20121024 0957 Global Commodities Related News.

DTN Closing Grain Comments 10/23 14:50 Soybeans Rally; Wheat, Corn Struggle Tuesday (CME)
The soybean market staged an impressive rally hinting at fresh export business while corn and wheat were limited by solid commercial selling and bearish outside markets.

Commodities Erase 2012 Gain on Global Economic Woes (Bloomberg)
Commodities declined, erasing this year’s advance, on speculation that demand for energy, industrial metals and some agricultural products will slump because of the sluggish global economy. The Standard & Poor’s GSCI Spot Index (MXWD) of 24 raw materials fell 1.4 percent to settle at 639.3 at 4 p.m. New York time. Earlier, the gauge touched 635.1, the lowest since Aug. 3. The measure also erased 2012 gains in May and July. The last annual drop was in 2008. The International Monetary Fund cut its 2012 global-growth forecast to 3.3 percent on Oct. 9 from a July prediction of 3.5 percent and said the euro area will contract 0.4 percent. The economy in China, the biggest user of everything from copper to cotton, has slowed for seven straight quarters.
“The commodity complex is very sensitive to the demand destruction that is happening because of the global slowdown,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York-based Aegis Capital Corp. “We are due for a big sell-off in the risk assets, and so commodities will not do well as the macro concerns remain.” Cotton futures fell the most in 10 weeks, and crude oil dropped to the lowest since mid-July. Gasoline declined for the ninth straight session, the longest slump since at least October 2005. Copper dropped to the lowest since Sept. 7. European leaders have struggled to contain the region’s debt crisis that prompted Greece, Ireland and Portugal to get bailouts.

‘Collateral Damage’
“People are still worried about demand from Europe and the collateral damage from Europe itself,” said Dan Denbow, a portfolio manager of the $2.1 billion USAA Precious Metals & Minerals Fund in San Antonio. “If Europe continues to slide and if it slides further into recession, does that tip the Chinese soft landing into something worse and therefore hurts commodity demand even more?” Spain’s economy contracted for a fifth quarter, adding pressure on Premier Mariano Rajoy to seek more European aid. Chinese factories are losing pricing power in the worst wholesale-cost deflation since 2009, signaling company earnings may deteriorate further. “For a while, global growth is off the table,” said John Stephenson, who helps manage $2.7 billion at First Asset Investment Management Inc. in Toronto. “You’ve got Europe clearly in the middle of a crisis. Commodities go lower and investors should adopt the fetal position.”

Wheat Harvest in Australia Falling 28% to Five-Year Low (Bloomberg)
Wheat production in Australia, the world’s second-biggest shipper, will probably decline 28 percent to the lowest level in five years, missing a government estimate, after dry weather reduced yields. The harvest (ALHVS) will total 21.2 million metric tons in the 2012-2013 marketing year, according to the median of estimates from four analysts and two traders compiled by Bloomberg. That compares with 23.25 million tons in a survey last month and an official forecast of 22.5 million tons. The crop was a record 29.5 million tons last year. Wheat climbed 33 percent this year as dry weather in parts of the European Union and Russia cut global stockpiles to the lowest in four years, helping boost food costs 7.7 percent the past three months. The U.S. Department of Agriculture cut its estimate for Australian output 12 percent to 23 million tons on Oct. 11. That may be lowered by 2 million tons in coming reports because of dry conditions, said Rabobank International.
“Western Australia had a very prolonged dry stretch through the cropping year,” said David Johnson, general manager of risk and pricing at Emerald Group Australia Pty in Melbourne. Eastern Australia “hasn’t been getting convincing rain to be able to fulfill crop potential, so the crop has just been slowly declining.” The Australian Bureau of Agricultural and Resource Economics and Sciences, or Abares, will revise its estimate in December.

Price Gains
Wheat for delivery in December declined 0.9 percent to $8.70 a bushel on the Chicago Board of Trade at 4:41 p.m. in Singapore. Futures rose 0.7 percent yesterday, advancing for the fourth straight session. The grain is the best performer this year on the Standard & Poor’s GSCI Spot Index of 24 commodities. CBH Group, Western Australia’s top grain handler, said Oct. 3 it expects to receive from the region between 9.1 million tons and 9.3 million tons this harvest, down from a record 15 million tons last year, after a dry July and August. That compares with its prediction of 9 million tons to 10 million tons on Sept. 5. Western Australia’s southwest had the driest July on record while the state had below-average rainfall in August and near- average rain in September, according to the Bureau of Meteorology. Wheat output in the nation’s biggest producer may drop 39 percent to 7.1 million tons, according to Abares.
“The crop has been really under pressure the whole way through,” Emerald’s Johnson said by phone Oct. 19. The east coast is set for an average year, he said. Global stockpiles will be 173 million tons on May 31, down from a previous estimate of 176.71 million, the USDA said Oct. 11. World output was forecast at 653.05 million tons, down 0.9 percent from the prediction a month earlier, it said.

