20120726 1010 Global Commodities Related News.

Midwest Rains Won’t Dent Drought or Help Crops (Source:Bloomberg)
The Midwest, where record amounts of rain fell in some places yesterday, may remain abnormally dry through the first week of August and the moisture probably won’t be enough to help drought conditions there, forecasters said. Flood advisories were still in force in North Dakota and Minnesota following the thunderstorms, according to the National Weather Service. The storms were local and didn’t extend across the rest of the region. It’s possible rain will fall across a much larger area, including Iowa and Illinois, through the next week, said Joel Widenor, of Commodity Weather Group LLC in Bethesda, Maryland. “This will ease moisture stress a bit, temporarily, in these areas, but will be insufficient for a major turnaround in soil moisture,” said Widenor, co-founder of the company.
Corn and soybean crops are in their worst state since 1988 as drought covers at least 56 percent of the contiguous 48 U.S. states. The lack of a soaking rain in the forecast and the persistence of temperatures 5 to 8 degrees Fahrenheit (2.8 to 4.4 Celsius) above normal until at least Aug. 8 have contributed to a rise in prices. The U.S. Drought Monitor, which measures the extent of drought nationwide, is scheduled to release an update tomorrow. As of July 22, 26 percent of U.S. corn and 31 percent of soybeans were in good to excellent condition, the lowest for the date since 1988, according to the Agriculture Department. In Fargo, North Dakota, 2.35 inches (6 centimeters) of rain fell yesterday an all-time high for the day that broke the old mark set in 1993, according to the Weather Service. A daily record 1.69 inches fell in Minneapolis, according to the agency. The rain caused minor flooding.

Iowa Heat
Farther south, in Des Moines, Iowa, today’s high temperature is expected to reach 104 degrees and there is a slight chance of thunderstorms later today, according to the Weather Service. Chicago may reach 99. While the heat remains fixed over the Midwest, there is a possibility that temperatures will rise about 3 degrees above normal in the U.S. Northeast from Aug. 4 to Aug. 8, according to Commodity Weather Group President Matt Rogers. Computer modeling shows another heat wave may strike the East Coast during the week of Aug. 6, he said. Heat in the large cities along the East Coast raises demand for electricity as people turn to air conditioners to cool off. The increase raises prices on the spot markets and for the fuels, such as natural gas, used to generate power.
The normal average temperature in New York for Aug. 1 is 78, according to MDA EarthSat Weather in Gaithersburg, Maryland. It’s 74 in Boston; 80 in Washington; 85 in Houston; 76 in Chicago; 80 in Atlanta; 67 in Seattle and 76 in Burbank, California.

Pro Farmer: After the Bell Wheat Recap
Wheat futures ended high-range with nearby contracts 20-plus cents higher. Deferred contracts ended with slightly lighter gains. After two days of declines, spillover support from weather-inspired rallies in the corn and soybean markets returned buyers to the wheat pit. This plus a weaker dollar kept attention away from spring wheat harvest pressure and better than expected results from the spring wheat tour.

Wheat Market Recap Report
September Wheat finished up 24 1/2 at 903 1/4, 5 3/4 off the high and 40 3/4 up from the low. December Wheat closed up 26 3/4 at 915. This was 42 1/2 up from the low and 4 1/2 off the high. September Chicago wheat traded sharply higher into the close after reports that more agricultural regions in Russia have declared emergencies due to the recent drought. This has stoked fears in the market that Russia will announce export restrictions in the coming weeks. Kansas City and Minneapolis followed the Chicago market higher. Export tenders have begun to come to market as major importers fear the worst is yet to come. Morocco announced a tender to purchase 300,000 tonnes of wheat and Libya issued a new tender to purchase 50,000 tonnes. Jordan rejected all offers on their 100,000 tonne tender but will likely come back to the market on the next dip. Outside markets have been supportive with the US Dollar trading sharply lower and stocks taking back some of yesterday's losses. There was widespread support in the commodity sector today caused by market optimism that central banks around the world will work together to fight deflation and slow world growth. September Oats closed up 10 1/4 at 372 3/4. This was 17 1/4 up from the low and 3/4 off the high.

Pro Farmer: After the Bell Corn Recap
Corn futures rebounded from losses the past two days and finished with gains of 4 to 11 cents in most contracts. After two days of profit-taking, focus returned to diminishing crop prospects. Traders feel recent rains and any precip that will develop over the coming days will do no more than help stabilize the crop. As a result, sellers were scarce today.

