20120823 1013 Global Commodities Related News.

DTN Closing Grain Comments 08/22 14:50 : Quiet Day in Grains(source:CME)
It was a slow day in the grain complex with contracts closing modestly lower but well off session lows on spillover support from the sharply lower U.S. dollar index. Late in the day the FOMC minutes were released with Fed members in favor of implementing QE3 "fairly soon" if the economy doesn't show stronger improvement.

GRAINS: U.S. new-crop soybeans eased from new highs while corn and wheat also fell as markets paused after a surge caused by the worst U.S. drought in 56 years as a crop tour found the condition of some Midwest grains was not as bad as feared. (Reuters)

Pro Farmer: After the Bell Wheat Recap (source:CME)
Wheat futures faced pressure throughout the day, but the market settled high-range. Chicago wheat ended mixed with a downside bias; Kansas City and Minneapolis wheat closed roughly 1 to 4 cents lower. Ample U.S. wheat supplies mean the wheat market needs either spillover support from corn or a fresh dose of fundamentally supportive news to rally. Both were lacking today, which encouraged profit-taking following yesterday's strong gains.

Wheat Market Recap Report (source:CME)
December Wheat finished down 5 at 917, 4 1/4 off the high and 5 3/4 up from the low. March Wheat closed down 4 3/4 at 925 1/4. This was 5 1/4 up from the low and 3 3/4 off the high. December Chicago Wheat closed slightly lower on the day. Kansas City and Minneapolis wheat settled lower as well. Wheat found support on reports that the European Union soft wheat crop may produce 125 million tonnes for 2012/13 which is down 3% from 2011 but traders took profits early in the day on reports that hard red winter wheat areas are expected to see good rainfall in the next 7-10 days. The rainfall is expected to help topsoil conditions as farmers begin to plant next year's wheat crop. Farmers in Argentina will plant 3.6 million hectares of wheat for the 2012/13 marketing year. This was unchanged from a July estimate. Argentina wheat plantings have declined year over year due to better prices for other cash crops and frustration with the Argentina government wheat export quota system. The US Dollar traded slightly higher midday but the gains were erased after the FOMC minutes suggested that further monetary easing may be needed to jump start the US economy. The US Dollar turned lower for the remainder of the session and wheat climbed off it's session lows. December Oats closed down 1 1/2 at 395 1/2. This was 4 1/4 up from the low and 2 1/2 off the high.

Pro Farmer: After the Bell Corn Recap (source:CME)
Corn futures saw profit-taking pressure today, with futures ending 1 to 7 1/2 cents lower. While traders continue to be disappointed by results from the Pro Farmer Midwest Crop Tour, they spent the day reevaluating positions and took some profits out of the market. Traders will continue to watch for results from the Tour to gauge the urgency to ration remaining supplies. Traders will also look to tomorrow morning's weekly export sales data for signs of price rationing. Tonight, results from Illinois will be released on www.profarmer.com.

Corn Market Recap for 8/22/2012 (source:CME)
December Corn finished down 4 at 834 3/4, 4 3/4 off the high and 6 1/2 up from the low. March Corn closed down 4 1/2 at 833 1/4. This was 5 3/4 up from the low and 5 1/4 off the high. December corn closed slightly lower on the day and well off session lows. Traders continue to monitor yield and condition reports as a large crop tour moves across the Corn Belt today. Early yield reports have been worse than expected, which has traders questioning if the US average corn yield could be near 121 bushels per acre vs. the current USDA estimate of 123.4. If achieved, production could fall to an 8 year low which would mean further demand cuts across the balance sheet. Ethanol production for the week ending August 17 averaged 823,000 barrels per day which is down 8.96% from last year. Total Ethanol production for the week was 5.76 million barrels vs. 5.73 the week prior. Corn used in last week's production is estimated at 87.67 million bushels which was the 4th consecutive week corn usage has increased. News that Argentina grain and vegetable oil exports have been halted for 3 days due to a strike offered support to the grain complex. The US Dollar traded slightly higher midday but the gains were erased after the FOMC minutes suggested that further monetary easing may be needed to jump start the US economy. The US Dollar turned lower for the remainder of the session and corn climbed off it's session lows. November Rice finished down 0.135 at 15.865, 0.035 off the high and equal to the low.

