Commodities Falls Most in Week on Europe Concerns, Jobless Rate (Source: Bloomberg)
Commodities fell the most in a week on skepticism that European Union leaders will make progress on the debt crisis and after a report showed U.S. jobless claims hovered near the highest level of the year. The S&P GSCI Index of 24 raw materials dropped, led by declines in energy and metals, as 27 European government chiefs met in a two-day summit to focus on immediate financial help for Spain and Italy. The U.S. Labor Department said applications for unemployment benefits were 386,000 in the week ended June 23. “We’re not getting a lot of good news with the economy,” said Dan Flynn, a trader at Price Futures Group in Chicago. The S&P GSCI dropped 1.7 percent to 567.47 after earlier touching 565.5. Eighteen of the commodities fell, led by silver, crude oil and natural gas. The euro fell as much as 0.5 percent to $1.2407, the lowest level since May 31. It was down 0.2 percent to $1.2445 at 4:01 p.m. in New York.
Crude oil for August delivery fell $2.52, or 3.1 percent, to settle at $77.69 a barrel on the New York Mercantile Exchange, the lowest price since Oct. 4. Brent for August settlement decreased $2.14, or 2.3 percent, to $91.36 a barrel on the London-based ICE Futures Europe exchange.
Monsoon Worst Since 2009 Threatening Sugar, Rice Crops (Source: Bloomberg)
The worst start to the monsoon season in India in three years is threatening crops from rice to sugar cane, stoking concern that the nation may limit exports to preserve supplies. Soybean futures in India climbed to the highest since 2003 and corn rose to a five-month high. Rainfall from June to September, which represents 70 percent of annual amount, may be below normal with the main cane-growing regions getting less rain than required, said Michael Ferrari, a commodity director and senior scientist at Falls Church, Virginia-based Computer Sciences Corp. (CSC) Rain is 23 percent below average since the season started on June 1, according to the India Meteorological Department.
Dry weather from the U.S. to Australia has parched fields, pushing up corn and wheat prices by as much as 17 percent this month in Chicago, curbing a decline in global food costs. El Nino weather conditions, which can parch Asia and bring cooler weather to the U.S, may develop some time during July to September, the World Meteorological Organization said June 26. India extended a ban on exports of sugar, rice and wheat in 2009, following the weakest monsoon since 1972.
DTN Closing Grain Comments 06/28 14:45 : All Bets Are In, USDA Set to Show Its Hole Card
Grains couldn't figure out which direction to trade, with traders placing their final bets before the dealer, USDA, shows its cards Friday morning with the release of the quarterly stocks and acreage update reports.
Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures were choppy through the day, but the market softened with corn into the close. Chicago wheat ended around 3 to 6 cents lower and Kansas City saw slightly heavier losses. Minneapolis ended narrowly mixed with a downside bias; the July contract was an outlier as it closed 23 1/2 cents higher. Action in the wheat market mirrored that of corn today.
Wheat Market Recap Report (Source: CME)
September Wheat finished down 5 1/4 at 746, 11 1/2 off the high and 3 3/4 up from the low. December Wheat closed down 5 1/2 at 766 3/4. This was 4 up from the low and 11 1/2 off the high. September wheat closed slightly lower with an inside trading session. The market bounced off early morning lows due to short covering, caused by a rebound in the corn market. Minneapolis spring wheat was the leader today as traders widened out the premium between Kansas City and Minneapolis, possibly on the potential for much better protein potential in the spring wheat crop. Outside markets turned negative midday after President Obama's healthcare package was upheld in the Supreme Court. U.S. stocks and energies are sharply lower while the US Dollar turned higher. Afternoon weather maps continue to show rainfall in the 1 to 3 day forecast for Iowa, northern Illinois, northern Indiana, and Ohio. Changes vs. the morning maps include showers reaching farther south with heavier rainfall to the north. Trader reaction was neutral to the forecast as the market positions themselves ahead of the Grain Stocks and Seeding report tomorrow morning. Heading into the report, traders are expecting all wheat planted acreage near 56.6 million acres. This would be slightly higher vs. the March forecast of 55.90 million acres. Wheat markets saw underlying support as traders continue to believe further revisions will need to be made to the Black Sea wheat production numbers on the next USDA report in July. The weekly export sales report was viewed as neutral to negative with 324,500 metric tonnes for the current marketing year. As of June 21st, cumulative wheat sales stand at 21.5% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 21.8%. Sales of 499,000 metric tonnes are needed each week to reach the USDA forecast. September Oats closed down 1 1/2 at 336. This was 6 1/2 up from the low and 8 3/4 off the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures spent much of the day in positive territory, but attention shifted to minimizing risk heading into the close; the market ended fractionally to pennies lower in all but the July contract which was 2 1/2 cents higher. Futures spent much of the day enjoying moderate gains thanks to ongoing worries about heat and dryness across the Corn Belt, but attention shifted to minimizing risk ahead of tomorrow's USDA's reports, which have historically delivered some surprises.