Corn Market Recap for 7/25/2012
September Corn finished up 4 1/2 at 794 1/2, 11 1/4 off the high and 12 3/4 up from the low. December Corn closed up 9 3/4 at 788. This was 17 up from the low and 8 off the high. December corn traded slightly higher into the close but settled off the session highs. The higher trade was linked to a more supportive commodity market tone due to the lower US dollar and continued fear over weather in the coming weeks. The hottest temperatures in the central Midwest will be seen today with modest relief over the weekend. The western Corn Belt will see a break in temperatures this weekend and light rainfall is expected but above normal temperatures is expected to return next week. This morning's ethanol production report and the fact that a US Senator intends to introduce legislation to waive the Renewable Fuel Standard when corn inventories fall to certain levels offered slight resistance. Ethanol production for the week ending July 20th averaged 796,000 barrels per day. This was down 8.9% from last year. Corn used in last week's production is estimated at 84.79 million bushels which is down from 85.430 million bushels last week. This crop year's cumulative corn used for ethanol production is 4.44 billion bushels vs. the USDA's current crop year estimate of 5.05 billion bushels. Corn use needs to average 104.6 million bushels per week to meet this crop year's USDA estimate. September Rice finished up 0.385 at 15.565, equal to the high and equal to the low.

GRAINS-US soy struggles on rain f'cast; corn, wheat rebound
SINGAPORE, July 25 (Reuters) - U.S. new-crop soybeans edged lower, falling for a third straight session with forecasts of rain in parts of the Midwest offering some relief as the crop enters its yield-determining phase.
"Early losses have started to turn around as the grain markets are torn between extremely alarming supply situation on one hand and expectations that current prices will induce demand rationing on the other hand," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.

China firm eyes controversial 58-sq-mile Australia farm project
CANBERRA, July 25 (Reuters) - A Chinese property conglomerate is bidding for a 58-sq-mile (15,000-hectare) farming project in the Australian outback as Canberra looks to open the remote north for farming to tap booming demand for food from Asia, especially China.    
Shanghai Zhongfu Group is bidding for the Ord East Kimberley Expansion project in Western Australia state, with plans to develop agriculture business in the sub-tropical region, but may face opposition from politicians increasingly concerned about foreign investment in Australian farms.

Rains give mild relief to US drought, grain prices tumble
CHICAGO, July 24 (Reuters) - Welcome rains provided some relief to heat-stressed cities and worried farmers in the U.S. Midwest on Tuesday, but reports of failed crops, wildfires and other fallout from the worst U.S. drought in more than 50 years tempered any optimism.
The first soaking rains for weeks in parts of the northern Midwest sent U.S. corn and soybean prices sharply lower. But those prices still hover around record highs with weather forecasts for August indicating more heat is on the way.

Tour finds above-average U.S. wheat yield prospects
MANDAN, North Dakota, July 24 (Reuters) - U.S. spring wheat yield prospects in southern North Dakota and neighboring counties in Minnesota and South Dakota are brighter than a year ago and above the average for the last five years, scouts on an annual crop tour said Tuesday.
Hot and dry weather that has scorched the Midwest Corn Belt has reached into the Dakotas as well, preventing the spring wheat crop from reaching its full potential, the scouts said.

TOUR-In Indiana's Putnam County, hopes dying for corn harvest
BLOOMINGTON, Ill., July 24 (Reuters) - On the western edge of Indiana, the Putnam County corn crop shows the effects of the worst U.S. drought in 56 years: the plants failed to form ears and will likely go unharvested, the second day of a U.S. Midwest crop tour found on Tuesday.
The area has so far received none to just a quarter of its normal rainfall since the beginning of June while temperatures have consistently soared above 100 degrees Fahrenheit. Because of the heat and dry conditions, plants are stunted at around 3 feet, leaves are curled and brown at the edges and stalks are brown at the bottom.

US should rethink ethanol target as drought bites-OECD
PARIS, July 24 (Reuters) - The United States should consider lowering its targets for the use of corn-based ethanol as a severe drought devastates the harvest, an OECD official said on Tuesday in a sign that renewed fears of a global food-price surge could revive the debate over biofuels.
Searing heat and the worst drought in half a century has parched crops in the Midwest grain belt, rattling markets that had anticipated big harvests would replenish low stocks; prices hit record highs last week. So far, however, U.S. officials say they see no need to relax a law that requires ethanol to make up nearly 10 percent of all U.S. gasoline.

