20121130 1021 Global Commodities Related News.

New Norm High Food Costs Boost Supply Risk as World Hunger Grows (Bloomberg)
High and volatile global food prices have become the “new norm,” creating increased risk for supplies at a time when 12 percent of the population remains chronically undernourished, the World Bank said. Even after the World Bank’s food-price index slipped from a record in July, the measure was still 7 percent higher in October than a year earlier, the Washington-based lender said today in a report. While costs have dropped in recent months, fats and oils still are 12 percent more expensive than a year earlier, and grains are “very close” to the all-time high reached in 2008, the bank said. “A new norm of high prices seems to be consolidating,” Otaviano Canuto, the World Bank Group’s vice president for poverty reduction and economic management, said in an e-mailed statement. “Although we haven’t seen a food crisis as the one of 2008, food security should remain a priority.”
Weather will play a large role in determining food prices in the near future, along with the cost of fuel and export competition, the bank said. About 870 million people live in chronic undernourishment, the United Nations Food and Agriculture Organization estimates. The world population will rise to 7.02 billion this year, according to the U.S. Census Bureau. Also, malnutrition accounts for more than one-third of mortality of children under 5 years old and is responsible for more than 20 percent of maternal mortality, according to the World Bank report. “The world cannot afford to get used to or be complacent” about high food costs, Canuto said. The World Bank Group committed more than $9 billion to agriculture and related sectors in the year ended June 30, the bank said.

Corn Market Recap for 11/29/2012 (CME)
December Corn finished down 8 3/4 at 751 1/2, 11 1/2 off the high and 1/2 up from the low. March Corn closed down 5 1/4 at 758 3/4. This was 2 1/2 up from the low and 8 1/4 off the high.
March corn traded lower on the day on light profit taking and pressure from a weaker wheat market. Above normal precipitation in Argentina and below normal in Southern Brazil continues to help the market move higher but it seems the recent run to the upside needed a break and traders took profits. Export sales were disappointing which likely triggered the move lower. Sales came in at 236,100 tonnes for the current marketing year and 27,400 for the next marketing year for a total of 263,500. As of November 22nd, cumulative corn sales stand at 42% of the USDA forecast for the current marketing year versus a 5 year average of 49%. Sales of 421,000 tonnes are needed each week to reach the USDA forecast. The last two weeks of sales have been slightly better than earlier in the crop year but cheaper corn continues to flow out of South America and Ukraine. Some traders suggest that Asia may be short corn supplies from January forward which could mean the US may become very active in the export market in 2013.
January Rice finished down 0.08 at 15.11, equal to the high and equal to the low.

Wheat Market Recap Report (CME)
December Wheat finished down 6 3/4 at 869 1/4, 10 1/2 off the high and 4 1/4 up from the low. March Wheat closed down 5 3/4 at 885 1/2. This was 4 3/4 up from the low and 9 1/2 off the high.
Chicago and KC wheat traded lower into the closing bell on light profit taking following an export sales report that came in below market expectations. Net weekly export sales came in at 279,300 tonnes for the current marketing year and no sales were reported for the next marketing year. As of November 22nd, cumulative wheat sales stand at 54% of the USDA forecast for the current marketing year vs. a 5 year average of 68%. Sales of 506,000 tonnes are needed each week to reach the USDA forecast. The US missed out on the 50,000 tonne Algerian tender today and it's being reported that the purchase was for 375,000 tonnes, likely French origin. Poor weather conditions in the western plains continue to support the US wheat markets this week. No significant precipitation is expected in the next two weeks. The EU granted export licenses for 438,000 tonnes of soft wheat bringing the 2012/13 season total to 7.3 million tonnes vs. 6.5 for the same period last year.
December Oats closed down 10 at 360 3/4. This was 3/4 up from the low and 11 3/4 off the high.

