DTN Closing Grain Comments 08/06 14:49 : Weekend Rains Pressure Soybeans(Source:CME)
Higher rain totals than expected over the weekend took soybeans sharply lower Monday, though the debate rages on how much it will help given the crop is 2 to 3 weeks ahead of schedule. Corn and wheat put up a good fight despite the weakness in beans, with the latter able to close higher.
Wheat Market Recap Report (Source:CME)
September Wheat finished up 2 at 893 1/4, 4 off the high and 16 1/2 up from the low. December Wheat closed up 2 1/2 at 906 1/4. This was 16 3/4 up from the low and 3 1/2 off the high. September Chicago wheat traded higher into the close after falling overnight on follow through from a lower corn market. KC and Minneapolis wheat traded lower on the day. The wheat market found support this morning after a private Russian consultant lowered their Russian wheat production forecast to 40.5-43 million tonnes. This was down from previous estimates of 46.5 million tonnes. Furthermore, the Russian Agriculture Ministry reportedly expects their best estimate for wheat production to be 45 million tonnes. The last USDA estimate was 49 million. Above normal heat and below normal precipitation continues to stress spring wheat areas in Russia, which is adding to the supportive trade. The United Nations' Food and Agriculture Organization said on Monday it had cut its 2012 global forecast for rice paddy production by 7.8 million tonnes to 724.5 million tonnes, due mainly to below average monsoon rains in India. This could have a positive impact on domestic usage of wheat in the coming year as major importers come to market for the cheapest available grain. Wheat export inspections for the week ending August 2nd were pegged at 20.90 million bushels vs. 18.60 million bushels last week. Current inspections stand at 14% of the current USDA estimates vs. the 5 year average of 16%. Weekly inspections continue to fall short of the 23.8 million bushels needed each week to meet the USDA estimate. September Oats closed down 4 1/2 at 373 1/2. This was 4 1/2 up from the low and 4 1/4 off the high.
Pro Farmer: After the Bell Wheat Recap(Source:CME)
Wheat futures saw two-sided trade today but a late surge of buying interest helped futures to finish high-range. Chicago wheat ended roughly 2 to 10 cents higher; Kansas City closed mixed and Minneapolis favored the downside in a choppy finish. Wheat futures saw choppy trade today, with bears having a slight advantage most of the day and into the close thanks to spillover pressure from corn and soybeans.
Corn Market Recap for 8/6/2012 (Source:CME)
September Corn finished down 7 at 803, 4 3/4 off the high and 10 up from the low. December Corn closed down 2 1/2 at 805. This was 15 3/4 up from the low and 4 3/4 off the high. December corn traded slightly lower into the close. Pressure was linked to a sharply lower soybean market after beneficial rainfall spread over 50% of the Midwest this weekend. The corn market continues to consolidate above $8.00 ahead of the USDA report on Friday where traders expect reductions to the US corn yield. Crop condition ratings for US corn are expected to decline 1-2% as temperatures have remained above normal for areas west of the Mississippi River and yields continue to fall. The US Dollar turned lower midday, offering support to the corn market. Corn export inspections for the week ending August 2nd were pegged at 19.88 million bushels vs. 21.43 million bushels last week for the 2011/12 marketing year. Current inspections stand at 89.3% of the current USDA estimates vs. the 5 year average of 89.8%. Weekly inspections continue to fall short of the 39.88 million bushels needed each week to meet the USDA estimate. September Rice finished down 0.025 at 15.95, 0.09 off the high and 0.05 up from the low.
Pro Farmer: After the Bell Corn Recap(Source:CME)
Corn futures opened lower, but trimmed losses to finish mixed. The September through May contracts ended 1 1/4 to 7 cents lower, with the rest of the market up 1/2 to 3 cents amid bull spread unwinding. Early weakness was tied to spillover from sharp losses in the soybean market, but traders trimmed losses as they realize weekend rains will do no more than stabilize the corn crop. Pressure on nearby futures was also limited by positive outside markets.
GRAINS-Soybeans drop on rain forecast; USDA report eyed
SYDNEY, Aug 6 (Reuters) - Chicago soybeans fell more than 2 percent, unwinding last week's gains, on forecasts for light rain in some regions of the drought-battered U.S. Midwest over the coming days.
"There's cooler weather and a little bit of light rain forecast, which I think is keeping the market a bit depressed," Andrew Woodhouse, a Sydney-based analyst at Advance Trading Australasia said.