US biofuel advocates urge Congress to continue Pentagon funding
WASHINGTON, July 24 (Reuters) - Military veterans and former lawmakers urged Congress on Tuesday to continue funding the Pentagon's controversial biofuels program, saying the failure to deal with U.S. dependence on foreign oil was a key factor in the wars of the past 22 years.
"As long as U.S. and global economic security are dependent on oil produced in volatile regions of the world, our military will be required to continue deployments and dangerous missions to ensure the ... security of vital energy resources," the group, led by retired Republican Senator John Warner, said in a letter to President Barack Obama and members of Congress.

Australia’s Liberals Would Expand Far North Farms on Asia Demand (Source:Bloomberg)
Australia, the world’s second- biggest wheat exporter, will seek to expand agricultural production in the country’s far north to meet surging Asian demand if the opposition coalition wins elections due next year, according to Shadow Finance Minister Andrew Robb. About 11 million hectares (27 million acres) of arable land is available in northern Australia, Robb said in an interview in Melbourne yesterday. Horticulture, sugar and rice may be industries suited to the area, he said. “It’s the century of Asia,” Robb said. “There’s so much opportunity in the region and we need to position ourselves to take advantage of that.” The Liberal-National coalition is leading Prime Minister Julia Gillard’s government in opinion polls with elections due by the end of 2013. World agricultural output needs to climb 60 percent over the next 40 years to meet growing demand for food as the global population expands and diets change, according to the United Nations’ Food & Agriculture Organization.
A mix of funding, which may include domestic and foreign investment and public-private partnerships, could be used to develop agricultural projects in northern Australia, Robb said. In northeastern Queensland state, some mining companies are prepared to pay for water at a rate that would fully finance dam construction, he said.

SOFTS-Sugar, coffee firm, buoyed by softer dollar
LONDON, July 25 (Reuters) - Sugar and coffee futures on ICE firmed in light volumes in early trade, underpinned by a weaker dollar. Benchmark October sugar futures on ICE  rose 0.09 cent or 0.4 percent to 23.58 cents a lb at 0836 GMT, having nudged up on Monday to touch 24.00 cents, a three-month high, underpinned by adverse weather in top producer Brazil.

Mexico to tender gov't-controlled sugar mills
MEXICO CITY, July 24 (Reuters) - Mexico will auction off nine government-controlled sugar mills, which together produce around a fifth of the country's sugar, to private companies by the end of the year in a move likely to boost output.
In 2001, the Mexican government took control of 27 heavily-indebted sugar refineries out of more than 50 mills operating in the country.

Better weather ahead for Brazil's coffee harvest
SAO PAULO, July 24 (Reuters) - Cooxupe, Brazil's biggest coffee cooperative, said on Tuesday dry weather in recent days has favored the harvest, which should pick up speed this week as rains stay away from the productive regions.
Harvesting in the areas where the cooperative operates is behind previous years' performance due to the above-normal rainfall that has fallen on the world's largest coffee belt in recent months.

Brazil's CS cane crop seen up at 520 mln tonnes - Safras
SAO PAULO, July 24 (Reuters) - Brazil's main center-south cane output is seen at 520 million tonnes this season, crop analysts Safras e Mercado said on Tuesday, raising their previous estimate 4 percent from 500 million tonnes.
Brazil's cane crop, the source of half the world's sugar exports, suffered its first drop in output in 11 years during the previous crop due to drought and falling yields. Output from last year was 494 million tonnes, down sharply from the record 560 million tonnes of the previous 2010/11 season.

Oil Falls First Day in Three in New York as U.S. Stockpiles Rise (Source:Bloomberg)
Oil dropped for the first time in three days in New York on concern rising stockpiles in the U.S., the world’s biggest crude consumer, signal faltering demand. Futures slipped as much as 0.4 percent after gaining 0.5 percent yesterday. Crude inventories climbed 2.7 million barrels last week, the first gain in five weeks, data from the Energy Department showed. They were forecast to fall 1 million barrels, according to a Bloomberg survey. Sales of new U.S. homes unexpectedly dropped in June from a two-year high, a Commerce Department report showed. “We’re stuck in the $80s until we get a little more confidence around global growth prospects,” Michael McCarthy, a chief market strategist at CMC Markets in Sydney said in a telephone interview. “I would expect, especially given the inventory numbers, oil to gravitate back toward the middle of the $81.50 to $88.50 range over the next few trading days.”
Oil for September delivery slid as much as 34 cents to $88.63 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.73 at 10:51 a.m. Sydney time. The contract yesterday climbed 47 cents to $88.97, the highest close since July 20. Prices are 10 percent lower this year. Brent crude for September settlement decreased 21 cents to $104.17 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $15.44, from $15.41 yesterday.

