Tracking Crops and Commodity Prices (Source: CME)
Consumers and investors get an early read this week on whether food commodity prices will give them indigestion in 2012. The U.S. Department of Agriculture releases its final assessment of last year's crop and the latest data on domestic grain inventories Thursday. The reports have a history of rippling well beyond futures trading at the Chicago Board of Trade, touching a wide range of companies from fertilizer producers such as Mosaic Co. to chicken processors such as Pilgrim's Pride Corp. The reports will drive how many acres U.S. farmers will plant come spring and what crops they choose to grow. That trickles down to raw-materials costs for food makers such as Kraft Foods Inc. and Sara Lee Corp. and what consumers pay at the supermarket. "It's definitely going to set the tone for 2012," said Peter Meyer, a New Jersey-based agribusiness consultant and publisher of farm commodity newsletter Opening Print.
The USDA reports have a history of immediately jolting grain markets. In each of the last five years following the release of the January reports, corn futures have either risen or fallen to the exchange-imposed limit on one-day price moves. Traders and corporate executives will look most closely at the inventory report. It comes out only quarterly and provides a snapshot of actual U.S. supplies of corn, soybeans and wheat rather than forecast. The last report, released Sept. 30, showed supplies of corn were larger than expected, and prices by the next week hit a nine-month low. The reports alter longer-range plans for agriculture companies as crop prices influence buying habits of farmers for seed, fertilizer and even tractors. Mosaic Chief Executive Jim Prokopanko said a fall swoon in corn prices made fertilizer dealers wary of adding inventory. With the price of phosphate falling sharply, the company announced in late December it would cut production.
"Our fertilizer pricing forecast is largely driven by corn prices," he said. The report also can hint at food prices for the year ahead. Last January, the reports stoked fears corn supplies could fall to historic lows as the 2010 harvest disappointed and global demand drained U.S. stockpiles. Food prices increased over the next 12 months, with the USDA projecting consumer prices for food rose 3.25% to 3.75% in 2011. The agency is forecasting a jump of 2.5% to 3.5% this year. That's slightly above the historical average for the past two decades. With so much attention put on this week's report, grain traders and buyers have become increasingly critical of the data, which they say has become highly unpredictable.
Analysts say the USDA's task has gotten more difficult in recent years. With a huge jump in the production of corn-based ethanol, many livestock producers are feeding their animals a byproduct of the biofuel rather than just the corn itself. That is helping to muddy overall grain demand. Meanwhile, many farmers have increased how much grain they can store on their own farms instead of bringing it to local elevators. That has made it more difficult for the USDA to figure out exactly how much grain is in the countryside. "Anyone that has a position in this market is generally worried going into this report," said Terry Reilly, an analyst with Citi.
Corn (Source: CME)
US corn futures end higher on continued worries about hot South America weather. Rains this week in Argentina are not going to be enough to save the crop from significant losses, some traders say, particularly with drought-like conditions returning afterwards. The market gave back some of its early surge amid profit-taking as uncertainty ahead of this week's big USDA report limits risk-taking. "This report on Thursday is going to set the fundamental tone for the market for the next month and a half," says ABN Amro. CBOT March corn ends up 8 1/2c at $6.52/bushel.
Wheat (Source: CME)
US wheat futures end higher on spillover support from worries about South America's corn and soybean crops. A slightly drier weather forecast for Argentina helped lift up the entire grains complex, analysts say. Wheat demand remains sluggish, however, due to ample world supplies, as weekly export inspections Monday were disappointing. Wheat could be the first market to show signs of "buyer's remorse" following Thursday's USDA report, says Mike Zuzolo of Global Commodity Analytics and Consulting. CBOT March wheat ends up 17c, or 2.7%, to $6.41 3/4 a bushel. KCBT March wheat up 18c to $6.98 and MGEX March wheat ends up 8 3/4c to $8.09 3/4.
