Record Heat Wave Pushes U.S. Belief in Climate Change to 70%(Source: Bloomberg)
A record heat wave, drought and catastrophic wildfires are accomplishing what climate scientists could not: convincing a wide swath of Americans that global temperatures are rising. In the four months since March there has been a jump in U.S. citizens’ belief that climate change is taking place, especially among independent voters and those in southern states such as Texas, which is now in its second year of record drought, according to nationwide polls by the University of Texas. In a poll taken July 12-16, 70 percent of respondents said they think the climate is changing, compared with 65 percent in a similar poll in March. Those saying it’s not taking place fell to 15 percent from 22 percent, according to data set to be released this week by the UT Energy Poll.
Following a winter of record snowfall in 2010, the public’s acceptance of climate change fell to a low of 52 percent, according to the National Survey of American Public Opinion on Climate Change, which was published by the Brookings Institution in Washington. After this year’s mild winter, support jumped to 65 percent, the same as that found by the UT Energy Poll in March. “There has been a rebound in belief” in global warming, Barry Rabe, a University of Michigan professor who published the research on the Brookings study. “All respondents are quite likely to use observations of weather as a big part of their explanation.”
India to Review Farm-Export Rules, Curb Hoarding on Weak Monsoon(Source: Bloomberg)
India, the second-biggest grower of rice, wheat and sugar, will review its export rules and consider curbing the amount of food crops that traders can stockpile as the worst monsoon in three years fuels a rally in prices. “I am concerned about the deficient rain,” Food Minister K.V. Thomas told reporters after a meeting with Prime Minister Manmohan Singh yesterday. “We will get a clear picture about the situation after 15 days.” Dry weather from the U.S. to Australia has parched fields, pushing up global corn and wheat prices and curbing a decline in food costs. El Nino weather conditions, which can parch Asia and bring cooler weather to the U.S., may develop 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.
“One of the big concerns about a repeat of the food crisis is whether we are likely to see the export policy in key producing and exporting countries changing,” Sudakshina Unnikrishnan, an analyst at Barclays Plc in London, said by phone. “An underperforming Indian monsoon does raise concern that potentially there could be some sort of export curbs.” More than 235 million farmers depend on the monsoon for crops such as rice, peanuts, soybeans and cotton. Sowing of monsoon crops begins in June and harvesting starts in October.
Pro Farmer: After the Bell Wheat Recap(Source: CME)
Wheat futures saw a volatile day of trade, but bulls gained the late upper hand. All three locations ended with gains through the May 2013 contract. Far-deferred months closed slightly lower in Kansas City and Chicago. Action in the wheat pit closely mirrored choppy trade in the corn market today. As corn rallied into the close on concern about heat and dryness in the Corn Belt, so did wheat.
Wheat Market Recap Report (Source: CME)
September Wheat finished up 18 1/4 at 903 1/4, 5 1/4 off the high and 37 3/4 up from the low. December Wheat closed up 15 1/4 at 912 1/2. This was 32 3/4 up from the low and 5 1/2 off the high. September Chicago wheat traded sharply higher into the close and settled above 9.00. After taking profits midday, wheat bulls re-entered the market, as corn began to climb higher. 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. Temperatures are expected to reach 95-105 degrees this week in the western Corn Belt, adding to corn stress. A well-known Russian, agricultural consultant expects Russian wheat exports to slow to 10 million tonnes for the 2012/13 crop year. Continued dry weather in the southern districts of Russia could mean further yield destruction. Wheat remains a follower of corn in the short-term but the outlook for a small US corn crop could mean better demand for feed wheat going forward. Outside markets offered support with stocks and crude oil trading higher today. September Oats closed up 2 1/4 at 380. This was 8 1/2 up from the low and 1/2 off the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn were lower much of the day but firmed around midday. The September through July contracts ended 10 3/4 to 15 1/2 cents higher, with deferred contracts mostly around a penny lower. Traders viewed early weakness brought on by profit-taking as a buying opportunity given ongoing drought conditions. Scattered showers are bringing relief to areas of the Corn Belt today, but for some areas, the rains are too late to provide much benefit.