Falling output, old fields spur North Sea tax fight
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 25 (Reuters) - UK government revenues from oil and gas production will almost halve over the next four years, as falling output as well as investment in new fields and the cost of decommissioning old ones cut into tax receipts.
Shrinking revenues highlight the rapid depletion of North Sea oil fields, but also the growing costs of plugging and abandoning old wells that are no longer productive as the province becomes more mature.

OIL-Brent steady, Middle East strife offsets Europe gloom
LONDON, July 25 (Reuters) - Brent crude oil gained slightly, as concern about threats to oil supply from the Middle East offset worries about oil demand from the euro zone.
"It seems as though all the bad news is priced in, and people are thinking things can't get much worse," said Christopher Bellew, broker at Jefferies Bache.

Hong Kong’s Largest Bullion Vault Signals Region’s Rising Wealth (Source:Bloomberg)
Hong Kong’s largest gold-storage facility, which can hold about 22 percent of the bullion now in Fort Knox, will open in September to meet rising demand from banks and the wealthy, according to owner Malca-Amit Global Ltd. The facility, located on the ground floor of a building within the international airport compound, has capacity for 1,000 metric tons, said Joshua Rotbart, general manager for the Hong Kong-based company’s Malca-Amit Precious Metals unit. Two of the vaults may hold assets, including gold, for banks and financial institutions, and others will be used for diamonds, jewelry, fine art and precious metals, said Rotbart.
The move in Hong Kong reflects increased demand for gold in Asia even as the commodity struggles to sustain its rally into a 12th year. Gold-demand growth in China, the world’s second- largest user after India last year, is slowing, according to the World Gold Council. Vault charges will depend on each customer’s operations, according to Rotbart, who declined to give a figure for the venture’s cost beyond millions of dollars. Hong Kong is a very important center for gold, especially because it acts as a doorway to China,” said Sunil Kashyap, head of Asia-Pacific foreign exchange and precious metals at Scotiabank. “Current international hubs are in New York, Zurich and London. There’s still a need to set up an Asian hub for physical gold. The trend is for more people to look at storage and trading in Asia, when it comes to physical metal.”

ArcelorMittal Rises as Profit Withstands Crisis: Amsterdam Mover (Source:Bloomberg)
ArcelorMittal (MT), the world’s biggest steelmaker, rose in Amsterdam trading after indicating its full- year earnings would meet analyst expectations even as the European crisis saps demand. ArcelorMittal advanced as much as 3.6 percent before closing 0.9 percent higher at 11.84 euros. Second-half earnings before interest, tax, depreciation and amortization per ton of steel would be similar to the first, the Luxembourg-based company said today. It reported Ebitda of $4.4 billion in the six months ended June, higher than the $4.2 billion median estimate of seven analysts compiled by Bloomberg. “There is relief that a disaster has been averted,” said Tim Cahill, an analyst at J&E Davy Holdings Ltd. in Dublin. “But before people get too excited we need to get some visibility on steel prices. The tone is a little more positive then we might have thought.”
Steelmakers are posting lower earnings as the European economic crisis erodes demand for steel and commodity prices weaken as Chinese growth slows. Posco (005490), Asia’s third-biggest steelmaker, yesterday reported a 44 percent decline in profit and cut its sales targets for the second time as demand fell.

Gold Futures Gain Most in Three Weeks on Europe Stimulus Outlook (Source:Bloomberg)
Gold gained the most in more than three weeks on speculation that European leaders may take further steps to tame the debt crisis. European Central Bank council member Ewald Nowotny said today there were arguments in favor of giving the region’s rescue fund a banking license. The move would give the permanent bailout fund, the European Stability Mechanism, access to ECB lending, increasing cash available for aid. Gold has dropped 7.3 percent since Jan. 31, partly as Europe’s escalating crisis damped global growth prospects and inflation expectations. “This is a market fueled by emotional readings of certain words coming from certain quarters,” Jon Nadler, an analyst at Kitco Inc., a precious-metal refiner and research company in Montreal, said in a report. “People are expecting some form of stimulus monetary action sooner rather than later.”
Gold futures for December delivery rose 2 percent to settle at $1,612.70 an ounce at 1:43 p.m. on the Comex in New York, the biggest gain for a most-active contract since June 29. Silver futures for September delivery jumped 2.4 percent to $27.466 an ounce on the Comex, the biggest gain since July 3.