Corn Market Recap for 6/28/2012 (Source: CME)
September Corn finished down 2 1/2 at 625, 17 3/4 off the high and 4 3/4 up from the low. December Corn closed down 3/4 at 632 1/4. This was 6 3/4 up from the low and 16 1/2 off the high. The corn market was trading higher midday as traders continue to be concerned with the above normal temperatures during corn pollination. The December contract gained 12 cents my mid-session but gains slowly eroded as traders took profits ahead of tomorrow's Grain Stocks and Seeding Report. The trade expects a slight increase in corn acreage, however traders will key off the stocks estimate. The trade expects June 1 stocks of near 3.17 billion bushels with range of estimates as wide as 670 million bushels. Afternoon weather maps continue to show rainfall in the 1 to 3 day forecast for Iowa, northern Illinois, northern Indiana, and Ohio. Changes vs. the morning maps include showers reaching farther south with heavier rainfall to the north. Trader reaction was neutral to the forecast. Outside markets turned negative midday after President Obama's healthcare package was upheld in the Supreme Court. U.S. stocks and energies are sharply lower while the US Dollar turned higher. The outside market pressure and pre-report jitters likely triggered profit taking after this week's gains. Weekly export sales for the week ending June 21st were considered negative. Net weekly export sales for corn, came in at just 192,900 metric tonnes for the current marketing year and 99,900 for the next marketing year for a total of 292,800. Cumulative corn sales stand at 92.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 94.7%. Old crop sales of 291,000 tonnes are needed each week to reach the USDA forecast. September Rice finished down 0.105 at 14.905, 0.115 off the high and 0.005 up from the low.
The Hightower Report: Corn and Soybean Strategy Update (Source: CME)
The weather outlook is still threatening, and many traders are holding long positions going into the key USDA Acreage and Quarterly Grain Stocks reports that will be released on Friday, June 29th. For end users who are not already covered, a bearish surprise might present an opportunity to sell puts and/or buy calls for coverage.
Corn up for 5th day as dryness curbs yields, soy rises
SINGAPORE, June 28 (Reuters) - Chicago new-crop corn rose for a fifth consecutive session to around a nine-month top, while soybeans edged higher as hot and dry weather curbed yields in the U.S. Midwest, threatening to squeeze global supplies.
"I think there is likely to be reduction in yield numbers which will ultimately lead to overall reduction in output," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore.
US drought brings back memories of 1988 crop losses
CHICAGO, June 28 (Reuters) - Just one year ago Jeff Scates saw the worst flooding on his southern Illinois farmland since 1937. Today, Scates is watching his corn fields shrivel from the driest season in 24 years.
"We've gone from one extreme to the other, from being flooded on three-quarters of the farm now to a drought," said Scates, 42, who with his family members farms 15,000 acres of corn, soybeans and other crops along the Kentucky-Indiana border where the Ohio and Wabash Rivers meet.
Stunted stalks, shriveled silks portend US corn calamity
CHICAGO, June 28 (Reuters) - Under threat of the worst drought in a quarter-century, corn crops from Indiana to Illinois may have a window of just three days for windblown pollen to reach shriveled cobs next month, crippling grain-making potential and fuelling the biggest price rally in over two years.
During the critical pollination phase of its life, which determines how many kernels will appear on each cob, this summer's parched crop must make grain with a fifth less soil moisture than average and only a third as much rain as usual for June, robbing it of the fuel needed for photosynthesis.
