Corn (Source CME)
US corn futures ended higher, buoyed by spillover support from wheat futures. Corn was also buoyed by broader based buying associated with weakness in the U.S. dollar, analysts say. Uncertainty surrounding the amount of damage South American crops incurred from hot, dry conditions are keeping prices underpinned with firm cash prices aiding the positive theme as well, analyst add. CBOT March corn ended up 3c at $6.42/bushel.
Wheat (Source CME)
US wheat futures ended higher, rallying to an over 4 month high for the second consecutive day on worries about freeze damage to European wheat and Russia curbing exports. Investors continued to favor buying wheat, as the uncertainty about lost production from winterkill in the Black Sea region and Europe as well the potential increased export demand from reduced Russian exports sparked buying, analyst say. Added support was drawn from weakness in the U.S. dollar, a feature generating broader based commodity gains. CBOT March wheat ended up 8 1/4c to $6.74 1/4/bushel, March KCBT wheat ended up 7c at $7.22 1/2, and March MGEX wheat ended up 9c at $8.36 3/4.
Rice (Source CME)
US rice futures tumbled for the second straight day, succumbing to speculative selling. The market is under pressure from lagging export demand, with chart based selling accelerating losses once futures dipped below recent lows, analysts say CBOT March rice ended down 26c at $13.74/hundredweight.
GRAINS-U.S. wheat at 4-1/2 month top on Russia export worries
NEW DELHI, Feb 1 (Reuters) - U.S. wheat climbed to a four-and-half month top rising for a second straight session on expectations that Russia, the world's third-largest supplier, was likely to curb exports.
"Prices have gone up because Russia has said that there could be restrictions on wheat exports," said Lynette Tan, analyst with Phillip Futures in Singapore.
Russia govt to determine grain export cap Feb 2
MOSCOW/TAMBOV, Russia, Jan 31 (Reuters) - Russia's government will determine on Thursday how much grain can be exported during this crop year before it considers imposing a protective duty to keep grain in the country, Deputy Prime Minister Viktor Zubkov told Reuters.
"The day after tomorrow I will hold a meeting. We will decide and I will give some signals," Zubkov said in response to a question about the level of export which could trigger the duty.
Mexico lowers corn harvest forecast due to drought
MEXICO CITY, Jan 31 (Reuters) - Mexico's corn harvest will likely be smaller than expected this year, after coming in below expectations last year, due to a devastating drought, Agriculture Minister Francisco Mayorga said on Tuesday.
The corn harvest is now expected to total 20 million tonnes of white corn and 1.8 million tonnes of yellow corn in 2012, compared with the 25 million tonnes estimated before the effects of the dry weather were fully known.
Tight Farmer Holding Pushes Cash Corn Basis (Source CME)
Farmer sales of U.S. corn are not keeping up with relative needs of the spot market, pushing basis levels to record levels for this time of year. Strong prices for corn futures are not loosening the tight grip farmers have on their stored supplies, as they remain reluctant sellers of inventories. "The spot cash market for corn is artificially tight, as we know there is plenty of corn out there in the middle of the marketing year in January," said Darrel Good, agricultural economist at the University of Illinois. Farmers believe the big break in price since August has left corn undervalued, and with a decent price available for storing corn, farmers are not motivated sellers at this point, Good said. Only a trickle is coming out of on-farm storage bins keeping available nearby supplies tight as farmers are optimistic prices have further to rise. Farmers are also disappointed with cash prices not improving since the harvest.
The average cash price for corn from Sept. 1 to the end of November in St. Louis was $6.61 1/4 a bushel. Current St. Louis prices are trading near $6.60, still cheaper than the average bid at harvest. "Farmers not pressed for cash are not inspired to sell at a price below what they passed up in the fall," said Dave Marshall, an independent marketing advisor for farmers in southern Illinois. Most producers have plenty of cash from lucrative sales last fall and during the early winter, so there is generally no urgent need for cash flow at this point. With the low interest returns available from bank deposits, its a better investment for farmers to hold onto supplies, said Kim Craig, a merchandiser for Bell Enterprises, a privately owned group of grain elevators in Illinois.
Indonesia To Review India Rice Contracts On Delivery Delay (Source CME)
Indonesia will review contracts with Indian rice exporters who are seeking more time to deliver cargoes citing congestion at ports and bottlenecks in procuring grain from millers, trading executives and a Jakarta-based official said. "We will be reviewing the delivery schedule for cargoes from India, to decide whether any additional time needs to be given or impose a penalty for delayed shipments," state-run procurement agency Bulog's chief executive Sutarto Alimoeso told Dow Jones Newswires. Indonesia, which was the top importer in 2011, traditionally buys from Thailand and Vietnam. For the first time in several years, Bulog locked in a deal for 250,000 metric tons of Indian rice on Nov. 15 for delivery by mid-February. However, with two weeks to go, less than 100,000 tons have been shipped out and around 31,000 tons delivered, according to estimates of traders, port officials and cargo surveyors. Another 36,700 tons are being loaded and ships for loading 35,000 tons are waiting for berth at Indian ports.
