Hedge Funds Add Wagers in Longest Streak Since 2009: Commodities(Source:Bloomberg)
Hedge funds raised commodity bets in the longest bullish streak in three years as speculation that policy makers will increase economic stimulus drove prices toward the biggest monthly rally since October. Money managers raised their net-long positions across 18 U.S. futures and options by 3.4 percent to 1.17 million contracts in the week ended July 24, U.S. Commodity Futures Trading Commission data show. Wagers gained for seven weeks, the longest increase since June 2009. Corn bets climbed to the highest since September 2011, and traders are the most bullish on natural gas since October 2006.
Investors added bets even as commodities fell 0.4 percent in the week to July 24. The bulls were proved right after prices rebounded 1.8 percent in the following three days as European Central Bank President Mario Draghi pledged to protect the euro on July 26. German Chancellor Angela Merkel and French President Francois Hollande echoed his comments the next day. A U.S. government report on July 27 showed the world’s biggest economy grew at a slower pace in the second quarter, increasing pressure on the Federal Reserve to boost aid measures. “Some of these issues that have been weighing against commodities, particularly industrial metals and energy, have probably over-emphasized the negative,” said Bill O’Neill, the chief investment officer for the Europe, Middle East and Africa at Merrill Lynch Wealth Management, which oversees more than $1.8 trillion. “The fundamental backup is the policy easing.”
Asia's feed mills caught short by costly corn
SINGAPORE, July 30 (Reuters) - As corn prices climb past the record levels hit this time last year, a major factor has changed for Asian importers of the grain: Australia no longer has heaps of cheap feed wheat as a substitute.
For a region that buys just under half the world's traded corn, the 25 percent jump in cash prices since the start of June for the main animal feed ingredient means more costly pork, chicken and beef by the end of the year.
Grocery giants bloodied by surge in corn prices
--Gavin Maguire is a Reuters market analyst. The views expressed are his own--
CHICAGO, July 27 (Reuters) - It's not just cattle feeders and ethanol manufacturers who are feeling the pain from the recent sharp rise in crop prices. Top manufacturers of goods that line grocery store shelves and meat counters have also been reeling of late as their share prices slump on the back of the dramatic surge in key production inputs.
Pork giant Smithfield Foods , chicken producer Tyson Foods and breakfast food maker Kellogg Co have all suffered steep share price declines lately on worries that each firm will have trouble passing on the steeply higher input and ingredient costs to consumers amid the prevailing uncertain economy.
Grains Rally on Weather(source:CME)
Another round of above average temperatures and lack of rain sparked a fresh round of buying interest and sharp gains in the grain markets to begin the week.
Pro Farmer: After the Bell Wheat Recap (source:CME)
Chicago wheat futures ended 1 1/2 to 16 1/2 cents higher, with the September through March 2013 contracts posting double-digit gains. Kansas City wheat finished mostly 7 to 11 cents higher. Minneapolis wheat posted gains of mostly 4 to 8 cents. Chicago wheat futures paced gains in the wheat market thanks to strength in the corn market. Traders are also concerned with crop prospects in the Former Soviet Union due to drought in key production countries.
Wheat Market Recap Report(source:CME)
September Wheat finished up 16 1/2 at 914 1/2, 5 1/4 off the high and 11 1/2 up from the low. December Wheat closed up 16 at 927 1/4. This was 10 1/2 up from the low and 6 off the high. September Chicago wheat traded sharply higher into the close with KC and Minneapolis following. Volume was slightly lower today but wheat managed to hang onto gains. Chicago wheat was supported by a strong corn market and off a warm and dry forecast for the Black Sea and Australia. Nearly a third of the Russian spring wheat crop will lack moisture this week and minimal rainfall is expected in Australian wheat growing areas over the next 10 days. East Russia domestic wheat prices rose last week signaling supply tightness and government officials announced that they would release additional intervention stocks to calm inflation fears. A well know banking institution announced that they expect the USDA to cut Russian wheat production to 42-43 million tonnes on the next USDA report. This is in line with market expectations. Export inspections for the week ending July 26th were reported at 18.60 million bushels vs. 11.64 for the week prior. Inspections needed per week to meet the current USDA estimate for the 2012/13 marketing year are 23.79 million bushels. Current inspections total 12.2% of the USDA estimate. Outside markets offered minimal resistance to wheat prices today as the US Dollar traded higher and US stocks were generally lower on the day. September Oats closed up 7 1/4 at 384 1/4. This was 2 1/2 up from the low and 3 1/2 off the high.
