20121005 1007 Global Commodities Related News.

DTN Closing Grain Comments 10/04 14:40 (CME)
Beans Extend Wednesday's Rally
The soybean market added sharp gains to Wednesday's recovery rally on continued support from commercial traders. Wheat and corn had a disappointing day, closing well off session highs given the sharp sell-off in the U.S. dollar index.

Pro Farmer: After The Bell Wheat Recap (CME)
Nearby wheat futures enjoyed gains most of the day, but the market softened into the close to end roughly 3 to 5 cents lower in most contracts at all three locations. Wheat futures benefited from spillover support from soybeans and heightened global wheat stocks concerns much of the day. December Chicago wheat ended low-range and within the bottom portion of their long-standing consolidation trading range.

Wheat Market Recap Report (CME)
December Wheat finished down 3 3/4 at 869 1/4, 13 1/2 off the high and 2 1/2 up from the low. March Wheat closed down 4 1/4 at 879 3/4. This was 1 3/4 up from the low and 13 off the high.
December Chicago wheat finished the day lower despite a sharply lower US Dollar and a surging crude oil market. The stronger trade early on for corn and soybeans helped support but gains eroded near the close which might suggest a bearish bias by some. Statistics Canada reported Canadian wheat production at 26.7 million tonnes in 2012 vs. 26.26 in 2011 but slightly below market expectations. The lower than expected production estimate helped support the KC and Minneapolis wheat markets midday. Export sales for the week ending September 27th came in below market expectations which are adding a negative bias to price action. Net weekly export sales for wheat, came in at 307,000 tonnes for the current marketing year and none for the next marketing year. As of September 27th, cumulative wheat sales stand at 40% of the USDA forecast for the current marketing year vs. a 5 year average of 55%. The slow pace of exports might be adding momentum to the bear camp but wheat prices continue to narrow their premium to corn which could imply greater use of feed wheat in the coming quarter. December Oats closed up 7 1/2 at 370 3/4. This was 8 3/4 up from the low and 3 1/4 off the high.

Pro Farmer: After The Bell Corn Recap (CME)
Corn futures favored a firmer tone most of the day, but softened into the close to finish narrowly mixed through the July contract. Deferred futures ended 6 1/4 to 7 3/4 cents lower. Concerns about tight supplies, spillover from sharp gains in the soybean pit and positive outside markets provided support to corn futures at times today. But market bulls are hesitant to extend long positions following last Friday's limit higher move due to signs of demand destruction.

Corn Market Recap for 10/4/2012 (CME)
December Corn finished up 1/4 at 757, 10 1/2 off the high and 4 up from the low. March Corn closed down 1/4 at 757 1/4. This was 3 1/2 up from the low and 10 off the high.
December corn traded mixed on the day and settled near the unchanged. Early support was linked to an explosive soybean market and a sharply lower US Dollar. Bulls believe the USDA may take down the average US corn yield and production next week while bears point to a slow export pace and cheaper South American corn. Net weekly export sales for corn, came in at 326,900 tonnes for the current marketing year and none for the next marketing year. This was slightly above market expectations. As of September 27th, cumulative corn sales stand at 33% of the USDA forecast for current marketing year vs. a 5 year average of 37%. Corn saw pressure late in the session as the wheat market sagged lower and after the US Grains Council reported that the 2012 China corn crop may produce 5-6 million tonnes more than in 2011. The USDA currently has the crop at 200 million tonnes. Long term pressure in corn may come from the fact that officials in Mexico are considering allowing corn imports from Argentina a month after approving imports of grain from Brazil. The US is the main supplier of corn to Mexico but rising food prices around the world have given reason for many world buyers to consider other origins. This could limit price gains going forward. November Rice finished up 0.13 at 15.37, equal to the high and 0.07 up from the low.

Monsanto sees US 2013 corn acres steady at 96 mln acres (Reuters)
Monsanto Co., the world's largest seed company, said on Wednesday that U.S. corn and soybean plantings in 2013 are likely to be similar to what was seen this year, though soybean acres may climb.

INTERVIEW-Mexico considers allowing Argentina corn imports (Reuters)
Mexico is considering allowing corn imports from Argentina, a month after approving shipments of the grain from Brazil, an official at the country's food safety agency said on Wednesday.

