China still key for commodities despite Greek relief
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, June 18 (Reuters) - Commodities joined the general relief rally after Greeks voted narrowly to support pro-bailout parties, but any sustained gains will depend on risks abating over Chinese demand and Iranian crude supplies.
While it is undoubtedly positive for Europe and for risk assets that Greece is now far more likely to stay in the euro, it would be a big call to say that the weekend election does much to solve the continent's underlying problems.
DTN Closing Grain Comments 06/18 14:26 : New-Crop Corn Leads the Way (Source: CME)
The new-crop corn market surged higher Monday, wiping out all but a dime of last week's collapse on weather concerns. Wheat and beans followed, posting sharp gains of their own despite renewed strength in the U.S. dollar index.
All Grains Higher at Midday(Source: CME)
Grain trade is higher on less favorable weather, and less outside market fears.
By David Fiala
DTN Contributing Analyst
The U.S. stock market indices are mixed with the Dow index down 25 points. The interest rate products are higher. The dollar index is 37 higher. Energies are mixed with crude $0.80 lower. Livestock trade is mixed with hogs sharply higher. Precious metals are mixed with gold up 3.
General Comments
Corn
Corn trade is 17 to 20 higher across the board this morning. Outside market input is mixed as the pro-bailout parties in Greece secured a narrow victory, but the initial relief rally was blunted by a continued increase in Spanish borrowing costs. U.S. weather remains a supportive factor with generally warmer and drier weather being shown in the forecasts, with near-term heat stressing crops. The July contract will be watched closely today, as rumors pounded it on Friday regarding Brazilian imports, and ethanol plant closures, but so far it has shrugged them off. One north-central Nebraska plant has suspended operations for the moment. Basis remains strong in the interior and will limit breaks. Today's crop condition reports will be watched closely, with expectations of last week's rain to hold conditions in the 62%-to-67% range. Export inspections were nearly 25 million bushels, which is a little slow compared to the USDA projections but 8 million better than last week.
Soybeans
Soybean trade is 11 to 14 higher on the nearby trade, and 16 to 18 higher on the new crop contract. Meal is $4 to $6 higher, and oil is 20 to 30 higher. The July contract will need to move back above $13.85 and $14.00 to regain positive chart momentum, but the November contract is better supported at $13.18, and $12.99. The recent rains in the western growing areas may have brought more double-crop beans into the equation as dryness is eased for the moment. Exports were fairly active last week, and the trade will be watching to see if that can be sustained this week. Crop conditions are expected to be in a range of 58% to 62% this afternoon. Export inspections were 7.9 million bushels, down pretty good on the week, and closer to typical for this time of year.
Wheat
Wheat trade is 20 to 22 higher in Chicago, 21 to 24 higher in Kansas City and 15 to 18 higher in Minneapolis this morning. Harvest pressure should be waning over half of the winter wheat crop should be harvested by now. The Russian Ag Ministry has indicated that early yields are disappointing and production may be off by as much as 30%. Russian wheat prices have surged the past week, and they have been releasing intervention stocks at regular intervals. Chinese production has also been reduced in the past week. U.S. yields have been a mixed bag, but generally the worst case scenario after the hot and dry may has not been realized. Chicago wheat will need to sustain a move above $6.22 and then $6.40 to create much positive chart momentum. Spring wheat conditions should remain elevated at 75% good to excellent or better. Export inspections were 20 million bushels, which is a shade below pace.
David Fiala is a DTN contributing analyst and the President of FuturesOne and a registered Commodity Trading Adviser.
Pro Farmer: After the Bell Wheat Recap (Source: CME)
Chicago wheat ended 20 1/4 to 21 3/4 cents higher through the March 2013 contract, while deferred months saw gains in the teens. Kansas City wheat closed 20 1/2 to 22 1/2 cents higher. Minneapolis finished with double-digit gains. Futures trimmed losses slightly in after-hours trade. Wheat futures enjoyed spillover support from a weather-inspired rally in the corn market today.
Wheat Market Recap Report (Source: CME)
September Wheat finished up 21 3/4 at 648 1/2, 3 off the high and 19 up from the low. December Wheat closed up 21 1/4 at 672 1/2. This was 21 up from the low and 3 1/4 off the high. July wheat traded 20 1/4 cents higher today on spillover support from the corn market. WN posted a new 4 session high and recovered all of Friday's losses. Short-covering from fund traders was noted as strength in the other grains and "less" macroeconomic fears has helped support the buying. Weekly export inspections came in at just 20.62 million bushels which was below trade expectations. Support in wheat could resurface if international production and weather issues do not subside soon. September Oats closed up 5 1/4 at 299. This was 5 up from the low and 8 off the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures settled 20 to 28 cents higher, which was a high-range close but slightly off session highs. Futures mildly extended gains in most contracts in after-hours trade. Traders built weather premium into the market today as weekend rains were generally disappointing, especially in the driest areas of the Corn Belt. In addition to the disappointing weekend rain event, conditions are forecast to be hot and dry this week.