"Due to infrastructural bottlenecks, we have sought two more weeks to complete deliveries," said Prem Garg, managing director of Shri Lal Mahal Ltd., which has a 100,000-ton contract with Bulog. Indonesia has also bought 100,000 tons from Amira Foods and 50,000 tons from Emmsons International. "Apart from a small cargo of 5,000 tons, all our orders from Bulog have been shipped out or are under loading and will be completed soon," an Emmsons executive said. An executive at Amira Foods didn't give details of shipments but Bulog officials said they haven't received any cargo from the company and only a ship with 6,000 tons is on high seas. Many Indonesian ports are difficult to access and arrangements had to be made for smaller vessels to deliver cargoes to Bulog, an Indian trading executive involved in the deals said. He added that Indian millers have also hiked the prices of 15% brokens due to the large Indonesian order.
Alimoeso said the government had given Bulog licenses to complete all imports by end-February and the agency had asked Indian exporters to deliver shipments by Feb. 15. Some shipments from Thailand are also pending but they will likely be completed this month, he said. Bulog has signed a memorandum of understanding with Myanmar Rice Industry Association to import up to 200,000 tons annually, if needed. Alimoeso said so far there are no plans to offset delay in deliveries from India by buying Myanmarese rice.
Indonesia's Sulawesi Jan cocoa bean exports fall -industry
JAKARTA, Feb 1 (Reuters) - Indonesia's cocoa bean exports from its main growing island of Sulawesi slipped 23 percent in January from the same month a year ago, and was down 26 percent from the previous month, industry data showed on Wednesday.
Sulawesi cocoa exports were at 8,904.25 tonnes in January from 11,634.66 tonnes a year ago, data from the Indonesia Cocoa Association showed. December exports were at 12,051.72 tonnes.
India coffee exports fall 7.5 pct in Oct-Jan
MUMBAI, Feb 1 (Reuters) - Coffee exports from India fell 7.5 percent to 79,021 tonnes in October-January on lower stocks and rising local demand. Arrivals from the new crop in coming months are expected to stem the fall, though.
In value terms, the exports rose to $243.05 million from $218.91 million a year ago, the Coffee Board said in a statement.
India releases 1.4 mln T sugar for Feb-sources
MUMBAI, Feb 1 (Reuters) - India has allowed millers to sell 1.4 million tonnes of sugar in the open market in February, 100,000 tonnes less than in January, government and industry sources said on Wednesday.
The government sets the quantity of sugar that millers can sell each month to control sharp swings in prices and ensure adequate supplies for the country's 1.2 billion people.
Global rubber output seen up 3.2 pct in 2012 -ANRPC
SINGAPORE, Feb 1 (Reuters) - Global natural rubber output is forecast to rise 3.2 percent in 2012 because of higher production in Vietnam, the Association of Natural Rubber Producing Countries (ANRPC) said on Wednesday.
The ANRPC pegged 2012 production at 10.450 million tonnes, up from 10.127 million tonnes last year and slightly higher than an earlier estimate of 10.415 million tonnes.
Exporters say boycott landmark I.Coast cocoa auction
ABIDJAN, Jan 31 (Reuters) - Ivory Coast's reform of its cocoa sector, vital for the country to obtain further debt relief, began in confusion on Tuesday as the regulator hailed the first two forward-sales auctions as a success while exporters said they had boycotted them.
Ivory Coast held as scheduled two auctions of the 2012-13 crop which is the first step in a move by the top grower away from a decade of liberalisation back to a price-regulated sector aimed at guaranteeing its farmers a price floor.
Al Khaleej Dubai refinery buys Indian sugar
LONDON, Jan 31 (Reuters) - The Dubai Al Khaleej sugar refinery, typically supplied by raw sugar from top producer Brazil, has recently bought more than 100,000 tonnes of Indian sugar, general manager Cyrus Raja said on Tuesday.
"The Indian raw sugar is refined and sold to the regular customers of Al Khaleej Sugar in the Middle East and North Africa region and other parts of the world," Raja told Reuters in an emailed interview before the Feb. 4-7 Kingsman Dubai sugar conference.
Brent rises above $111, Iran supply worries support
SINGAPORE, Feb 1 (Reuters) - Brent crude rose above $111 a barrel, gaining for a second straight session on fears that tensions between Iran and the West may escalate with U.S. lawmakers mulling more sanctions on Tehran, while promising China data also supported sentiment.
