Speculators Fail to Reap Rally in Crops After Wager Cut (Source: Bloomberg)
Speculators reduced wagers on a rally in agricultural prices to a five-month low just as returns from crops and livestock beat most other commodities on concern that parched fields from Iowa to Russia will curb supply. Hedge funds and other money managers cut net-long positions across 11 U.S. farm goods by 20 percent to 312,099 futures and options in the week ended June 5, the lowest since Dec. 27, Commodity Futures Trading Commission data show. Corn holdings tumbled to the lowest since June 2010 and traders switched to betting on a decline in wheat prices. Agricultural commodities accounted for nine of the 10 best performers in the Standard & Poor’s GSCI Spot Index of 24 raw materials last week. Speculators cut combined bullish bets across the S&P GSCI by 13 percent to the lowest this year on mounting concern that Europe’s widening debt crisis will derail global growth and curb demand for commodities.
Agricultural prices rallied as dry weather harmed the corn crop in Iowa and Illinois, the biggest U.S. growers, and Russia’s government declared a state of emergency in some areas because of drought. “People don’t look at fundamentals when the crisis overshadows everything,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York- based Aegis Capital Corp. “The tug of war gets tough when the correlation between the economy and agricultural commodities is very high.”
Goldman Sees a 29% Return From Commodities Over 12 Months (Source: Bloomberg)
Goldman Sachs Group Inc. (GS) predicted a 29 percent return over the next year from the Standard & Poor’s GSCI Enhanced Commodity Index, led by energy and industrial- metals investments. European policy makers will be able to contain the euro-area debt crisis, while recovery in the U.S. and China is set to continue, Jeffrey Currie, head of commodities research in New York, said today in a report. Returns may be 41 percent in a year for energy investments, compared with 23 percent for industrial metals and 18 percent for precious metals, while agriculture is forecast to lose 14 percent, the report showed. “Although the macroeconomic backdrop still remains uncertain, particularly in Europe, we believe that the selloff in commodity prices is likely overdone and the price risks are shifting more to the upside,” Currie wrote.
Commodities as measured by the S&P GSCI Enhanced Commodity Index dropped 13 percent in May and are down 9.1 percent this year on mounting concern that Europe’s widening debt crisis will derail global growth and curb demand for commodities. Coffee, natural gas, cotton and crude oil paced declines. Goldman Sachs cut its three-month outlook on commodities to neutral from overweight on March 28, while sticking with an overweight recommendation for a one-year period. Commodities may return 13 percent in a year, the bank said in April.
Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures settled narrowly mixed in Chicago and Minneapolis, while Kansas City wheat closed mostly around 3 cents lower. After-hours trading was very quiet. Wheat futures were firmer for much of the session as traders covered short positions ahead of USDA's June crop reports Tuesday morning. Traders expect USDA to cut its estimate of the winter wheat crop.
Wheat Market Recap Report (Source: CME)
July Wheat finished up 1/4 at 630 1/2, 11 3/4 off the high and 1 1/2 up from the low. December Wheat closed down 1 at 671 3/4. This was 1 3/4 up from the low and 11 off the high. Late weakness in corn and a turn sharply lower in the US stock market helped to pressure the wheat market to give back all of the early gains to close near unchanged on the day. The rally in the US dollar and weakness in other commodity markets and weakness in the stock market turned outside forces from bullish to bearish and this sparked selling pressure. The outlook for declining US and world ending stocks and an adjustment lower for winter wheat production for the USDA reports in the morning are forces which helped to support the market earlier today. Weekly export inspections came in at 21.5 million bushels which was right in the range of estimates. Inspections need to average 22 million bushels per week to reach the USDA projection for the new season. July Oats closed down 8 1/4 at 295. This was 3/4 up from the low and 15 1/4 off the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures faced pressure for much of today's session and settled low-range with losses of 5 1/2 cents in the July contract, while deferred months were mostly around a dime lower. Most contracts extended losses slightly in after-hours trade. Corn futures were pressured by overnight rains that lingered into today and the market extended losses as the dollar firmed.
