Commodities Rally to Highest in More Than Six Months on Bailout for Greece (Source: Bloomberg)
Commodities jumped to a six-month high as euro-area finance ministers reached agreement on a second debt bailout for Greece and U.S. equities rallied, boosting prospects for raw-material demand. The Standard & Poor’s GSCI Spot Index of 24 commodities rose 1.7 percent to close at 699.92 at 3:46 p.m. in New York, after reaching 700.79, the highest since July 27. Metals led the gains with silver up 3.7 percent and aluminum gaining 3.5 percent. The Dow Jones Industrial Average climbed above 13,000 for the first time since 2008. Greece won a rescue after governments in Europe wrung concessions from private investors and tapped the European Central Bank to shield the region from a default. Finance ministers awarded 130 billion euros ($173 billion) in aid. Investors who were waiting for a Greece resolution are “planting themselves long commodities,” said James Cordier of OptionSellers.com.
“In the U.S., we have the Dow touching 13,000, and that is opening a whole lot of eyes to the fact that the U.S. economy is getting possibly much better,” Cordier, a portfolio manager, said in a telephone interview from Tampa, Florida. “You have investors really pouring money into the riskier assets and, of course, commodities get to be the big winner.”
Corn (Source: CME)
US corn futures end lower, stumbling on expectations of a large US crop and fund-selling. Traders say anticipation of the USDA's annual outlook forum later this week, and the likelihood it will forecast a big jump in corn acreage, weighed on prices. The market's inability to climb overnight despite outside macro support prompted selling, and funds were heavy sellers of an estimated 11,000 contracts, traders add. The market held above key 50-day and 100-day moving averages, however. CBOT March corn ends down 12 1/4c to $6.29 1/2 per bushel.
Wheat (Source: CME)
US wheat futures end lower on pressure from corn and large world supplies. The market sank along with corn, which was pressured by US acreage expectations. Traders say the US could also have a large wheat crop with adequate moisture this season. Regardless, world supplies are bulging and export demand is lackluster. CBOT March wheat ends down 11c to $6.33 per bushel, KCBT March wheat closes down 12 1/2c to $6.77, MGEX March wheat ends down 5 1/2c to $8.16 3/4.
Rice (Source: CME)
US rice futures stumble to their lowest level in a week amid broad weakness in grains and sluggish demand. Lackluster exports and domestic use have weighed on the rice market for months, but it had added pressure today from sliding corn and wheat caused by US acreage expectations. However, fears that US farmers won't plant enough rice is limiting the market's downside. CBOT March futures end down 30 1/2c at $13.83/hundredweight.
S.American drought, Russian exports in focus at grains meet
SINGAPORE, Feb 20 (Reuters) - A drought that has shrunk grain output in South America, slowing wheat exports from the Black Sea region and hopes for higher corn plantings in the United States will take centre stage at a global grains industry meeting in Singapore this week.
China's rising food imports and Australia's record wheat output -- which are likely to affect global supplies and prices -- are other issues that will dominate the conference.
U.S. wheat, corn, soy inch up; await USDA data
NEW DELHI, Feb 21 (Reuters) - U.S. grains edged higher the first day of trading after a long weekend, and traders expected prices to rise further as unfavourable weather limits supplies from the Black Sea region and South America.
"The market is relatively quiet after a long weekend and keenly waiting for the USDA outlook figure. At the moment, we are seeing strong export demand for U.S. wheat and lower supplies from Russia and Ukraine," said Lynette Tan, an analyst with Phillip Futures in Singapore.
Canada 2011 farm income hits record high
Feb 20 (Reuters) - Canadian farmers recorded record-high net income in 2011, but their earnings are likely to slip modestly in 2012, Statistics Canada said on Monday.
In 2011, strong crop and livestock prices, combined with higher government payouts for flooding in western Canada more than offset higher operating expenses, Statscan said. Net cash income reached C$11.7 billion in 2011.
