-Shanghai rebar falls for third week in a row
SINGAPORE, May 4 (Reuters) - Shanghai steel futures ticked higher on Friday, but posted a weekly loss for a third straight week amid slow Chinese demand, which has trapped iron ore prices in tight ranges over the past two weeks.
Despite sluggish steel demand in China, the world's biggest consumer and producer, the country's steel output remains high as mills tend to continue to produce more, even at thin margins, unless they see prices dropping sharply and on a sustained basis.

Indonesia to impose tax, curbs on raw metal exports
JAKARTA, May 3 (Reuters) - Indonesia will impose a new export tax on metal ores and prohibit the shipment of raw minerals unless miners submit plans to build smelters, in a decision likely to shake up mining in one of the world's major metals exporters.
The tax is an average 20 percent duty on 14 mineral ore exports including copper, gold and nickel from Sunday, slightly lower than expected but enough to hurt miners in Southeast Asia's biggest economy.

China steel mills too big to fail - or succeed
HANCHENG, China, May 3 (Reuters) - In a ramshackle township in northwest China's Shaanxi province, red Communist Party banners call on a nearby steel mill's workers to seek "progress" and avoid making "backward steps".
The slogans demonstrate the hybrid nature of China's floundering steel sector, which as it tries to serve the twin masters of the state and the market has seen margins plummet and racked up a mountain of debt.

Baltic sea index rises on higher capesize rates
May 3 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose on Thursday after a three-day losing streak as rates for larger capesizes rose.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, gained eight points or 0.7 percent to 1,157 points.

Asia Dry Bulk-Rates to fall on increasing tonnage supply
SINGAPORE, May 3 (Reuters) - Rates for panamax dry bulk carriers on key Asian freight routes are expected to fall next week with an increasing amount of tonnage weighing on an already oversupplied market, ship brokers said on Thursday.
The rate for panamax vessels travelling via the transpacific route dropped 6 percent to a 12-day low of $11,581 a day on Wednesday from $12,321 last week on ample vessel supplies and limited demand.