Pro Farmer: After the Bell Corn Recap (source:CME)
Corn futures ended slightly off session highs with gains of 17 to 21 1/2 cents in the September through July 2013 contracts. Far-deferred contract months posted gains the 9- to 12-cent range. Focus remains on the weather, with traders showing their disappointment with weekend rainfall by moving futures higher today. Traders expect the crop to continue to wither this week as there's little rain in the near-term forecast and above-normal temps are expected to stay around.
Corn, Soybean Conditions Decline as U.S. Drought Expands(Source:Bloomberg)
The condition of the U.S. corn crop worsened for an eighth straight week amid the worst Midwest drought in a generation. Soybean ratings also fell. About 24 percent of the corn was in good or excellent condition as of yesterday, down from 26 percent a week earlier and 77 percent in mid-May, the U.S. Department of Agriculture said today in a report. An estimated 29 percent of the soybeans got the top ratings, down from 31 percent. Both crops are in the worst shape for this time of year since a drought in 1988. “The damage has been done to the corn crop,” Peter Meyer, a senior director of agriculture commodities at PIRA Energy Group in New York, said by telephone today. “Now the weather is starting to become more of a factor in the soybean markets.” The worst of the drought occurred when corn plants were going through the critical pollination stage last month. Soybeans, which normally are planted later in the Midwest, are just now entering reproductive stages, so they have more time to grow.
Corn futures reached a record $8.1775 a bushel today on the Chicago Board of Trade and have surged 28 percent this month. Soybeans are up 15 percent in July. During the past week, little or no rain fell in parts of Iowa, Illinois and Nebraska, the largest corn-growing states, National Weather Service data show.
Corn Market Recap for 7/30/2012(source:CME)
September Corn finished up 21 1/2 at 820, 3 off the high and 20 1/4 up from the low. December Corn closed up 20 3/4 at 814. This was 19 up from the low and 3 3/4 off the high. December corn traded sharply higher into the close after posting a new all-time high. The sharply higher trade is linked to continued concern over the falling US corn yield. Private crop scouts have estimated the US corn yield near 118-122 bushels per acre. The market is likely trading a yield slightly higher than that but traders fear that the warmer than normal weather this week will cause increased yield loss in the western Corn Belt. Crop condition reports will be released this afternoon. The trade expects a 2% decline in corn good/excellent conditions. Export inspections for the week ending July 26th were reported at 21.44 million bushels vs. 19.59 million bushels in the week prior. This week's inspections continue to lag the needed pace of 36.11 million bushels to reach the 2011/12 USDA estimate. Current inspections are 88% of the USDA estimate for this crop year. Iowa ethanol processors posted their 3rd straight week of positive margins. As of July 27th, Iowa processors saw margins of.06 cents/bushel which was slightly lower than last week. A firmer DDG market and lower corn prices also offered some support today. Outside markets offered minimal resistance today, with the US Dollar mostly trading higher and US equities spending a lot of time in negative ground. September Rice finished up 0.235 at 15.835, equal to the high and 0.145 up from the low.
GRAINS-Soy jumps to 1-week top, new-crop corn hits contract high
SINGAPORE, July 30 (Reuters) - Chicago soybeans jumped to a one-week top while new-crop corn rose to a contract high as the worst drought in five decades continued to threaten crop yields across the U.S. grain belt with little relief expected this week.
"There is no weather relief this week as there are no rains in central and southeastern corn belt until the weekend and temperatures will remain above average," said Victor Thianpiriya, agricultural commodity strategist at ANZ.
