Hong Kong Exchanges Said to Hire Banks for LME Bid Loan (Source: Bloomberg)
Hong Kong Exchanges & Clearing Ltd. (388) hired Deutsche Bank AG (DBK), HSBC Holdings Plc (HSBA) and UBS AG to arrange a loan to finance an offer for the London Metal Exchange, according to a person familiar with the matter, who asked not to be identified because the details are private. LME, the world’s biggest metals bourse, began a process in September that it said may lead to its sale. CME Group Inc. (CME), NYSE Euronext (NYX) and IntercontinentalExchange Inc. (ICE) were among suitors to submit offers before a May 7 deadline, according to five people with direct knowledge of the matter. Hong Kong Exchanges “continues to participate in the process,” Henry Law, a spokesman for the world’s second-biggest bourse by market value, said in an e-mailed response to questions yesterday.
The LME, founded more than a century ago in London’s financial district, handles about 80 percent of global trading in metals futures and reported record volume of $15.4 trillion last year. The company said May 8 that it received multiple proposals that may lead to it being acquired.
Commodities Drop a 6th Day as Greek Crisis Fuels Concerns (Source: Bloomberg)
Commodities fell, marking the longest slump since August, as a global equity rout and an unraveling bailout of Greece increased the risk that a slowdown in the global economy will curb demand for raw materials. The Standard & Poor’s GSCI Spot Index (MXWD), which tracks 24 commodities, lost less than 0.1 percent to settle at 648.28 at 3:44 p.m. in New York, leaving the gauge up 0.5 percent this year. The index fell to 641.8 yesterday, the lowest since Dec. 29, as the euro extended a drop. Silver and gold plunged to four-month lows. The MSCI All-Country World Index of equities dropped to the lowest since January today.
Wheat, corn and zinc led the commodity decline today after the head of Greece’s biggest party failed to reach an agreement on a new government. That left responsibility for forming an administration to Alexis Tsipras of the Syriza party, who said he’ll cancel the bailout. Services and manufacturing shrank in April in the euro region, and unemployment soared to a 15-year high, according to reports last week. The U.S. added fewer jobs than forecast last month, government data showed last week. “Investors should adopt the fetal position,” said John Stephenson, who helps to manage $2.7 billion at First Asset Investment Management Inc. in Toronto. Commodity prices may extend declines, he said.
Market Recap: Wheat Futures (Source: CME)
Wheat futures faced pressure throughout the session and selling intensified ahead of the closing bell. Chicago wheat ended with losses of 12 1/4 to 17 3/4 cents, Kansas City closed around 17 cents lower and Minneapolis wheat ended mostly around 2 cents lower. Wheat traders focused on removing risk ahead of USDA’s Supply & Demand Report tomorrow, encouraged by a firmer dollar and mounting global economic headwinds.
Wheat Market Recap Report (Source: CME)
July Wheat finished down 15 at 600, 18 off the high and 1 3/4 up from the low. December Wheat closed down 13 1/2 at 639. This was 1 3/4 up from the low and 16 1/4 off the high. July wheat closed sharply lower on the session and managed to push into new contract lows late in the day. The surge in the US dollar and selling across a wide spectrum of commodity markets helped to pressure the market early today. Traders look for another rain event in the western and southern plains late in the weekend to help support a continued high yield potential for the central plains. Traders see a hefty production total for the crop production report in the morning and the selling in corn seemed to have opened the door for more aggressive selling. Even a strong recovery in the US stock market and energy markets failed to provide much support to the market. For the reports tomorrow morning, traders see winter wheat production near 1.64 billion bushels as compared with 1.494 billion last year. All wheat production is expected near 2.195 billion bushels as compared with 1.999 billion last year. For ending stocks for the 2011/12 season, traders see stocks near 780 million bushels as compared with 793 million posted in the April update. For the 2012/13 season, traders see ending stocks near 785 million bushels but with a range of near 600-925 million bushels. For the weekly export sales, traders see wheat sales near 600,000 tonnes as compared with 711,600 tonnes last week. July Oats closed down 1 3/4 at 336. This was 2 up from the low and 3 1/4 off the high.