Record low rainfall puts UK on drought watch
LONDON, Feb 20 (Reuters) - Large parts of Britain are facing a drought this year after groundwater reached levels not seen for more than 35 years, which could spell restrictions for farmers and households.
Rivers, canals and reservoirs are running low after a second dry winter in a row, with some areas receiving less than 70 percent of normal amounts.
Algeria wheat imports up 56 pct in January-customs
ALGIERS, Feb 20 (Reuters) - Algeria's soft and durum wheat imports rose 56 percent to 508,620 tonnes in January this year from 325,928 tonnes in the same month a year ago, customs data showed.
The data, seen by Reuters, did not provide details for wheat imports in January 2012, but showed 289,429 tonnes of soft wheat was imported in January 2011, while durum wheat imports reached 36,499 tonnes.
India 2011/12 pulses output seen lower-trade body
MUMBAI, Feb 20 (Reuters) - India could miss the 2011/12 estimated output target for pulses as lesser-than-usual winter rains have reduced moisture in the soil in key chana growing areas and affected sowing and harvesting, a senior official of an industry body said.
India had hoped to produce 17.28 million tonnes of pulses in the current crop year ending in June. In 2010/11, it produced 18.24 million tonnes, a record high.
Russian grain exports slow in early Feb-IKAR
MOSCOW, Feb 20 (Reuters) - Total grain exports from July 1 to Feb. 12 amounted to 19.85 million tonnes, but the pace of exports dropped dramatically in the first two weeks of February, the Institute for Agricultural Market Studies (IKAR) said on Monday.
At the end of January, Russia had exported about 19.6 million tonnes, implying a monthly average of more than 2.74 million tonnes.
Grain farms in China's northeast may see drought - ministry
BEIJING, Feb 20 (Reuters) - China's agriculture ministry has urged the authorities in the country's major corn and soybean growing northeast to be fully prepared for a possible drought in the spring planting period, which may delay or hurt crops.
"Since autumn, rainfall in the northeast has been 30 to 80 percent less (than in normal years), which has reduced water supplies to rivers and led to a shortfall of water storage in reservoirs," the ministry said during a meeting with local government officials.--
Favorable Prospects For Brazil 2012 Corn Crop, High Exports - FAO (Source: CME)
Early prospects for this year's Brazilian corn crop remain favorable despite dry weather, the United Nations's food body said, with the country's exports in 2011-12 forecast at a "high level" of 10 million metric tons. The Rome-based Food and Agriculture Organization said Brazil's 2012 corn production for both the main and second season crops is forecast at around 60 million tons, or an increase of 7% on the record level of 2011. The area planted for Brazil's second season corn crop is thought to have expanded significantly to compensate for an expected decrease in production from the South-Region, the FAO said, after the main crop experienced adverse weather. The FAO anticipates a good harvest from the second season crop--which is mainly grown in the Centre-West Region and in the southern state of Parana--with Mato Grosso likely to have registered a 29% increase in plantings.
A prolonged dry spell from November onwards negatively impacted yields for Brazil's main corn crop, the FAO said, with forecasts for a decline of around 11% on the year. However, the area planted for the main crop is estimated around 9% higher than the previous season in response to higher prices. Brazil's corn exports in the 2011-12 marketing year are forecast to remain well above the average of the last five years, the FAO said, but still decline around 14% on last year's record 11.7 million tons, partly due to growing feed demand from the domestic livestock industry. The FAO said prices of wheat flour and yellow corn in the main urban market of Sao Paulo declined by 7% and 5% on the month in February due to improved forecasts for the 2012 crop.
India Govt: Aim To Procure 31.89 Mln Tons Wheat In 2012-13 (Source: CME)
India is targeting a 12.6% increase in wheat procurement for government stocks to 31.89 million metric tons during the fiscal year that starts April 1, a government statement said. Wheat, one of the two most important grain staples, is usually sown between end-October and mid-November, and harvested from the end of April to early March onwards. State-run agencies procure the grain for government stocks between April and June. India has estimated that its wheat output during the crop year that started July 1 will touch a record 88.31 million tons. Two years of successive bumper wheat crops will enable the government to roll out an ambitious nationwide food security program that aims to offer the grain to the poor and malnourished at a fraction of market prices.
