An expanding US drought, now deemed the worst since 1956, dealt another blow to the corn and soybean crops, with conditions deteriorating for a second straight week in the world's top exporter of the grain. The drought, previously considered to be the worst since 1988, has been wreaking havoc on developing crops in the US farm belt. The drought also pummelled the soybean crop, which was rated 34% good to excellent, down 6% from the previous week and 1% below estimates of 35%. The latest weather forecasts call for the drought afflicting the US Midwest to worsen. (Reuters)
Pro Farmer: After the Bell Wheat Recap (Source:CME)
Wheat futures were choppy today, with Chicago softening late to end mixed. Kansas City and Minneapolis ended with slight to mostly moderate gains. As corn and soybean futures softened in late trade, Chicago wheat followed amid profit-taking. But pressure was limited by ongoing weather concerns that have raised competition between corn and wheat as a feed ingredient.
Wheat Market Recap Report (Source:CME)
September Wheat finished up 1/2 at 885, 13 1/2 off the high and 19 up from the low. December Wheat closed down 1/2 at 897 1/4. This was 18 1/2 up from the low and 13 1/2 off the high. September Chicago wheat traded lower into the close after posting new highs for the move overnight. Kansas City and Minneapolis gained on Chicago today. Wheat continues to find strength from unfavorable weather conditions the next 2 weeks in the US Midwest and on production concerns in the Black Sea. Above normal temperatures and below normal rainfall for areas in the Black Sea could mean further production downgrades to their spring wheat crop. Jordan canceled their tender for 100,000 tonnes of wheat as offers were too high. Jordan canceled their July 4th tender because of the same reason. Major importers have moved to the sidelines until world price levels stabilize. Chicago wheat remains a follower of the corn market as the likelihood of a much small US corn crop could mean better feed wheat demand. Outside markets are providing pressure to commodities with the US Dollar trading sharply higher on the day. September Oats closed down 2 1/2 at 377 3/4. This was 3 3/4 up from the low and 9 1/2 off the high.
Pro Farmer: After the Bell Corn Recap (Source:CME)
Corn futures saw two-sided trade today with bulls holding a slight advantage most of the day. Trader activity was very active heading into the close and futures ended mid-range in a narrowly mixed trading range. The weather rally gave signs of sputtering today as all the "easy" money is already in the market. Driving buying interest is worrisome heat and dryness and resulting dire condition of the corn crop.
Corn Market Recap for 7/17/2012 (Source:CME)
September Corn finished up 2 3/4 at 779 1/2, 17 off the high and 12 1/2 up from the low. December Corn closed down 1 1/4 at 771 1/4. This was 9 up from the low and 17 3/4 off the high. December corn traded both sides of the unchanged today but moved higher into the closing bell. The weather outlook for most of the Midwest looks unfavorable the next two weeks. Limited rainfall is expected east of the Mississippi River and the western Corn Belt will remain dry. Temperatures are expected to reach 95-105 degrees for corn growing regions this week. The best chance for rain will reach the southeast and delta in the next two weeks but will not be beneficial to corn. One closely followed crop scout pegged the US corn yield at 140 bushels/acre, down 6 bushels/acre from his prior estimate. A corn yield under 140 bushels/acre will require further demand rationing from higher prices. Blistering temperatures this week are expected to stress corn entering into the pollination stage in the western and northern regions of the Corn Belt, reducing yield further for states like South Dakota, Iowa, and Nebraska. Outside markets were mixed today with stocks trading stronger and the US Dollar offered resistance to commodities after trading stronger on the day. September Rice finished down 0.085 at 15.555, 0.145 off the high and equal to the low.
Corn Poised to Resume Rally on Concern Drought Is Harming Yields (Source: Bloomberg)
Corn is poised to resume a rally as the worst drought in decades wilts crops in the U.S., the biggest grower and exporter, boosting concern that production may decline. Corn for December delivery was little changed at $7.7225 a bushel on the Chicago Board of Trade at 8:04 a.m. in Singapore, erasing an earlier drop of 1 percent. The price reached $7.89 yesterday, the highest level for a most-active contract since June 9, 2011, and near the record $7.9925 set in 2008. About 55 percent of the contiguous U.S. states were in moderate-to-extreme drought at the end of June, the highest percentage since December 1956, according to the National Climatic Data Center. Corn has surged 52 percent since mid-June, while soybeans and wheat advanced, increasing concern that world food costs may increase.