Corn Market Recap for 7/18/2012(Source: CME)
September Corn finished up 15 1/2 at 795, 2 off the high and 31 1/2 up from the low. December Corn closed up 13 at 784 1/4. This was 28 1/2 up from the low and 1 1/2 off the high. December corn traded sharply higher into the close after posting slight loses early in today's session. Corn rallied off it's lows after the EPA stated it had no plans to cut the ethanol mandate due to this year's drought stricken corn crop. Traders viewed this news as bullish as prices will need to rise high enough to slow other sources of demand. The ethanol production report for the week ending July 13th show production averaged 802,000 barrels per day. This is down 2.3% vs. last week and down 8.1% vs. last year. Furthermore, total ethanol production for the week was 5.61 million barrels, a 16 week low. Corn usage for the week was estimated at 85.4 million bushels as compared with 101.7 million bushels needed each week to reach the USDA forecast for the marketing year. The weather forecast calls for 95-105 degree temperatures for the central and western Corn Belt this week. The southeast and delta are expected to see showers this week, along with restricted rainfall in parts of Northern Illinois and Indiana. Rainfall is not expected to benefit corn a great deal as most of the eastern corn crop is done pollinating. The market continues to add risk premium to prices as stressful weather conditions could result in a much lower than anticipated US corn yield. September Rice finished down 0.02 at 15.535, equal to the high and 0.105 up from the low.
Corn Seen Rallying to Record $8.50 as Drought Kills Crops(Source: Bloomberg)
Corn may rally to a record $8.50 a bushel as the worst U.S. drought in decades cuts production in the world’s biggest exporter, driving global stockpiles lower, according to broker Newedge USA LLC. he U.S. harvest may drop to 11.8 billion bushels (299.7 million metric tons), said Dan Cekander, director of grain research, who correctly predicted in March that soybeans would trade at the most expensive level relative to corn since 2010. Cekander’s output forecast is 29.75 million tons less than the latest estimate from the U.S. Department of Agriculture, and would be the smallest crop since 2006-2007. Futures traded as high as $7.89 yesterday, near the $7.9925 record set in 2008. The drought is baking farms from Arkansas to Ohio, reducing yields, after frosts followed by drought cut wheat harvests in the former Soviet Union, prompting the United Nations and the USDA to pare estimates for world grain harvests.
Dimming corn- crop prospects in the U.S. may push global food costs higher, the Food & Agriculture Organization said earlier this month. “If it doesn’t start raining the rest of July, you’re going to have a significant shortfall here in production,” said Cekander, a fourth-generation farmer who grows corn and soybeans in Illinois, the second-largest U.S. grower of both crops. “That would put the 2012-2013 world corn carry-out below last year,” he said, referring to year-end stockpiles.
Corn Drops on Concern Rally Is Curbing Demand; Wheat Declines(Source: Bloomberg)
Corn fell for a second day in Chicago on speculation a drought-fueled rally to a 13-month high may curb demand for supplies from the U.S., the world’s largest grower and exporter. Wheat also dropped. U.S. output of ethanol, made from corn, fell 4.2 percent in the week ended July 6 to the lowest in almost two years, Energy Department data show. U.S. feedlots likely cut cattle purchases by 1.5 percent in June from a year earlier amid higher corn costs, according to a Bloomberg survey of analysts before a government report July 20. Corn has surged 51 percent since mid- June as Midwest crops withered under the drought. “Demand is being rationed,” Arnaud Saulais, a broker at Starsupply Commodity Brokers, said by telephone today from Nyon, Switzerland. End users “are just buying day after day, week after week. They are not buying for the long term.”