Corn Market Recap for 6/18/2012 (Source: CME)
September Corn finished up 28 3/4 at 538 1/4, 3 1/2 off the high and 26 up from the low. December Corn closed up 29 1/2 at 535 1/2. This was 25 1/2 up from the low and 3 3/4 off the high. December corn traded 28 1/2 cents higher towards the end of today's session. Traders continue to be concerned with the above average temperatures and below normal precipitation in the eastern Corn Belt. Furthermore, dry conditions in the North China Plains are offering support. Traders see crop conditions slipping 2% for the crop rated good to excellent for this afternoon's update. Weekly export inspections came in at 24.7 million bushels which was above trade estimates of 16-21 million bushels. CN lost to CZ as bull spreaders unwound positions ahead of this afternoon's crop progress report. September Rice finished up 0.145 at 14.295, equal to the high and equal to the low.
U.S. corn firms as pro-bailout party wins Greek polls
SYDNEY, June 18 (Reuters) - U.S. corn rose following the election of a pro-bailout government in Greece, but off early highs as optimism waned slightly that the euro zone would avoid a fresh crisis.
"The macro economic picture has been improved by the Greek elections and that has boosted sentiment," Ker Chung Yang, investment analyst said. "However, while the pro-bailout party won, and this may bring Greece back to the negotiations table with the IMF and EU, we have to bear in mind that situations with Italy and Spain remain unresolved."
Hot weather hits Ukraine barley, good for maize
KIEV, June 18 (Reuters) - Hot weather across most of leading Ukrainian grain-producing areas may hurt output of spring barley but be favourable for maize, a senior weather forecaster said on Monday.
Mykola Kulbida, the head of Ukraine's state weather forecasting centre, also said Ukraine's western regions were suffering from excessive rain, resulting in waterlogged soil and sharper growth of weeds.
Russia's southern growing regions facing more rain
MOSCOW, June 18 (Reuters) - Rain fell this weekend in key southern agricultural regions of Russia, with further rainfall expected in the coming days after a dry spell in some regions, the state weather forecaster said on Monday.
Krasnodar, Rostov, Volgograd and Stavropol regions saw heavy rains this weekend, the Federal Hydro meteorological Centre said on its website in a weather forecast for June 18.
Turkey's wheat production seen at 19.5 mln tonnes in 2012
ISTANBUL, June 18 (Reuters) - Turkey's wheat production is expected to be around 19.5 million tonnes this year, and the state purchase price for Anatolian hard red wheat was set at 780 lira per tonne ($430) including incentives, Agriculture Minister Mehdi Eker told reporters on Monday.
Eker said durum wheat purchase price was set at 820 lira ($450) per tonne including a 115 lira incentive, and he expected barley production to be at least 6.5 million tonnes in 2012.
Argentina says 25 pct of 2012/13 wheat area planted
BUENOS AIRES, June 15 (Reuters) - Farmers in grains powerhouse Argentina have planted a quarter of the area expected to be sown with wheat this season, helped by favorable weather and soil moisture conditions, the Agriculture Ministry said on Friday.
The ministry, as well as the local office of the U.S. Department of Agriculture and the Buenos Aires Grains Exchange, expects 4.0 million hectares (9.9 million acres) to be planted with 2012/13 wheat, down from 4.6 million hectares in the 2011/12 season.
Informa raises U.S. corn, soy plantings estimates
CHICAGO, June 15 (Reuters) - Private analytical firm Informa Economics raised its estimate of U.S. 2012 corn plantings to 96.759 million acres (39.2 million hectares), from its previous forecast of 96.124 million, trade sources said Friday.
Informa's latest figure is above the U.S. Department of Agriculture's March 30 corn plantings forecast of 95.9 million acres, which, if confirmed, would represent the most U.S. acres seeded to corn since 1937.
US corn entering pollination as weather threatens
CHICAGO, June 15 (Reuters) - Corn plants in the southern and central areas of the United States are beginning to pollinate, or produce grain, a time when cool, wet weather is needed for the crop, but forecasts are calling for high temperatures and little widespread rain.
Corn was planted at a record fast and early pace this season, which moved the critical pollination stage ahead two to three weeks in nearly all of the Midwest.