"There's the positive factor of supply worries from Iran and South Sudan while on the other side, we have a bearish factor from a weaker economy in Europe that will reduce oil demand," Ken Hasegawa, a commodity sales manager at Newedge Japan, said.
Oil Futures Decline a Fifth Day as U.S. Stockpiles Rise, Fuel Demand Slips (Source: Bloomberg)
Oil declined for a fifth day in New York, matching the longest losing streak since August, as U.S. crude stockpiles increased more-than-estimated and gasoline consumption fell to a 10-year low. Futures were down as much as 0.6 percent after settling yesterday at the lowest close in six weeks. Crude supplies rose by 4.2 million barrels last week, figures from the Energy Department showed. They were projected to increase 2.6 million barrels, according to a Bloomberg News survey. Oil rose earlier yesterday after manufacturing indexes from Germany to the U.S. increased. “It appears to be driven by U.S. domestic factors, the larger-than-expected increase in crude stockpiles and fall in gasoline demand,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “In the short-term, it flies in the face of the run of reasonably positive data from the U.S.”
Indonesian Bourse Starts Trading Physical Tin Contract in Challenge to LME (Source: Bloomberg)
An exchange in Indonesia, the world’s largest tin exporter, started trading a physical contract today to create an alternative to the benchmark on the London Metal Exchange after twice delaying the initiative. The Indonesia Commodity & Derivatives Exchange, which offers palm oil and gold, had two lots of 5 metric tons each traded before the contract settled at $24,500 a ton. The introduction was delayed from Dec. 15 and Jan. 12 to allow potential users more time to prepare. Tin rallied 27 percent last month, the biggest gain since at least July 1989, as stockpiles fell. Indonesia represents about 40 percent of global exports, and the move to set up the new benchmark was supported by the government through the Commodity Futures Trading Regulatory Agency and PT Timah (TINS), the country’s biggest producer. At present, the LME, the world’s largest metals bourse, offers cash and futures trading in tin.
Steel Demand Slowing With Europe in Setback to ArcelorMittal: Commodities (Source: Bloomberg)
Steel demand worldwide is growing slower than forecast, eroding profit at producers including ArcelorMittal and Tata Steel Ltd. (TATA) and forcing investors to revise their 2012 outlook for the $430 billion industry. Global use of the alloy will rise 4.5 percent this year, less than the 5.4 percent forecast in October by the World Steel Association, according to the median estimate of 14 steelmakers, analysts and traders surveyed by Bloomberg. Growth may be as low as 1.2 percent, according to Bloomberg Industries analysts. The gain, the lowest in three years, is tempered by cooling economies in China and Europe, where orders for steel products for houses, cars and machinery are stagnating and will keep the alloy’s prices and overseas shipments muted, analysts said.
Iron Ore-Spot prices respond to China demand signals
BEIJING, Feb 1 (Reuters) - Chinese spot iron ore prices rose on Wednesday as traders drifted back to the market following the new year break amid signs that demand could start to pick up in the coming weeks.
Industry consultancy Umetal said Pilbara fines with 61.5 percent iron content were being offered at $141-143 per tonne cost and freight on Wednesday, up $2 from Tuesday.
US Steel offers improved outlook for 1st quarter
Jan 31 (Reuters) - U.S. Steel Corp posted a wider-than-expected quarterly loss on Tuesday but said it expects a better first quarter as it sold off its money-losing Serbian operations, European prices appear to have bottomed-out and end-user demand is ticking up.
The positive outlook in an industry that has been struggling to rebound from the recession sent the steelmaker's stock up nearly 5 percent to $30.19 on the New York Stock Exchange.
Gold Climbs to Eight-Week High as Dollar Drop, Europe Debt Fueling Demand (Source: Bloomberg)
Gold futures in New York climbed to the highest price in almost eight weeks as Europe’s lingering debt crisis and a weaker dollar spurred demand for the precious metal as an alternative asset. The dollar fell as much as 0.8 percent against a basket of six currencies. Gold jumped 11 percent last month, the biggest January gain since 1983, on mounting concern that Europe’s debt woes may lead to a recession, and after the Federal Reserve pledged to keep its benchmark U.S. interest rate low until at least late 2014 to spur growth. “Gold is trading like a hard currency,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in an e-mail. “People are worried about currency debasement because of the credit easing by several countries.”
METALS-Copper steady, supported by firmer China PMI
SHANGHAI, Feb 1 (Reuters) - London copper traded steady on Wednesday, underpinned by Chinese data that reinforced Beijing's commitment to economic growth, but gains were capped ahead of data expected to show European and U.S. economies got off to a slow start in 2012.