Pro Farmer: After The Bell Wheat Recap  (CME)
Wheat futures settled 3 1/2 to 9 1/2 cents lower in Chicago, mostly 1/2 to 8 cents lower in Kansas City and around 2 to 3 cents lower in all but the far-deferred contracts that were firmer in Minneapolis. Futures got caught up in the broad, risk-off move in the investment world today. Despite heavy outside market pressure, wheat was able to rebound well off session lows into the close as corn trimmed losses and many of the soybean contracts worked higher.

Wheat Market Recap Report (CME)
December Wheat finished down 9 1/2 at 868 3/4, 9 3/4 off the high and 8 3/4 up from the low. March Wheat closed down 8 1/4 at 882. This was 9 1/4 up from the low and 8 off the high. December Chicago wheat traded lower on the day and led all thee wheat classes in losses. Poor corporate earnings and a higher dollar forced bulls to the sidelines as long liquidation spread across most commodity markets. Reports that US exporters sold Taiwan 104,000 tonnes of wheat for November through December shipment was moved aside after it was clear the US was uncompetitive in a hard wheat tender to Iraq. Traders noted that Black Sea cargoes were offered at a steep discount which triggered profit taking. The bull camp is beginning to take notice to the wheat emergence problems in the western plains which could add support to wheat in the long term. This week's Planting Progress report showed 49% of the entire winter wheat crop had emerged as of October 21st vs. 51% for the same period last year. Emergence in Colorado, Montana, Nebraska, and South Dakota remain well behind the 5 year average. A dry pattern is expected to persist in the western plains this week but longer term forecasts suggest a better chance for rainfall after October 31st. December Oats closed down 9 1/2 at 386. This was 2 1/2 up from the low and 10 off the high.

Pro Farmer: After The Bell Corn Recap  (CME)
December through July corn futures ended fractionally to 5 3/4 cents lower, with far-deferred contracts fractionally to 1 3/4 cents higher. Corn futures favored a weaker tone throughout the day, but deferred futures found late-session spillover support as soybean futures came off their lows. Negative outside markets tempered buying throughout the day.

Corn Market Recap for 10/23/2012 (CME)
December Corn finished down 5 1/4 at 756, 6 1/2 off the high and 6 1/2 up from the low. March Corn closed down 3 1/4 at 756. This was 7 1/2 up from the low and 4 1/4 off the high. December corn traded lower on the day, along with most other commodity markets. Worse than expected corporate earnings along with fears of a global economic slowdown sent crude oil down almost 2% on the day. Afternoon strength was seen in the soybean market which helped corn pick itself off the session lows. Corn bids were weaker in river markets midday as barge freight firmed and on slow export demand. Physical traders noted that basis was steady to slightly firm in processor markets. The USDA reported this morning that exporters switched 270,000 tonnes of US corn sold to Mexico to a non-US origin for the 2012/13 crop year. This may have added to the downside influence but the weakness in the broader market overshadowed fundamentals. Iowa ethanol margins remain in negative territory as of October 19th. Public data suggests facilities are now losing 46 cents per bushel which is up from a 51 cent per bushel loss the week prior. This is the 12th straight week of negative margins. The weak ethanol margins continue to favor the bear camp however the potential for a pickup in exports later this crop year is adding long term support to the market. November Rice finished up 0.08 at 14.98, equal to the high and 0.11 up from the low.

U.S. corn harvest 87 pct done, soybeans 80 pct (Reuters)
U.S. corn harvest was a record 87 percent complete and farmers had finished 80 percent of soybean harvest as of Sunday, according to a U.S. Agriculture Department report issued on Monday, but the tail end of their combining efforts was expected to be slow due to rain.

Argentine storms to help grain output, hurt quality (Reuters)
Argentine grains output will benefit from this year's early and potent arrival of El Nino-related rains, but low crop quality linked to flooding is likely to undermine the expected increase in soy and corn volume.

Ivorian cocoa arrivals seen at 51,000 T by Oct 21 (Reuters)
Cocoa arrivals at ports in top grower Ivory Coast reached around 51,000 tonnes by Oct. 21 since the since the start of the season Oct. 3, exporters estimated on Monday, compared with 50,381 tonnes in the same period of the previous season.

Oil Near Three-Month Low on Speculation U.S. Stockpiles Rose (Bloomberg)
Oil traded near a three-month low in New York before a report forecast to show that stockpiles gained amid surging U.S. production. Futures were little changed after dropping 2.3 percent yesterday, the biggest decline since Sept. 19. The Energy Department will show in a report today that U.S. crude supplies climbed for a third week, according to a Bloomberg News survey of analysts. The industry-funded American Petroleum Institute reported yesterday that oil inventories increased by 313,000 barrels last week to 369.6 million. Crude for December delivery was unchanged at $86.67 a barrel in electronic trading on the New York Mercantile Exchange at 8:38 a.m. in Tokyo. The contract fell $2.06 yesterday to its lowest close since July 10 and is down 12 percent this year.
Brent oil for December settlement dropped $1.19, or 1.1 percent, to end yesterday’s session at $108.25 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to the New York-traded West Texas Intermediate grade widened to $21.58. Today’s Energy Department report will probably show that U.S. crude supplies increased after output climbed to the highest level in more than 17 years, according to the median of 11 analyst estimates in a Bloomberg survey. Crude inventories rose by 1.8 million barrels in the week ended Oct. 19, the survey showed. A gain of that size would leave stockpiles at the highest level since July. Gasoline supplies climbed 500,000 barrels, the analysts forecast.
Stronger U.S. economic data later this week may spur a rally in oil prices, said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. The Commerce Department is projected to report that U.S. new home sales and house prices increased in August, according to a Bloomberg survey of analysts.

