Commodities Record Longest Rally in 10 Months After Gains in U.S. Economy (Source: Bloomberg)
Commodities rose, capping the longest rally in 10 months, on signs of gains in the U.S. economy. Industrial metals and crude oil led the rally. The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 1.1 percent to settle at 715.52 at 3:45 p.m. New York time. The gauge climbed for the seventh straight session, the longest rally since April. Earlier, the measure reached 715.77, the highest since May 5. An index of U.S. consumer confidence unexpectedly rose to a one-year high in February, and purchases of new homes in January topped forecasts by analysts, according to reports today. Jobless claims held at a four-year low, data showed yesterday. China may make more cuts to banks’ reserve requirements to fuel lending and sustain economic growth.
“The environment is ideal for commodities,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “On one hand, the U.S. is growing, and on the other, China is making credit availability easier. People also expect the situation in Europe to improve.” In the week ended Feb. 21, hedge funds and other money managers increased net-long positions, or bets on a rally, in 18 U.S. commodity futures and options to the highest since September, government data showed today. The dollar fell to an 11-week low against a basket of major currencies.
Bullish Futures Top 1 Million Contracts For First Time in ’12: Commodities (Source: Bloomberg)
Bullish commodities futures rose above 1 million contracts for the first time in five months as U.S. growth prospects improved and Goldman Sachs Group Inc. predicted further price gains. Hedge funds and money managers boosted combined net-long positions across 18 U.S. futures and options by 7.3 percent to 1.03 million contracts in the week ended Feb. 21, Commodity Futures Trading Commission data show. That’s the highest since Sept. 13. Bullish wagers on gold climbed to a five-month high, and bets on crude oil rose to the most since May. The Standard & Poor’s GSCI Spot Index of 24 commodities capped its biggest weekly increase of the year last week, touching a nine-month high on Feb. 24. U.S. consumer confidence rose more than forecast in February, and new-home sales topped estimates. Goldman reiterated an “overweight” recommendation on raw materials on Feb. 22.
“The U.S. is showing better signs of self-sustaining economic activity,” said Michael Strauss, who helps oversee about $27 billion of assets as chief investment strategist at Commonfund in Wilton, Connecticut. “What we see is reasonable global growth this year, which should be supportive of gains in overall commodities.”
Corn (Source: CME)
US corn futures end mixed, with nearby contracts gaining slightly on tight near-term supplies while deferred months slide on the prospect of a large crop this year. ABN Amro says talk of export interest from Asia, including China, helped lift the market off early losses. But the USDA's projections for increased acreage and a much-better yield this year are negative for new-crop prices. Traders add that March options expiration played a role in Friday's sideways trade. CBOT March corn ends up 1 1/4c at $6.40 3/4 per bushel while December falls 3/4c to $5.58.
Wheat (Source: CME)
US wheat futures end mostly lower on large world supplies and prospect of increased domestic supplies. MGEX led the slump, falling to a fresh 15-month low on USDA's forecast for increased spring wheat acreage and snow in the Northern Plains that alleviates drought concerns there. Meanwhile world supplies are abundant, and export demand, though solid in the USDA's weekly report, is generally considered lackluster. Market trimmed early losses as corn prices rebounded. CBOT March wheat ends down 3/4c to $6.41/bushel, while MGEX March wheat falls 14 1/2c to $7.85 1/2. KCBT March wheat ends up 1c to $6.81.
Rice (Source: CME)
US rice futures end higher, climbing amid acreage concerns. CBOT March rice ends up 24c at $14.20 1/2 per hundredweight, but the market remains range-bound. Upside is limited by poor export demand, but concerns about how much rice US farmers are planting underpins prices. Rice finished just above the 50-day moving average.
US wheat falls for 2nd day, higher acreage weighs
SINGAPORE, Feb 24 (Reuters) - Chicago wheat lost more ground falling for a second day and on track for a weekly loss, as the market was weighed down by the U.S. government's projection of the largest acreage in three years.
Soybeans slid from a five-month top, while corn dipped in sympathy with the weakness in wheat.
"The sentiment is turning more bearish on grains, given the forecasts of larger acreage in the U.S., flattening ethanol demand growth, plenty of wheat," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne.