U.S. corn harvest underway in record fast start (Reuters)
The U.S. corn harvest, the world's largest, got off to the fastest-ever start last week as early planting last spring and a hot summer accelerated crop development, a U.S. government report showed on Monday.

Corn, Soy Drop as Indiana Shows Less Drought Damage; Wheat Falls (Source:Bloomberg)
Corn and soybean futures declined on speculation that the worst U.S. drought since 1956 caused less crop damage than the government expected in Indiana, the nation’s fifth-largest grower. Wheat also fell. Field surveys conducted yesterday during the annual Professional Farmer Crop Tour showed corn production may reach 113.3 bushels an acre, compared with an Aug. 10 forecast of 100 bushels by the U.S. Department of Agriculture. Soybean-pod counts from yesterday’s samplings showed a 9.2 percent drop from last year, implying a yield drop from last year to 40.9 bushels an acre. The USDA forecast 37 bushels on Aug. 10. “We were expecting to see a train wreck in the fields, and this isn’t quite the train wreck we were expecting,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana, said by telephone. “This calls into question whether the USDA will have to lower its production estimate next month.”
Corn futures for December delivery declined 0.5 percent to settle at $8.3475 a bushel at 2 p.m. on the Chicago Board of Trade. The price yesterday reached $8.40, the highest since touching a record $8.49 on Aug. 10. The most-active contract is up 65 percent since mid-June. Soybean futures for November delivery fell 0.3 percent to $17.2775 a bushel on the CBOT, after reaching a record $17.3425. The price is up 31 percent since June 15. Wheat futures for December delivery slumped 0.5 percent to $9.17 a bushel in Chicago, the first decline since Aug. 14.

China July corn imports surge on stockpiling spree (Reuters)
China's corn imports rose in July for the third month to hit a six-month high, as the state stockpiler and commercial traders in the world's second-largest consumer took advantage of cheap prices in the second quarter to bolster their stocks.
Thai Rice Haul Seen Winning Votes as Sales Drop: Southeast Asia (Source:Bloomberg)
For Thai Prime Minister Yingluck Shinawatra’s ruling party, keeping the farmers that form its political base happy is more important than retaining the country’s 30-year position as the world’s top rice exporter. Shippers including the 100-year-old Kamolkij Group and opposition politicians have vilified the government’s policy to buy rice at above-market rates, saying the measure is putting exporters out of business and encouraging corruption. Officials say the price-support stance is boosting the economy and helping the third of the population that depends on rice farming. “Ninety-nine out of 100 want the government to continue this rice program,” Commerce Minister Boonsong Teriyapirom said in an interview last week. “The more success we receive from this policy means a worse scenario for the opposition.”
Parties linked to Yingluck’s brother, former Prime Minister Thaksin Shinawatra, have won the past five elections on support from rice-growing areas that are poorer and more populous than the rest of Thailand. While the rice policy helped the country’s gross domestic product expand more than expected in the second quarter, its ability to sustain that growth remains in doubt. “In the long run, if the program is kept as is, it will impact the fiscal policy space and therefore pose a risk to the ability to spend on infrastructure,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG. “The key question is whether there are better ways to spend 1 percent of GDP worth of money on more growth enhancing and equality-improving activities.”

SOFTS: Raw sugar futures on ICE were slightly higher, trimming losses after the previous session's sell-off, as dealers anticipated dry weather will have aided the acceleration of top grower Brazil's harvest in recent weeks. Cocoa was steady, with dealers monitoring the development of West Africa's main crop, while coffee slipped. (Reuters)

Vietnam Coffee-Sellers avoid forward deals, prices stable (Reuters)
Vietnamese coffee exporters are reluctant to offer fresh beans for loading in coming months because they are wary about fluctuating prices while thin domestic stocks and slack demand have prevented trade from picking up, traders said on Tuesday.

