S&P GSCI Spot Index of Commodities Erases Advance for the Year (Source: Bloomberg)
The Standard & Poor’s GSCI Spot Index, which tracks raw materials, dropped for an eighth day, losing 0.7 percent to 642.93 at 10:02 a.m. in Singapore. That puts the gauge on course for erasing this year’s gains after it ended 2011 at 644.91. The index droppd today as crude oil and base metals declined.
Inside the commitments of traders report
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, May 9 (Reuters) - Research and analysis into commodity prices and derivatives almost always relies on the commitments of traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC).
Except for some correlation studies published by the European Central Bank and International Monetary Fund, every major report on the formation of commodity prices, supply/demand, the role of index funds, and the possible "financialisation" of the asset class, published in the last five years, has relied on data taken from the COT report.
Indian monsoon onset seen around normal date
NEW DELHI, May 9 (Reuters) - India's monsoon rains are expected to arrive nearly on time, a former government forecaster said on Wednesday, adding to hopes of another drought-free year which would enable the major crop producer to continue its liberal export policy.
Monsoon rains usually arrive around June 1 over the south coast, and P.V. Joseph, now professor emeritus in the atmospheric science department at Cochin University of Science and Technology in Kerala, said they could arrive on that date, give or take three days - a timeframe considered to be normal.
GRAINS-U.S. grains futures climb; USDA report eyed
SYDNEY, May 10 (Reuters) - U.S. grain futures firmed , with wheat gaining more than 1 percent, as traders picked up bargains after steep losses in the previous session when mounting fears that a euro zone debt crisis could worsen dented sentiment.
"We've seen a significant sell-off over the last week or so, and this is a little bit of buying, position squaring, ahead of tonight's USDA reports," Luke Mathews, commodity strategist at CBA said.
Syria buys grain via Lebanon to beat sanctions
HAMBURG, May 9 (Reuters) - Syria is importing significant volumes of grain via Lebanon to work around western sanctions and secure vital supplies, European traders told Reuters.
The trade is not illegal because food imports are not included in sanctions imposed by the European Union, the United States and other Western countries on President Bashar al-Assad's government over his crackdown on a revolt.
France exported 1.6 MT of wheat in March - customs
PARIS, May 10 (Reuters) - France exported 1.6 million tonnes of soft wheat in March, bringing the total since of the start of the 2011/12 season on July 1 to 12.6 million tonnes, down 17 percent on the same period last season, customs data showed on Thursday.
Shipments outside the European Union amounted to 1 million tonnes, marking the second biggest monthly haul this season, with volumes boosted by shipments to Algeria, Morocco and Egypt.
Asia faces threat to crops if El Nino unleashed again
SINGAPORE, May 10 (Reuters) - A return of the El Nino weather pattern may threaten food output in Asia, the world's top producer of rice and palm oil, but drier conditions in some areas could also benefit crops such as coffee and cocoa and keep global prices in check.
With memories of the devastating El Nino in the late 1990s still fresh in their minds, farmers are braced for the return of the weather anomaly, which can bring drought in some places and heavy storms in others.
USDA to see global grain stocks on rise at last-analysts
WASHINGTON/CHICAGO, May 10 (Reuters) - Global stockpiles of corn and soybeans are set to rise next autumn after years of thinning inventories, the U.S. Agriculture Department was expected to say on Thursday, offering hope for a break in the cycle of surging food prices.
A breakneck start on planting the U.S. corn crop and timely rains in the drought-hit wheat fields of the southern Plains may encourage the USDA to estimate higher-than-average yields, analysts said ahead of the first USDA report to project crops and ending stockpiles for the 2012/13 crop year.
Philippines says Q1 farm output up 1.08 pct on yr
MANILA, May 10 (Reuters) - The Philippines' agricultural output in the first quarter grew 1.08 percent from a year earlier as favourable weather boosted crop harvests and with higher livestock and poultry production, the farm minister said on Thursday.
Unmilled rice output was down 1 percent to 4 million tonnes compared to last year's record harvest of 4.037 million tonnes, Agriculture Secretary Proceso Alcala told reporters. Corn production was up 5.4 percent at 2.02 million tonnes.
Workers at Argentina's key grains port to strike
BUENOS AIRES, May 9 (Reuters) - Workers at most of the installations of Argentina's key grains port, Rosario, will start an indefinite pay strike at midnight on Wednesday, CGT labor union official Edgardo Quiroga said.
The work stoppage will include oilseed-crushing workers, dock workers and other staff at the giant export terminals in San Lorenzo and other areas close to the river port city of Rosario, from which 80 percent of Argentine grains are shipped.