Rice (Source: CME)
US rice futures end higher, winning back some of the week's earlier losses despite outside market pressure. Prices had fallen early in the week, and analysts say demand remains lackluster. Stronger US dollar pressured commodities generally, hurting export prospects. But US rice exports have already been poor, as evidenced by weekly net sales announced today under 30,000 metric tons. CBOT March rice ends up 14 1/2c, or 1%, to $14.68 per hundredweight. Down 18 1/2c on the week.
Corn, soy up on Argentine crop concerns; wheat rises
SINGAPORE, Jan 9 (Reuters) - U.S. corn rose 0.7 percent, while soybeans recovered after two straight sessions of losses with harsh hot and dry weather threatening to curb crop-yields in Argentina, a top global supplier of grains and oilseeds.
"We are looking at sideways trade because of the USDA report this week with an upside bias on weather concerns in South America," said Lynette Tan, analyst with Phillip Futures in Singapore.
Argentina says drought will reduce corn crop
BUENOS AIRES, Jan 6 (Reuters) - The drought that is drying out Argentina's farm areas will cut into the country's 2011/12 corn harvest, as crops struggle to flower under parched conditions, the government said in a weekly report on Friday.
The world's No. 2 corn producing country has been hit by dryness related to the La Nina phenomenon just as corn and soy plants need water to help them develop.
Jan. 6 (Bloomberg) -- Corn and soybean production in South America will be smaller than forecast last month after hot, dry weather delayed planting and damaged crops, said agriculture researcher Informa Economics Inc. The corn harvest in Brazil, Argentina and Paraguay will be 6.2 million metric tons less than forecast last month, Informa said today in an e-mailed report to clients. The soybean crop in Brazil, Argentina, Paraguay and Uruguay will be 4.3 million tons below the earlier forecast, Informa said.
Informa lowers US, Argentine corn crop estimates
CHICAGO, Jan 6 (Reuters) - Analytical firm Informa Economics lowered its estimate of the U.S. 2011 corn yield to 147.0 bushels per acre (bpa), from 149.5 previously, trade sources said on Friday.
The firm cut its estimate of U.S. 2011 corn production to 12.34 billion bushels, from 12.549 billion previously.
Afghanistan minister sees bigger 2011/12 grain crop
KABUL, Jan 6 (Reuters) - Afghanistan expects to pull in a bigger grain harvest in the current 2011/12 season and avoid a repeat of last year's severe food shortages, its agriculture minister said this week.
Afghanistan consumes around 6.5 million tonnes of grain annually, of which 5.4 million tonnes are wheat, its staple crop, and the rest consist of rice and barley. Last season, a drought led to a deficit of nearly 2 million tonnes.
No relief for dry Argentine farmlands this weekend
BUENOS AIRES, Jan 6 (Reuters) - Hot, dry weather is expected to continue over the next three days in Argentina's main farming regions, stoking concerns about the country's key corn and soybean crops which have bolstered CBOT futures.
The country's National Meteorological Service (www.smn.gov.ar) forecast isolated thunderstorms on Friday evening in marginal growing areas in northwestern Cordoba, San Luis and much of La Pampa province.
Morocco prays for rain for 1st time since 2007
RABAT, Jan 6 (Reuters) - Moroccans on Friday held the first nationwide prayers for rain since 2007, when drought slashed output of staple cereals to less than a quarter of the country's needs, although experts say the current crop year will probably be far less disastrous.
The prayers were held in mid-morning throughout Moroccan mosques and prayer areas "in accordance with the instructions of HM King Mohammed, the Commander of the Faithful", the Islamic affairs ministry said.
EU clears 107,000 tonnes wheat exports this week
PARIS, Jan 6 (Reuters) - The European Union this week granted export licences for 107,000 tonnes of soft wheat, taking the total since the beginning of the 2011/12 (July-June) season to 7.4 million tonnes, official data showed on Friday.
The total so far this season remained well below the volume in 2010/11 when 11.2 million tonnes of export licences had been cleared by the same stage.
Buyers turn to India, Thailand and Vietnam out of market
BANGKOK, Jan 4 (Reuters) - Indian rice prices edged down a little over the holiday period and remain far lower than the grain in Thailand and Vietnam, which should ensure that India remains the only seller in the market for the time being, traders said on Wednesday.