Corn Market Recap for 6/11/2012 (Source: CME)
July Corn finished down 6 at 592, 11 3/4 off the high and 3 1/4 up from the low. December Corn closed down 10 at 534. This was 3 1/2 up from the low and 9 3/4 off the high. July corn closed moderately lower on the day with December corn down 12 cents late in the session as fund traders were aggressive sellers. Central and southern sections of Illinois look to receive more rain than traders had anticipated with the rain system today but some of the northern parts of the state may be missed. The July contract tested Friday's highs last night and was still trading higher into the pit opening but a turn down in outside market forces helped to pressure. In addition, December corn has been under pressure as the weather outlook is not as threatening as Friday's outlook for next week and the market is still absorbing the outlook for 1/4 to 3/4 inches of rain over the short-term moving across the Midwest in the next day or two. Traders see the rain easing topsoil moisture concerns into the early pollination period. In addition, more rains are suggested for the middle of neat week. Positioning ahead of the supply/demand report for release tomorrow morning has helped to keep the trade choppy. Dryness concerns persist for the northern China plains as well and this helped to provide some underlying support but even here, some of the longer-term models show rain chances for part of the dry areas. Weekly export inspections came in at 17.029 million bushels which was about 10 million below trade expectations. Inspections need to average 37.5 million bushels per week to reach the USDA projection for the season. Traders look for a 3-4% decline in crops rated good to excellent for this afternoon's update. July Rice finished up 0.005 at 14.055, 0.115 off the high and 0.015 up from the low.
Corn near two-week high on dry US weather; soy firm
SINGAPORE, June 11 (Reuters) - Chicago corn rose for a fourth straight session to trade near last week's two-week high on forecasts of dry weather in the U.S. grain-belt threatening the early planted crop as it enters the pollination phase.
"There is some strength in grains and oilseeds today with the fact that we have forecasts of unfavourable weather in the U.S. which could hurt the early planted crops," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore.
Thai govt to start releasing record rice stocks
BANGKOK, June 11 (Reuters) - Unmilled rice stocks held by the Thai government have jumped to a record 15 million tonnes, Commerce Ministry data showed on Monday, and prices could be forced down if it starts releasing some of the grain into local and overseas markets, as planned.
A senior Commerce Ministry official said the grain in stock was equivalent to around 9 million tonnes of milled rice. In recent years, Thailand has exported between 8 million and 10 million tonnes a year.
Rising temperatures to stress U.S. corn, soybeans
CHICAGO, June 8 (Reuters) - Developing corn and soybean crops in the U.S. Midwest will be stressed by hot and dry weather forecast for the region this weekend, meteorologists said on Friday.
Temperatures in key growing areas were expected to reach into the low 90s degrees Fahrenheit, said Kyle Tapley, meteorologist for MDA EarthSat Weather. Some light rains could bring 0.5 to 1.0 inch of rain Sunday through Tuesday.
Inclement weather may take a bite off US corn yield
CHICAGO, June 11 (Reuters) - Earlier this year, U.S. farmers reveled in what was the warmest spring ever, sowing corn seeds on a near-record number of acres in record time.
Their haste may now be their undoing, however, as the crop enters a critical growth phase weeks earlier than normal, pollinating during a period of unusually dry weather that threatens to eat into its yield potential.
Thai Mills Seen Boosting Refined Sugar Output as Premium Climbs (Source: Bloomberg)
Millers in Thailand, the world’s second-largest exporter, are increasing production of refined sugar after the premium over the raw variety soared, according to the country’s biggest shipper. The refined premium climbed 62 percent in 2012, reaching the highest in almost a year, data compiled by Bloomberg show. Demand from the Middle East and North Africa, combined with the end of the crop in the European Union and a delay to harvesting in top producer Brazil, are limiting supplies of the refined or white sweetener, according to Naim Beydoun, a broker at Rolle, Switzerland-based Swiss Sugar Brokers. “Prices of white sugar are attractive, drawing some mills to buy raws to re-melt them into the white variety,” Piromsak Sasunee, chief executive officer at the Thai Sugar Trading Corp., said in an interview yesterday in Bangkok.
