Bulls Lift Wagers by Most in Two Years After Rally: Commodities (Source: Bloomberg)
Speculators increased bullish commodity bets by the most in two years as prices rebounded from a bear market, boosted by a crop-damaging drought in the U.S. and moves by China and Europe to spur economic growth. Money managers raised their net-long positions across 18 U.S. futures and options by 33 percent to 963,447 contracts in the week ended July 3, Commodity Futures Trading Commission data show. While the Standard & Poor’s GSCI Index of 24 raw materials fell 0.3 percent since then, the measure has rallied 10 percent since reaching a bear market on June 21. Gains were led by corn, which climbed 33 percent, and wheat, which surged 22 percent.
The worst Midwest drought since the 1980s is wilting the U.S. corn crop, the world’s biggest, prompting Goldman Sachs Group Inc. to cut its forecast for yields. European Central Bank President Mario Draghi yesterday signaled policy makers may be open to another interest-rate cut after lowering the benchmark rate to a record last week. Chinese officials will intensify their response to an economic slowdown, Premier Wen Jiabao said, the official Xinhua News Agency reported July 8. “We’re still locked in a risk on, risk off battle,” said Dan Denbow, a fund manager at the $1.8 billion USAA Precious Metals and Minerals Fund (USAGX) in San Antonio. “It’s back and forth until there’s clarity on where the economy goes.”
DTN Closing Grain Comments 07/09 14:44 : Weather Remains Dry, Markets Remain Hot (Source: CME)
One of the sillier lines of comments following last Friday's lower day was that pressure came from forecasts of "cooler" temperatures across much of the Midwest this week. The reality is that rain isn't expected to fall anytime soon, and that recharged market bulls on Monday.
Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures posted gains in the teens to low 20s at all three exchanges. That was near the middle of today's trading range. Wheat futures were boosted by strong gains in the corn and soybean markets today. With traders actively building weather premium into those markets, there is a reason for wheat to follow.
Wheat Market Recap Report (Source: CME)
September Wheat finished up 22 at 828 1/4, 16 1/2 off the high and 13 1/4 up from the low. December Wheat closed up 22 at 843 3/4. This was 13 3/4 up from the low and 15 off the high. Chicago wheat traded sharply higher today, taking out last Thursday's highs at 8.40 3/4 before settling into the mid-point of today's range. The strength in the wheat market stemmed from a sharply higher corn market as the trade continues to be concerned over the drought conditions in the Corn Belt and the effect on the new crop corn yield. Weather maps are showing a break from the record heat this week, but mostly dry conditions. This brought on a new round of buying in corn and wheat followed suit. Weekly export inspections for the week ending July 5th came in at 14.9 million bushels vs. 21.5 million bushels last week. Inspections currently stand at 8.7% of the USDA estimates vs. the 5 year average of 8.8%. Crop condition reports will be released this afternoon and the trade expects a slight downgrade in Spring Wheat conditions. Outside markets provided a mixed tone but wheat found support from the corn market and prospects of lower wheat production estimates for the Black Sea region on Wednesday's USDA report. September Oats closed up 16 at 377 3/4. This was 11 up from the low and 4 off the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures soared again today, with many contracts touching their 40-cent daily trading limit at points throughout the session. July 2012 to July 2013 contracts settled just off their highs with gains of 30-plus cents. Traders were again focused on the weather and its crop implications. Traders expect recent heat and dryness to result in continued crop deterioration.
U.S. Corn Growers Farming in Hell as Midwest Heat Spreads (Source: Bloomberg)
The worst U.S. drought since Ronald Reagan was president is withering the world’s largest corn crop, and the speed of the damage may spur the government to make a record cut in its July estimate for domestic inventories. Tumbling yields will combine with the greatest-ever global demand to leave U.S. stockpiles on Sept. 1, 2013, at 1.216 billion bushels (30.89 million metric tons), according to the average of 31 analyst estimates compiled by Bloomberg. That’s 35 percent below the U.S. Department of Agriculture’s June 12 forecast, implying the biggest reduction since at least 1973. The USDA updates its harvest and inventory estimates July 11.