After lifting a four-year ban on rice exports in September, India is believed to have shipped 1.0-1.2 million tonnes, they said.
India wins 1 mln T corn export deals at $240-$250/T
NEW DELHI, Dec 14 (Reuters) - (Repeats story published late on Wednesday with no change to text)
India has sealed deals to export one million tonnes of corn to southeast Asia in the first two months of the season, indicating a robust start but traders fear that congestion at domestic ports could impede overseas sales later.
"We have contracted to export one million tonnes for January delivery and most deals have been struck in the range of $240-$250 per tonne FOB ($6.60-6.81 per bushel)," Vijay Shrishrimal, managing director of Mumbai-based top exporter K.N. Resources Pvt Ltd, told Reuters.
Australia 2012-13 Wheat Output Seen Strong Despite Lower Prices (Source: CME)
Despite a sharp downturn in wheat prices since mid 2011, Australian wheat plantings are likely to contract only a little in 2012, John Eastburn, Chairman of GrainGrowers Ltd., a national organization representing producers, said. Given favorable seasonal conditions at planting time in May and June, growers will still "push it to the limit again," he said by phone. With a current harvest all but finished, Australian wheat production is estimated by the state-run Australian Bureau of Agricultural and Resource Economics and Sciences at a record 28.3 million metric tons this crop year ending March 31, about 50% more than a long-term annual average. After annual domestic consumption of around 6 million tons is met, the balance is available for exports, making Australia the third-largest global supplier in 2010-11, according to industry regulator the Wheat Export Authority. Underpinning the estimated record output in 2011-12 was a record area planted of 14.1 million hectares, according to Abares.
Crops were sown in May and June last year when benchmark ASX milling wheat futures for delivery in New South Wales was quoted around A$320 a metric ton. ASX wheat futures have since fallen sharply with March milling wheat futures quoted Monday around A$212.50/metric ton, a price level that generates only "pretty ordinary" returns. This has brought operating margins down to a level that is just above the cost of production, said Eastburn, who grows grains in the Coonamble region of northern New South Wales. But that may not dent planting intentions for this year. "Most producers are locked in and have to plant again, even knowing that the prices aren't that good," Eastburn said. Having invested around A$2 million each in their farm plant and equipment as many have, growers can't readily leave that idle, waiting for better times, he said.
Some growers in the southern areas of Western Australia, South Australia, Victoria and southern New South Wales will plant more land to canola, but this option isn't available to growers in northern cropping areas, he said. Nor, given the costly entry levels, can landholders swing their operations to sheep or cattle production, he said. "Wheat production will probably come back a little bit," he said without venturing a planting or production estimate for 2012-13.
India Wheat Crop Unaffected By Hailstorm, Rain In Breadbasket State - Official (Source: CME)
Hailstorms and heavy rains over the weekend in India's northern breadbasket state of Punjab haven't affected the winter-sown crop, a senior state agriculture department official said. "The crop is fine. Rather, the weather conditions may help as the rain has cleared cloudy and overcast conditions," Punjab's agriculture director, Mangal Singh Sandhu, told Dow Jones Newswires. Foggy weather over Punjab and Haryana states was causing concern as poor light over a period of about a month could reduce absorption of nutrients and affect plant growth. India is betting on a repeat of last year's record wheat crop of around 86 million metric tons this year to shore up government stocks, ahead of a planned nationwide food security program. Any drop in wheat output could affect the government's plans as wheat and rice are the two main grain staples that will be distributed under the program that targets the poor and malnourished.
Sandhu said the area under wheat in Punjab this year is about 10,000 hectares less than last year's 3.51 million hectares. Sowing of wheat usually starts end-October and the crop is harvested from end-March or early April.
S.America soy crop seen shrinking; US exports eyed
CHICAGO, Jan 6 (Reuters) - Analysts expect few major shifts in U.S. soy stockpiles when the U.S. Department of Agriculture issues its January crop reports next week but dry weather should prompt downgrades in USDA's South American crop forecasts.