“Ongoing crop concerns in the U.S. continue to provide a solid floor under the market,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note today. “The trade is now asking at what price will grain demand be sufficiently rationed.” U.S. corn yields may drop to 138 bushels an acre compared with 146 bushels forecast by the U.S. Department of Agriculture, AccuWeather.com said yesterday. Soybeans for November delivery were little changed at $15.9225 a bushel after declining as much as 0.4 percent. Prices rose to $16.07 yesterday, the most expensive since July 2008.
GRAINS-US corn, soy surge to contract highs on drought damage
SYDNEY, July 17 (Reuters) - Chicago corn surged to a contract high extending a drought-fed rally of more than 40 percent over the last four weeks, after data showed searing heat in the U.S. grain belt dealt another heavy blow to crop yields last week.
"It is all weather related," said Victor Thianpiriya, an agricultural strategist at ANZ.
Cooperatives raise German 2012 wheat crop forecast
HAMBURG, July 17 (Reuters) - The German Farm Cooperatives Association said on Tuesday it has raised its forecast of Germany's 2012 wheat harvest to 21.9 million tonnes from 21.3 million tonnes estimated in June and so up from the 22.7 million tonnes of wheat Germany harvested in 2011.
The association also raised its forecast of Germany's 2012 winter rapeseed crop to 4.70 million tonnes from 4.51 tonnes it forecast in June and 3.8 million tonnes Germany harvested in 2011.
Kazakh drought signals alarm for grain crop
YESIL-AGRO FARM, Kazakhstan, July 17 (Reuters) - Kazakhstan is preparing for a below-average grain crop this year due to an "alarming" drought in the Central Asian country's main grain-growing regions, Deputy Agriculture Minister Muslim Umiryayev said on Tuesday.
While reiterating the ministry's latest 2012 crop forecast of 14 million tonnes, a decline of 48 percent on last year's post-Soviet record, Umiryayev said hot and dry weather conditions in northern regions were giving cause for concern.
Italy wheat, maize imports fall in Jan-April-Anacer
MILAN, July 17 (Reuters) - Imports of wheat and maize into Italy, a major grain buyer in Europe, fell in the first four months of the year compared with the same period in 2011, while exports of other grains and products mostly decreased, Italian cereals body Anacer said on Tuesday.
Imports of soft wheat fell about 4 percent to 1.54 million tonnes while maize imports dropped nearly 24 percent to 0.793 million tonnes in the January-April period, Anacer said in a statement. It did not provide explanations for trade flows.
India grains output hit record in 2011/12
NEW DELHI, July 17 (Reuters) - India's food grains output is seen at 257.44 million tonnes in the crop year ended June 30, 2012, the farm ministry's latest production estimates on Tuesday showed, as rice and wheat harvests rode to records.
The latest or fourth advance estimates which are the final production estimates for the 2011/12 crop year are 1.93 percent higher than the previous estimates of 252.56 million tonnes which were announced in April, 2012.
The crop year in Asia's third-largest economy runs from July to June.
Ukraine grain exports fall 87 pct July 1-11
KIEV, July 17 (Reuters) - Ukraine's grain exports totalled about 108,000 tonnes in the first eleven days of July, the first month of the new 2012/13 season, which runs from July to June, analyst ProAgro said on Tuesday.
Ukraine exported 840,350 tonnes of grain in the same period in June. Exports totalled 1.47 million tonnes of grain last month.
U.S. drought worsens crop damage, raising world food, fuel worry
CHICAGO, July 16 (Reuters) - Corn and soybeans in the U.S. Midwest baked in an unrelenting heat wave on Monday with fears rising of big crop losses that will boost food and fuel prices and cut exports and aid from the world's top shipper of the key crops.
The condition of the nation's corn and soybeans as of Sunday deteriorated even more than grain traders had feared, and the U.S. Agriculture Department cuts its weekly corn crop condition rating by the biggest amount in nearly a decade.