The refined price has also been bolstered by demand from Muslim nations before the fasting month of Ramadan, Piromsak said. Ramadan begins next month. White sugar was $143.27 a metric ton more expensive than raws yesterday, the most since July 1, according to the data.
US coffee roasters stick with less costly robusta
NEW YORK, June 11 (Reuters) - U.S. coffee roasters quietly pulled off a financial feat last year that went unnoticed by most customers: Adding a higher proportion of cheaper, lower-grade robusta to their grounds as the price of top-notch arabica beans surged.
As new data reveals the surprising extent of that substitution, which appears to have been far more widespread than experts had thought possible, the industry faces a vexing question: As the price premium for arabica beans returns to historically normal levels, will roasters switch back?
Sugar, coffee, cocoa on ICE rise
LONDON, June 11 (Reuters) - Raw sugar, coffee and cocoa futures on ICE firmed, supported by stronger shares and the euro after a bailout for Spain's banking sector eased some concern about its ability to survive the euro zone debt crisis.
“New York July sugar will retest its June 7 high of 20.43 cents per lb as rebound from the June 4 low of 19.46 cents will continue, according to Reuters market analyst Wang Tao.
Czarnikow keeps 2011/12 global sugar surplus f'cast at 7.7 mln T
BANGKOK, June 11 (Reuters) - Merchant Czarnikow expects a 2011/12 global sugar surplus at 7.7 million tonnes, unchanged from a prior estimate, Director Toby Cohen said on Monday.
"For 11/12 we will be keeping our forecast unchanged at 7.7 million tonnes," Cohen told Reuters on the sidelines of a Kingsman sugar conference.
Thailand aims to be sugar bowl of Asia
BANGKOK, June 11 (Reuters) - Thailand, the world's second-biggest sugar exporter, has revised up its forecast for 2012/13 sugar production to 10.4 million tonnes and aims to produce more every year in order to supply rising consumption in Asia, a top industry official said.
That new forecast is up 1 to 2 percent from a May estimate of 10.2 million to 10.3 million tonnes. A crop of that size would beat the current 2011/12 season's record of 10.2 million tonnes.
Kingsman boosts 2012/13 sugar surplus forecast
SINGAPORE, June 8 (Reuters) - A global sugar surplus was revised higher to 9.3 million tonnes in the 2012/13 crop year from a previous projection of 5.7 million because high prices earlier in the year had spurred planting, consultancy Kingsman SA said on Friday.
Sugar production in 2012/13 (October/September) was put at 179.9 million tonnes.
Brazil rain-blighted cane harvest set for dry week
BRASILIA, June 8 (Reuters) - Brazil's cane harvest will see dry weather for most of next week, forecaster Somar said on Friday, helping the progress of harvesting which has been blighted by wet weather since the outset and speeding loading of sugar at the ports.
"It should be a drier week with rains only from the end of next week when a new cold front comes in," said meteorologist Tatiane Martins at Sao Paulo-based Somar.
Algeria's Cevital targets Ivory Coast expansion
ABIDJAN, June 8 (Reuters) - Algerian food processing company Cevital plans to make investments in Ivory Coast in rice growing and cocoa processing as a first big step in a plan to expand abroad, its owner and president said.
Cevital, North Africa's biggest sugar refiner, is in negotiations with the West African nation's government to lease 300,000 hectares of farmland on which it initially intends to grow rice.