Crops on July 1 were in the worst condition since 1988, and a Midwest heat wave last week set or tied 1,067 temperature records, government data show. Prices surged 37 percent in three weeks, and Rabobank International said June 28 that corn may rise 9.9 percent more by December to near a record $8 a bushel. The gain is threatening to boost food costs the United Nations says fell 15 percent from a record in February 2011 and feed prices for meat producers including Smithfield Foods Inc. (SFD) “The drought is much worse than last year and approaching the 1988 disaster,” said John Cory, the chief executive officer of Rochester, Indiana-based grain processor Prairie Mills Products LLC. “There are crops that won’t make it. The dairy and livestock industries are going to get hit very hard. People are just beginning to realize the depth of the problem.”
Corn Market Recap for 7/9/2012 (Source: CME)
September Corn finished up 36 3/4 at 732, 3 1/4 off the high and 22 1/2 up from the low. December Corn closed up 37 at 730. This was 22 3/4 up from the low and 3 off the high. December corn pushed to levels not seen since April 2011 on a day that saw corn trade limit-up at one point. The sharply higher trade was linked to continued concern over the new crop corn yield with analyst estimates falling by the day. Crop Condition reports today are expected to show corn pollination near 50%, during a time where record temperatures were seen throughout the Midwest and topsoil moisture conditions are some of the worst ever recorded. Weather maps are showing a break from the record heat this week, but mostly dry conditions for the heart of the Corn Belt. The southeast and delta are expected to see showers this week but coverage and accumulation is expected to be low. Traders are bullish ahead of the crop condition ratings this afternoon as most feel they will be revised sharply lower with estimates ranging from a 5% to 8% drop in the good-excellent category. Weekly export inspections for the week ending July 5th came in at 22.8 million bushels vs. 22.2 million bushels last week. Inspections currently stand at 81.5% of the USDA estimates vs. the 5 year average of 82.1%. Outside markets provided a mixed tone with the U.S. Dollar trading lower and energies higher on the day. Corn has been able to trade limit-up on it's own bullish, supply fundamentals. Demand for corn remains sluggish with weakening exports and negative Iowa ethanol margins. September Rice finished up 0.205 at 15.26, 0.04 off the high and 0.1 up from the low.
Corn, Soybeans Surge as Hot, Dry Weather Menaces U.S. Crops (Source: Bloomberg)
Corn rose the most allowed by the Chicago Board of Trade and soybeans extended a rally to a four- year high as hot, dry weather in the past two weeks eroded prospects for output in the U.S., the world’s biggest grower of the crops. More than 50 percent of the growing region was stressed by temperatures that exceeded 95 degrees Fahrenheit (35 degrees Celsius) on at least six of the past 14 days, T-Storm Weather LLC said in a report. As of yesterday, more than 91 percent of the production area was dry at the topsoil level and 59 percent was at high risk of intense stress and lower yields, the Chicago-based analyst said. “The threat of irreversible yield losses from Midwest dryness” is boosting demand, Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana said in a report. “The extreme heat of this past week, when combined with very dry soils, has likely impacted pollination of corn in many areas of the Midwest with significant reductions in yield potential.”
On the CBOT, corn futures for December delivery, after the harvest, jumped 36.5 cents, or 5.3 percent to $7.295 a bushel at 10:40 a.m. Earlier, the price soared by the limit of 40 cents to $7.33, the highest for a most-active contract since Sept. 13. Soybean futures for November delivery gained 3.1 percent to $15.5775 a bushel after reaching $15.7125, the highest since July 15, 2008. The record high for a contract with the greatest open interest was $16.3675 on July 3, 2008. Soybean futures for July delivery, before the harvest, rose 2.9 percent to $16.67. Earlier, the price reached $16.795, the highest ever for any contract. The U.S. Department of Agriculture is scheduled to release forecasts on domestic production and global supply and demand on July 11. Traders and analysts surveyed by Bloomberg News projected smaller U.S. and world reserves. Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
GRAINS-U.S. grains strengthen on drought; corn jumps 3 pct
SYDNEY, July 9 (Reuters) - U.S. new-crop corn jumped 3 percent to a contract high, leading strong gains for the grain complex as unfavorable weather across the United State's Midwest persists, threatening crop yields further.