Frost seen for W.Canada, most crops should be okay
WINNIPEG, Manitoba, May 9 (Reuters) - Parts of Western Canada may see freezing temperatures later this week, but the damage to crops would be minimal with seeding still just getting underway, weather and crop specialists say.
Frost should reach southern Alberta and Saskatchewan on Thursday or Friday and stay below freezing overnight, said Andrew Owen, meteorologist at U.S.-based World Weather Inc.
French farm body ups wheat stocks forecast
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.
Argentine wheat area seen down, quality suffers
BUENOS AIRES, May 9 (Reuters) - Farmers in grains powerhouse Argentina will plant less wheat this year, sowing other crops instead to skirt government export curbs that are hobbling investment in wheat, the head of industry group ArgenTrigo said.
Reforms to the country's export rules have failed to revive interest among wheat growers while worries mount that faltering quality, is costing the world's sixth biggest wheat exporter its competitiveness. Algeria rejected an offer of Argentina wheat last month.
Recap: Wheat Futures (Source: CME)
Wheat futures traded on both sides of unchanged today and finished likewise, with Chicago slightly firmer, Kansas City narrowly mixed and Minneapolis slightly lower. The wash-finish in the wheat market can be attributed to a mix of bullish and bearish data in USDA’s balance sheet adjustment today. However, this was countered by smaller-than-expected carryover for both old- and new-crop wheat.
Wheat Market Recap Report (Source: CME)
July Wheat finished up 1 1/4 at 601 1/4, 6 1/4 off the high and 6 1/4 up from the low. December Wheat closed up 1 3/4 at 640 3/4. This was 6 1/2 up from the low and 5 3/4 off the high. July wheat experienced two-sided choppy trade and closed slightly higher on the day. The higher close after posting a new low for the move is seen as a positive technical factor. While production numbers came in higher than expected, usage was also higher than expected and stocks are tightening. Weakness in corn was offset by strength in soybeans and the tightening stocks situation for both the US and world for wheat is a positive force as well. The USDA pegged winter wheat production at 1.694 billion bushels which was about 55 million above trade expectations and compares with 1.494 billion last year. All wheat production was pegged at 2.245 billion bushels which is up 50 million from expectations and compares with 1.999 billion last year. The USDA pegged US ending stocks for the 2011/12 season at 768 million bushels which was about 12 million below trade expectations and down from 793 million last month. For the 2012/13 season, ending stocks were pegged at 735 million bushels which is 50 million below trade expectations. World ending stocks for the 2011/12 season came in at 197.03 million tonnes as compared with 206.27 million last month as feed usage was revised up by 16.5 million tonnes. For the 2012/13 season, world ending stocks were pegged at 188.13 million. Weekly export sales came in at 221,600 metric tonnes for the current marketing year and 328,900 for the next marketing year for a total of 550,500 which was about as expected. Cumulative wheat sales stand at 98.6% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 97.1%. Sales of 95,000 metric tonnes are needed each week to reach the USDA forecast. The Buenos Aires Grains Exchange pegged the 2012/13 planted area for wheat at 4.0 million hectares, down 13% from last year. July KC wheat closed lower and managed to push to the lowest level since July of 2010. July Oats closed unchanged at 336. This was 2 up from the low and 3 1/4 off the high.
Recap: Corn Futures (Source: CME)
Pressure on old-crop corn futures built into the close, with those contracts ending 15 3/4 to 19 3/4 cents lower. September corn ended 13 1/2 cents lower, with new-crop down 5 3/4 to 9 1/2 cents. Traders' initial reaction to USDA's 50-million-bu. increase in 2011-12 corn carryover was muted, as the general belief in the market is supplies are tighter than that. But as the day progressed, sell stops were triggered to sharply extend losses.
