20120903 1005 Global Commodities Related News.

Commodities Beating All Assets Again for First Time in 16 Months (Bloomberg)
Commodities beat equities, bonds and the dollar for a second consecutive month, the longest streak in more than a year, on mounting speculation policy makers will seek to rescue their economies. The Standard & Poor’s GSCI Total Return Index of 24 commodities rose 6.4 percent in August, led by silver, cocoa and heating oil. The MSCI All-Country World Index of equities gained 1.9 percent for a third straight advance, as the U.S. Dollar Index (DXY), a measure against six currencies, dropped 1.7 percent. Bonds of all types returned 0.2 percent on average, led by Europe’s most indebted nations, according to Bank of America Merrill Lynch’s Global Broad Market Index.
Gains in riskier assets show investors expect policy makers will succeed in bolstering growth. The Federal Reserve and European Central Bank are already holding borrowing costs at a record low, and more than two-dozen nations cut market interest rates this year. China has slowed for six quarters, the 17- nation euro area is contracting, and consumer confidence in the U.S. fell the most in 10 months in August. “The market has clearly already taken a very sanguine view,” said Bill O’Neill, the London-based chief investment officer for Europe, Middle East and Africa at Merrill Lynch Wealth Management, which oversees more than $1.8 trillion of assets. “The dollar has been weaker, and that’s one of the reasons why commodities are propelled higher. Part of it has been the easing expectations, and the conviction that the Fed would do something aggressive in early September.”

Crop Traders Extend Bull Run as Rain Comes Too Late: Commodities (Bloomberg)
Corn and soybean traders extended their longest bullish outlook in at least 11 months on speculation rain in the U.S. will come too late to revive crops after the worst drought in a half century. Seventeen analysts surveyed by Bloomberg said corn will climb next week. A further six were bearish and four were neutral. Twenty expect gains in soybeans, four saw a drop and four predicted little change. The 19th straight bullish outlook is the longest run for corn since September and for soybeans since June 2011. Hedge funds’ bets on a rally in corn are the most in 16 months and near the largest for soybeans since at least 2006, U.S. Commodity Futures Trading Commission data show.
The worst U.S. drought since 1956 and dry weather in Eastern Europe and Russia drove corn to a record $8.49 a bushel this month. Food prices tracked by the United Nations rose the most since 2009 in July. Rain in the Midwest may be too late to improve yields because farmers already started the corn harvest and soybeans are reaching maturity. Credit Suisse Group AG said Aug. 29 the rally will to continue for several more months. “The crop needed these rains a month ago,” said Christopher Gadd, an analyst at Macquarie Group Ltd. in London. “We expect to see prices of corn move closer to $9 a bushel. The situation for soybeans looks far more difficult because demand remains resilient at these levels.”

Crops Rally
Soybeans advanced 45 percent to $17.5275 on the Chicago Board of Trade this year and set a record yesterday. Corn gained 23 percent to $7.9725, reaching an all-time high Aug. 10. The Standard & Poor’s GSCI gauge of 24 commodities added 4.4 percent and the MSCI All-Country World Index (MXWD) of equities rose 7.5 percent. Treasuries returned 2.3 percent, a Bank of America Corp. index shows. Areas of central Illinois and Indiana had as much as 3 inches of rain in the past two weeks, twice the normal amount, National Weather Service data show. Some Midwest regions received less than half of normal rainfall in the past 90 days. Tropical Storm Isaac may bring more than 4 inches of rain to areas of Illinois, Missouri and Indiana in the next five days, with smaller amounts stretching from southeast Iowa to Ohio, according to the service.
Corn production will drop 13 percent to 10.779 billion bushels this year, the lowest since 2006, and the soybean crop may be 12 percent lower at 2.692 billion bushels, the U.S. Department of Agriculture said Aug. 10. The agency updates its forecasts Sept. 12.