Scorching heat forecast for struggling US corn, soy
CHICAGO, June 27 (Reuters) - A heat wave, with highs that could top 100 degrees Fahrenheit, is forecast for the southern U.S. Midwest this week and next week, which should put more stress on corn and soybean crops, agricultural meteorologists predicted Wednesday.
"There's not much change in the midday forecast. Still above to much-above normal temperatures for the Midwest for next week," said Anthony Chipriano, meteorologist for MDA EarthSat Weather.
India's monsoon rains 18 pct below average in the week to June 27
NEW DELHI, June 28 (Reuters) - India's crucial monsoon rains were 18 percent below average in the week to June 27, the weather office said on its website on Thursday, reflecting a lull phase over oilseed-growing areas of central India.
The monsoon rains are important for farm output and economic growth as about 55 percent of the south Asian nation's arable land is rain-fed, and the farm sector accounts for about 15 percent of a nearly $2-trillion economy, Asia's third-biggest.
ICE sugar little changed, nearby premium widens
LONDON, June 28 (Reuters) - Raw sugar futures on ICE were little changed in early trade with the market's focus on a widening premium for the July contract ahead of its expiry on Friday. Raw sugar futures on ICE were little changed with the nearby premium edging up ahead of Friday's expiry of the July contract.
Australia sugar exports face delays due to rains
SYDNEY, June 28 (Reuters) - Australia's sugar exports may be delayed after rain pushes back cane harvesting in Queensland state and disrupts crushing operations in about half the 24 sugar mills in the world's third-largest raw sugar exporter.
Delays in exports could help boost sugar prices, which have surged in recent days on concern about near-term supplies in top grower Brazil and on talk of Chinese buying.
Rain curses early stages of Brazil coffee harvest
BATATAIS, Brazil, June 27 (Reuters) - Unseasonably wet weather has spoiled much of the first arabica coffee being harvested in Brazil and put the futures market on edge, but dryness now returning to the coffee belt has averted damage to the bulk of the crop, which has yet to be picked.
Arabica futures have risen some 12 percent in the past week and a half to a one-month high with persistent rain irreversibly damaging harvested beans, denting the potential supply of high-quality produce from the world's top supplier this year.
Datagro sees 2012/13 c/s Brazil cane output 508.7 mln t
LONDON, June 28 (Reuters) - Sugarcane output in the centre-south of Brazil in 2012/13 is projected to stand at 508.70 million tonnes, up from 493.3 million tonnes in 2011/12, Brazilian sugar and ethanol consultancy Datagro said on Thursday.
Sao Paulo-based Datagro forecast production of sugar in centre-south Brazil at 33.9 million tonnes in 2012/13
Colombia coffee growers see June output up 17 pct
BOGOTA, June 27 (Reuters) - Colombia's coffee production in June will likely rise to 550,000 60-kg bags, up almost 17 percent from the same month last year, according to the coffee growers federation.
Colombia, the world's top producer of high quality arabica beans, has missed its yearly coffee production goals for three years in a row, due to torrential rains brought about by the La Nina weather phenomena.
Coffee growing countries drive up robusta demand
GENEVA, June 27 (Reuters) - Coffee growing countries are driving up global demand for cheaper robusta beans as their domestic consumption rises, analysts said on Wednesday.
The world's top arabica coffee producer Brazil, along with the top two robusta producers Vietnam and Indonesia, have seen strong consumption growth for robusta - mainly used for instant coffee.
Vietnam 2012/13 coffee crop seen at a record-FO Licht
GENEVA, June 27 (Reuters) - Vietnam is forecast to produce a record 2012/13 crop of 23.7 million 60-kg bags, analyst F.O. Licht said on Wednesday.
Speaking on the sidelines of the World Coffee Outlook conference in Geneva, analyst Stefan Uhlenbrock said that top robusta grower Vietnam was expected to raise its output 1 million bags from its 2011/12 production of 22.7 million bags.
Uganda sugar producer says to double output by 2015
KAMPALA, June 27 (Reuters) - Uganda's third largest sugar producer, Sugar Corporation of Uganda Ltd. (SCOUL), aims to double its output by 2015 after securing a $23 million loan from a French financing firm, it said on Wednesday.