Indonesia wheat flour consumption may rise 10 pct in 2012
JAKARTA, July 30 (Reuters) - Wheat flour consumption in Indonesia, Asia's top wheat importer, may increase 10 percent in 2012, the Indonesian Wheat Flour Producers Association said on Monday, as increasing wealth enables more consumers to shift away from rice.
Southeast Asia's largest economy may import as much as 6.8 million tonnes in 2012, compared to 6.2 million tonnes last year, association Chairman Francis Welirang told Reuters.
Thailand may adjust rice buying scheme for Oct crop-minister
BANGKOK, July 30 (Reuters) - Thailand may limit the amount of rice it buys from farmers or cap the money it pays per tonne for the October crop, the commerce minister said on Monday, in a bid to defuse criticism of a government intervention scheme aimed at helping the poor.
"We may limit the amount of rice we buy or put a ceiling on the money we pay to individual farmers," Minister Boonsong Teriyapirom told reporters, adding that the policy was being looked at to allow small farmers to benefit.
Australian wheat growers tap some, not all, of price spike
SYDNEY, July 30 (Reuters) - Australian wheat growers look set to miss out on the full benefits of a spike in prices on the back of the worst drought to hit the U.S. Midwest in more than 50 years after reducing plantings and selling stocks earlier in the year.
Led by a 55 percent spike in corn, global grain prices have soared as unrelenting heat across the U.S. Midwest over the past six weeks has destroyed crops, reducing yields in what was expected to be a bumper harvest.
Bangladesh to lift rice export ban to boost farmers
DHAKA, July 29 (Reuters) - Bangladesh is lifting a ban on rice exports to support farmers after record crops and bulging domestic reserves left prices below production costs, the finance minister said on Sunday.
Bangladesh, the world's fourth-biggest rice producer, banned overseas shipments of common varieties in May 2008 following a spike in prices and banned all exports a year later.
Drought slashes U.S. Midwest corn crop
OMAHA, Neb., July 27 (Reuters) - The most extensive U.S. drought in five decades has left corn plants withered and dying, and crop yields in the largest producing states will be much lower than experts have forecast, scouts said on Friday as they completed a U.S. Midwest crop tour.
The MDA EarthSat crop tour estimated a corn yield of a 118 bushels per acre after surveying 49 fields in Iowa, Illinois, Indiana and Ohio. That was sharply lower than a U.S. Agriculture Department estimate earlier this month of a yield of 146 bpa and a Reuters poll this week of 130.8 bpa.
Dry conditions affecting Argentine wheat crop - government
BUENOS AIRES, July 27 (Reuters) - Dry weather in some wheat-growing areas in Argentina has begun to affect the 2012/13 crop, which farmers have yet to finish planting, the Agriculture Ministry said on Friday in its weekly crop progress report.
The country is the world's No. 6 wheat exporter and the top supplier to neighboring Brazil. The government expects farmers to seed 3.8 million hectares with the grain this season, down from 4.6 million hectares last season.
Midwest crops, fish, water supply punished by US drought
CHICAGO/SCRANTON, Iowa, July 27 (Reuters) - Temperatures heading north of 100 degrees Fahrenheit and scarce rain portended another blistering weekend for much of the U.S. Midwest, where the most extensive drought since 1956 is devastating crops, evaporating rivers, and threatening to push world food prices higher.
Violent storms brought rain to the extreme eastern portions of the U.S. corn belt in Ohio on Thursday night, but moisture was sparse further west.
Corn highly variable in west Iowa, yields lower
SCRANTON, Iowa, July 27 (Reuters) - Corn yield potential appears highly variable in west-central Iowa, mirroring the ups and downs of production prospects in the central and eastern areas of the No. 1 corn and soy growing state, scouts on a U.S. Midwest crop tour said Friday.
Some plants suffering under the worst drought in 56 years were withered and dying, standing only 4 to 5 feet (1 to 1.5 m)tall with thin stalks and small ears.