China Economy’s Harsh Winter to Hurt Cotton, Commodities (Source:Bloomberg)
Cotton consumption in China, the world’s largest user, may shrink 11 percent this year as a deteriorating economy hurts demand and causes a buildup in commodities, according to Weiqiao Textile Co. (2698) Futures fell. “The Chinese economy is only at the beginning of a harsh winter,” Zhang Hongxia, chairman of China’s largest cotton- textile maker, said in an interview in Hong Kong on Aug. 20. “China now is facing a situation where everything from coal to steel inventories are piling up.” Zhang’s outlook runs counter to forecasts from banks such as Goldman Sachs Group Inc. that forecast a second-half rebound as the government expands stimulus. China’s economy grew at the slowest pace in three years in the second quarter as Europe’s debt crisis hurt exports and a government drive to cool consumer and property prices damped domestic demand. Cotton for December delivery declined as much as 1.6 percent on ICE Futures U.S.
“The slowdown in China is due to overall industrial overcapacity accumulated in recent years,” said Lou Zhi, head of the trading department at Hunter Capital Ltd., a Dalian-based commodity hedge fund. “Overseas demand is unlikely to revive soon as the European debt crisis looks set to drag on. Despite a recovery in the U.S., growth there seems anemic.” Cotton usage may drop to 8 million metric tons this year, compared with consumption of about 9 million tons in 2011, according to Zhang, who had forecast in March that 2012 demand may increase to as much as 9.5 million tons. China accounts for about 40 percent of global cotton consumption.

Oil Trades Near Three-Month High on U.S. Stockpiles, Fed Minutes (Source:Bloomberg)
Oil traded near the highest level in more than three months after U.S. stockpiles declined more than analysts forecast and minutes from the Federal Reserve showed many policy makers backed more monetary easing. Futures were little changed in New York after climbing for a second day yesterday. Crude inventories shrank 5.4 million barrels last week, the Energy Department said in a report. They were projected to drop 250,000 barrels, according to a Bloomberg News survey. Members at the Federal Open Market Committee’s gathering that ended Aug. 1 indicated monetary easing will be needed “fairly soon” unless there are signs of a durable economic pickup, the minutes showed yesterday. Oil for October delivery was at $97.31 a barrel, up 5 cents, in electronic trading on the New York Mercantile Exchange at 9:16 a.m. Sydney time. The contract yesterday climbed 42 cents, or 0.4 percent, to $97.26, the highest close since May 7. Prices are 1.5 percent lower this year.
Brent oil for October settlement gained 27 cents, or 0.2 percent, to $114.91 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark grade’s premium to West Texas Intermediate closed at $17.65. Gasoline inventories in the Energy Department report fell 962,000 barrels versus a forecast decrease of 1.35 million barrels. Distillate supplies, which include heating oil and diesel, rose 992,000 barrels, near the predicted gain of 1 million. The Fed’s minutes showed that many participants said a new large-scale asset-purchase program “could provide additional support for the economic recovery.” The central bank will pump fresh stimulus into the economy if needed to spur growth and cut the jobless rate, it said in a statement after the meeting.

OIL-Oil slips on euro zone uncertainty, Mideast eyed
LONDON, Aug 22 (Reuters) - Oil eased below $114 a barrel as investors held out hope that Europe would overcome its debt crisis while Middle East tension kept the potential for supply disruption in focus.
There "might just be a little bit of profit-taking, given that we're up at lofty levels and all we've got (from Europe) at the moment is dialogue, but they haven't got any action or any follow-through," said Ben Le Brun, a Sydney-based market analyst at OptionsXpress.

Japan LNG imports rise for 16th month in July
TOKYO, Aug 22 (Reuters) - Japan's customs-cleared liquefied natural gas imports rose 11.6 percent in July, the 16th straight monthly rise, as power stations burned more gas after the Fukushima crisis shut most of the country's nuclear capacity.
Japan, the world's biggest buyer of LNG, imported 7.15 million tonnes of the fuel last month, according to preliminary data released by the Ministry of Finance on Wednesday.

Euro Coal-Steady as Atlantic supplies improve
LONDON, Aug 21 (Reuters) - Physical prompt coal prices in Europe were steady between $90 and $95 a tonne on Tuesday as a healthy level of supply following the end of a Colombian rail workers strike balanced against the effect of rising oil prices.
The Colombian rail strike, which last nearly a month, led to supply squeezes in the Atlantic basin early in August, but analysts said the seaborne Atlantic coal market would return to a surplus by the end of August as Colombia ramps up exports.

China July coal imports down 10 pct from June's record -customs
SHANGHAI, Aug 21 (Reuters) - China's coal imports in July dropped 10.3 percent from the record high purchases in the previous month, but shipments by the world's top producer and consumer of the fuel were still up from year-ago levels, official customs data showed on Tuesday.
The monthly fall in July imports to 20.22 million tonnes was mostly due to an easing of coking coal shipments, which had doubled in June on strong shipments from Mongolia and the United States. Coking coal is used as a raw material for steel making.