Wheat Halts Weeklong Rally as Demand for U.S. Exports Slackening (Bloomberg)
Wheat futures fell for the first time in five sessions on signs of declining demand for supplies from the U.S., the world’s biggest exporter. Export sales in the week through Nov. 22 totaled 279,337 metric tons, down 56 percent from a week earlier, the U.S. Department of Agriculture said today. Since June 1, overseas buyers have agreed to purchase 16.2 million tons, down 10 percent from the same period a year earlier, USDA data show. The government said Nov. 9 that exports would rise 4.8 percent. “Demand bearishness has reared its head after the export- sales report came out,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana, said by telephone. Wheat futures for March delivery slid 0.6 percent to close at $8.855 a bushel at 2 p.m. on the Chicago Board of Trade. The price has gained 36 percent this year as dry weather reduced global production 6.4 percent to a five-year low.
The grain climbed 3.7 percent in the previous four sessions as dry weather eroded conditions for winter varieties grown in the U.S. Great Plains. About 78 percent of Kansas, the biggest grower of the variety, was in extreme or exceptional drought as of Nov. 27, compared with 36 percent a year earlier, data from the weekly U.S. Drought Monitor show. Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Corn Futures Drop as Export Demand Ebbs; Soybeans Advance (Bloomberg)
Corn futures fell from a five-week high as demand by producers of grain-based fuel, animal feed and food ebbed. Soybeans gained. U.S. export sales of corn in the week ended Nov. 22 tumbled 69 percent to 263,140 metric tons from a week earlier, the Department of Agriculture said today. Production of ethanol slid 1 percent in the week ended Nov. 23 to the lowest in five weeks, the Energy Department said yesterday. The number of chicks placed on feed last week dropped 3.8 percent from a year earlier, USDA data show. “The rally in prices slowed exports and ethanol production,” Jerrod Kitt, the director of research at the Linn Group on Chicago, said in a telephone interview. “The drop in chicken production also weighed on the market.”
Corn futures for March delivery dropped 0.7 percent to close at $7.5875 a bushel at 2 p.m. on the Chicago Board of Trade. Yesterday, the price reached $7.675, the highest for a most-active contract since Oct. 19. The grain has gained 17 percent this year after a Midwest drought reduced production. Soybean futures for January delivery rose 0.1 percent to $14.48 a bushel in Chicago. Earlier, the price reached $14.60, the highest since Nov. 9. Export demand increased last week for animal feed and cooking oil made from supplies in the U.S., the world’s biggest producer. U.S. exporters sold 365,058 metric tons of soy-based animal feed in the week ended Nov. 22, up 84 percent from a week earlier and the most in two years, the USDA said today. Soybean- oil sales surged more than 13-fold to 121,527 tons from a year earlier.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Natural Gas Futures Tumble After Inventories Advance (Bloomberg)
Natural gas futures tumbled in New York, heading for the biggest weekly decline since June, after a government report showed an unexpected gain in U.S. stockpiles as mild weather reduced demand. Gas dropped 4 percent after an Energy Department report showed supplies rose by 4 billion cubic feet last week to 3.877 trillion cubic feet, the latest seasonal gain since 2009. Analyst estimates compiled by Bloomberg showed a decline of 9 billion cubic feet. Gas has slid 7.2 percent on moderating temperatures after reaching a one-year high on Nov. 23. “That’s a pretty bearish inventory number,” said Gordy Elliott, a risk-management specialist at FC Stone LLC in St. Louis Park, Minnesota. “December forecasts have turned warmer and there are no supply issues at all. This storage report could be the thing that breaks the market.”
Natural gas for January delivery fell 15.3 cents to settle at $3.648 per million British thermal units on the New York Mercantile Exchange. Gas futures have dropped 6.5 percent this week, heading for the biggest decline since the seven days ended June 1. February $3.50 puts were the most active gas options in electronic trading. They were 4.4 cents higher at 13.4 cents on volume of 2,510 contracts as of 3:07 p.m. Puts accounted for 57 percent of options volume. The five-year average gas stockpile change for the week is a decline of 18 billion cubic feet, department data show. A surplus to the five-year average rose to 5.2 percent from 4.5 percent the previous week, widening for the first time since the week ended Oct. 26.

Oil Trims First Monthly Gain Since August as Rise Seen Excessive (Bloomberg)
Oil trimmed its first monthly gain since August in New York amid speculation that the biggest daily rise in almost two weeks was excessive. Futures slid as much as 0.7 percent after climbing 1.8 percent yesterday, the most since Nov. 19, as a Commerce Department report showed the U.S. economy expanded more than previously estimated last quarter. West Texas Intermediate is giving up gains after failing to trade higher than the 50-day moving average, a sign of technical resistance, according to data compiled by Bloomberg. This indicator, at about $88.61 a barrel today, is where sell orders may be clustered. “The market climbed to the top-end of a range and people have grabbed some profits,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney.
Crude for January delivery dropped as much as 60 cents to $87.47 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.73 at 12:12 p.m. Sydney time. The contract increased $1.58 yesterday to $88.07. Prices are down 0.6 percent this week, the first weekly decline in four, and up 1.7 percent this month. Brent for January settlement slid 26 cents to $110.50 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.77 to West Texas Intermediate futures, from $22.69 yesterday.