Coffee steady, sugar firms, eyes on Greece
LONDON, June 18 (Reuters) - Arabica coffee futures on ICE, sugar and cocoa were steady to slightly higher in early trading, supported by stronger financial markets on relief that pro-bailout parties had won a slim majority in Greek elections.
“New York July coffee KCN2 will keep falling to $1.4630 per lb, driven by a wave 3-3, according to Reuters market analyst Wang Tao.”
Nicaragua coffee exports fall 3.3 percent in May
MANAGUA, June 16 (Reuters) - Coffee exports from Nicaragua dropped 3.3 percent in May compared to the same month a year earlier, reaching 196,366 60-kg bags in the month.
Nicaragua's export association CETREX said coffee exports through the first eight months of the 2011/2012 harvesting season totaled 952,708 bags, down 19.8 percent from the same eight-month period during the 2010/2011 harvest.
Zambia Sugar workers end strike with pay deal
LUSAKA, June 16 (Reuters) - A strike over wages at Zambia Sugar , a unit of South Africa's Illovo Sugar , has ended after the company awarded permanent workers a 15 percent pay rise, the sugar producer and a union said on Saturday.
Workers at the company's Nakambala Sugar Estate south of the capital Lusaka went on strike on Tuesday demanding a 35 percent pay rise.
Vietnam to miss its 2015 cocoa development target
HANOI, June 16 (Reuters) - Vietnam will miss its target to have 40,000 hectares of cocoa by 2015 as farmers are reluctant to switch to the new cash crop and the government has not devised a formal development for the commodity, a state-run newspaper reported on Saturday.
Cocoa farmers in southern provinces have switched to growing rubber, pepper or fruits for higher profit, the Vietnam Economic Times newspaper quoted Nguyen Van Hoa, an Agriculture Ministry deputy manager as telling an industry conference on Friday.
Kimberly-Clark Plans to Cut Use of Forest Wood Pulp by Half (Source: Bloomberg)
Kimberly-Clark Corp. (KMB), maker of Kleenex tissues and Huggies diapers, plans to cut in half, by 2025, the amount of wood fiber newly taken from forests for use in the company’s products. Kimberly-Clark said it used almost 750,000 metric tons (827,000 short tons) of primary wood fiber sourced from natural forests last year. Its initiative will save the equivalent of all the fiber needed to make more than 3.5 billion rolls of toilet paper, the company said. The company will use or test alternative sources of fiber, such as bamboo and wheat straw, as part of its sustainability efforts, Dallas-based Kimberly-Clark said today in a statement disclosing the commitment. “In the long run, we hope that one day all our fiber needs will be met from sources that collectively have maximum land use efficiencies while minimizing impact on people and our planet,” Suhas Apte, the company’s vice president for global sustainability, said in the statement.
Rubber Glut Extends Bear Market Cutting Bridgestone Costs (Source: Bloomberg)
Rubber shortages are about to turn into a flood as China, the biggest consumer, grows at the slowest pace in three years, driving prices paid by Bridgestone Corp. (5108) and other tiremakers to the lowest since 2009. The surplus will reach 402,000 metric tons in the second half, from a 134,000-ton shortage in the first six months, said Chris Pardey, a former commodities trader at Cargill Inc. and Noble Group Ltd. Futures, which entered a bear market last month, will drop a further 21 percent to 200 yen a kilogram ($2,529 a metric ton) in Tokyo by the end of the year, the lowest since October 2009, according to the median of 15 analyst and trader estimates compiled by Bloomberg.
This quarter’s 22 percent decline is the worst since the global financial crisis in 2008 and exceeds a 16 percent retreat in commodities. The slump is reducing income for growers from Thailand to Ivory Coast to Indonesia and costs for Bridgestone, the world’s largest tiremaker. Shares of the Tokyo-based company will advance 33 percent in the next 12 months, the average of 11 analyst estimates compiled by Bloomberg shows. “We do remain bearish,” said Singapore-based Pardey, who is now the chief executive officer of RCMA Commodities Asia Group and predicted in January that prices would decline because of a weakening global economy. “There is potential for a significant increase in stockpiles in the second half as production picks up quickly and demand slows down.”
Euro Coal-Prices stable, FOBs under pressure
LONDON, June 15 (Reuters) - South African FOB prices were 30-75 cents a tonne higher on Friday afternoon, a minimal move upwards, but all FOB coal prices remained under pressure from oversupply and weak spot demand.
"Prices moved very slightly higher in early trading, with power, gas and a fall in the euro but overall it's still looking weak," one European trader said.