Russia harvested 24.8 mln T of grains as of July 26 - ministry
MOSCOW, July 27 (Reuters) - Russia has harvested grain and legumes from 24.1 percent of the total target area, bringing in 24.8 million tonnes compared to 25.3 million tonnes a year earlier, harvest data published on Friday by Russia's Agriculture Ministry showed as of July 26.
Inclement weather in Russia's southernmost agricultural regions has slashed yields to 2.3 tonnes per hectare, it added.
India's monsoon stays weak as govt mulls drought steps
NEW DELHI, July 27 (Reuters) - India's monsoon rains are unlikely to pick up enough to avert the possibility that ministers meeting next week may officially declare a drought, which could prompt the government to offer more support for farmers to ensure adequate food supplies.
Rains from June 1 up to the end of the planting month of July are likely to be 21-22 percent below average, Farm Secretary Ashish Bahuguna said on Friday, unchanged from the seasonal shortfall recorded up to July 25.
SOFTS-Sugar nudges higher, weak monsoon supports
LONDON, July 30 (Reuters) - Raw sugar futures edged higher supported by key producer India's weak monsoon, while cocoa was steady and robusta coffee eased. Sugar futures were slightly higher in early trading, as a lack of rain in the world's second biggest producer India, was expected to cut the country's production prospects.
Chinese cotton stock policy to dominate in 2012/13 -Allenberg
July 27 (Reuters) - China's policy of buying and stashing large amounts of cotton in state reserves will dominate the market in the 2012/13 marketing season getting started on Aug. 1, the chief executive of the world's biggest cotton trader and merchant said on Friday.
Allenberg Cotton Co President and CEO Joe Nicosia told the Ag Market network's annual radio program from New York that "everything (in the cotton market) is dependent on the Chinese reserve policy."
OIL-Brent slips to $106 as stimulus expectations fade
LONDON, July 30 (Reuters) - Brent crude oil fell to around $106 a barrel, erasing early gains as hopes faded that the United States and Europe would soon announce measures to shore up their fragile economies, which could boost the outlook for oil demand.
"Speculation over central bank action looks like it has gone too far," said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt. "The euro has already begun to retreat and oil has also started to weaken. The move upwards seems exaggerated."
Japan's Iranian crude imports jump in June from May
TOKYO, July 30 (Reuters) - Japan's crude oil imports from Iran in June rose 60.5 percent from May as refiners ramped up loadings before a halt in oil flows this month due to the imposition of sanctions on the Middle Eastern country.
Customs-cleared imports from Iran rose to 812,693 kilolitres (170,389 barrels per day) in June from 106,162 bpd in the previous month, Ministry of Finance data showed on Monday. Imports were down 33.9 percent from a year earlier.
Oil Trades Near Two-Day Low Before Central Banks Meet on Economy(Source:Bloomberg)
Oil traded near the lowest closing price in two days in New York before central bank policy makers meet to discuss the economy and ahead of a report that may show crude imports fell in the U.S. Futures were little changed, heading for the first monthly gain in three. Prices slid for the first time in five days yesterday as economic confidence in the euro area dropped to the lowest level in almost three years. The European Central Bank and the U.S. Federal Reserve hold separate meetings this week, with ECB President Mario Draghi pledging to do whatever it takes to preserve the euro. Crude purchases by the U.S. probably dropped in the seven days ended July 27, a Bloomberg News survey showed before an Energy Department report tomorrow.
“Oil, like a lot of markets, is parked, waiting for the outcome of the ECB meeting,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market has taken quite a leap of faith and run up based on Draghi’s statements of intent so we’ll be looking for some detail which confirms that.” Oil for September delivery was at $89.58 a barrel, down 20 cents, in electronic trading on the New York Mercantile Exchange at 11:07 a.m. Sydney time. The contract yesterday dropped 0.4 percent to $89.78, the lowest close since July 26. Prices are up 5.4 percent this month and 9.4 percent lower this year.