Pakistan May Match Record Wheat Export Volume On Bumper Crop (Source: CME)
Pakistan may export up to 1.5 million metric tons of wheat this year, matching last year's record, thanks in part to a third consecutive bumper crop expected from the harvest set to begin in a few weeks, a senior industry executive said. Output from the coming harvest is likely to total 24 million tons, almost unchanged from last year, due to good soil moisture, adequate use of fertilizer amid high farm incomes and fine weather throughout the planting and development stages, said Muhammad Najib Balagamwala, the chairman of Karachi-based Seatrade Group. Last year, Pakistan exported a record 1.5 million metric tons of wheat. That level may be reached again this year if prices remain competitive, Balagamwala said ahead of a grains conference here. The Pakistani government has raised the procurement price this year by PKR100 to PKR1,050 per 40 kilograms, or PKR26,250/ton.
Based on this price, Pakistan's export prices of the new harvest will be around $335/ton, free on board, which won't be competitive, Balagamwala said. Australia, the U.S. and Russia are offering wheat well below $300/ton. However, brisk exports are still likely because the government is holding at least 3.0 million tons of wheat from previous harvests, and may sell some of its stocks to traders and millers at lower prices to create storage space for the new harvest and bolster dwindling foreign exchange reserves, Balagamwala said. Not all growers have access to the government's grain-procurement machinery and prices in many regions generally fall below the intervention price due to the harvest pressure, thus boosting exports, he said. Pakistan enjoys a geographical advantage in shipping wheat to Southeast Asia and freight costs for container shipments are negligible.
Pakistan emerged as a major exporter last year because its wheat was among the world's cheapest in the May-July period but shipments slowed after Russia lifted a ban on exports. Ukraine, another major exporter, now plans to restrict exports due to concerns that bad weather will hurt its June-July harvest. Australia has ample supply but most of its shipping slots are fully booked due to strong demand. Many buyers looking for small volumes for prompt shipment and delivery at short notice may turn to Pakistan, Balagamwala said. Pakistan is currently exporting wheat after processing it into flour to several countries, including Sri Lanka and the United Arab Emirates, he said.
Wilmar International 4th Quarter Profit Gains 57% on Higher Sales, Sugar (Source: Bloomberg)
Wilmar International Ltd. (WIL), the world’s biggest palm-oil processing company, said fourth-quarter profit rose 57 percent on higher contributions from oilseeds, grains and its acquired sugar business. Net income climbed to $500 million, or 7.7 cents a share, in the three months ended Dec. 31, from $318.6 million, or 4.9 cents, a year earlier, the company said today in a statement. That compares with the $519.8 million average estimate of six analysts compiled by Bloomberg. Revenue gained 27 percent to $11.5 billion. Wilmar owns plantations and is the biggest palm oil refiner in Indonesia, where the maximum tax on crude palm-oil exports was cut in October and lower duties were imposed on products. The Singapore-based company completed the purchase of Australia’s largest sugar producer in December 2010 to help meet demand in Indonesia and India and rely less on China’s cooking oil market.
“We focused on strengthening our businesses through continued investments in sugar, flour and rice milling, oleochemicals, biodiesel, oil refining and consumer products,” Chairman Kuok Khoon Hong said in the statement.
Vietnam to export up to 150,000 T sugar in 2012
HANOI, Feb 21 (Reuters) - Vietnam will export 100,000-150,000 tonnes of sugar this year to help offset a domestic surplus as supply is expected to outstrip demand, the agriculture ministry said on Tuesday.
Domestic refined sugar output could reach 1.57 million tonnes, above expected demand of 1.4 million tonnes, the ministry's department for processing and trading agricultural and forestry products said on its website (chebien.mard.gov.vn).