GRAINS: U.S. soybeans edged higher, rising for a second consecutive day on bargain hunting by end-users and investors after prices slid to a three-month low in the previous session, although gains were capped by harvest pressure. Corn lost more ground, weighed down by a decline in U.S. ethanol production and record pace of the Midwest harvest. Wheat also eased, tracking corn and as Egypt continued to bypass U.S. wheat in tenders. (Reuters)

Food Prices Jump to Six-Month High as Dairy Costs Rise (Bloomberg)
World food prices rose in September to the highest in six months as dairy and meat producers passed on higher feed costs to consumers, the United Nations’ Food & Agriculture Organization said. An index of 55 food items tracked by the FAO rose to 215.8 points from a restated 212.8 points in August, the Rome-based agency reported on its website today. Dairy costs jumped the most in more than two years. Livestock breeders and dairy farmers are passing on the higher cost of feed, after grain prices jumped in June and July, according to Abdolreza Abbassian, an economist at the FAO in the Italian capital. Higher prices don’t mean a food crisis is imminent, he said today by phone. “Despite a very difficult market, the fundamentals that suggest a food crisis are just not there,” Abbassian said. “Market sentiment is now accepting high prices more as a rule than as an exception.”
The FAO dairy-price index jumped 6.9 percent to 187.7 points from 175.6 in August, the biggest advance since April 2010, the data showed. The index for meat prices rose 2.1 percent to 175, climbing for a second month. The world cereal-price index rose to 262.6 points from 259.9 points the previous month to reach the highest level since April last year. The index for grain prices in July surged 17 percent, the biggest jump since February 2008. “We expected this for both meat and dairy, you have a lag with this big increase in input cost from the grain sector,” Abbassian said. “There will be a limit to how much it goes up. By how much you can raise prices without consumers cutting consumption remains an issue.”

Weather trims Ivorian cocoa output by 2 pct (Reuters)
Cocoa output from the world's top grower Ivory Coast slipped by a smaller-than-expected 2.3 percent in the 2011-12 season as a decline in smuggling masked weather-related production losses, sector regulator CCC said on Wednesday.

SOFTS: Raw sugar futures on ICE touched an eight-week high in early trading , and arabica coffee and cocoa edged up in light volumes, supported by a softer dollar and stronger financial markets. (Reuters)

U.S. ethanol output drops 3 pct to two-year low (Reuters)
U.S. ethanol production fell for the third straight week to the lowest level since the government began releasing the weekly data more than two years ago, the Energy Information Administration said on Wednesday.

U.S. Natural Gas Rises on Outlook for Colder Weather (Bloomberg)
Natural gas futures advanced for the seventh time in eight days as an expected blast of cold air signaled stronger demand for heating fuel. Gas gained 0.3 percent as the National Weather Service predicted below-normal temperatures for most of the lower 48 states over the next six to 10 days. Prices retreated from steeper gains after the Energy Department said supplies rose 77 billion cubic feet last week, above the median of 26 analyst forecasts showing an increase of 73 billion. “It’s a shoving match between the bulls and the bears,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “This is a seasonal play as supply is secured for the winter and speculators look to make end users pay up for it. You have so much supply in the ground so people are really bearish on the market rallies.”
Natural gas for November delivery gained 1.1 cents to settle at $3.406 per million British thermal units on the New York Mercantile Exchange after rising as high as $3.464. The futures have climbed 14 percent this year. November $3 puts, bets that prices will fall, were the most active gas options in electronic trading. They fell 0.7 cent to 1.7 cents on volume of 1,411 contracts as of 2:40 p.m. Puts accounted for 63 percent of options volume. The discount for November futures widened to 0.6 cent versus December contracts from yesterday to 27.4 cents.
The low temperature in Detroit on Oct. 12 may be 37 degrees Fahrenheit (3 Celsius), 9 below normal, and New York City may drop 8 below the usual reading to 43 degrees, according to AccuWeather Inc. in State College, Pennsylvania.