East Africa's third largest economy forecasts its production of raw sugar will soar by 26 percent this year to 327,075 tonnes from 2011's 259,413 tonnes, lifted by favourable weather and higher cane supplies.
Biggest Coal Takeover No Easy Flip for Tinkler: Real M&A (Source: Bloomberg)
An electrician-turned-dealmaker is poised to make the biggest bet ever on coal mining in Australia just as prices of the fuel tumble. Nathan Tinkler has held talks with banks to fund a bid for Sydney-based Whitehaven (WHC) Coal Ltd., according to people familiar with the matter, after his initial approach was rejected on June 13. The 36-year-old multimillionaire is seeking to acquire the 79 percent he doesn’t yet own of a company already trading at more than 38 times estimated earnings, making Whitehaven the most expensive coal mining company globally with a market value of more than $1 billion, data compiled by Bloomberg show.
Tinkler may now need to pay a 35 percent premium, valuing Whitehaven at A$5.6 billion ($5.6 billion), Macquarie Group Ltd. said, in the largest acquisition of an Australian coal company on record, the data show. While he would be buying a company that is targeting a fivefold increase in coal production by 2016, prices for the commodity are mired in their worst slump since the financial crisis. Tinkler may need to weather four more years of a bear market as the start of mining projects in Australia and exports from Indonesia and Colombia further depress prices for coal, Standard Chartered Plc. said. “To do a deal like this, you have to be a lot more bullish on coal prices than the market is right now,” David Cotterell, a Sydney-based analyst at Nomura Holdings Inc., said in a phone interview. “Unless the market’s wrong, you could be waiting a long time to get your money back.”
U.S. Weather Promises Energy Boost as Temperatures Rise (Source: Bloomberg)
Chicago may reach 99 degrees Fahrenheit (37 Celsius) today and New York City 90 as a heat wave that set or tied 196 daily temperature records yesterday moves east, promising to raise energy demand. Temperatures broke 100 from North Dakota to Texas yesterday as 138 new daily highs and 58 warmest lows were set or tied across the Great Plains, according to the National Climatic Data Center in Asheville, North Carolina. Yesterday’s highest temperature was 114 in Benkelman, Nebraska. “A very hot pattern continues over many areas of North America over the next two weeks,” said Matt Rogers, president of Commodity Weather Group LLC in Bethesda, Maryland. Ninety to 100-degree temperatures in the large cities and suburbs of the U.S. East Coast will spike energy demand, raising prices in spot electricity markets. The forecasts helped boost natural gas futures to a five-month high yesterday.
Energy demand may rise by 60 percent from Chicago to the mid-Atlantic states through July 5, said David Salmon, owner of Weather Derivatives in Belton, Missouri. It may be 30 percent more in New York, Boston and Philadelphia, he said.
Iran's top Asian oil buyers cut imports 18 pct
TOKYO, June 28 (Reuters) - Asia's top buyers of Iranian oil cut imports by more than a quarter of a million barrels per day in the first five months of the year as they prepared for U.S. sanctions that take effect on Thursday and EU curbs that bite from Sunday.
Most of Iran's exports flow to Asia and Tehran acknowledged for the first time on Wednesday that its oil exports had fallen sharply, down as much as 30 percent from normal volumes of 2.2 million barrels daily.
Oil Rises From Nine-Month Low on European Summit, Iran (Source: Bloomberg)
Oil rebounded from the lowest close in almost nine months amid European Union talks on a plan to stem the region’s debt crisis and speculation that crude supplies will tighten as an embargo on Iran starts. Futures rose as much as 1.2 percent in New York, trimming the biggest quarterly decline since the final three months of 2008. Leaders have agreed on a 120 billion euro ($149 billion) plan to boost the economy, EU President Herman Van Rompuy said yesterday during a summit in Brussels. Oil pared gains after French President Francois Hollande said the pact is “not enough.” Prices may advance next week as the EU imposes new sanctions on Iranian crude, a Bloomberg survey showed. Oil for August delivery increased as much as 89 cents to $78.58 a barrel in electronic trading on the New York Mercantile Exchange, and was at $78.40 at 9:42 a.m. Sydney time. The contract yesterday plunged $2.52, or 3.1 percent, to $77.69, the lowest close since Oct. 4.