Copper Drops on Economic Concerns Before Central Bankers Meet(Source:Bloomberg)
Copper fell for the first time in four sessions as investors awaited signals from central banks this week on bolstering the faltering global economy. European Central Bank President Mario Draghi is attempting to build consensus for a plan to ease euro-area borrowing costs amid the region’s debt crisis. Federal Reserve policy makers meet before a U.S. employment report that may show the pace of hiring in July failed to reduce the jobless rate. “A lot of people are taking a wait-and-see attitude ahead of the meetings and the payrolls report,” Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Copper will rally if we get an agreement out of Europe, but the market needs to see it. The table is set, but they’re waiting for the meal to be served.”
Copper futures for September delivery declined 0.3 percent to settle at $3.416 a pound at 1:14 p.m. on the Comex in New York. The metal rose 2.2 percent in the previous three sessions in the longest rally since mid-June. A Labor Department report on Aug. 3 is expected to show U.S. payrolls increased by 100,000 workers, according to the median forecast of economists surveyed by Bloomberg News. Unemployment is projected to hold at 8.2 percent.
Most-Accurate Gold Forecasters Splitting After Rout: Commodities(Source:Bloomberg)
The only three analysts to correctly predict gold’s biggest quarterly slump in four years are now split, reflecting investors’ diverging views on the probability of central banks doing more to shore up growth. Justin Smirk of Westpac Banking Corp., the most accurate of 20 analysts tracked by Bloomberg in the second quarter, says prices will keep dropping. Eugen Weinberg of Commerzbank AG and Nick Trevethan at ANZ Banking Group Ltd. predict a record within a year. Hedge funds and other speculators are the least bullish since 2008, even with investor holdings of physical bullion in exchange-traded products close to an all-time high, government data and figures compiled by Bloomberg show.
While gold has rallied since tumbling to within 1 percent of a bear market in May, it’s still 16 percent below the record $1,923.70 an ounce reached on Sept. 6. Investors have favored sovereign debt and the dollar to protect their wealth as economic growth slows, driving yields to record lows and the U.S. currency to a two-year high. Central banks from Europe to China cut interest rates this month, and the Federal Reserve said it was prepared to act to boost the recovery. “There is not much interest in gold right now given the fears of economic slowdown globally,” said Michael Cuggino, who manages $17 billion of assets at Permanent Portfolio Funds in San Francisco, with about 20 percent of his investments in gold. “The velocity of the money has not yet entered the system, but one has to buy gold as it is a long-term play and will keep rising as you need insurance against future inflation.”
July Cargoes on Panamax Ships Slump as China Coal Demand Falls(Source:Bloomberg)
The number of cargoes booked on Panamax bulk carriers, the largest to transit the Panama Canal, slumped 33 percent in July amid slowing Chinese imports of thermal coal, used for power stations, Morgan Stanley said. There were 151 new cargoes reported for Panamax ships in July, compared with 224 for the same period 12 months ago and 174 in each of the previous two months, according to an e-mailed report today from Morgan Stanley analysts including New York- based Fotis Giannakoulis. Monthly bookings, known as fixtures in the industry, gained for the larger Capesize vessels in July compared with the previous two months, even as rates to hire the ships slumped. “Panamax fixtures continue to decline as China’s thermal coal demand is softening,” the U.S. investment bank said in the report, citing a slowing economy and growing hydropower output. “The weakness of the freight market is rapidly moving towards the smaller vessels that until recently seemed decoupled.”
The Baltic Dry Index, a measure of commodity freight costs for four vessel sizes, dropped 1.9 percent to 915, the lowest since June 14, according to the Baltic Exchange. The London- based exchange assesses freight costs on more than 50 international maritime routes. Average Panamax hire costs slid 2.1 percent to $8,054 and are 42 percent lower than 2012’s high on April 27, data show. U.S. grain and soybean exports, which usually begin to surge in October, will be reduced due to an ongoing drought, extending weakening demand for smaller bulk carriers, according to the report.
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