Recap Energy Market Report (CME)
January crude oil prices trended higher throughout the session and climbed to their highest level since November 20th in the process. Early support for the crude oil market came from a decisive risk-on vibe, supported by gains in global equity markets and weakness in the US dollar. It seemed that a shift in sentiment that US lawmakers would be able to compromise on budget negotiations and avert the fiscal cliff was taken as a positive. Added support for the crude oil market came from rising tensions in the Middle East and the potential disruption of near term supply. The geopolitical risk came from Iran's uranium enrichment program and comments from the IAEA to take quick action to resolve the conflict. Further protests are being called for in Egypt in opposition to President Mursi's decree. Sentiment in the market took a slightly negative turn around the mid-session following comments from US House Speaker John Boehner that no substantive progress had been made on budget negotiations. January WTI crude oil finished the US trading session up 1.8% and back above the $88.00 level.

Copper Shortage Seen Extending as China Accelerates: Commodities (Bloomberg)
Copper supply shortages will extend into the first half of next year as an accelerating Chinese economy more than doubles the pace of growth in global consumption even as mines extract a record amount of metal. Demand will outpace supply by 316,000 metric tons in the first six months, more than all copper in London Metal Exchange warehouses, before a surplus emerges in the second half, Barclays Plc estimates. Production has lagged behind consumption since 2010, according to the International Copper Study Group. The metal may average $8,300 a ton in the second quarter, 5.1 percent more than now and the most in a year, according to the median of 21 analyst and trader estimates compiled by Bloomberg.
China, which uses 41 percent of the world’s copper, is rebounding from seven quarters of slowing growth after the government approved a $161 billion subways-to-roads construction plan in September. It’s being joined by central banks from the U.S. to Europe to Japan, who also pledged more stimulus. Housing starts in the U.S., the second-largest consumer, reached a four- year high last month and business confidence unexpectedly strengthened in Germany, Europe’s biggest economy. “U.S. growth will be moderate and Europe is stabilizing, so that drag might reverse partially, and then it all falls back to China,” said Dominic Schnider, Singapore-based global head of non-traditional assets at UBS AG’s wealth-management unit. “Economic activity doesn’t have to be that strong in China for inventories to get drawn down and you could see a rally in the first half, but then you come into the second half where mine supply comes in on the strong side.”

Gold, Silver Rise on Bets Fed Will Expand U.S. Stimulus (Bloomberg)
Gold rose for the first time in four days on speculation that the Federal Reserve will buy more debt to boost the U.S. economy. Silver climbed to a seven-week high. “I will be assessing the employment and inflation outlook in order to determine whether we should continue Treasury purchases into 2013,” Federal Reserve Bank of New York President William C. Dudley said in a speech in New York. Treasury Secretary Timothy F. Geithner began talks with congressional leaders on a budget accord. “Talks about more stimulus measures being introduced are bullish for gold,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. “The market is expecting some sort of resolution soon to avert the fiscal-cliff crisis” on U.S. spending and taxes, he said. Gold futures for February delivery gained 0.6 percent to settle at $1,729.50 an ounce at 1:49 p.m. on the Comex in New York. The price slumped 1.9 percent in the previous three days.
The metal has climbed 10 percent this year, heading for the 12th straight annual gain, as the Fed announced stimulus measures. Silver futures for March delivery increased 2 percent to $34.431 an ounce on the Comex. Earlier, the price reached $34.49, the highest since Oct. 8. The metal has advanced 23 percent this year. On the New York Mercantile Exchange, platinum futures for January delivery rose 0.5 percent to $1,619.50 an ounce. Palladium futures for March delivery gained 1.8 percent to $687.45 an ounce. Earlier, the price reached $692, the highest since Sept. 17.

Silver Market Recap Report (CME)
December silver took a setback today and kept on ticking. In fact, from the Wednesday low to the mid afternoon high, December silver prices managed a very impressive recovery bounce of roughly $1.40 an ounce. With the rally today December silver prices reached up to the highest level since October 8th. Silver clearly benefited from favorable US scheduled data early on and mostly positive action in US equities throughout the trading session.

Gold Market Recap Report (CME)
The bull camp has to come away from the action today somewhat emboldened as two sided political dialogue today could have swamped physical commodity markets today. However, favorable equity market action, supportive currency market action, mostly positive US scheduled data and ongoing hopes for an eventual fiscal cliff solution, simply left the bull camp in gold with the benefit of the headlines today. Others are suggesting that the brunt of the gains in gold today were simply technical in nature after the sharp compacted slide in the prior trading session.