"We are seeing what is shaping up to be the worst drought in nearly two decades hitting the corn belt, which is spurring speculation as to what is going to happen to yields and the overall production outlook," Michael Creed, agribusiness economist at National Australia Bank said.
No hit to harvest from Russia floods-trade, analyst
MOSCOW, July 9 (Reuters) - Deadly floods that hit Russia's Black Sea coast on Saturday have wrought chaos on key road and rail links to Russia's main grain export outlet, but the impact on exports may be delayed as port stocks are high, trade and analyst sources said on Monday.
Russian Railways said it had halted rail traffic to Novorossiisk to repair a bridge southwest of Krymsk, by far the hardest hit of the towns hit when floodwaters came crashing down suddenly in the early hours of Saturday, killing at 171 people.
Dry skies threaten US corn crop as heat wave breaks
NEW YORK, July 9 (Reuters) - The withering U.S. corn crop is gaining some respite from a record heat wave this week but new weather forecasts offered scant signs of the rainfall it urgently needs to avoid the worst drought damage in nearly a quarter century.
As the majority of a near-record-size U.S. corn area is now set to enter the key phase of pollination, a period when hot and dry conditions can cause irrevocable damage, the lack of moisture threatens to extend a rally that has already propelled corn prices more than a third higher since mid-June.
Water quest should make EU look beyond thirsty wheat
NICOSIA, July 8 (Reuters) - European Union agriculture reforms have a role to play in making farmers use water wisely and eventually changing the crops they grow to less thirsty plants that can improve public health, the head of the European Environment Agency said.
Cyprus, one of the most water-stressed nations in the EU, is making water a priority during its six months as EU president. Debate will focus on a blueprint to safeguard supplies and linking water with other policy debates, such as Common Agricultural Policy (CAP) reform.
Novorossiisk halts grain exports due to rain
MOSCOW, July 7 (Reuters) - Russia's Black Sea port of Novorossiisk suspended grain exports on Saturday due to heavy rains, which resulted in floods that killed scores of people, a port spokesman told Reuters.
"We stopped the grain loadings. There are certain limitations for it due to rain," Mikhail Sidorov said.
Japanese corn buyers yet to cover Q4 supply-traders
SINGAPORE, July 9 (Reuters) - Millers in the world's top corn importer Japan need to buy 4 to 5 million tonnes, mostly for October-December shipment, to cover their needs to the end of the year after a rally in U.S. futures slowed purchases, traders said on Monday.
Importers have yet to cover most of their requirements for the last quarter of the year, the traders added.
Egypt's GASC in no rush to enter overseas markets
ABU DHABI, July 8 (Reuters) - Egypt, the world's largest wheat importer, said on Sunday it was in no rush to tap international grain markets due to its large stockpile of local wheat and the surge in prices following the worst U.S. Midwest drought in nearly a quarter of a century.
Another Middle Eastern wheat importer, Jordan, also said earlier on Sunday it had postponed a tender to buy 100,000 tonnes of wheat to July 17 as it awaits more reports on the U.S. crop situation.
SOFTS-Sugar firms, eyes on Russia floods, coffee slips
LONDON, July 9 (Reuters) - Raw sugar futures on ICE rose underpinned by adverse weather in top producers Brazil and India, while coffee edged down and cocoa inched higher in light volumes. Sugar futures rose as dealers eyed weather concerns in top producers including Brazil, where unseasonably wet weather has hampered the harvest, and India, where poor monsoon rains have caused worry.
Ivorian cocoa arrivals seen at 1,259,000 T by July 8
ABIDJAN, July 9 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast reached around 1,259,000 tonnes by July 8, exporters estimated on Monday, compared with 1,310,614 tonnes in the same period of the previous season.
Exporters estimated around 21,000 tonnes of beans were delivered to the West African state's two ports of Abidjan and San Pedro between July 2 to July 8, down from 24,897 tonnes in the same week a year ago.
India's 2012/13 cotton area seen down from last year-govt official
MUMBAI, July 9 (Reuters) - Area under cotton in India, the world's second-biggest producer, is likely to fall in 2012/13 from last year, Textile Commissioner A.B. Joshi told reporters on Monday, as other competing crops like soybeans gave farmers better returns.