Oil Declines as al-Naimi Says OPEC May Need Higher Quota (Source: Bloomberg)
Oil dropped for a fourth day in New York after Saudi Arabian Oil Minister Ali al-Naimi said OPEC may need to increase its production quota. Futures slumped as much as 2 percent, after sliding 1.7 percent yesterday. The Organization of Petroleum Exporting Countries “maybe” needs a collective output ceiling higher than the current 30 million barrels a day, al-Naimi said in Vienna. U.S. gasoline stockpiles probably climbed to the highest level in five weeks even as crude supplies fell, according to a Bloomberg News survey before an Energy Department report. Oil for July delivery dropped as much as $1.63 to $81.07 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.41 at 9:30 a.m. Sydney time. The contract declined to $82.70 yesterday, the lowest close since Oct. 6. Prices are down 18 percent this year.
Brent oil for July settlement slipped $1.47, or 1.5 percent, to $98 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $15.30. Al-Naimi was responding to questions from reporters yesterday after the Gulf Oil Review quoted him as saying in a June 2 to June 3 interview that Saudi Arabia’s analysis suggests OPEC needs a higher production ceiling. The cartel, which supplies 40 percent of the world’s crude, meets in Vienna on June 14 to decide on output levels for the second half of the year. Its 12 members exceeded their quota by 1.9 million barrels a day in April, according to the International Energy Agency.
OPEC Set to Break 10-Year Habit of Supply Cuts During Routs (Source: Bloomberg)
For the first time in a decade, OPEC will maintain oil-output quotas while prices plunge as Europe’s debt crisis and China’s slowing growth curb fuel demand. The Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s crude, will keep its official daily production ceiling at 30 million barrels when its 12 members meet in Vienna on June 14, all 20 traders and analysts surveyed by Bloomberg News said. The group has agreed to cuts at every meeting in the past 10 years that coincided with a price drop of more than 10 percent in the preceding three months, data compiled by Bloomberg News show. OPEC will probably keep the limit unchanged, a Middle East member state delegate said today. Crude has fallen 22 percent in London since March 13 on mounting concern that Europe’s debt crisis will derail global growth and curb demand for energy. Saudi Arabia, the biggest OPEC member, is pumping the most in 33 years to bring prices below $100, a target set by its Oil Minister Ali al-Naimi.
The group exceeded its official output level by 6 percent in April, according to the International Energy Agency. “They’re not going to want to rock the boat,” said Mike Wittner, head of oil research for the Americas at Societe Generale SA in New York. “This is a very fragile time for the global economy so I don’t think they’re going to take any action. There’s no way that OPEC is going to announce any cut or even say that very strongly.”
OIL-Oil climbs above $100 on Spanish banks rescue, Iran
LONDON, June 11 (Reuters) - Brent crude oil rose above $100 after a weekend rescue package for Spanish banks calmed fears of an imminent euro zone collapse and a breakdown in nuclear talks between the UN and Iran renewed concerns over oil supplies.
"The aid for Spanish banks has revived risk appetite, for a while at least," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt. "This positive market sentiment could last some days although there is still event risk -- the Greek elections, Iran -- that could prevent big gains from here."
Taiwan halts Iran crude imports in April
SINGAPORE, June 11 (Reuters) - Taiwan did not import Iranian crude in April, government data showed on Monday, halting purchases from the country earlier than expected ahead of Western sanctions on oil exports from the Islamic Republic.
A company official at Taiwan's state-run refinery CPC Corp had said in March it would temporarily stop buying Iranian crude from July. Taiwan imported close to 3 million barrels of crude from Iran in March.
Saudi cuts oil output in May to 9.8 mln bpd
DUBAI, June 9 (Reuters) - Top oil exporter Saudi Arabia pumped 9.8 million barrels per day (bpd) of crude oil in May, cutting output by 300,000 bpd from the month before, an industry source said on Saturday.
The Saudi kingdom's oil production was 10.1 million bpd in April, its highest for more than 30 years, as it bid to meet growing demand and curb oil prices.
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