Such a drop would tighten world soy supplies and could eventually bolster flagging U.S. soybean exports, especially in the upcoming 2012/13 crop year.
US wheat acres seen rising after disappointing crop
CHICAGO, Jan 6 (Reuters) - A U.S. government report is expected to show that farmers last fall planted the most winter wheat in three years as some much-needed rain boosted crop prospects following a dry growing season in 2011, according to analysts surveyed by Reuters.
"The increase in wheat acres was no surprise," said Farm Futures magazine market analyst Arlan Suderman. "Unexpected fall moisture led Plains farmers to aggressively plant winter wheat to get a cover over their previously parched soils."
Corn supply to shrink as Argentine crop wilts
CHICAGO, Jan 6 (Reuters) - The U.S. Department of Agriculture (USDA) should trim its forecast for this year's ending supply of U.S. corn to a fresh 16-year low in a report next week, and more declines may occur if U.S. exports increase to compensate for Argentina's drought-hurt crop, analysts said.
"I think USDA may make a slight reduction but they won't be aggressive in this report. I recognize that additional reductions will probably be necessary, we'll know more in 30 days," said Shawn McCambridge, analyst for Jefferies Bache.
Argentina's new wheat system seen spurring output
BUENOS AIRES, Jan 6 (Reuters) - Argentina's new wheat export system promises to spur output from the grains-producing powerhouse at a time when farmers are hurting from dry weather and the government needs more foreign currency.
The administration of recently re-elected President Cristina Fernandez will scrap incremental export quotas in a bid to improve prices for farmers by boosting competition among the global trading houses that bid for their crops.
Ivorian natural rubber output up 6 pct in 2011
ABIDJAN, Jan 6 (Reuters) - Ivory Coast's rubber output grew nearly six percent in 2011 to reach 240,000 tonnes from 227,000 tonnes a year ago, with plans to boost production to 600,000 tonnes by 2020, an official of the West African nation's rubber association said on Friday.
Akpangni Attobra, general secretary of the Ivorian natural rubber association, APROMAC, said Ivory Coast, the world's top cocoa producer, plans to increase output by expanding tree planting to other areas of the country.
Cocoa Futures Jump Most Since October 2009 in N.Y. on Nigeria Supply Risk (Source: Bloomberg)
Cocoa surged the most since October 2009 as a labor stoppage threatened to disrupt supplies from Nigeria, the world’s fourth-biggest producer. Sugar and coffee also advanced. Nigerian workers began a national strike today, which may shut ports, after fuel costs more than doubled. Growers in the nation aren’t selling crops after prices paid to farmers fell more than 40 percent and the government’s removal of fuel subsidies left them facing higher costs, the head of the Cocoa Association of Nigeria said on Jan. 4. Higher prices may lift costs for companies including Hershey Co., Nestle SA and Barry Callebaut AG, the world’s top bulk-chocolate maker. Last year, cocoa tumbled 31 percent, the largest annual loss since 1999, as output rose in Ivory Coast, the biggest grower.
US 2011 cotton quality readings slip slightly
Jan 6 (Reuters) - The U.S. Agriculture Department said on Friday the micronaire readings that measure quality of the 2011 U.S. upland cotton crop slipped but the strength readings remained steady.
Grading the quality of the U.S. cotton crop is critical because it determines the ability of producers to sell the fiber at a premium or a discount to New York cotton futures.
Indonesia confident on Q1 white sugar stocks -govt
JAKARTA, Jan 6 (Reuters) - Indonesia, Southeast Asia's top sugar consumer, has enough white sugar stocks to meet domestic demand until its milling season begins in May, a government minister said on Friday, adding that a decision on imports would be announced next month.
Southeast Asia's largest economy currently has about 800,000 tonnes of white sugar inventories, Agriculture Minister Suswono told reporters.
India's Nov rubber imports rise, trend to continue
Dec 9 (Reuters) - India's natural rubber imports edged up 4.6 percent in November to 15,069 tonnes, the state-run Rubber Board said on Friday, and steep falls in prices on overseas markets are likely to continue to make imports attractive for tyre makers.