Argentina to approve 15 mln tonnes corn exports-president
BUENOS AIRES, July 16 (Reuters) - Argentina's government will approve the exportation of 15 million tonnes of 2012/13 corn, with an announcement scheduled for Wednesday, President Cristina Fernandez said on Monday.
Fernandez's center-left government sets a ceiling on corn and wheat exports to guarantee affordable local food supplies and help tame high inflation.
Nebraska farms told to halt irrigation as drought drains rivers
July 16 (Reuters) - More than 1,100 farmers in Nebraska have been ordered by the state's Department of Natural Resources to halt irrigation of their crops because the rivers from which they draw water have dropped due to a worsening drought.
The orders come as the central United States bakes under the worst drought in a quarter century which has parched corn and soybean crops and sent prices of both commodities to near-record highs.
SOFTS-Sugar dips, eyes on Brazil weather, coffee steady
LONDON, July 17 (Reuters) - Sugar futures on ICE dipped in early trade underpinned by concerns over the impact of wet weather in Brazil, while coffee and cocoa were steady.
Dealers awaited results later on Tuesday following expiry of the Liffe August white sugar futures contract on Monday, anticipating a modest delivery tonnage. Sugar futures eased in light volumes as the market focused on weather in top producers Brazil, where rains delayed harvesting, and India, where monsoon progress was slow.
India imposes 10 pct duty on raw sugar imports - report
MUMBAI, July 17 (Reuters) - India, the world's top sugar consumer, has imposed ten percent duty on raw sugar imports, the Hindu Business Line newspaper reported on Tuesday, without citing any source.
The duty is unlikely to affect demand-supply in the local market as mills in India are not importing sugar currently, the report quoted G.S.C. Rao, chief executive of Simbhaoli Sugars .
Nicaragua coffee exports soar nearly 90 pct in June
MANAGUA, July 16 (Reuters) - Coffee exports from Nicaragua jumped 88.8 percent in June compared to the same month a year earlier, totaling 217,371 60-kg bags in the month.
But Nicaragua's export agency Cetrex said Monday coffee exports through the first nine months of the 2011-12 harvesting season totaled 1.17 million bags, down 10.2 percent compared with the same nine-month period during the 2010-11 season.
Wet weather mixed blessing for Brazil sugarcane crop
SAO PAULO, July 16 (Reuters) - Recent wet and overcast weather throughout Brazil's main sugarcane belt is a blessing for cane to be harvested in early 2013 but a curse for mills currently crushing and trying to ship sugar through the ports, meteorologists Somar said on Monday.
Unusually rainy weather in May and June over the main center-south sugarcane belt in Brazil let up in the first two weeks of July. This should improve the volume of sugar and ethanol produced by mills over the fortnight, Somar's long-term forecaster, Marco Antonio dos Santos, said.
Poor mid-crop, rains drive up cocoa prices in Cameroon
YAOUNDE, July 16 (Reuters) - The dearth of beans due to a poor mid-crop and steady rains in parts of the country have pushed up cocoa farmgate prices in Cameroon so far this month, farmers and industry sources said on Monday.
The warning came after a senior official from the National Cocoa and Coffee Board told Reuters that output from the world's No. 5 grower is expected to fall some 10-15 percent from last year's record 240,000 harvest.
Oil Drops From Seven-Week High on Outlook for Economy (Source: Bloomberg)
Oil fell from a seven-week high on concern fuel demand may falter after China signaled more economic weakness and analysts cut their profit forecasts for European companies at the fastest rate since 2009. Futures slid as much as 0.4 percent in New York after advancing a fifth day yesterday, the longest run of gains since April. The labor situation in China, the world’s second-biggest crude user, will become more “severe,” Premier Wen Jiabao said, according to a statement on the central government’s website. Profits at Euro Stoxx 50 Index companies will rise 6.8 percent this year, more than 12,000 estimates compiled by Bloomberg show. That compares with a 19 percent gain predicted at the start of the year. “If $90 can’t be breached then I think we’ll come in for a bit of a correction lower,” Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, said in a telephone interview. “You can possibly see a pretty ugly scenario from Europe developing.”