Corn for December delivery fell 0.2 percent to $7.695 a bushel on the Chicago Board of Trade by 1:05 p.m. in London. The grain yesterday reached $7.89, the highest level for a most- active contract since June 9, 2011, and near the record $7.9925 set in 2008. September-delivery wheat fell 0.8 percent to $8.7775 a bushel after yesterday reaching $8.985, the highest for a most- active contract since February 2011. Soybeans for November delivery lost 0.2 percent to $15.87 a bushel after yesterday touching $16.07, the most expensive since July 2008.
Current corn famine may lead to a feast in 2013
--Gavin Maguire is a Reuters market analyst. The views expressed are his own--
CHICAGO, July 17 (Reuters) - The corn story of 2012 may still be unfolding as drought and searing temperatures sap yield potential, but many traders are already turning their attention to next year's crop after December 2013 prices bolted to life-of-contract highs lately to score a hefty advantage over soybeans that may heavily skew planted acres in corn's favor next spring.
Indeed, corn's early claim on next spring's acreage may be so strong that it could potentially threaten an oversupply of the crop next year if growing conditions avoid another drought and demand contracts as expected.
GRAINS-U.S. corn firms on threat of further weather damage
SYDNEY, July 18 (Reuters) - U.S. corn rose as the Midwest continued to endure its worst drought in over 50 years, increasing fears of further declines in yield forecasts as 2012/13 supplies tighten.
"There is talk of demand destruction going round, which is probably tempering gains, but the market is waiting for further confirmation of lower than expected yields from the drought, which is supportive of prices," said Brett Cooper, senior manager of markets at FCStone Australia.
Repeated rain stops German barley harvest- farmers
HAMBURG, July 18 (Reuters) - Repeated rain in the last two weeks has mostly halted harvesting of Germany's barley crop while fears about lost barley volumes and quality damage to wheat are increasing, the German farmers' association DBV said on Wednesday.
"Because of the continued forecasts of unsettled weather there is increased worry among farmers about crop losses caused by stems snapping and grains being beaten over, while there is also worry about quality loss to wheat," the DBV said in its first harvest report.
India to wait until August to review farm exports policy
NEW DELHI, July 18 (Reuters) - India, the world's second-biggest producer of rice, wheat, sugar and cotton, will wait until August to review its export policy on farm commodities as the monsoon scenario will be clearer by then, the country's food minister said.
India allowed exports of sugar, wheat, rice and cotton after a bumper harvest last year.
Punishing drought in US Midwest shows no sign of abating
July 17 (Reuters) - Broiling heat blanketed much of the U.S. Midwest again on Tuesday, exacerbating the region's worst drought in more than 50 years and devastating corn, soy and other vital crops.
Across the country's agricultural heartland, elected officials met with farmers and ranchers affected by the growing disaster promising government relief.
Stand-off looms over U.S. plans to cut GMO crop oversight
July 17 (Reuters) - Efforts to write benefits for biotech seed companies into U.S. legislation, including the 2013 Farm Bill, are sparking a backlash from groups that say the multiple measures would severely limit U.S. oversight of genetically modified crops.
From online petitions to face-to-face lobbying on Capitol Hill, an array of consumer and environmental organizations and individuals are ringing alarm bells over moves they say will eradicate badly needed safety checks on crops genetically modified to withstand herbicides, pests and pesticides.
Russia deputy PM sees no need for grain export limits
MOSCOW, July 17 (Reuters) - Russia has no grounds to ban grain exports this year, a senior government official said on Tuesday as a top analyst said drought damage and low stocks could slash Russian wheat exports to just 10 million tonnes.
A newly formed commission on food security is due to meet on Wednesday under the chairmanship of Deputy Prime Minister Arkady Dvorkovich, in charge of industry and commodity producers in the new government of Prime Minister Dmitry Medvedev.
U.S. corn crop shrinking by the hour
CHICAGO, July 17 (Reuters) - U.S. corn production has shrunk 7 percent versus the government's downgraded estimate a week ago, a Reuters poll found on Tuesday, with a worsening drought likely to cause more damage before the month is out.