China Sales
The USDA announced daily export sales of soybeans to China exceeding 100,000 metric tons twice in the past two weeks. In the six weeks through Aug. 23, U.S. exporters sold 3.719 million tons for delivery in the current and upcoming marketing years, 12 percent more than in the same period a year earlier, USDA data show. Corn sales totaled 1.877 million tons, 49 percent less than a year earlier. Costlier crops may curb demand from biofuel producers. U.S. ethanol output slid 11 percent since June 8 and in the week through July 20 reached the lowest level since the Energy Department began tracking weekly data in 2010. Producers are losing about 36 cents on each gallon of ethanol, based on fuel and corn contracts for September, data compiled by Bloomberg show. More U.S. corn went to ethanol refineries than into livestock feed in 2010-11 for the first time ever.

GRAINS: U.S. soybeans gave back all their gains from the previous session, when they touched a contract high, as traders took profits, with markets looking to a gathering of central bankers later in the day for clues on possible imminent monetary stimulus. Wheat was flat -- though it remains on course for its first weekly gain since the end of July -- ahead of a critical meeting of Russian ministers that is expected to herald curbs to grain exports. Corn fell as traders speculated damage from Hurricane Isaac would be less severe than feared, with new-crop corn on course to record its biggest weekly fall in 11 weeks. (Reuters)

DTN Closing Grain Comments 08/31 14:45 : Another Quiet Friday (CME)
Grains drifted lower during another sleepy session, though contracts were able to close well off session lows by the close. Soybeans led the way, closing near the new all-time high. Outside markets had a strong day as the dollar came under increased pressure tied to Ben Bernanke's comments.

Corn Market Recap for 8/31/2012 (CME)
December Corn finished down 8 3/4 at 799 3/4, 10 off the high and 6 1/2 up from the low. March Corn closed down 6 3/4 at 802. This was 6 3/4 up from the low and 7 3/4 off the high. December corn traded sharply lower into late in the day but managed to close back up near 800 after a low of 793 1/4 which was also Wednesday's low and the low for the week. Traders took profits ahead of the 3-day holiday weekend. The weaker trade was also linked to a sharply lower wheat market after Russian officials failed to announce any type of restriction on wheat exports in today's meetings. Technical selling and calendar spread pressure added to the negative tone. Tropical Storm Isaac is expected to dump 4-6 inches of rain in areas of Arkansas, Missouri, and Illinois over the next couple days. The heavy rain will not have a positive impact on corn conditions and will delay harvest for some areas. Corn basis was mixed today as some areas begin harvest, while others are delayed due to Hurricane Isaac.
Corn bids in the Gulf of Mexico held steady on today's move lower as exporters prepare to open back up for business next week. The US Dollar sank to a 3 month low today, but the move offered minimal support to price gains. November Rice finished down 0.025 at 15.285, 0.115 off the high and 0.065 up from the low.

Wheat Market Recap Report (CME)
December Wheat finished down 13 1/2 at 889 1/2, 16 1/2 off the high and 8 1/2 up from the low. March Wheat closed down 11 1/2 at 899 1/2. This was 9 up from the low and 13 1/4 off the high.
December Chicago wheat traded sharply lower late in the day but managed to bounce near 7 cents into the close with help from a recovery in the other grains and a positive tilt to outside markets. Kansas City and Minneapolis were lower as well. Wheat slipped lower early this morning after Russian officials offered no evidence that wheat export restrictions would be put in place. As a result, traders took profits after the sizeable gains this week. Chicago wheat led the grain market lower as it narrowed its premium to the corn market. Another private analyst cut their estimate for Russian wheat production today to 39-40 million tonnes vs. the current USDA estimate of 43 million tonnes. The cut in production offered no support to the market but traders continue to fear that the lower production levels could mean a dramatic slowdown in exports later this year. This could be supportive to wheat long term. The US Dollar fell to a fresh 3 month low but the weaker dollar did little to support grains as traders took profits ahead of the holiday weekend. December Oats closed up 2 1/4 at 397 1/2. This was 5 up from the low and 4 1/2 off the high.