ISO raises 2011/12 global sugar surplus forecast
LONDON, Feb 20 (Reuters) - The International Sugar Organization on Monday increased its forecast for a projected global sugar surplus in 2011/12 to 5.17 million tonnes, up from a forecast of 4.46 million issued in its previous quarterly update.
World production in 2011/12 was seen at a record 173.00 million tonnes, up 4.9 percent from the previous season, with consumption climbing 2.3 percent to 167.83 million, the ISO said in a quarterly market outlook.
Rains lift hopes for Ivorian cocoa midcrop
ABIDJAN, Feb 20 (Reuters) - Rains picked up in Ivory Coast's main cocoa growing regions last week, lifting hopes for healthier production volumes during the April-to-September midcrop, farmers and analysts said on Monday.
Dry, windy weather has crimped output so far this season, with volumes already down about 8 percent from last year, according to exporter estimates.
Rain ruins part of Vietnam's 2012/2013 coffee-Vicofa
HANOI, Feb 20 (Reuters) - Rain and rough handling have ruined some coffee flowers in Vietnam, which could lead to a drop in the yields of the next crop, a Vietnamese industry executive said on Monday.
Vietnam, the world's second-largest coffee producer after Brazil, has ended harvesting the 2011/12 crop in January.
Ethanol Industry Tries To Work Off Supply Glut As Subsidy Ends (Source: CME)
A surge in U.S. ethanol production and falling export demand are driving down prices for the corn-based fuel, curbing producer profits and causing some plants to shut. Ethanol inventories ballooned late last year as producers rushed to take advantage of a government subsidy that expired Dec. 31. Around the same time, exports started to slide and domestic demand weakened for gasoline, with which ethanol is blended. Futures for the biofuel trade 11.6% below year-ago levels, closing at $2.215 a gallon at the Chicago Board of Trade on Friday. The weak market is expected to cut into the profits of ethanol makers such as Archer Daniels Midland Co. and privately held POET, LLC. Some producers are cutting output, with Green Plains Renewable Energy Inc. announcing last week it would reduce production by 30% at two of its nine plants and consider further cuts. "There is an overcapacity problem," Morningstar analyst Min Tang-Varner said. "It will take a couple of large plants shutting down to make a difference."
The U.S. has ethanol production capacity of 14.8 billion gallons a year, according to the Renewable Fuels Association. In the past week, producers have announced shutdowns totaling a combined 101 million gallons a year. Ethanol producers say the supply glut is a temporary issue the industry will burn through in the coming months. Still, returning to normal supply levels soon will require a combination of recovering export demand and a seasonal jump in domestic gasoline usage, said Sander Cohen, analyst at energy consultancy ESAI Inc. "The glut is more likely to stick around than go away," Cohen said. Fuel blenders had since 2004 enjoyed a subsidy that awarded them 45 cents for every gallon of ethanol they blended into motor gasoline, driving up demand for the biofuel. That subsidy expired at the end of 2011. Added production ahead of the subsidy's end helped build ethanol inventories to an all-time high of 21 million barrels during the first week of February, up 7% from a year ago, according to federal data.
Previous gluts have usually resolved themselves by demand growing each year as federal requirements for ethanol uses continued to kick in. But producers already are blending retail gasoline with 10% ethanol, leaving little room for additional gains under government mandates. So with domestic hunger for ethanol slowing, overseas demand will be a bigger factor in draining the glut, said Don Roose, president of U.S. Commodities, a Des Moines brokerage that advises ethanol plants. U.S. ethanol exports reached a record 1.2 billion gallons in 2011, more than triple the 2010 export total of 396 million gallons, according to the Renewable Fuels Association.