China's demand for US corn seen rising after latest buy
Feb 23 (Reuters) - China's first major purchase of U.S. corn in four months may be a harbinger of more deals as surging prices in that country's southern region make imports from the United States a cost-effective move, analysts and traders said.
The U.S. Department of Agriculture on Thursday said China bought of 120,000 tonnes of U.S. corn. The grain will be from last year's harvest, supplies of which already are rapidly shrinking and forecast to reach a 16-year low before the next harvest this fall.
Bunge to boost investments in Brazil agriculture
SAO PAULO, Feb 23 (Reuters) - International foods processor Bunge Ltd plans to invest an additional 1 billion reais ($584 million) in Brazil with a possible focus on palm oil production, the company's chief executive of agribusiness in Brazil, Pedro Parente, said on Thursday.
The investment is in addition to the $2.5 billion in investments through 2016 in sugar, ethanol and biomass energy generation that the company announced in August.
Drought improves in Texas, worsens in western U.S.
Feb 23(Reuters) - Drought kept a tight grip on large sections of the United States, but recent rains put some of the most hard-hit areas on the road to recovery, a report from climate experts said Thursday.
Recent rains and snowfall boosted soil moisture and started to replenish ground water supplies in key areas of the U.S. South that suffered historic drought in 2011.
EU clears 299,000 tonnes wheat exports this week
PARIS, Feb 23 (Reuters) - The European Union this week granted export licences for 299,000 tonnes of soft wheat, taking the total since the beginning of the 2011/12 (July-June) season to 8.7 million tonnes, official data showed on Thursday.
The total so far this season compared with 13.1 million tonnes of export licences cleared by the same stage in 2010/11.
Iran pumps up grain buys with further 800,000 T
HAMBURG, Feb 23 (Reuters) - Iran ramped up grain purchases on international markets this week, taking the total bought this month to almost two million tonnes as the Islamic republic scrambled to sidestep western sanctions aimed at thwarting its nuclear ambitions.
Government Trading Corporation of Iran (GTC), breaking with the previous practice of private-sector wheat purchases, bought some 800,000 tonnes of wheat, trade sources told Reuters on Thursday, including 500,000 tonnes from Russia and 300,000 tonnes from Australia.
Philippines may hike H1 rice output forecast by 1 mln T - official
MANILA, Feb 23 (Reuters) - The Philippines may raise its rice output forecast for the first half of the year by as much as 1 million tonnes due to changes in the cropping pattern, a farm official said on Thursday, making any unplanned grain imports unlikely this year.
The Bureau of Agricultural Statistics (BAS), an agency under the Department of Agriculture, is expected to come up with new production forecasts as early as next week, Assistant Secretary Dante Delima said.
USDA Sees Record 2012-13 US Corn Output, Prices Down (Source: CME)
The U.S. is likely to produce a record 14.27 billion bushels of corn and 3.25 billion bushels of soybeans in the 2012-13 marketing year, with the large crop pushing down prices for corn, soybeans and wheat, the U.S. Department of Agriculture said. The output projections were above the USDA's baseline forecasts issued this month, which projected corn output of 14.235 billion bushels and soybean output of 3.215 billion bushels in the year from September 2012 to August 2013. Those projections were compiled in November as part of the government's budget process. In the 2011-12 marketing year, corn output was 12.358 billion bushels and soybean production was 3.056 billion bushels. Farmers are likely to plant so much corn this year--about 94 million acres, the most since 1944--that production will sharply overshoot demand, pushing up stocks and pulling down prices, the USDA said. Recent high corn prices have also made farmers more likely than usual to plant that crop instead of soy in the next year, analysts say.
Corn ending stocks are likely to double to 1.616 billion bushels from 801 million bushels at the end of the 2011-12 marketing year, "pushing cash prices sharply lower by fall harvest," the USDA said. "Futures and cash prices for wheat, corn, and soybeans are all expected to fall in 2012-13 as record U.S. corn production pushes global grain supplies to a new record," the USDA said. "Despite the expected decline, prices remain historically high because of strong global demand for grains and oilseeds." But demand from ethanol producers is falling and that sector won't be buying as much corn. "Falling gasoline consumption and declining ethanol exports limit expected corn use in the production of ethanol," USDA said. The USDA also forecast wheat production of 2.165 billion bushels, up slightly from a baseline projection of 2.12 billion bushels, and up from 2.0 billion bushels in 2011-12.