As the worst drought since 1956 begins to expand to the northern and western Midwest, areas that had previously been spared, analysts are slashing corn yield estimates by the hour. Some analysts are also starting to cut their forecasts on the number of acres that will be harvested as farmers opt to plough under their fields to claim insurance.
Rains make French grain exporters use German wheat
LONDON/PARIS, July 17 (Reuters) - French grain exporters are turning to German wheat to fulfil contracts as quality concerns and harvest delays plague farmers, traders said on Tuesday.
Unseasonably wet weather in France has delayed the start of the top EU producer's harvest and damaged quality, prompting French exporters to buy six cargoes of German wheat last week, a European trader said.
Rains threaten quality of wheat crops in western Europe
LONDON, July 17 (Reuters) - Repeated rains threaten to reduce the quality of wheat crops in western Europe, though there remains the potential for reasonable yields in most areas, crop analysts said on Tuesday.
"There is still potential, but there are threats to quality," Jean-Paul Bordes, head of research at Arvalis, said, referring to the crop in France, the European Union's top wheat grower.
Kazakh drought sounds alarm for grain crop
YESIL-AGRO FARM, Kazakhstan, July 17 (Reuters) - Kazakhstan expects a below-average crop this year due to an "alarming" drought across its northern grain belt, although carryover stocks from last year's record harvest should allow the country to remain a top-10 global wheat exporter.
Deputy Agriculture Minister Muslim Umiryayev forecast on Tuesday that hot and dry weather would cut Kazakhstan's grain crop to 14 million tonnes this year, a decline of 48 percent on last year's post-Soviet record and undershooting the average of 17 million tonnes over the last nine years.
UK wheat exports fall sharply in May
LONDON, July 17 (Reuters) - UK wheat exports fell to 70,262 tonnes in May, sharply down from the prior month's 136,484 tonnes and the lowest monthly total so far in the 2011/12 season, customs data showed on Tuesday.
The Netherlands was the largest customer, taking 44,598 tonnes.
SOFTS-Sugar, coffee little changed early in cautious trade
LONDON, July 18 (Reuters) - Sugar, coffee and cocoa futures on ICE were barely changed in thin early trade, reflecting a cautious mood in financial markets after U.S. Federal Reserve Chairman Ben Bernanke offered little guidance as to whether the central bank was moving closer to new stimulus.
Brent de-links from global oil balance
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 17 (Reuters) - Far too many analysts and commentators are still linking rising Brent futures prices to geopolitical tensions in the Middle East and macroeconomic factors, rather than looking for a more localised cause in the North Sea.
It is always tempting to seize on a single piece of hard evidence to make a larger point, especially when that data confirms an already-held belief (something which behavioural economists call "confirmation bias"). But in this case it could not be more wrong.
OIL-Oil eases on Fed economy outlook
LONDON, July 18 (Reuters) - Oil retreated slightly, snapping five days of gains as U.S. Federal Reserve Chairman Ben Bernanke offered few signs of further monetary stimulus and a gloomy view of the economy of the world's top oil consumer.
"Oil fell pretty rapidly after traders and investors had seen what was in the testimony, so crude was responding to whether we are going to see (quantitative easing) or are we not," said David Morrison, analyst at GFT Global."
China plan to expand eastern oil reserve storage delayed by 2 years
BEIJING, July 18 (Reuters) - China's state-run Sinochem Corp has started expanding a facility that will become the country's largest oil reserve storage site after a two-year delay due to environmental and safety concerns, local officials and industry executives said.
The extension of the facility is part of the second phase of China's plan to build capacity to store strategic petroleum reserves.
BP makes small gas find in Norwegian Sea
OSLO, July 18 (Reuters) - British oil major BP has made a small gas find in the Norwegian Sea, with reserves preliminary estimated at between 1.2 and 2.3 billion cubic metres, the Norwegian Petroleum Directorate said on Wednesday.