FAO cuts global rice output forecast for 2012
ROME, Aug 6 (Reuters) - The United Nations' Food and Agriculture Organisation said on Monday it had cut its 2012 global forecast for rice paddy production by 7.8 million tonnes to 724.5 million tonnes, due mainly to below average monsoon rains in India.
A 22 percent lower than average monsoon rainfall in India through mid-July is likely to reduce output in the country this season, FAO said. Production forecasts have also been cut for countries including Cambodia and Nepal.
Grain yields halved in part of Russia's Volga Valley
BOLSHIE KLYUCHISHCHI, Russia, Aug 6 (Reuters) - Farmers in this drought stricken Russian province are used to shipping grain down the Volga River as far afield as Iran but this year yields have halved, sending up local prices and prompting farms to hold onto grain in hope of further gains.
The Ulyanovsk region harvested 1.3 million tonnes of grains in 2011, exporting a million tonnes of that.
Saudi Arabia buys hard wheat from U.S., Australia, EU
JEDDAH, Saudi Arabia, Aug 5 (Reuters) - Saudi Arabia's grains authority bought 290,000 tonnes of hard wheat from North and South America, the European Union and Australia for shipment in October and November, the Saudi Grain Silos and Flour Mills Organisation said in an emailed statement on Sunday.
"Saudi Arabia has bought 290,000 tonnes of hard wheat (12.5 percent protein) from the EU, Australia, North and South America (Seller options) for October and November shipments," it said.
Informa cuts forecasts for US 2012 corn, soy production
CHICAGO, Aug 3 (Reuters) - Private analytics firm Informa Economics expects the U.S. government to lower its U.S. 2012 corn yield estimate to 120.7 bushels per acre (bpa) next week, but the firm also said in a note to clients on Friday that it expected a "most likely final" corn yield of 131.0 bpa.
Similarly, Informa said it expected the U.S. Department of Agriculture next week to cut its U.S. 2012 corn production forecast to 10.338 billion bushels, but the firm pegged final U.S. corn production at 11.224 billion bushels.
Hail hammers Saskatchewan, Alberta crops
WINNIPEG, Manitoba, Aug 3 (Reuters) - Hail pounded crops in Saskatchewan and Alberta during the past two weeks, likely causing significant damage in Canada's two biggest wheat- and canola-growing provinces, a report said.
Saskatchewan has had hail nearly every night in the past two weeks, with insurance claims totaling more than 7,600, ahead of the five-year average and last year's pace, the Canadian Crop Hail Association said.
Texas feedlots buy HRW wheat from Canada
Aug 3 (Reuters) - Texas cattle feedlots purchased 45,000 tonnes of hard red winter wheat from Canada in recent days due to tight supplies of feed corn and its record-high prices, United States and Canadian trade sources said on Friday.
In the past two weeks, Canadian exporters sold as many as 500 rail cars of wheat for shipment into the No. 1 U.S. cattle state of Texas, the sources said.
SOFTS-Sugar dips, cocoa falls, eyes on weather
LONDON, Aug 6 (Reuters) - Raw sugar futures on ICE eased, weighed by harvest pressure in Brazil, while cocoa fell in a technically driven correction, pressured by a firmer dollar. Arabica coffee futures edged higher, with upside potential capped by harvesting in Brazil. A key focus of the softs markets was weather in Brazil, the world's top sugar and coffee producer, and in West Africa, the main cocoa growing region. Dry weather in West Africa could erode output prospects, dealers said.
Speculators switch to net short cotton position-CFTC
Aug 3 (Reuters) - Speculators turned net short in cotton contracts on ICE Futures U.S. for the first time since mid-June, in the week to July 31, when the futures market hit a one-month low, U.S. Commodity Futures Trading Commission data showed on Friday.
The noncommercial dealers cut 3,948 cotton futures and options, causing it to switch to a net short position of a slight 255 contracts, the data showed.
Cotton Crop in India to Tumble as Dry Weather Hurts Crops (Source:Bloomberg)
The cotton harvest in India, the world’s second-biggest grower, is poised to decline as the worst monsoon since 2009 parches fields and curbs planting, potentially cutting exports for the first time in three years. Futures surged to a six-month high in Mumbai. The crop in Gujarat, the largest producer, may plunge as much as 30 percent in the harvest starting Oct. 1 from 12 million bales of 170 kilograms each a year earlier, said Hasmukhbhai Raval, chairman of the Gujarat State Cooperative Cotton Federation. The planted area in the state will probably slump by as much as 25 percent from 3 million hectares (7.4 million acres) in 2011-2012, he said. Rainfall in some parts of Gujarat is as much as 81 percent below a 50-year average as more than 50 percent of India is threatened by drought, shriveling crops from rice to cotton and oilseeds. A smaller harvest would reduce exports, helping halt a decline in New York prices, which slumped 23 percent in the past year as demand slowed in China, the biggest consumer.