The sowing of the fibre crop has started and in some areas poor rainfall affected the pace of sowing, Joshi said.
OIL-Brent rises towards $99 on Norway strike, China data
LONDON, July 9 (Reuters) - Brent crude oil climbed to around $99 a barrel as failed labour talks stoked worries of a full shutdown of Norwegian oil production, while hopes China would ease monetary policy also supported prices.
"The price-supporting effect of the oil strike in Norway will probably be only temporary in nature," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
Oil Declines From Two-Day High as Norway Orders End to Strike (Source: Bloomberg)
Oil dropped from the highest close in two days after Norway ended a strike by energy workers that had threatened to halt production by western Europe’s largest crude exporter. Futures slipped as much as 1.1 percent in New York after the Norwegian government ordered compulsory arbitration in the dispute, preventing a lockout of platform workers that was scheduled to start at midnight yesterday. Norway pumped 1.63 million barrels of oil a day in May, or about 1.8 percent of global consumption, data from the Norwegian Petroleum Directorate show. “Traders are probably taking the premium out of oil now that they think the strike will be settled,” said David Lennox, an analyst at Fat Prophets in Sydney. “It was looking like the strike was going to deteriorate further. That risk premium is certainly coming out of crude.”
Oil for August delivery fell as much as 98 cents to $85.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $85.15 at 11:05 a.m. Sydney time. The contract climbed 1.8 percent yesterday to $85.99, the highest close since July 5. Prices are 14 percent lower this year.
Alcoa Beats Estimates as Carmakers Buy More Aluminum (Source: Bloomberg)
Alcoa Inc. (AA), the largest U.S. aluminum producer, reported second-quarter earnings and revenue that beat analysts’ estimates after an increase in orders from the auto and aerospace industries. The company had a net loss of $2 million, or break even on a per share basis, compared with net income of $322 million, or 28 cents, a year earlier, New York-based Alcoa said today in a statement. Profit excluding a charge related a proposed settlement of Aluminium Bahrain BSC (ALBH)’s lawsuit and other items was 6 cents a share, compared with the 5-cent average of 19 estimates compiled by Bloomberg. Sales fell 9.4 percent to $5.96 billion from $6.59 billion, exceeding the $5.81 billion average of 11 estimates.
Alcoa, whose customers include Ford Motor Co. and Toyota Motor Corp., is benefiting as car and truck makers are being compelled by regulations to produce lighter vehicles. The U.S. aluminum industry will ship 16 percent more aluminum to automakers in 2012 as car output climbs 11 percent, according to Lloyd O’Carroll, an analyst at Davenport & Co. in Richmond, Virginia. Aircraft manufacturers also face record backlogs as airlines hurry to refurbish aging fleets. “In their downstream business and midstream business, those two pieces we are seeing margin expansion,” Brian Yu, a San Francisco-based analyst at Citigroup Inc. who recommends holding Alcoa’s shares, said in a July 6 interview. “It’s a sign that, yes, the company is doing some things right.”
Copper Climbs on Bets More China Stimulus to Boost Demand (Source: Bloomberg)
Copper rose for the first time in three sessions on speculation that China will take more steps to spur its economy, bolstering the outlook for metals demand. Chinese officials will intensify their response to a slowdown in the country’s economy, Premier Wen Jiabao said. He spoke as government figures showed inflation reached a 29-month low. Goldman Sachs Group Inc. said copper usage probably will keep climbing in the Asian nation, the world’s top metals consumer. “Any indication that China may ease is encouraging,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “Chinese inflation numbers were a bit on the low side, and that’s a plus for the market because it allows for accommodation” in monetary policy, he said.
Copper futures for September delivery gained 0.6 percent to settle at $3.4315 a pound at 1:17 p.m. on the Comex in New York. On July 6, the metal slumped 2.4 percent, the most in two weeks, after a report showed the U.S. added fewer jobs last month than economists had forecast. A 50 percent jump in June property sales in eastern provinces of China compared with a year earlier will support metals demand, according to Goldman Sachs. The Copper Development Association says construction accounts for about 40 percent of demand.
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