Corn Market Recap for 5/10/2012 (Source: CME)
July Corn finished down 19 3/4 at 587 1/2, 24 3/4 off the high and 2 up from the low. December Corn closed down 9 1/2 at 507 1/4. This was 2 1/4 up from the low and 12 off the high. July corn closed sharply lower on the session and saw the lowest close since March 16th. The USDA had enough bearish factors to drive futures lower early in the day with December corn pushing down to the lowest level since February 25th. The USDA pegged ending stocks for the 2011/12 season at 851 million bushels which was up 50 million from last month and up about 100 million from trade expectations. Feed usage was adjusted lower by 50 million bushels and other usage numbers were left unchanged on the month. Traders see US producers using more domestic wheat and even UK feedwheat imports into the East Coast as reasons for the decline. Brazil production was revised to 67 million tonnes from 62 million last month. As a result, world ending stocks came in at 127.5 million tonnes as compared with expectations at near 122 million. For the new crop season, the USDA pegged yield at a record high 166 bu/acre which pushed ending stocks to a whopping 1.881 billion bushels which is up from trade expectations near 1.71 billion. The record high yield was calculated by "not" using last years yield in their 20 year trend calculation and by raising the yield by 2 bu/acre due to early plantings. In the May report last year they used the trendline yield for the 1990 to 2010 seasons and the same years for the calculation this year. Total usage was pegged at 13.775 billion from 12.655 billion this season. Weekly export sales came in well below trade expectations at 224,200 metric tonnes for the current marketing year and 249,200 for the next marketing year for a total of 473,400. Cumulative corn sales stand at 86.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 84.0%. Sales of 327,000 metric tonnes are needed each week to reach the USDA forecast. July Rice finished up 0.395 at 15.79, equal to the high and 0.32 up from the low.
SOFTS-Sugar firms near 20-month low, coffee up
LONDON, May 10 (Reuters) - Raw sugar futures on ICE firmed in early trading and stood above Wednesday's 20-month low, with upside potential limited by plentiful global supplies. Raw sugar futures on ICE firmed and stood close to Wednesday's 20-month low, as recent upward revisions to the expected 2011/12 global surplus weighed on prices.
Marex Spectron sees smaller 2011/12 world cocoa deficit
LONDON, May 10 (Reuters) - Marex Spectron estimates 2011/12 world cocoa output will fall 19,000 tonnes short of grindings, smaller than its February estimate of a 94,000 tonne deficit, partly due to improved production prospects, the commodities brokerage said in a report.
This compares with a record surplus of 442,000 tonnes the previous year when West Africa saw a bumper harvest after ideal weather.
China 2012/13 cotton output seen dropping-attache
May 9 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in China:
"MY12/13 domestic cotton production is forecast to drop to 6.85 million tonnes on lower forecast planted area of 5.05 million hectares, while cotton consumption is expected to increase to 10 million tonnes. High domestic stock levels could weaken import demand in MY12/13, depending on the level of China's market intervention measures. The U.S. remains China's largest cotton supplier with MY10/11 sales of 1.2 million tonnes."
Ivorian cocoa crop to hit 1.35 mln T -ICCO
ABIDJAN, May 9 (Reuters) - Ivory Coast will produce around 1.35 million tonnes of cocoa during the current season, down from a record 1.5 million last season, the International Cocoa Organisation said on Wednesday.
"For the 2011-2012 season currently underway, we estimate production lowering in Ivory Coast to around 1,350,000 tonnes," Jean-Marc Anga, executive director of the ICCO, told a conference in the country's commercial capital, Abidjan. An ICCO official had said in late March that cocoa output from the world's top producer country would likely reach 1.3 million tonnes.
Saudi to supply full contract June crude to Asian buyers-sources
TOKYO/SEOUL, May 10 (Reuters) - Saudi Arabia, the world's top crude exporter, will supply full contracted volumes of crude oil in June to at least three Asian term buyers, as the region's crude buyers strive to find alternative sources to Iran, industry sources said on Thursday.
The June volume offers were unchanged from May, the sources familiar with the matter said. Saudi Arabia has supplied full contractual volumes to most Asian buyers since late 2009.
China April crude oil imports up 3.3 pct on yr
BEIJING, May 10 (Reuters) - China's April imports of crude oil rose 3.3 percent from the same month a year ago to 5.42 million barrels per day (bpd), but high oil prices reduced the level of purchasing from the previous month, customs data showed.
China is the world's second biggest oil consumer and crude buyer, and its demand growth i s one of the biggest drivers of global crude markets.
Ghana aims to almost double oil revenues in 2012
CAPE TOWN, May 9 (Reuters) - Ghana expects to almost double its oil revenues to $650 million in 2012 as it ramps up production, a senior energy ministry official said on Wednesday.
"Last year the government got about $350 million of revenue from the sector and this year we are projecting $650 million from the sector," Thomas Mba Akabzaa, chief director in the ministry of energy, told Reuters on the sidelines of an Africa-EU energy conference.
OIL-Brent drops below $113 after China trade data
SINGAPORE, May 10 (Reuters) - Brent crude slipped below $113 on Thursday, after weaker-than-expected Chinese trade data that raised concerns over energy demand by the world's second-largest oil consumer.