The country's production during the month rose 4.3 percent on a year ago to 94,400 tonnes, the Rubber Board said in a statement, while consumption was 82,000 tonnes compared with 78,010 tonnes a year ago, it said.
Biggest Rubber Glut Since 2004 Offers Respite to Bridgestone: Commodities (Source: Bloomberg)
Rubber plantations from Indonesia to Ivory Coast will tap a global crop this year that will create the biggest glut since at least 2004, cutting costs for Bridgestone Corp., Michelin & Cie. and other tiremakers. The market will switch to a 413,000-metric-ton surplus, from an 87,000-ton shortage in 2011 that helped drive rubber to a record in February, Goldman Sachs Group Inc. estimates. Prices fell since then on prospects for more supply and slower growth in China, the largest consumer. Futures will drop as much as 10 percent to 240 yen ($3.12) a kilogram (2.2 pounds) in Tokyo this year, the lowest since November 2009, the median estimate in a Bloomberg survey of 14 analysts and traders shows.
Commodities posted their first annual loss in three years in 2011 as China, the biggest user of everything from coal to cotton to copper, slowed growth to cool inflation that reached a three-year high in July. Auto sales in the nation rose 2.6 percent in the first 11 months of last year, down from 32 percent in 2010, industry data show. That’s adding to pressure on raw-material prices, already weakening as economists surveyed by Bloomberg forecast the slowest global growth since 2009.
India coffee exports seen falling 15 pct in 2011/12
NEW DELHI, Dec 7 (Reuters) - Coffee exports from India, the world's sixth-biggest producer, were likely to fall some 15 percent in 2011/12, Coffee Board Chairman Jawaid Akhtar said on Wednesday, as a burgeoning Indian middle class expands domestic consumption.
Exports for the year ending March 31, 2012 were seen between 240,000-250,000 tonnes as against 294,000 tonnes a year ago, Akhtar said.
India sugar output up so far; more exports likely
NEW DELHI, Dec 5 (Reuters) - India's sugar output rose 22.2 percent in the first two months of the new season from October despite crushing delays in its top producing state, a leading industry body said on Monday, boosting the chances of more sugar exports by the government.
Last month, the world's top consumer of sugar, and the biggest producer after Brazil, allowed mills to export 1 million tonnes, kicking off the overseas sales of the sweetener in the 2011/12 season.
Euro Coal-Prices rise 50c/T on short-covering
LONDON, Jan 6 (Reuters) - Prompt physical coal prices rose by 50-75 U.S. cents a tonne on Friday as players covered short positions and Indian buying showed signs of picking up after several months of a lull.
Traders and utilities in Europe short of Colombian tonnes due to delays to shipments from two of the country's biggest exporters, Drummond and Prodeco, have been seeking replacement cargoes, helping to bolster DES ARA prices.
S.Africa 2011 coal exports rise, China's share up
LONDON, Jan 6 (Reuters) - South Africa's coal exports for calendar year 2011 rose by 1.9 percent or 1.2 million tonnes to 64.6 million tonnes from the previous year, with a fourth-quarter surge in shipments going to China, exporters said.
China took just over 13 million tonnes from South Africa last year, much of it in the fourth quarter as Chinese utilities filled stockpiles to capacity before the New Year holidays.
Oil Trades Near Lowest This Year on Rising Stockpiles, European Outlook (Source: Bloomberg)
Oil traded near the lowest price in more than a week in New York as investors speculated that increasing U.S. crude stockpiles and signs of weakening growth in Europe indicate fuel demand may falter. Futures were little changed after sliding a third day yesterday as a report showed German (GRIPIMOM) industrial production fell in November. U.S. crude inventories probably rose a third week, a Bloomberg News survey showed. Iran is unlikely to close the Strait of Hormuz, according to Goldman Sachs Group Inc. and President Barack Obama’s former adviser on the nation. A general strike in Nigeria enters a second day today, threatening shipments by Africa’s biggest oil producer. “Concerns over slower economic activity in Europe offset potential tight supply from the geopolitical tensions in the Middle East and Africa,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today.