“The outlook for the 2013 crop suggests global supply might be squeezed due to competition for acreage from crops like soybeans, and the weak monsoon in India,” Abah Ofon, an analyst at Standard Chartered Plc, said by e-mail. “Output is being disincentivised at current price levels and we believe global supply will be lower next year.” Global cotton production in the year that started Aug. 1 will drop to 24.878 million metric tons from a record 26.66 million tons in the year ended July 31, Birkenhead, U.K.-based industry researcher Cotlook Inc. said July 19.
Euro Coal-Prices expected to be pushed up by Colombian strike
LONDON, Aug 3 (Reuters) - European physical prompt coal saw extremely thin trading on Friday since most market players are on holiday, but analysts said that prices would likely come under upward pressure as a strike in Colombia reduced supplies to Europe.
Two of Colombia's top coal exporters -- Drummond International and Glencore's Prodeco unit -- have already cancelled some cargoes due to an 11-day strike that may give support to global prices despite an oversupplied market.
Oil Drops From Two-Week High as Investors Seek Profit After Gain (Source:Bloomberg)
Oil slid from the highest close in two weeks in New York as investors sought to profit from crude’s 5.8 percent advance in two days. Futures slipped as much as 0.5 percent after climbing 0.9 percent yesterday. Prices are declining in New York as they approach technical resistance at $92.75 a barrel, according to data compiled by Bloomberg. U.S. crude stockpiles probably fell by 1.6 million barrels last week, according to a Bloomberg News survey of nine analysts before an Energy Department report tomorrow. Tropical storm Ernesto was forecast to become a hurricane as it heads for Mexico’s Bay of Campeche. “If you come up to the topside then naturally you’re going to see people take profit,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney, who predicts West Texas Intermediate oil faces technical resistance at $92.50 a barrel.
Oil for September delivery slid as much as 42 cents to $91.78 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.91 at 2:28 p.m. Singapore time. It settled yesterday at $92.20, the highest level since July 19. Prices are 7 percent lower this year. Brent crude for September settlement was at $109.35 a barrel, down 20 cents, on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $17.45 from $17.35 yesterday.
Saudi oil price cut shows softer Asian demand
--Clyde Russell is a Reuters market analyst. The views expressed are his own--
LAUNCESTON, Australia, Aug 6 (Reuters) - Saudi Arabia's decision to cut oil prices for September loading to major customers in Asia by more than expected is probably the best sign that physical crude demand is softening.
The official selling price (OSP) of the main grade Arab Light was cut to a premium of $1.25 a barrel over the Oman-Dubai average for September, down from $2.05 for August cargoes.
OIL-Oil softens after surge; data eyed
LONDON, Aug 6 (Reuters) - Oil retreated from last week's gains, easing towards $108 a barrel as investors took profits and awaited more clues on the health of the global economy and the outlook for oil demand.
"Prices did rise quite a lot so it's probably profit-taking going on," said Michael Creed, an economist at the National Australia Bank.
Vietnam July crude oil output jumps to 1.38 mln T-min
HANOI, Aug 6 (Reuters) - Vietnam's July crude oil production rose 16 percent from a year ago to 1.38 million tonnes, or 326,000 barrels per day, the Industry and Trade Ministry estimated on Monday, slightly above an earlier government estimate of 1.31 million tonnes.
Crude oil production in the first seven months of 2012 increased 13.2 percent from the same period last year to 9.5 million tonnes, the ministry said, citing data by state oil and gas group Petrovietnam.
Many U.S. coal power plants headed for retirement(Source:CME)
Cheap, abundant natural gas, stricter air-quality rules hastening shift. About one-sixth of U.S. coal-fired power capacity is on track to be phased out by 2020 as older plants are shut down and more electricity is generated through cheaper natural gas, according to the Energy Information Administration. In a recent forecast, the EIA said an estimated 49 gigawatts of coal-burning capacity, or less than 5% of nationwide electrical capacity, will be retired over the next eight years. “Most of the generators projected to retire are older, inefficient units primarily concentrated in the Mid-Atlantic, Ohio River Valley, and Southeastern U.S. where excess electricity generation capacity currently exists,” the EIA said in the report. “Lower natural gas prices, higher coal prices, slower economic growth, and the implementation of environmental rules all play a role in the retirements,” according to the EIA, the Energy Department’s statistical arm.