Strong crop prices are driving farmers' intentions to plant more this year, the USDA said. "Combined 2012 area for wheat, corn and soybeans is projected to be [a] record high and up 3% from 2011 supported by strong new-crop futures prices and a return to more normal spring and summer weather," it said. The USDA forecast cotton production of 17 million bales, up from a baseline projection of 16.2 million bales. The USDA forecasts are subject to change in coming months as they come long before the harvest and the current figures are not based on surveys of farmers.
US Spring Wheat Futures Fall To 15-Month Low On Acreage, Weather (Source: CME)
U.S. hard red spring wheat futures fell to their lowest level in 15 months Fas prospects for the crop start to look much better than they did a year ago. Hard red spring wheat, a high-protein wheat used for baking bread, is traded at the Minneapolis Grain Exchange, or MGEX. In recent months, it has traded at an abnormally high premium to other types of wheat traded in Chicago and Kansas City. But that gap could shrink in the months ahead. Prices for hard red spring wheat fell to their lowest level since Dec. 1, 2010 Thursday. MGEX futures for March delivery recently were down 14.75 cents to $7.8625 per bushel, down 18% since early November. The slump started to accelerate Thursday after the U.S. Department of Agriculture's chief economist said at an annual-outlook conference spring wheat acreage would jump this year as many farmers in the northern U.S. Plains, unable to plant because of wet weather in 2011, reclaim flooded fields.
Meanwhile, a late-February shift in weather patterns is giving soils much-needed moisture, alleviating concerns a drought could stifle crops this spring. Much of the Dakotas received several inches of wet snow Thursday and more snow is likely next week, Tregg Cronin, an analyst with Country Hedging, a brokerage near St. Paul, Minn., said. "This is speculative selling tied to the outlook numbers and the weather forecast," Cronin said of the market selloff. The market traded above $8 for virtually all of 2011, and Friday's decisive move below that support level prompted more selling, traders said. The decline also is partly seasonal, they added. "You're entering a period of the year where if things go right [for crops], it's natural to see some pressure," Jim Gerlach, president of A/C Trading, a Fowler, Ind. brokerage, said.
The weakness in spring wheat comes at a time of more modest losses for soft red winter wheat at the Chicago Board of Trade and hard red winter wheat at the Kansas City Board of Trade. Still, the entire market is being pressured by bulging world stockpiles and U.S. crop prospects. The USDA projects total U.S. wheat acres this year will jump 6.6% to 58 million. CBOT wheat was down 4.25 cents to $6.375 per bushel, while KCBT wheat was down five cents to $6.75. Because of its higher protein content, MGEX wheat prices are usually higher than those for winter wheats. But the spread between MGEX prices and those in Chicago and Kansas City is more than double the historical average, thanks to last year's flood that limited the size of the spring wheat crop, as well as crop troubles for other types of wheat that prompted food companies to seek out more high-protein wheat to blend in their products, analysts said.
If weather in the northern Plains remains favorable, "spring wheat can fall for a while, and we don't need to see the other two markets do much of anything," Cronin said.
Global Rice Inventories To Rise For Seventh Successive Year -IGC (Source: CME)
Global rice inventories will likely to rise for a seventh consecutive year to a nine-year high of 99.3 million tons in 2011-12, up 4% compared with the previous year, as major exporting countries, especially Thailand, are maintaining larger inventories, the International Grains Council said. The IGC tabulates its data over an aggregate marketing year covering all major producing and trading countries. It revised upward its forecast for Thailand's rice stocks at the end of 2012 by 4% to 7.7 million tons, up 43% on year. Thailand's exports have been falling sharply in recent months, after the government started purchasing unmilled rice from farmers at prices that are higher than most export prices from competing countries. The IGC lowered its 2012 rice export forecast for Thailand by 7% to 6.7 million tons; down 37% on year. Traders said that current trends indicate exports may fall even more steeply, to 6.0 million tons or lower.