Prices are down 21 percent this year and have dropped 24 percent this quarter. Brent oil for August settlement slid $2.14, or 2.3 percent, to $91.36 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark’s premium to West Texas Intermediate closed at $13.67.
Oil- Brent below $93 as EU worries outweigh Norway strike
LONDON, June 28 (Reuters) - Brent crude oil slipped below $93 per barrel as worries a deepening euro zone crisis would curb conomic growth and energy demand outweighed a cut in Norwegian oil output.
"The Norwegian strike is lending some support, at least at the moment, but market sentiment is very negative," said Carsten Fritsch, ommodities analyst at Commerzbank in Frankfurt.
Petronas Agrees to Buy Canada’s Progress Energy (Source: Bloomberg)
Petroliam Nasional Bhd, Malaysia’s state-owned oil and natural-gas company, agreed to buy Progress Energy Resources Corp. (PRQ) for C$4.8 billion ($4.6 billion), in its biggest deal as it moves to export Canadian gas to Asia. Petronas, as the Kuala Lumpur-based company is known, offered C$20.45-a-share for Progress Energy, 77 percent more than its close before the deal. Including convertible debentures, the deal is valued at about C$5.5 billion, Calgary- based Progress Energy said in a statement yesterday. Buying the company gives Petronas Chief Executive Officer Shamsul Azhar Abbas ownership of the largest holder in the Montney shale-gas area of British Columbia and full control of the three Progress Energy fields it bought a stake in last year as it explores development of a liquefied natural gas export terminal. Asian buyers have been lured to North America by gas prices that are about 88 percent cheaper.
“The proposed transaction will combine Petronas’s significant global expertise and leadership in developing LNG infrastructure with Progress’s extensive experience in unconventional resource development,” Datuk Anuar Ahmad, executive vice president of Petronas’s gas and power business, said in the statement.
Mongolian Mining Bets China Will Double Coal Imports (Source: Bloomberg)
Mongolia Mining Corp. is betting there’s enough demand from China to support the construction of an $800 million railway that will double export capacity to the nation that counts Mongolia as its biggest coal supplier. Expanding transportation links between the adjacent countries “will improve the position of Mongolia as the leading coking coal supplier to China,” Battsengel Gotov, chief executive officer of MMC, as the company is known, told reporters in the Mongolian capital of Ulan Bator. Mongolia, the world’s fastest growing economy, overtook Australia as China’s biggest coking coal supplier last year, exporting 20 million metric tons of the raw material used to make steel. MMC is building a 250 kilometer (155 mile) rail to add 30 million tons of export capacity direct to China. “There’s still room for everybody in Mongolia” to mine and sell commodities, Gotov said from the company’s head office.
MMC shares have fallen 28 percent this year in Hong Kong as coal prices declined. Chinese demand has been curbed by slower global growth and coking coal prices have fallen as much as 15 percent in the first half from the previous six months, Gotov said.
Gold Traders Extend Bullish Streak as Debt Crisis Deepens (Source: Bloomberg)
Gold traders are bullish for a sixth week on speculation that Europe’s debt crisis will boost demand from investors seeking to protect their wealth and drive prices higher after the biggest quarterly slump in eight years. Sixteen analysts surveyed by Bloomberg said they expect a rally next week and 10 were bearish. Another five were neutral. Investors added about $1.9 billion to holdings in gold-backed exchange-traded products this month, the most since November, according to data compiled by Bloomberg. Hedge funds and other speculators have increased bets on a rally for four consecutive weeks, U.S. Commodity Futures Trading Commission data show.
Spain formally asked for a bailout for its banks on June 25 and Cyprus that day became the fifth member of the 17-nation euro zone to ask for outside help. European leaders are scheduled to complete a two-day summit in Brussels today. Gold fell to within 1 percentage point of a bear market in May as investors favored the dollar and some sold bullion to cover losses in stock markets as $7 trillion was wiped off the value of global equities in about two months. “While demand has been weaker for bullion in recent months, it has picked up in the last month,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores everything from quarter-ounce British Sovereigns to 400-ounce bars. “A resolution to the crisis is not going to be seen in the short term. A lot more speculators could pile back into the market.”
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