Oil Falls After Surging on Middle East, Heads for Weekly Decline (Bloomberg)
Oil fell in New York and headed for a third weekly decline on speculation the biggest gain in two months yesterday was exaggerated amid rising supplies. Futures slid as much as 0.4 percent after surging 4.1 percent yesterday on concern tension between Turkey and Syria will disrupt Middle East output. Saudi Arabia, OPEC’s biggest crude producer, sees no difficulty in meeting demand, according to Oil Minister Ali al-Naimi. Iraq’s exports will increase to 200,000 barrels a day from 170,000 “within days,” Oil Minister Abdul Kareem al-Luaibi said. Prices may drop next week as U.S. production rises, a Bloomberg survey showed. “The situation with the oil market is that current and forecast future demand levels over the next 12 months are well covered by supply and that’s been the driving factor behind the decline we’re seeing in recent weeks,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The most likely scenario is that this will continue to be the case.”
Crude for November delivery fell as much as 36 cents to $91.35 a barrel and was at $91.43 in electronic trading on the New York Mercantile Exchange at 10:04 a.m. in Tokyo. The contract rose $3.57 to $91.71 yesterday. Prices are down 0.8 percent this week, for the longest run of weekly declines since June, and 7.5 percent this year. Brent oil for November settlement was down 45 cents, or 0.4 percent, at $112.13 after advancing $4.41 yesterday on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $20.70 to New York-traded West Texas Intermediate grade.

U.S. crude inventories rose last week, products fell -API
NEW YORK, Oct 2(Reuters) - U.S. crude oil inventories rose less than expected last week while oil product stockpiles fell slightly, data from the American Petroleum Institute showed on Tuesday.
Crude inventories rose 462,000 barrels in the week to Sept. 28, compared with analysts' expectations for a build of 1.5 million barrels, the API reported.

U.S. Oil Output at 14-Year High, Poised to Climb Further  (CME)
Shale Drilling Investments Will Yield Significant Increases
U.S. crude oil production, already at the highest level in 14 years, probably will increase further amid stepped-up horizontal drilling to tap "tight" oil formations in North Dakota and other areas, the Energy Information Administration said in its This Week in Petroleum Report.
Since the start of 2009, North Dakota's oil production has more than tripled, to nearly 675,000 barrels a day, primarily because of increased drilling in the Bakken shale formation. Combined, Montana and North Dakota output may approach 1.1 million barrels a day in January 2014, up 49% from 738,000 currently.
"Companies are making significant capital investments in horizontal drilling rigs and deploying them to tight oil plays," the EIA said. "Development of tight formations will lead to continuing significant increases in U.S. oil production in the coming years."
Additionally, Texas is pumping more oil from its Permian Basin region. During the first eight months of 2012, total U.S. oil production averaged 6.21 million barrels a day. If sustained over the full year, production would be the highest since an average of 6.25 million barrels a day in 1998.

OIL-Oil rallies to $109 as risk appetite returns
LONDON, Oct 4 (Reuters) - Brent crude oil rose towards $109 per barrel as expectations Spain would seek a bailout and better U.S. data encouraged investors back into riskier assets such as oil and commodities.
"There was no really convincing explanation for the fall in price yesterday," said Carsten Fritsch, analyst at Commerzbank. "We are seeing a counter-movement, a slight counter-movement, after the exaggerated decline in price."

Recap Energy Market Report (CME)
November crude oil trended higher throughout the US trading session and managed to overtake Wednesday's high in the process. There seemed to be a number of positive catalysts supporting the day's advance, including weakness in the US dollar, bargain hunting after yesterday's downdraft and gains in the product markets. There were also a number of headlines circulating over the conflict between Syria and Turkey, as well as US officials investigating the Embassy bomb site in Benghazi from the September 11 attack. Reports of a fire at a large Texas refinery offered support to the US gasoline market, which seemed to provide an added lift to crude oil prices.