Record U.S. farm export sales seen despite drought--USDA (Reuters)
U.S. farm exports will set a sales record in the new marketing year due to high commodity prices that will magnify the value of dramatically smaller harvests amid the worst drought in half a century, the government forecast on Friday.

U.S. physical coffee-Colombian dealers strive to attract buyers (Reuters)
U.S. coffee importers said on Thursday that dealers in Colombia expect their harvest to improve and have grown more aggressive in efforts to sell beans, while Brazil's fine-cup beans maintained their small premium over the benchmark futures contract.

Russia wheat crop forecast to be lowest in 9 years (Reuters)
Drought-stricken Russia will have less wheat to supply domestic and export markets this season than it did in the 2010/11 crop year, when the government shocked markets with a snap decision to ban exports, a leading Russian grain analyst said.

SOFTS: ICE cocoa touched a nine-month high in early trading due to concerns that adverse weather in West Africa could damage crops, while sugar hovered above 11-week lows, with harvesting in Brazil capping gains. ICE arabica coffee firmed, underpinned by a soft dollar, with upside potential limited by abundant supplies. (Reuters)

Oil Declines From Two-Week High as China Manufacturing Contracts (Bloomberg)
Oil dropped from the highest closing price in almost two weeks as manufacturing unexpectedly contracted in China and crude production resumed in the Gulf of Mexico after Hurricane Isaac. Futures slipped as much as 0.5 percent in New York after capping the biggest monthly gain since October on Aug. 31. Manufacturing in China, the world’s second-biggest oil user, shrank for the first time in nine months in August as orders declined, a government survey showed Sept. 1. About 72 percent of daily crude output in the Gulf of Mexico is shut after Isaac, down from as much as 95 percent last week, data from the U.S. Bureau of Safety and Environmental Enforcement showed. Oil for October delivery slid as much as 46 cents to $96.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.17 at 11:18 a.m. Sydney time. The contract rose 2 percent on Aug. 31 to $96.47, the highest level since Aug. 22. Prices climbed 9.6 percent in August for a second monthly gain and are down 2.7 percent this year. Brent oil for October settlement decreased 5 cents to $114.52 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 9.2 percent last month. The European benchmark grade’s premium to West Texas Intermediate was at $18.35, compared with $18.10 on Aug. 31. China’s Purchasing Managers Index fell to 49.2 from 50.1 in July, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Sept. 1. The figure was below the estimates of 24 of the 25 analysts in a Bloomberg survey. The dividing line between expansion and contraction is 50. Oil and natural-gas production in the Gulf of Mexico from undamaged platforms will resume immediately after checks have been completed, the BSEE said on its website. The equivalent of about 986,698 barrels a day of oil and 56 percent of daily gas output was offline as of 12:30 p.m. New York time yesterday, it said.

Gold Wagers Jump to 5-Month High as Fed Spurs Rally: Commodities (Bloomberg)
Speculators increased bets on rising gold prices to the highest since March as mounting speculation that the Federal Reserve will expand its record stimulus drove bullion to its second-biggest monthly gain this year. Money managers raised their net-long positions by 19 percent to 131,687 futures and options contracts in the week to Aug. 28, U.S. Commodity Futures Trading Commission data show. Combined bets across 18 U.S. commodities fell 1.9 percent to 1.3 million contracts, still near the highest in 15 months. The Standard & Poor’s GSCI Spot Index of 24 commodities gained for a fifth straight week, the longest rally since June 2011.
Investors accumulated a record hoard of gold in exchange- traded products last week, exceeded only by the U.S. and Germany when compared with national reserves. U.S. sales of bullion coins jumped 28 percent in August. Fed Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with “additional policy accommodation as needed.” The metal rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. “Anytime they’re putting more money into the economy, it’s good news for gold,” said Dan Denbow, a fund manager at the $1.8 billion USAA Precious Metals & Minerals Fund in San Antonio. The outlook for monetary stimulus “allows the risk-on trade to come back in to the market.”  (Bloomberg)