Market Recap: Corn Futures (Source: CME)
Corn futures faced sharp price pressure into the close, with nearby contacts leading losses. May corn ended 24 3/4 cents lower, with July down 15 3/4 cents. The rest of the market ended mostly 11 to 12 cents lower. Funds sold an estimated 14,000 contracts (70 million bu.) of corn today. Sell stops were triggered into the close due to negative outside markets. The U.S. dollar index returned above the 80.00 level, but came off its high as corn was closing.
Corn Market Recap for 5/9/2012 (Source: CME)
July Corn finished down 15 3/4 at 607 1/4, 15 3/4 off the high and 1 3/4 up from the low. December Corn closed down 11 1/4 at 516 3/4. This was 1 3/4 up from the low and 12 off the high. July corn saw another round of aggressive selling late in the day to close sharply lower on the day and to the lowest close since April 25th. Continued demand fears coming out of Europe plus a bearish weather forecast for the Midwest helped spark the aggressive sell-off ahead of the key USDA Supply/Demand update for tomorrow. December corn closed sharply lower and matched the lows from Monday and Friday as traders expect the first outlook for the new crop season to show a surge in US ending stocks for the 2012/13 season. US cash traders indicate that China has bought near 8 cargoes or about 500,000 tonnes of US corn in the past week. Traders await confirmation on the daily wires. Ethanol production for the week ending May 4th averaged 897,000 barrels per day. This is up 0.34% vs. last week and up 4.06% vs. last year. Total Ethanol production for the week was 6.279 million barrels which is the highest weekly total since March 2nd. Corn used in last week's production is estimated at 95.55 million bushels as compared with 94 million bushels per week necessary to meet the USDA estimate for the year. Stocks were 21.4 million barrels. This is down 3.8% vs. last week and up 4.6% vs. last year. The implied demand for the week is 7.127 million barrels which would be the highest since December 9th. For the report in the morning, traders see US ending stocks for the 2011/12 season near 750 million bushels as compared with 801 million posted in the April update. For the 2012/13 season, traders see ending stocks near 1.71 billion bushels but with a range of near 1.2 billion to well above 2 billion bushels. World ending stocks for the 2011/12 season are expected to drop to near 122 million tonnes from 122.71 million last month. Stocks for the new crop season are expected to recovery to near 137 million tonnes. For the weekly export sales, traders see corn sales near 1.2 million tonnes as compared with 3.472 million last week. July Rice finished up 0.1 at 15.395, 0.045 off the high and 0.185 up from the low.
Corn's cash/futures breakdown annoying spec longs
--Gavin Maguire is a Reuters market analyst. The views expressed are his own.--
CHICAGO, May 8 (Reuters) - According to the law of convergence -- the foundation of confidence in the futures arena as an effective medium for grain hedgers and speculators -- the recent blistering rise in cash corn values should be bringing about a similar firming in May futures prices as that contract enters its final week of trade.
But with less than five full trading days left before May futures expire, they continue to trade at an historically wide discount to physical corn at the U.S. Gulf, distressing futures traders who are sitting on long positions in the contract fully expecting it to trade more closely in tandem with its physical counterpart.
French farm body ups 11/12 wheat stocks, cuts exports
PARIS, May 9 (Reuters) - Farm office FranceAgriMer on Wednesday raised its forecast of French 2011/12 soft wheat ending stocks, reflecting a cut in its export outlook, data released on the office's website showed.
The office increased its forecast of soft wheat stocks at the end of the current 2011/12 season to 2.36 million tonnes against 2.1 million seen last month. This was still down 19.2 percent on stocks at the end of 2010/11.
Indonesia cuts 2012 unhusked rice output target to 67.8 mln T
JAKARTA, May 9 (Reuters) - Indonesia revised down its unhusked rice output target for 2012 to 67.8 million tonnes from 72.02 million tonnes forecast in February, Agriculture Minister Suswono said on Wednesday.
"We are facing the impact of climate change, pests and diseases, ageing agricultural infrastructure, land conversion, limited farmer access to financing, inter-commodity competition and high rice consumption," Suswono told reporters.
Philippines on track for record rice output-official
MANILA, May 9 (Reuters) - The Philippines is unlikely to exceed its rice import target this year as its rice harvest remains on track to rise to a record 18 million tonnes, a senior farm official said on Wednesday.