Chinese steel mills default, defer iron ore shipments
SINGAPORE/SHANGHAI, Aug 22 (Reuters) - Chinese steel mills, burdened by poor demand at home, have either defaulted on supply contracts or deferred shipment of up to 4 million tonnes of iron ore this month following a rapid fall in prices, traders said.
Bulk of the volume, equivalent to the load of 24 capesize vessels, have found their way into the spot market, adding pressure to iron ore prices that have slumped 23 percent so far this year -- perhaps the hardest hit by the slowdown at its biggest consumer, China.  

Global steel output rebounds in July -Worldsteel
LONDON, Aug 21 (Reuters) - Global crude steel production rose in July, reversing direction after a slight fall in June, data from industry body Worldsteel showed on Tuesday, with the sector anticipating a pick-up in demand following the end of the slow summer period.
Global output rose by 2 percent to 130 million tonnes in July, compared to the same month a year earlier, according to the World Steel Association (Worldsteel).

Iron Ore Price to Rebound as China Seeks Cheaper Imports (Source:Bloomberg)
A plunge in iron ore prices and shipping costs means it’s cheaper for Chinese steel mills to buy the material from Brazil more than 8,000 nautical miles away than to buy the lower-grade ore being dug in their own backyard. China’s iron ore output had the steepest decline in July in four years, signaling the world’s largest metals consumer is poised to boost purchases from producers such as Brazil’s Vale SA (VALE) and Rio Tinto Group. Stronger demand may push iron ore higher, with the spot price set to gain as much as 41 percent in the fourth quarter after touching a near-three-year low today, according to estimates compiled by Bloomberg. “We’re using almost all imported ore to feed our furnaces now as prices have become more appealing,” Wang Liancheng, an international trading manager of Hebei Tianzhu Iron & Steel (Group) Co., said by phone from Tangshan. The company, which used to buy a quarter of its needs domestically, has switched to ore from South Africa, Australia and Brazil, he said.
China’s Premier Wen Jiabao is overseeing $23 billion of investment in new mills to stimulate auto-making and housing, which will boost demand for iron ore and help revive the nation’s flagging economy, which grew at the slowest pace since 2009 in the second quarter. Ore prices may rebound as soon as next month because of declining stockpiles in China and the nation’s rising demand for construction, Vale, the world’s largest iron-ore producer, said this month.

Iron Ore-Shanghai steel hits record low as demand wanes
SINGAPORE, Aug 21 (Reuters) - China steel futures fell for a seventh consecutive session to a record low on Tuesday, pressured by waning demand in the world's top steel market that has thinned appetite for iron ore, dragging it below $110 a tonne, a level last seen in 2009.
The price of iron ore has fallen in all but three trading days over the past six weeks as Chinese steel mills curbed purchases on expectations that rates could fall further while steel prices struggled.

Pimco Fund Expands Gold Holding on Outlook for Inflation (Source:Bloomberg)
Pimco Commodity Real Return Strategy Fund has expanded its holding of gold as a hedge against inflation, anticipating further moves by central banks to spur economic growth, said Nic Johnson, the fund’s manager. The $20 billion fund increased its gold holdings to 11.5 percent of total assets from 10.5 percent two months ago, Johnson said today in a telephone interview from Newport Beach, California. The commodity fund is part of Pacific Investment Management Co., which also owns the world’s largest bond fund. “We think gold is going to perform in a positive correlation to changes in inflation,” Johnson said. “We see higher inflation because of rising commodity prices, unconventional monetary policies and increasing sovereign debt.”
Gold rallied in New York today to the highest price since May 2 after Federal Reserve policy makers issued the minutes from their July 31-Aug. 1, which indicated the Federal Open Market Committee may expand monetary stimulus to bolster the economy. Gold futures for December delivery rose as high as $1,658.20 an ounce on the Comex. The precious metal surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so- called quantitative easing. Gold advanced in the past two months amid speculation that China, the U.S. and Europe may take more steps to boost economic growth.

The Baltic index weighed by lower capesize rates
Aug 21 (Reuters) - The Baltic Exchange's main sea freight index, used to measure rates for ships carrying dry commodities, continued to fall on Tuesday due to lower capesize rates.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, dropped 2 points to 709 points, a low last seen in February this year.