PetroChina Dalian to shut 120,000 bpd CDU for maintenance
BEIJING, Jan 9 (Reuters) - PetroChina plans to shut down a 120,000 barrel-per-day crude distillation unit (CDU) at its largest Dalian refinery for maintenance from mid-March, an industry source said on Monday.
The maintenance, which also includes a 800,000 tonne-per-year fluid catalytic cracking (FCC) unit, will last for 35 to 40 days, the source said
Oil markets brace for turbulence of index shift
NEW YORK, Jan 6 (Reuters) - Amid the drama of Iran, the meltdown of refiner Petroplus and a wave of upbeat economic data, it was all too easy to overlook one of the most important short-term factors shaping oil markets this week: the reweighting of the world's biggest commodity indexes.
The S&P GSCI Index and the DJ-UBS Index, the world's no. 1 and no. 2 commodity indexes, announced two months ago plans to rejig their component weights to reflect growing trade in European benchmark Brent crude, at the expense of U.S. WTI, which some traders say had become detached from global prices.
Brent rises above $113 on Iran supply threat
SINGAPORE, Jan 9 (Reuters) - Brent crude prices rose above $113 a barrel as concerns over the economic health of the euro zone were overshadowed by Iran's threat to shut a key oil-shipping route.
"The geopolitical concerns are definitely putting a floor on oil prices at the moment. There are no two ways about that," said Ben Le Brun, market analyst at OptionsXpress in Sydney.
Iron Ore-Shipping Costs Plunge 47% This Year Amid China Slowdown Risks (Source: Bloomberg)
The cost of hauling iron ore and coal fell to a four-month low, extending this year’s decline to 47 percent, amid concerns a Chinese economic slowdown will curb steel production, the biggest driver of global shipping demand. Rates to hire a capesize ship, the largest in the fleet of dry-bulk vessels, dropped 6.1 percent to $14,535 a day, according to the London-based Baltic Exchange. That’s less than half the 2011 high of $32,889 reached on Dec. 12, according to exchange data. “Concerns about a Chinese economic slowdown mean that there are real risks to weaker Chinese steel production (CHMMCRST) growth in 2012, which the capesize sector is highly leveraged to,” Natasha Boyden, an analyst at New York-based Cantor Fitzgerald LP, wrote today in an e-mailed report.
Iron Ore-China steel futures ease, limited ore restocking
SINGAPORE, Jan 9 (Reuters) - Shanghai steel rebar futures edged lower on Monday, reflecting a drab outlook for demand in top steel consumer China that has restrained buying of iron ore ahead of the Lunar New Year break this month.
The most-traded May rebar contract on the Shanghai Futures Exchange dropped 0.3 percent to close at 4,185 yuan a tonne , its second loss in four sessions.
China daily steel output slips in late Dec - CISA data
SHANGHAI, Jan 9 (Reuters) - China's daily crude steel output declined to 1.626 million tonnes in the last 11 days of December, down 2.4 percent from the preceding ten days, data from the China Iron & Steel Association (CISA) showed on Monday.
CISA figures showed that daily average output in the world's largest steel-producing country stood at 1.654 million tonnes in December, down 0.5 percent from November.
China imported iron ore stocks up 1.1 pct in wk to Jan 6
BEIJING, Jan 6 (Reuters) - Imported iron ore stockpiles at major Chinese ports rose 1.1 percent in the first week of 2012 to end at 96.61 million tonnes, driven largely by an increase in Brazilian shipments, industry consultancy Mysteel said on Friday.
Inventories sourced from India also increased over the week, despite a decision to raise iron ore export tariffs from 20 percent to 30 percent, effective from Dec. 30.
Baltic index slides to near 5-month low, trade slow
LONDON, Jan 6 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell to its lowest in nearly five months on Friday as a slump in cargo trade and a growing vessel surplus took their toll.
The shipping sector in coming months is expected to face a supply glut and economic gloom that will pressure earnings, including concerns over the outlook for Chinese demand for raw materials.