Two separate surveys of Chinese manufacturing activity showed stuttering growth in the world's second largest economy. A government survey indicated a slight upturn in production in January, but a private sector report suggested factory activity shrank for a third month.
PRECIOUS-Gold steady; U.S., Europe data eyed
SINGAPORE, Feb 1 (Reuters) - Gold was steady on Wednesday after ending January with its biggest monthly rise since August, while investors eyed more data from the world's key economies for trading cues after China released a better-than-expected manufacturing survey number.
China's official Purchasing Managers' Index showed the manufacturing sector expanded modestly in January, with the index reading inching up to 50.5 from 50.3 in December, above a 49.5 reading forecast.
Global Shipping Prices Face More Choppy Waters (Source CME)
Times are tough for the shipping market. Freight rates hit a record low on weak demand for iron ore, poor weather conditions in mining regions and a glut of shipping capacity. The Baltic Dry Index, a composite of commodity shipping costs around the world, fell for a 32nd consecutive session to 662. The previous low, of 663, came in December 2008, during the depths of the credit crunch. But unlike the one three years ago, this slump reflects more than a sluggish global economy. A conflation of seasonal, environmental and demand-side factors accelerated the index's decline in recent months and could tip it further into the red. The index has plunged 59% this year alone and is down 94% from the peak reached just before the crisis hit. More than anything, this collapse "is due to excessive supply of ships and shipping capacity," said Beethowen Nepomuceno, who is responsible for ocean transport at commodities-trading company Cargill Inc.'s Sao Paulo's office.
Analysts and industry players expect the glut in shipping capacity to last for several years given that vessels often operate for around 25 years. But increased scrapping and the possibility that unprofitable shipping firms could be forced out of business should eventually lend some stability to prices, they said. "If old ships exit, that could start to correct the market," Nepomuceno said. "It's an eternal game of push and shove." A big factor depressing rates is the delivery of vessels ordered when the global economy was booming in the early-to-mid-2000s and credit was freely flowing, said Mark Williams, research manager at global shipbroking firm Braemar Seascope. "Companies saw China as a never-ending story and wanted to invest their profits in new shipping capacity," he said. Now those vessels are being delivered, yet the need for all of them is no longer as obvious. The order book currently stretches to 2015, according to industry analysts, with the majority of vessels due for delivery this year.
Other, more-recent factors have aggravated the situation. Unusually heavy rains in Brazil prompted mining giant Vale SA (VALE, VALE5.BR), which produces around 25% of the world's iron ore, to invoke a clause known as "force majeure" on Jan. 11 in some contracts to free itself from penalties on delayed shipments of ore, which is primarily used to make steel. That was lifted on Jan. 23, and mining and transportation resumed. In addition, demand for iron ore in China, which consumes more than half the world's iron-ore output, has been waning in recent months; inventories at Chinese ports are near record levels. China's crude-steel output climbed 8.9% in 2011 to 695.5 million metric tons, but growth should slow to 5% this year as Beijing's efforts to cool the economy continue to bite, according to market estimates compiled by London-based The Steel Index. In addition, the Lunar New Year holiday, which essentially shut down the country for a week in January, was a temporary brake on demand.
"The shipping market has been hit by a triple whammy of bad weather, weaker Chinese iron-ore demand and public holidays," Williams of Braemar Seascope said. A longer-lasting source of pressure is Vale's order for a fleet of 35 so-called Valemax vessels that can carry 400,000 deadweight tons, making them more than twice as large as Capesizes, the next-largest carrier, which typically carry up to 180,000 deadweight tons. The super-sized ships will be used on the company's Brazil-Asia route to compete more efficiently with nearer Australia shippers. Vale docked the first of the fleet, the Berge Everest, at China's Port of Dalian in late December, with a delivery of 350,000 tons of iron ore. China's shipping industry has lobbied against such ships, fearing they may strengthen Vale's dominance on the dry bulk market and China's Ministry of Transport has restricted access of the vessels into its ports.
"The vessels have been built, so the tonnage will be there," said an analyst at a shipping firm who declined to be named. "It's going to be a tough couple of years for the shipping market."
China ministry says to bar giant ships from ports
SHANGHAI, Jan 31 (Reuters) - China will no longer allow large ships exceeding approved capacities to dock at its ports, the Ministry of Transport said, effectively snuffing Brazilian miner Vale SA's hopes of sending its mega-ships to China.
Ships exceeding approved capacities were previously assessed on a case-by-case basis, but the ministry said in a statement on its website on Tuesday that giant dry bulk vessels and oil tankers were prohibited with immediate effect.