The wildcat well drilled to a total vertical depth of 2,923 metres below the sea surface proved gas about 20 kilometres north of the Skarv field and about five kilometres east of the Marulk field, it said in a statement.
Taiwan's Formosa raises refinery crude throughput to near 80 pct
SINGAPORE, July 18 (Reuters) - Taiwan's Formosa Petrochemical has raised crude throughput at its 540,000 barrels per day (bpd) refinery by about 20 percentage points to about 80 percent after the restart of a crude distillation unit (CDU), a spokesman said on Wednesday.
But it will shut a No. 1 residue fluid catalytic cracker (RFCC) soon after it discovered a steam leak, he added.
POLL-US crude stocks seen down, products up
July 17 (Reuters) - U.S. crude oil stockpiles likely fell last week due to higher refinery utilization, while gasoline and distillate inventories were forecast to have increased, an expanded Reuters poll showed on Tuesday.
The 10 analysts polled on oil and products data due this week forecast a 1.2 million barrel drop in domestic crude inventories for the week to July 13.
Oil Trades Near Seven-Week High on Gasoline Stockpiles, Housing(Source: Bloomberg)
Oil traded near the highest close in seven weeks after U.S. gasoline stockpiles unexpectedly dropped and housing starts beat estimates, signaling fuel demand may increase amid an economic recovery. Futures were little changed in New York after advancing for a sixth day yesterday, the longest run of gains since April. Gasoline supplies decreased 1.8 million barrels, an Energy Department report showed. They were forecast to climb by 1.2 million, according to a Bloomberg News survey. Total petroleum consumption rose 0.3 percent to 18.6 million barrels a day. New U.S. home construction increased in June to the highest level in almost four years, figures from the Commerce Department showed. “U.S. inventory figures are doing the right thing,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Housing is an area of the U.S. economy where we have seen what looks to be quite a step-up in growth in recent months, so that’s a mild positive.”
Oil for August delivery was at $89.89 a barrel, up 2 cents, in electronic trading on the New York Mercantile Exchange at 11:18 a.m. Sydney time. The contract expires tomorrow, and the more-active September future was up 3 cents at $90.20. Front- month prices gained 65 cents to $89.87 yesterday, the highest close since May 29, and are 9.1 percent lower this year. Brent crude for September settlement was at $105.29 a barrel, up 13 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract closed at a premium to West Texas Intermediate of $15.09, from $14.99 yesterday.
Nuclear Resurgence Seen Luring Paladin Bids: Commodities(Source: Bloomberg)
Australian uranium producer Paladin Energy Ltd. (PDN) is tempting acquirers from Canada to China with a stock price that’s less than the value of its net assets as Japan restarts idled nuclear reactors. Paladin, which lost almost 80 percent of its value after Japan suffered the worst atomic crisis in a quarter century, is now trading at a 22 percent discount to book value, according to data compiled by Bloomberg. While uranium prices have tumbled 26 percent since the meltdowns at the Fukushima Dai-Ichi plant in March 2011, the Perth-based company is projected this fiscal year to post its first profit since beginning production of the nuclear fuel, analysts’ estimates compiled by Bloomberg show. With Japan’s decision to turn two reactors back on this month signaling a possible bottom for uranium prices, Paladin, which operates mines in Africa and explores for the fuel in Australia and Canada, may attract interest from Saskatoon, Saskatchewan-based Cameco Corp. (CCO), Resource Capital Research said.
Chinese companies seeking uranium as the country builds 26 new reactors are also potential bidders for the $917 million company, according to Octa Phillip Securities Ltd. “Paladin is a target,” Andrew Shearer, a Melbourne-based analyst for Octa Phillip, said in a telephone interview. “It could be an opportunistic purchase at a time when the uranium market is potentially at its bottom.”
Looming Copper Surplus Contracting as Mining Fails(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.”
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