Copper Rises as Low European Rates Boost Demand Outlook (Bloomberg)
Copper futures advanced for the fifth time in six sessions as European policy makers held borrowing costs at record lows, bolstering prospects for metal demand. The European Central Bank left its benchmark interest rate at 0.75 percent, and the Bank of England held its key rate at 0.5 percent. The dollar headed for the biggest drop in three weeks against a basket of currencies, boosting the appeal of commodities as alternative investments. The Standard & Poor’s 500 Index of equities rose for the fourth straight day. “The positive equity story reflects both a growth and risk story and also expectations of more liquidity, and those same expectations drive other risk assets, in particular copper,” said Justin Smirk, an analyst at Westpac Banking Corp. (WBC) in Sydney and the most accurate forecaster for industrial metals in Bloomberg rankings in the past eight quarters.
Copper futures for December delivery rose 0.1 percent to settle at $3.786 a pound at 1:23 p.m. on the Comex in New York. The price has gained 10 percent this year on speculation that government stimulus plans will shore up their economies. On the London Metal Exchange, copper for delivery in three months climbed 0.1 percent to $8,300 a metric ton ($3.76 a pound). Aluminum, nickel, tin advanced, while lead and zinc fell.

Silver Market Recap Report (CME)
The silver market was pulled up in sync with the gold market but the technical advances in silver weren't nearly as significant as those posted on the gold charts. Certainly silver was benefiting from the weakness in the dollar, but having the added advantage of a flurry of dovish foreign central bank statements probably served to embolden the buyers of silver today. As mentioned in the mid day coverage an apparent escalation of tensions in the South African mining sector probably provided some indirect lift to silver prices today. In the end, a risk-on day with higher equities and higher physical commodity prices created a bullish environment for silver.

Gold Market Recap Report (CME)
The gold market did forge a fresh new high for the move and in the process the December contract reached up to the highest level since February. In addition to ongoing easing dialogue from the ECB and BOE, the gold market was also cheered by US data that was weak but wasn't as weak as expected. News of violence in South African mining areas is another factor that probably added to the upward march on the charts. In fact, given the upside breakout it is also likely that some of the buying in gold today was technically motivated. Some players are suggesting that rising gold prices might actually serve to embolden the Unions wage requests and make the wage negotiations even more troublesome.

Gold Traders More Bullish as Holdings Reach Record: Commodities (Bloomberg)
Gold traders are the most bullish in three weeks as investors’ bullion holdings expanded to a record after central banks pledged to do more to spur economic growth. Twenty of 32 analysts surveyed by Bloomberg expect prices to rise next week, nine were bearish and three were neutral. Investors are holding the most metal ever through gold-backed exchange-traded products after buying 85.4 metric tons last month, the most since July 2011. Hedge funds’ bets on a rally are the biggest in seven months, U.S. Commodity Futures Trading Commission data show.
The European Central Bank held interest rates at a record low yesterday after agreeing on an unlimited bond-purchase program last month and the Federal Reserve announced a third round of quantitative easing. The Bank of Japan has said it will add to a fund that buys assets and China approved a $158 billion subways-to-roads construction plan. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. “More and more people are going to anticipate inflation in the future because of quantitative easing and the amount of debt we’ve got in the system,” said Frederique Dubrion, the Geneva- based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “We can print whatever amount of money we need, but you can’t print gold. It’s nobody’s liability, it’s a hard currency.”

Gold Jumps to Highest Since November on ECB’s Bond Plan (Bloomberg)
Gold futures jumped to the highest in almost 11 months as the European Central Bank said it is ready to start buying government bonds, boosting demand for the metal as a store of value. Silver, platinum and palladium also gained. The ECB will begin purchases “once all the prerequisites are in place,” President Mario Draghi said today after policy makers left the benchmark interest rate at a historic low of 0.75 percent. In the third quarter, gold gained 11 percent, the most since June 2010, as the Federal Reserve announced a third round of U.S. monetary stimulus. “A global accommodative stance will continue to support gold,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. Gold futures for December delivery climbed 0.9 percent to settle at $1,796.50 an ounce at 1:43 p.m. on the Comex in New York. Earlier, the price reached $1,797.70, the highest for a most-active contract since Nov. 9.
UBS AG said in a report that its physical gold sales to India yesterday were the highest since April as the rupee strengthened against the dollar. Silver futures for December delivery advanced 1.2 percent to $35.101 an ounce on the Comex, the highest settlement since March 1. Platinum futures for January delivery rose 1.8 percent to $1,725.10 an ounce on the New York Mercantile Exchange, the highest settlement since Sept. 21, 2011. Palladium futures for December delivery jumped 2.6 percent to $674.75 an ounce on the Nymex, the biggest gain since Sept. 10.