OIL-Oil turns negative as optimism fades
LONDON, June 18 (Reuters) - Oil futures fell , erasing early gains after a victory for pro-bailout parties in Greece failed to ease concerns about the euro zone, and analysts said oversupplied crude markets would cope with any loss of Iranian oil.
"The economic outlook is upsetting people more than security issues around Iran, and they realise that nothing really has come out of Greece, except that the crunch may have been delayed for a while," said Roy Jordan, an oil analyst at Facts Global Energy.
Oil Trades Near Three-Day Low as Spain Loans Fuel Europe Concern (Source: Bloomberg)
Oil traded near the lowest close in three days in New York as an increase in bad Spanish loans fueled speculation that Europe’s spreading debt crisis threatens global economic growth. Futures were little changed after dropping for the first time in three days yesterday. Spain, which has asked euro-region governments for as much as 100 billion euros to help shore up its banks, reported that bad loans jumped in April to 8.72 percent of total lending, the highest since 1994. A government report tomorrow may show U.S. crude stockpiles fell while fuel supplies increased, a Bloomberg News survey shows. Oil for July delivery, which expires tomorrow, dropped 14 cents to $83.13 a barrel in electronic trading on the New York Mercantile Exchange at 9:21 p.m. Sydney time. It slipped 0.9 percent yesterday to $83.27, the lowest close since June 13. The more-actively traded August contract lost 16 cents to $83.44. Front-month prices are down 16 percent this year.
Brent oil for August settlement decreased $1.56, or 1.6 percent, to $96.05 a barrel on the London-based ICE Futures Europe exchange yesterday. The front-month price for the European benchmark contract closed at a premium to West Texas Intermediate of $12.45. U.S. crude supplies probably dropped 1.3 million barrels last week, according to the median estimate of 7 analysts in a Bloomberg News survey before a report from the Energy Department. Gasoline stockpiles likely rose 1 million barrels as distillates increased the same amount, the survey shows.
Japan approves renewable subsidies in shift from nuclear power
TOKYO, June 18 (Reuters) - Japan approved on Monday incentives for renewable energy that could unleash billions of dollars in clean-energy investment and help the world's third-biggest economy shift away from a reliance on nuclear power after the Fukushima disaster.
Industry Minister Yukio Edano approved the introduction of feed-in tariffs (FIT), which means higher rates will be paid for renewable energy. The move could expand revenue from renewable generation and related equipment to more than $30 billion by 2016, brokerage CLSA estimates.
Saudi crude exports fell by 121,000 bpd in Apr-JODI
DUBAI, June 18 (Reuters) - Saudi crude exports fell to 7.583 million barrels a day (bpd) in April, down by 121,000 bpd from March, despite production rising to 10.102 million, according to the latest official data published by the Joint Data Initiative (JODI).
Saudi Arabia pumped 179,000 bpd more in April than in March but exports fell due to an increase in internal demand for oil and stock building, JODI data shows.
Oil market shrugs at imminent Iran tanker insurance ban
June 18 (Reuters) - In less than two weeks, Iran's biggest oil buyers will lose access to the London-based insurance market that protects 95 percent of the world's tanker shipments against oil spills or catastrophic collisions.
Barring an unexpected last-minute deal to relax European Union sanctions, Europe's Protection and Indemnity (P&I) clubs will be unable to insure vessels carrying Iranian crude from July 1, an unforeseen but ultimately critical side effect of EU sanctions to punish Iran for its nuclear program.
Iron Ore-Spot may struggle to extend rally on demand view
SINGAPORE, June 18 (Reuters) - Spot iron ore prices steadied and may struggle this week to sustain recent gains with sluggish steel demand in top consumer China likely to limit appetite for the raw material.
"We could see small gains in physical iron ore prices due to some limited restocking taking place," said a Hong Kong-based iron ore trader.
Platinum: All Signs Point to a Major Trend Reversal! : Now what’s your strategy? (Source: CME)
The Inverse Head & Shoulders forms at the end of a bearish trend and falls under the category of a reversal pattern. The reversal is further reinforced when a bullish divergence is identified on the daily RSI before breaking the neckline of the pattern. This bullish divergence occurs when the price continues to reach new lows, while each corresponding low on the RSI is higher than the previous one but is still below the oversold area (under 30).
Baltic index rises as smaller ships support
June 15 (Reuters) - The Baltic Exchange's main sea freight index, which is used to track rates for ships carrying dry commodities, rose on Friday for a sixth straight day spurred by increased activity in smaller ships.
"We note that there is a slightly more positive view on the smaller segments still," analyst Erik Nikolai Stavseth of Arctic Securities said.
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