Oil for August delivery fell as much as 37 cents to $88.85 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.89 at 10:59 a.m. Sydney time. The contract gained 79 cents, or 0.9 percent, to $89.22 yesterday, the highest close since May 29. Prices are 10 percent lower this year. Brent crude for September settlement declined 67 cents, or 0.6 percent, to $103.33 a barrel on the London-based ICE Futures Europe exchange. The front-month price for the European benchmark contract was at a premium to West Texas Intermediate of $14.10.
Brent prices mask plentiful supply in wider market
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 16 (Reuters) - The big jump in headline oil prices since the end of June highlights the growing disconnect between Brent and the rest of the oil market.
It owes more to North Sea production problems and the broken nature of the benchmark Brent contract than rising tensions with Iran or hopes for more stimulative policies from the major central banks.
OIL-Oil rises to $104 on Fed stimulus hopes
LONDON, July 17 (Reuters) - Brent crude oil rose to $104 a barrel ahead of a speech by U.S. Federal Reserve Chairman Ben Bernanke that could signal more measures to stimulate economic growth.
"The oil market appears to be looking for reasons to go higher," said Eugen Weinberg, head of global commodity research at Commerzbank in Frankfurt. "If Bernanke indicates more stimulus is needed, that would be the catalyst for a rise in prices."
US crude stocks seen down, products up
July 16 (Reuters) - U.S. commercial crude oil stockpiles were projected down for last week due to higher refinery utilization, and increases in petroleum products were expected, a preliminary Reuters poll showed on Monday.
The poll of five analysts of oil and products data due this week forecast a 500,000-barrel drop in domestic crude inventories for the week to July 13. Two analysts called for a decline, one analyst expected an increase, and the other two forecast an unchanged reading.
OPEC 2011 exports jump, Angola's reserves slide
LONDON, July 16 (Reuters) - OPEC's petroleum exports jumped in value by 40 percent in 2011 year-on-year and the producers' GDP climbed 18 percent, according to their latest report, before a further increase in supplies this year that could bolster income further.
The gains, announced in OPEC's Annual Statistical Bulletin 2012 on Monday, reflect higher prices and steadily climbing output last year from many members of the Organization of the Petroleum Exporting Countries.
Asia crude demand to fall in Sept on refinery disruptions
SINGAPORE, July 17 (Reuters) - Asia's sweet crude market could come under pressure for a second month in September as demand is expected to fall with the shutdown of an Australian refinery and a slower pace of operations at a Thai refiner, trade sources said on Tuesday.
Demand, mainly for Malaysian and Vietnamese grades, is expected to fall by nearly 130,000 barrels per day (bpd), or 6-1/2 cargoes of 600,000 barrels each, on refinery shutdowns.
India's top buyer of Iran oil turns to Azeri, Saudi
NEW DELHI, July 16 (Reuters) - India's biggest buyer of Iranian oil, MRPL, has bought Azeri, Saudi and Emirati crude to replace imports from Iran in July and it may halt purchases from Tehran altogether as sanctions make shipments more difficult, industry sources said on Monday.
Loss of exports to Mangalore Refinery and Petrochemicals (MRPL) would be a blow to Iran, which has seen overseas sales decline by more than half from a year ago due to U.S. and European Union sanctions.
Mosaic Says China Potash Price More Likely to Rise (Source: Bloomberg)
China, the world’s largest potash consumer, is more likely to pay a higher price for imports of the fertilizer after grain prices soared because of a drought in the U.S., according to Mosaic Co. (MOS) Corn futures have jumped 52 percent in Chicago in the past month and soybeans have climbed 21 percent as the worst U.S. drought in a generation damages crops. Mosaic Chief Executive Officer Jim Prokopanko said that will influence talks currently in progress between China and North American potash suppliers about a six-month supply accord. “That strengthens our hand,” he said yesterday in a telephone interview from Mosaic’s headquarters in Plymouth, Minnesota. “The more grain is worth, the more fertilizer is worth.” Mosaic, based in Plymouth, Minnesota, rose 5.1 percent to close at $58.21 yesterday in New York, the biggest gain since April 25.