Iran Threatens to Halt Crude Exports If Sanctions Intensify (Bloomberg)
Iran will suspend all oil exports, pushing global crude prices higher, if the U.S. and Europe tighten sanctions further on the OPEC member’s economy, Oil Minister Rostam Qasemi warned. “If you continue to add to the sanctions, we will stop our oil exports to the world,” he said at a news conference in Dubai. “The lack of Iranian oil in the market would drastically add to the price.” Iran wants “reasonable” prices for crude and doesn’t seek an increase, he said earlier today. Brent crude for December settlement was $1.09 lower at $108.35 a barrel on the London- based ICE Futures Europe exchange at 2:36 p.m. local time. Prices for the grade have risen 11 percent since the European Union banned purchases of Iranian crude on July 1.
Iran’s oil exports have dwindled in the face of U.S. and EU sanctions on its energy and financial industries. The International Energy Agency, which advises the world’s biggest industrialized economies, reported that Iranian shipments slumped to 860,000 barrels a day in September from 1.1 million barrels in August. About 40 percent of Iran’s exports last month were destined for China, according to tanker-tracking data compiled by Bloomberg. A unilateral halt in Iran’s oil sales would be “extremely unlikely,” said Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management.

Recap Energy Market Report  (CME)
December crude oil traded sharply lower throughout the session and fell to its lowest level since July 10th. Weakness in the crude oil market originated from slowing economic growth prospects, strength in the US dollar and a sell off in global equity markets. Disappointing corporate earnings from a couple of large multi-national companies, like DuPont and 3M, sparked further concerns over a slowing global economy. Some traders indicated that prospects for slowing growth were seen tamping down global oil demand. Meanwhile, West-Texas crude oil was decisively weaker than Brent crude oil throughout the session, perhaps in the wake of the TransCanada Keystone pipeline restart. Another force weighing on December crude oil was expectations that this week's EIA inventory report will likely show a build in crude stocks last week in the range of 1.5 million barrels.

Gold Futures Fall to Six-Week Low as Dollar Extends Rally (Bloomberg)
Gold futures fell to a six-week low as the dollar’s advance curbed demand for the metal as an alternative investment. Palladium tumbled the most since March. The greenback rose for the fourth straight session, the longest rally in five months. The euro dropped as Spain’s economy contracted for the fifth straight quarter and French industrial confidence fell to the lowest in more than three years. Gold has declined 4.1 percent this month. “Spain continues to drive the direction of the market, and people are moving toward the dollar and staying away from riskier assets,” Fain Shaffer, the president of Infinity Trading Corp. in Medford, Oregon, said in a telephone interview. Gold futures for December delivery fell 1 percent to settle at $1,709.40 an ounce at 1:48 p.m. on the Comex in New York. Earlier, the price touched $1,705.10, the lowest for a most- active contract since Sept. 7.
On the New York Mercantile Exchange, palladium futures for December delivery plunged 4.6 percent to $593.85 an ounce, the biggest drop since March 22. Earlier, the metal touched $590.40, the lowest since Aug. 17. Platinum futures for January delivery fell 2.3 percent to $1,575.60 an ounce. The price dropped as low as $1,573.70, the cheapest since Sept. 7. Silver futures for December delivery slid 1.4 percent to $31.793 an ounce on the Comex. The price touched $31.65, the lowest since Sept. 4. In 2012, silver has climbed 14 percent. Platinum has gained 12 percent, and gold has advanced 9.1 percent. Palladium has dropped 9.5 percent. Today, the Standard & Poor’s GSCI Spot Index of 24 raw materials, which includes gold and silver, erased this year’s gain.

Silver Market Recap Report (CME)
The silver market didn't exhibit as much range down action as the gold market today but December silver still managed to reach the lowest level since September 4th. Like gold, silver was clearly undermined by the sharp washout in global equities and silver was probably put under additional pressure because of weak US data. Surprisingly silver seemed to discount hard range down action in a host of industrial commodities but silver ultimately managed to spend a large portion of the Tuesday trade above the prior low!

Gold Market Recap Report  (CME)
Significant technical damage was seen today as December gold prices at times were as much as $93 an ounce below the October highs. Fears of slowing joined fears of a change in leadership at the Fed to produce an aggressive wholesale liquidation of gold prices. While the market started out in a risk-off mode, seeing soft scheduled data, hard down equity market action and uncertainty toward the leadership of the Fed was apparently enough to force a number of longs from positions. While gold hasn't paid that much attention to currency influences recently, adverse currency market action was probably another element turning up the liquidation pressure on gold prices. The real test of the bear's resolve might come in the lead up to the FOMC statement release Wednesday afternoon.