Agriculture Assistant Secretary Dante Delima told Reuters a day before official farm output data is due to be released that the unmilled rice output in the first quarter will be little changed from last year's record level of 4.037 million tonnes.
Australia says wheat exports drop 13 pct in March
SYDNEY, May 9 (Reuters) - Australian wheat exports fell 13 percent in March from February, when exports hit a nine-year high, government data showed on Wednesday.
Wheat exports totalled 2.1 million tonnes in March, down 301,000 tonnes on February, the Australian Bureau of Statistics said. Despite the fall, March wheat exports were the third largest monthly figure in the last nine years.
Argentine grains port workers threaten pay strike
BUENOS AIRES, May 8 (Reuters) - Workers at leading grains export ports in Argentina will go on strike on Thursday and blockade soy-crushing plants unless their minimum wage is hiked to reflect brisk inflation, a union spokesman said on Tuesday.
A prolonged work stoppage by members of the San Lorenzo branch of the CGT labor federation could slow shipments of soybeans, soymeal and oil from Argentina, the world's biggest supplier of soy products.
S.Africa's 2011 wheat output at 2 mln T -CEC
JOHANNESBURG, May 8 (Reuters) - South Africa produced 2 million tonnes of wheat during the 2011 season, up from 1.43 million tonnes in 2010, the country's Crop Estimates Committee (CEC) said on Tuesday.
The output was also 5 percent more than the committee's final forecast of 1.905 million tonnes because of higher-than-expected yields, the CEC said.
Brazil’s $2 Billion Cane Revival Plan Fails: Commodities (Source: Bloomberg)
Brazil’s 4 billion-real ($2.1 billion) drive to revive sugar-cane production has faltered as government bureaucracy and a curb on foreign loans choked credit needed to finance planting. Cane refiners, who also grow the crop, couldn’t complete paperwork in time to qualify for loans from the state development bank known as BNDES before the main planting season ended last month, said Maurilio Biagi Filho, president of the ethanol producer Grupo Maubisa. In March, the government imposed a tax on overseas borrowing to stifle capital inflows that are boosting the currency. The shortage of credit dried up funds for replacing older sugar-cane stalks, which must be renewed every five years to maintain yields. At least eight of the nation’s 420 processing mills are idle because of a lack of cane, threatening Brazil’s lead over the U.S. as the biggest ethanol exporter. Brazil is the world’s largest sugar producer.
Brazil’s growers “need to plant but simply don’t have the financial resources,” said Alexandre Grendene Bartelle, who is seeking to tap a credit line from BNDES to expand fields around two sugar-cane facilities he co-owns. “Mills are in financial troubles. They need this line of credit.” Brazilian growers replanted about 15 percent of their fields last year, less than the 17 percent annual replacement rate needed to maximize productivity, said Marcio Perin, an analyst at Informa Economics FNP, a consulting company in Sao Paulo. As much as 20 percent may be replanted this year.
SOFTS-Sugar hovers above 20-month low, coffee firms
LONDON, May 9 (Reuters) - Raw sugar futures reversed early losses after touching a fresh 20-month low as the global sugar surplus dragged on prices, while coffee firmed and cocoa dipped, weighed by weaker outside markets. Raw sugar futures on ICE firmed after earlier touching a fresh 20-month low, as recent upward revisions to the expected 2011/12 global surplus weighed on prices.
Indonesia sees 2012 processed cocoa bean exports at 380,000 T
JAKARTA, May 9 (Reuters) - Indonesia estimates that exports of processed cocoa beans this year will total 380,000 tonnes, up from 249,188 tonnes in 2011, Sindra Wijaya, executive director of the Indonesian Cocoa Industry Association (AIKI) said on Wednesday.
The association sees installed industry capacity at 680,000 tonnes in 2012, up from 580,000 tonnes last year, Wijaya told Reuters. "Increasing investment in the cocoa industry will boost Indonesian cocoa processing capacity in the coming years," Wijaya said.