"The weak Chinese data is putting more pressure on oil. With demand for oil looking bleak and rising inventories, I don't expect crude oil prices to rebound any time soon," said Miguel Audencial, a trader with CMC Markets in Sydney.
Oil Heads for Second Weekly Drop as Supply Exceeds Demand (Source: Bloomberg)
Oil fell in New York, heading for a second weekly drop, on concern Europe’s debt crisis will worsen and curb fuel demand as global crude supplies increase. Futures slid as much as 1 percent, retreating for the seventh day in eight. Oil may extend declines next week amid rising U.S. stockpiles and concern the crisis in Europe will spread, threatening the global economic recovery, according to a Bloomberg survey. OPEC is producing 8.3 percent more crude than it considers necessary this quarter, data released yesterday by the Vienna-based group showed. “The outlook remains mixed to negative and I think that’s the state of play for a little while,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “The optimism we had at the end of 2011 that created a firm footing for a lot of commodities has slowly eroded. We still continue to see inventory builds.”
Crude for June delivery fell as much as 95 cents to $96.13 a barrel in electronic trading on the New York Mercantile Exchange, and was at $96.32 at 10:54 a.m. Sydney time. The contract yesterday rose 27 cents to $97.08. Prices are 2.2 lower this week and down 2.5 percent this year.
ArcelorMittal Profit Falls 24%, Exceeds Estimates (Source: Bloomberg)
ArcelorMittal (MT), the world’s biggest steelmaker, posted first-quarter profit that beat estimates after a recovery in North America countered declining revenue from mining and weaker European demand. Earnings before interest, tax, depreciation and amortization were $1.97 billion, ArcelorMittal said today in a statement, exceeding the $1.67 billion median estimate of 13 analysts surveyed by Bloomberg. The company maintained guidance that first-half Ebitda will be higher than the prior six months. “North America was a lot stronger than I would have thought, up very strongly sequentially driven by both volumes and prices,” Tim Cahill, a Dublin-based analyst at J&E Davy Holdings Ltd., said by phone. “That was definitely a surprise.”
Profit at ArcelorMittal’s Americas flat-steel business more than doubled from the prior three months as production rose by 4 percent to meet demand for use in cars, appliances and farming equipment -- so-called yellow goods. U.S. consumption of the metal is forecast by the World Steel Association to rise 5.7 percent this year, contrasting with slumping European demand.
Goldman Stands By Gold-Rally Forecast Even as Price Drops (Source: Bloomberg)
Goldman Sachs Group Inc. (GS) stood by its forecast for a rally in gold this year, saying that the precious metal will advance to $1,840 an ounce over six months as the U.S. central bank embarks on a third round of stimulus in June. Gold remains the “currency of last resort,” according to analysts led by Jeffrey Currie in a report dated yesterday, the same day that the price sank to the lowest level in four months as Europe’s escalating debt crisis boosted the dollar. The restated gold forecast implies a 16 percent surge. Concerns that Greece may leave the euro reignited Europe’s crisis this week, driving commodities including gold lower along with base metals, crude oil and equities as the dollar climbed. The 17-nation euro area is on the verge of losing one of its members, according to a Bloomberg Global Poll published today.
“In early 2009, we suggested that gold had become the currency of last resort, overtaking the U.S. dollar’s status due to the rising risk of sovereign default and debasement concerns,” Currie wrote. Even as the U.S. currency advanced and gold fell on the European crisis in recent months, “it is too early for the dollar to reclaim this status,” he wrote.
Gold Bulls Weakest in Month as Investors Buy Dollar (Source: Bloomberg)
Gold traders are the least bullish in five weeks after the metal erased almost all of this year’s gains, as political turmoil in Europe and mounting optimism about the U.S. economy drives investors to favor the dollar. Fourteen of 32 analysts surveyed by Bloomberg expect prices to gain next week and six were neutral, the lowest proportion since April 6. Bullion futures slid to a four-month low of $1,578.50 an ounce this week and hedge funds are making their smallest bet on a rally in about three years, Commodity Futures Trading Commission data show.
The Dollar Index, a measure against six major counterparts, rose for eight consecutive days through May 9, the longest winning streak since September 2008. Gold fell on seven of those days, a sign that investors are favoring the currency over the metal to protect their wealth amid concern that Greece may have to leave the euro. The U.S. economy will accelerate this quarter and in the following three months, according to the mean of 72 economists surveyed by Bloomberg. “When the market gets very nervous, then they buy dollars and gold finds it difficult to rally,” said Jesper Dannesboe, an analyst at Societe Generale SA in London. “Given what’s going on in the markets at the moment, any rally will probably just be a bounce before another setback.”
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