The export market may be losing steam, however. Official statistics for January aren't yet available, but ADM, Green Plains and the Renewable Fuels Association have all in recent weeks said they expect 2012 exports to fall by half as a weakened Brazilian currency gives importers there less buying power. About 40% of all U.S. ethanol exports went to Brazil last year. In one example of how low margins have fallen, Valero Energy Corp., the largest independent refiner in the U.S. and one of the largest ethanol producers in the U.S. by volume, saw profit margins in January dwindle to a "pretty weak" 5 cents a gallon or less, compared with 56 cents a gallon at the end of December, S. Eugene Edwards, Valero's chief development officer, said during a call with investors. The weak margins have some producers shutting capacity rather than losing money. Besides Green Plains Renewable Energy, several small producers have announced cutbacks recently. In addition, ADM said it would close down a small plant in North Dakota.
Still, producers aren't slowing down. Even with the closure, ADM says it will continue to operate at its full capacity of 1.72 billion gallons. ADM's Chief Operating Officer Juan Luciano was subdued about the industry in a recent earnings conference call, saying spot ethanol margins would remain "poor" until supply and demand rebalance, but that the company should see "a little bit of a pickup in the ethanol margin" by the end of the current quarter on March 31.
Oil Rises to Nine-Month High on Greece, Iran (Source: Bloomberg)
Oil increased to a nine-month high after Greece won a second bailout and Iran said it stopped selling crude to France and Britain. Futures rose 2.5 percent after the euro-area ministers approved 130 billion euros ($173 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing debt relief, shielding the region from a default. Iran stopped selling oil to the countries yesterday, preempting a European Union ban, an official news website said. “There’s a lot of relief about the Greek situation in the market and Iran is making a lot of noises,” said Kyle Cooper, director of research at IAF Advisors, a Houston-based energy consulting company. “The Greek agreement has increased optimism about the economy.” Crude oil for March delivery gained $2.60 to $105.84 a barrel on the New York Mercantile Exchange, the highest settlement since May 4. Futures have risen 7.1 percent this year. The March contract expired at the close of floor trading.
Oil Drops in New York on Concern Greek Bailout Not Enough to Stem Crisis (Source: Bloomberg)
Oil fell on speculation that fuel demand will falter as Europe continues to struggle with its debt crisis and crude stockpiles rise in the U.S., the world’s biggest consumer of the commodity. Futures slid as much as 0.4 percent, after closing at the highest price in nine months. European stocks dropped and the euro surrendered gains yesterday as economists from Citigroup Inc to Commerzbank AG said Greece may again fail to deliver on pledged economic reforms after winning an 130-billion euro ($172 billion) international bailout. U.S. crude supplies probably climbed 1.5 million barrels last week, according to a Bloomberg News survey of analysts. Oil for April delivery decreased as much as 38 cents to $105.87 a barrel in electronic trading on the New York Mercantile Exchange. It was at $105.97 at 10:58 a.m. Sydney time.
The contract yesterday advanced $2.65, or 2.6 percent, to $106.25, the highest settlement since May 4. U.S. floor trading was closed on Feb. 20 because of the Presidents’ Day holiday and trades were booked with yesterday’s electronic transactions fro settlement purposes. Prices are 13 percent higher the past year.
Risk of reversal rises as oil enters "danger zone"
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, Feb 20 (Reuters) - The chances of a sharp drop in oil prices similar to the record one-day fall on May 5 last year are increasing sharply as the market becomes locked into a classic price spike.
By close of business on February 14, hedge funds and other money managers were running 7.3 long futures and options positions linked U.S. crude prices (308 million barrels) for every short position (42 million barrels), according to commitments of traders data published by the U.S. Commodity Futures Trading Commission (CFTC).
EU pays price for oil sanctions on Iran
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, Feb 17 (Reuters) - Businesses and consumers across the EU are starting to pay a financial penalty for the bloc's decision to ban crude oil imports from Iran.
Near record prices for crude oil in sterling and euro are compounding the misery many firms and households were already suffering as a result of the region's debt crisis and faltering growth.
China's Jan crude oil imports from Iran down 5 pct y/y-customs
BEIJING, Feb 21 (Reuters) - China's January crude oil imports from Iran fell 5 percent from a year earlier to 490,727 barrels per day (bpd), customs data showed on Tuesday.