Most market watchers expect China will end up paying the same or less, Edlain Rodriguez, an analyst at Lazard Capital Markets LLC in New York, said yesterday in a telephone interview.
BHP Iron Ore Output Rises 15% to Beat Analyst Estimate (Source: Bloomberg)
BHP Billiton Ltd. (RIO)’s fourth-quarter iron ore production gained 15 percent as the world’s largest mining company expands operations in Australia’s Pilbara region, setting a 12th consecutive annual record. Output was 40.9 million metric tons in the three months ended June 30, compared with 35.5 million tons a year earlier, Melbourne-based BHP said today in a statement. That beat the 37.3 million ton median estimate of five analysts surveyed by Bloomberg. Rio Tinto Group (RIO), the world’s third-largest miner, yesterday reported iron ore production in line with expectations as Chief Executive Officer Tom Albanese warned of deteriorating global economic conditions. “Operationally in iron ore it’s a good result,” said Shaun Manuell, chief investment officer of Equity Trustees Ltd., which manages A$2.4 billion ($2.5 billion), including BHP and Rio shares. “Despite all this noise and concern about China we still haven’t seen a dramatic collapse in the iron ore prices that people were forecasting.”
BHP shares fell 0.9 percent to A$30.51 at 10:11 a.m. in Sydney trading, after declining 0.7 percent in London yesterday BHP, planning to more than double production capacity of the steelmaking raw material, said last month it must be flexible in the face of falling commodity prices and deepening global uncertainty. The International Monetary Fund this week cut its 2013 world economic growth forecast to 3.9 percent from 4.1 percent estimated in April as Europe’s debt crisis slows expansion.
Looming Copper Surplus Contracting as Mining Fails: Commodities (Source: Bloomberg)
Analysts are slashing predictions for the first copper glut in four years as producers from Chile to Indonesia contend with aging mines and strikes at a time of record demand. The global surplus will total 18,500 metric tons, according to the median of 22 analyst estimates compiled by Bloomberg, 85 percent less than a January forecast of 124,000 tons. Barclays Plc expects shortages in the first half of next year and Morgan Stanley and JPMorgan Chase & Co. anticipate an annual deficit. Prices will rally as much as 14 percent to $8,700 a ton by Dec. 31, the median in a survey of 15 analysts shows.
Mining companies on average are processing about 15 percent more ore than they were in 2000 to extract the same amount of metal, according to Macquarie Group Ltd. Freeport-McMoRan Copper & Gold Inc. (FCX) shut Grasberg, site of the world’s largest reserves, for two weeks in the first quarter after violent protests, following a three-month strike in 2011. Demand growth will accelerate to 4.7 percent next year from 1.5 percent in 2012, Morgan Stanley estimates. “It’s really a matter of scarcity in copper, with mined supply lagging behind expectations,” said Thomas Benedix, a Stuttgart, Germany-based metals analyst at Tiberius Group, which manages about $2.1 billion of assets. “At the start of the year people were expecting that the supply side could really start delivering on their targets, and now it’s not going to happen.”
Gold Drops as Fed Chief Fails to Discuss Further Stimulus (Source: Bloomberg)
Gold fell for a second day as Federal Reserve Chairman Ben S. Bernanke refrained from discussing steps to boost the U.S. recovery, while insisting the central bank will act if labor markets don’t improve. Bernanke, responding to questions from lawmakers today in Washington, said Fed tools include further purchases of assets, such as mortgage-backed securities, reducing the interest rate it pays on reserves banks keep with the Fed, and altering its communications on the outlook for interest rates. Gold surged 70 percent from the end of December 2008 to June 2011 as the central bank kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing. This year, the price is up 1.4 percent. “The market wants to know specifics even as it’s clearer that some form of easing will be announced soon,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview.
Gold futures for August delivery slid 0.1 percent to settle at $1,589.50 an ounce at 1:36 p.m. on the Comex in New York, after earlier slipping as much as 1.3 percent. The price is down 0.9 percent in July, after dropping in four of the previous five months. Bullion pared losses today after Bernanke’s answers to questions from the Senate Banking Committee signaled he doesn’t view inflation as a hindrance to providing more stimulus to spur the economy.
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