Colombia coffee output up for first time in a year
BOGOTA, May 8 (Reuters) - Colombia's coffee production rose 11 percent in April versus the same month last year, after 12 months of declines due to heavy rains that had battered coffee crops, the growers federation said on Tuesday.
Colombia, the world's top producer of high-quality arabica beans, produced 580,000 60-kg bags in April, the federation said in a statement. However, exports last month fell 14.6 percent to 495,000 bags compared with the same month a year earlier.
Brazil April green coffee exports down 30 pct on yr
BRASILIA, May 8 (Reuters) - Brazil exported 1.72 million 60-kg bags of green coffee in April, down 30 percent from the 2.47 million bags shipped in the same month a year earlier, the Council of Green Coffee Exporters, Cecafe, said on Tuesday.
The 2011 harvest was a smaller off-year crop estimated officially at 43.5 million bags, versus 48.1 million bags in the larger on-year crop that preceded it. Output rises and falls from one year to the next due to a biennial production cycle.
Guatemala's coffee crop hit by killer fungus
GUATEMALA CITY, May 8 (Reuters) - A mutant strain of one of the world's most devastating coffee diseases is attacking crops in Guatemala, putting farmers on high alert for a wider outbreak across Central America.
Growers are battling a new form of leaf rust fungus, or roya, which kills leaves on coffee trees and makes the weakened plants produce less.
India cotton exports may hit record 13.5 mln bales
MUMBAI, May 9 (Reuters) - India could ship up to 2 million additional bales of cotton in the current crop year, reaching a record 13.5 million bales after the government allowed export sales to resume, a trade association said on Wednesday.
Last month, India reversed a ban on cotton exports imposed in March as concerned eased that supplies would fall short for the textile industry, the country's second largest employer, allowing firms in the world's second-biggest producer and exporter to resume shipments abroad.
Honduras coffee boom feels growing pains
MARCALA, Honduras, May 8 (Reuters) - In the small town of Marcala in the western mountains of Honduras, farmers are harvesting more coffee than ever before, part of a nationwide push to capitalize on higher prices that has doubled production in less than 10 years.
But the boom comes with a cost.The coffee is coming in faster than growers can handle it and they are running out of space to dry all the beans, which need time in the sun or in drying machines to stop fermenting.
Euro Coal-Fresh lows draw out trader buying
LONDON, May 8 (Reuters) - European and South African coal prices dipped by around $1.00 to fresh lows on Tuesday, a move which drew out buying by traders rather than end-users.
European DES ARA prices hit two-year lows last week and have slipped a little further, pressured by oversupply.
Asia Coal-Australia prices top $122/T, fat-finger entry blamed
SHANGHAI, May 8 (Reuters) - Australia's thermal coal price spiked over $20 overnight to top $122 a tonne on Tuesday, a jump which traders said was likely due to a "fat finger" entry since there were no trades recorded.
Australia's Newcastle spot index for the week to date closed Tuesday at $122.50 per tonne, up from $99.24 the previous day, data provided by online trading platform globalCOAL showed.
Saudi says producers pumping enough to deal with Iran sanctions
TOKYO, May 9 (Reuters) - Saudi Oil Minister Ali al-Naimi said on Wednesday oil markets would remain well supplied even after fresh international sanctions against Iran take effect, as global crude oversupply is already as much as 1.5 million barrels per day (bpd).
U.S. and European Union sanctions on Iran's oil exports take effect in June and July, and are aimed at stemming the flow of petrodollars to Tehran to force it to halt a nuclear programme the West suspects is intended to produce weapons.
China gas reforms spark investment boom
HONG KONG, May 9 (Reuters) - China's big state companies, confident on the outlook for domestic natural gas reforms, are buying up local distributors and raising fresh capital - and making gas the hottest prospect for energy investment in the world's top energy consumer.
The prospects for expansion and acquisitions also have China's natural gas distributors trading like growth stocks, instead of bog-standard utilities.
OIL-Oil slips on Greece jitters, strong supply
LONDON, May 9 (Reuters) - Brent crude oil slipped towards $112 on Wednesday, on track for its longest losing streak in nearly two years, as political turmoil in the debt-laden euro zone deepened worries about prospects for fuel demand.