Iron-Ore Rout Seen Curbing Commodity-Ship Losses: Freight (Source:Bloomberg)
The cheapest iron ore in 31 months and the lowest shipping costs on record are poised to increase the number of cargoes going to China, curbing losses for vessel owners enduring a seven-month run of unprofitable rates. Capesizes, each hauling about 160,000 metric tons of cargo, will earn an average of $14,000 a day in the fourth quarter, the most in a year, the median of six analyst estimates compiled by Bloomberg shows. While that’s more than the $10,500 anticipated by forward freight agreements, handled by brokers and used to bet on future transport costs, it’s still less than the $16,700 owners need to break even. The 34 percent slump in iron-ore prices in the past year means some Chinese mines will start curbing output, according to Morgan Stanley, the U.S. bank that ships the most commodities. Declining domestic supply will spur the nation’s mills, making about 46 percent of the world’s steel, to import more of the raw material, the biggest source of cargoes for Capesizes. (GNK)
“There will be a time when Chinese traders will come back to buy iron ore,” said Philippe Van Den Abeele, the London- based managing director of Castalia Fund Management (U.K.) Ltd., an adviser to a hedge fund trading freight derivatives. “The market is bad and there are too many ships, but we should have support in commodity demand and a pick-up in rates. We believe the fourth quarter will be busy.”
Iron Ore-More downside pressure for spot prices, support seen at $110
SINGAPORE, Aug 6 (Reuters) - Sellers of iron ore cargoes to top importer China cut prices further on Monday, pointing to more downside pressure for the commodity that slid nearly 13 percent last month as Chinese steel demand soured.
But iron ore, which hit a 2-1/2 year trough of $115.20 per tonne last week, is unlikely to fall below $110, traders say, as some Chinese mills could pick up cargoes to replenish run-down stocks.
Indonesia issues more mining export permits after June slump
JAKARTA, Aug 3 (Reuters) - Indonesia has awarded mineral export permits to 55 companies since it introduced curbs on such shipments this year, a trade ministry official said on Friday, after the limits triggered a slump in June exports to key customers Japan and China.
Indonesia, a major exporter of metal ores, in May imposed new rules on mining exports, including a 20 percent export tax. To obtain export permits under the new rules miners must now be certified "clear and clean" and provide plans to process ores they dig up, ahead of a 2014 ban on unprocessed ore exports.
COLUMN-Gold trapped between soft physical demand and economic fear
LAUNCESTON, Australia, Aug 3 (Reuters) - Gold remains trapped in no man's land between hopes it will rally if Western central banks are forced to further ease monetary conditions and the reality that physical demand in Asia remains tepid.
Managed money raises gold longs, trims copper shorts
Aug 3 (Reuters) - Hedge funds and money managers sharply raised their net long position in U.S. gold and silver futures and options in the week to July 31, as price gains based on speculation of more Federal Reserve stimulus prompted speculators to boost their bullish bets.
They raised their net longs in gold by 25,071, or 35 percent, to 96,200 lots in the period, data from the Commodity Futures Trading Commission (CFTC)'s Commitments of Traders showed. The net longs marked the highest since the week of June 19.
METALS-Copper treads water underpinned by U.S. jobs data
London copper was little changed after a better-than-expected U.S. jobs report eased concern over growth in the world's biggest economy, and a fresh pledge by top metals consumer China to support growth also helped to support prices.
"Friday's lift came in part from the very positive payroll number, but the market also seems to be reassessing its slightly negative take on ECB (European Central Bank) policy," said senior commodities strategist Nick Trevethan of ANZ in Singapore.
PRECIOUS-Gold ekes out gains as U.S. data weighs on dollar
Gold inched higher, extending gains from the previous session after better-than-expected U.S. employment data lent support to risk appetite, weighing on the dollar.
"Market participants are now betting on Fed action at next month's FOMC (Federal Open Market Committee) meeting as the unemployment rate ticked up, even though the payrolls figure beat expectations," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.
Weak panamax rates drag down Baltic index
Aug 3 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell further on Friday as a rise in capesize rates was offset by weakness in the panamax segment.
The overall index, which reflects daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 1.05 percent to 852 points. The index has fallen about 9 percent this week.
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