January imports were 14 percent, or 82,000 bpd, lower than 572,761 bpd in December.
Japan, US near deal on Iran oil import cut, report says 11 pct
TOKYO, Feb 21 (Reuters) - Japan is close to agreement with Washington on the size of cuts refiners must make in imports of Iranian crude oil to win waivers from U.S. sanctions, two ministers said on Tuesday after a media report the two sides would settle on an 11 percent cut.
The Yomiuri newspaper, citing unidentified sources, said Japan and the United States reached an agreement at talks last week about the size of cuts to crude imports from Iran, with a formal deal expected by the end of this month.
Iran's fuel oil exports to E.Asia slump as sanctions bite
SINGAPORE, Feb 21 (Reuters) - Iran's fuel oil exports to East Asia for March are expected at a six-month low of 300,000-350,000 tonnes as tighter Western sanctions against Tehran make payments difficult, and volumes will fall further as a European Union embargo approaches, traders said on Tuesday.
Iranian exports made up nearly 8 percent of the 7-million tonne monthly inflow into East Asia, the world's biggest market for the product, last year. A further decline may boost prices above the three-year highs they hovered around in the past four months and keep them at elevated levels.
Oil steady near $120, buyers take less Iran oil
LONDON, Feb 21 (Reuters) - Oil held near $120 a barrel as world consumers grappled with supply disruptions ranging from Iran to Sudan to the North Sea.
"With its current regime, Iran is always going to be considered a hostile nation by the West, so the long term solution maybe for countries to wean themselves off Iran's oil supply where possible," Ben Le Brun, a Sydney-based markets analyst at OptionsXpress, said.
Record Nickel Supply Expanding Glut Thwarts Bull Market Rally: Commodities (Source: Bloomberg)
Mining companies and refineries are producing more nickel than at any time in history, expanding a glut that threatens to reverse this year’s rally. Production will exceed demand by 45,000 metric tons, a 73 percent jump from 2011, Barclays Capital estimates. That’s equal to 46 percent of stockpiles tracked by the London Metal Exchange. Refined output will rise 12 percent, the most in at least eight years, according to Morgan Stanley. Prices, which rose 8 percent to $20,230 a ton this year, may fall as much as 13 percent to $17,630 a ton by Dec. 31, the median of 11 analyst estimates compiled by Bloomberg shows.
Metals have returned to a bull market from a 22 percent slump last year on an improving outlook for global growth with manufacturing in the U.S. capping the biggest two-month increase in more than two years in January and unexpectedly gaining in China. With new supply expected from Australia to Madagascar to Brazil, consumption still won’t expand fast enough to absorb the extra metal. Most markets for stainless steel, accounting for 76 percent of nickel demand, remain “depressed,” Deutsche Bank AG said in a report Feb. 15.
Gold Imports by India Seen Dropping From Record to Make China Top Consumer (Source: Bloomberg)
Gold imports by India (INMOGOLD) are poised to decline for the first time in three years as rising prices deter jewelry buyers and investors, potentially allowing China to overtake the country as the world’s largest consumer. Purchases may drop 7 percent to 900 metric tons this year, according to the median estimate in a Bloomberg News survey of eight analysts, brokers and jewelers including Rajesh Exports Ltd. (RJEX), the biggest gold-jewelry exporter. India bought a record 969 tons in 2011, according to the World Gold Council. Bullion is climbing for the 12th year as investors seek a store of wealth amid volatility in stock markets, depreciating currencies and the threat of inflation. China’s consumption may surpass India this year after surging 20 percent to 769.8 tons in 2011, the council says. Use in India fell 7 percent to 933.4 tons last year as the currency slumped to a record low, cooling purchases for festivals and marriages.
“With the prices of gold going up, nothing fits into the budget of the customer,” Ramesh Pahlajani, partner at Mumbai- based Bherumal Shamandas Jewellers, said in an interview. “Demand for gold has been quite subdued.”