"The weakness in oil was the result of higher Saudi production and concerns for the U.S. economy and a slow-down in China," said Christopher Bellew at Jefferies Bache.
Oil Futures Pare Losses to Trade Little Changed in New York (Source: Bloomberg)
Oil traded little changed in New York after falling yesterday to the lowest in more than three months. Futures for June delivery traded at $96.77, down 4 cents, on the New York Mercantile Exchange at 8:49 a.m. in Singapore. They earlier fell as much as 46 cents to $96.35.
Crude Oil Falls for a Seventh Day in Longest Decline Since 2009 (Source: Bloomberg)
Oil dropped for a seventh day, the longest losing streak in more than two years, as U.S. crude stockpiles climbed to the highest level since 1990 and Europe’s debt crisis worsened. Futures slipped as much as 0.5 percent in New York. Crude inventories increased 3.7 million barrels last week to 379.5 million, data from the Energy Department showed. They were forecast to climb 2 million barrels, according to a Bloomberg News survey. Oil also slipped as Greece struggled to form a government and the cost of insuring against a Spanish default on its debt climbed to a record. Crude for June delivery decreased as much as 46 cents to $96.35 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.45 at 9:26 a.m. Sydney time. The contract yesterday slid 20 cents to $96.81, the lowest close since Feb. 2. Prices are down 2.4 percent this year. The run of declines is the longest since December 2009.
Brent oil for June settlement gained 47 cents, or 0.4 percent, to $113.20 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $16.39. China Investment Corp., the nation’s sovereign wealth fund, has stopped buying European government debt because of the economic crisis there, CIC President Gao Xiqing said yesterday in an interview in Addis Ababa, Ethiopia.
Aluminum Fee by Japan May Jump to Record as Asia Supply Drops (Source: Bloomberg)
Aluminum buyers in Japan, Asia’s largest importer, may pay a record-high fee to producers after China boosted its own purchases and smelters cut output. Premiums for the three months starting in July may rise by more than $30 from fees this quarter ranging between $115 to $127 a metric ton over the London Metal Exchange cash price, four executives, representing smelters and buyers, said before pricing talks this month. The highest fee since Japanese buyers began purchasing most requirements through long-term contracts in 1996 was $125 to $130 for the first quarter of 2010, said the people, declining to be identified as the negotiations are private.
Iron Ore-Shanghai rebar falls 3rd day to 2-1/2 month low
SINGAPORE, May 9 (Reuters) - Shanghai steel futures fell on Wednesday for a third straight day, reaching their lowest level since February amid sluggish demand in top consumer China that also kept pressure on iron ore prices.
Excess steel supply has weighed on prices in China where mills continued to produce at a record clip even as inventories of steel products fell at a slower pace than last year.
Promising start for China iron ore trading platform
SINGAPORE/SHANGHAI, May 8 (Reuters) - An Australian cargo was among three sold via China's first physical iron ore platform on Tuesday, a promising start for the electronic trading system, although traders say volumes must rise before the platform can create price benchmarks.
Run by state-owned China Beijing International Mining Exchange (CBMX), the platform is the boldest effort so far by the world's top iron ore buyer to determine pricing, an area it believes has long been dominated by global miners Rio Tinto , Vale and BHP Billiton .
China eyes upper hand in pricing with iron ore platform
SINGAPORE/SHANGHAI, May 7 (Reuters) - China's first physical iron ore trading platform is set to debut on Tuesday, helping the world's biggest buyer of the commodity boost its price-setting influence.
The timing looks perfect. Nearly all iron ore sold to China is now based on spot prices, with the industry evolving over the past two years after four decades of yearly-set contracts.
Australian port's April iron ore shipments rebound
SYDNEY, May 7 (Reuters) - Iron ore shipments to China from Australia's Port Hedland rose nearly 6 percent in April from the previous month, according to port authority data released on Monday, after weather-related disruptions in March.
Iron ore shipments to China rose to 14.84 million tonnes in April from 14.04 million tonnes in March, it said.
Baltic sea index rises on higher iron ore activity
May 8 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, inched higher on Tuesday as Chinese interest in buying iron ore kept rates steady for large capesize vessels.
The overall index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, rose 8 points or 0.69 percent to 1,165 points.
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