India's rice stocks will likely total 21 million tons by end-September, up 5.5% on year, the IGC said. Record global rice output of 463 million tons, up 3% on year, is helping to push prices higher, the IGC said. "Exceptional production in India and China will more than offset the fall in Brazilian and U.S. output," it said, putting China's rice output in 2012 at 140.5 million tons, up 2.5% on year. India's government has forecast rice output in 2011-12 at a record 102.8 million tons, a 7% increase from last year. Inventories are more than comfortable, as the government had a stockpile of 31.8 million tons rice at the beginning of this month--more than double the country's mandatory minimum buffer requirement and almost equal to the total global annual trade in rice. The global rice trade in 2012 will decline by 7% to 32.2 million tons due to reduced demand in Bangladesh and Indonesia, the IGC said. Imports in the East and South Asian regions will decline by one-fifth to 8.4 million tons, it said.
After last year's heavy purchases, Indonesia's imports may fall to 900,000 tons from 2.6 million tons, while Bangladesh's imports will likely fall by 50% to 700,000 tons, it said. The IGC revised upward its forecast for India's exports in 2012 by 22% to 6.1 million tons; up 50% from last year. India, which resumed non-Basmati rice exports in September, had already shipped out 2.7 million tons of these grades by end-January, the IGC said. India's rice exports are underpinned by strong demand from buyers in Africa, it added.
India govt issues sugar export notification-source
LONDON, Feb 23 (Reuters) - India's government on Thursday issued a notification to mills detailing terms for the export of 1 million tonnes of unrestricted sugar during the 2011/12 season, a trade source told Reuters.
A copy of the letter dated Feb. 23 from Rajan Sehgal, chief director sugar, to Indian mills was made available to Reuters, detailing terms for the export of the so-called Open General License (OGL) sugar.
Brazil exporter raises coffee outlook on robusta
BRASILIA, Feb 23 (Reuters) - Brazil's upcoming 2012/13 coffee harvest should turn out 53.9 million 60-kg bags, exporter Terra Forte said on Thursday, raising its November estimate by 1.4 million bags due to hopes for record robusta production.
The world's top coffee grower should begin picking its higher-output year harvest around May yielding supplies eagerly awaited by a coffee market running on low supplies of quality arabica beans after a run of disappointing harvests in Colombia.
GEPEX exporters end Ivorian cocoa auction boycott -sources
ABIDJAN, Feb 23 (Reuters) - The GEPEX group of exporters that accounts for about 55 percent of Ivory Coast's cocoa exports has agreed to end its boycott of auctions, three industry sources told Reuters on Thursday.
The group, which includes Nestle , Cargill Barry Callebaut , Olam and ADM Cocoa, will take part in auctions starting from Friday, the sources told Reuters, asking not to be named.
Oil Drops From Nine-Month High After IMF Warns on Global Economic Growth (Source: Bloomberg)
Oil fell from the highest level in more than nine months as investors bet that prices have climbed too far after the International Monetary Fund warned that the global economy is still at risk of a slowdown. Futures slid as much as 0.4 percent in New York. Oil’s relative strength index signaled crude’s seven days of gains, the longest winning streak since January 2010, may have been exaggerated. The world economy is “not out of the danger zone” amid fragile financial systems, high debt and higher world oil prices, IMF Managing Director Christine Lagarde said. Prices rose the most in two months last week as sanctions tightened against Iran, OPEC’s second-biggest producer. “The market is taking a bit of profit,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “There’s still a lot of uncertainty. The market is still concerned about what will happen with Iran.”
Oil for April delivery fell as much as 47 cents to $109.30 a barrel in electronic trading on the New York Mercantile Exchange and was at $109.56 at 12:47 p.m. Sydney time. The contract gained 1.8 percent to $109.77 on Feb. 24, the highest close since May 3. Prices increased 6.3 percent last week and are 13 percent higher the past year.
Oil rally runs into first signs of Asian resistance
--Robert Campbell is a Reuters market analyst. The views expressed are his own--
NEW YORK, Feb 23 (Reuters) - Asian crude oil buyers are starting to balk at increasingly costly Brent crude oil. The sustainability of the current rally hinges on Asia recovering its for Atlantic basin crude.
The Brent-Dubai exchange of futures for swaps (EFS) quote , the premium holders of Asian benchmark Dubai swaps must pay over their postion to switch into Brent, is signalling a growing weariness with the recent spike in Brent prices.
Brent rises above $124 on Iran jitters, US data
SINGAPORE, Feb 24 (Reuters) - Brent crude rose above $124, on track for a fifth straight weekly gain, as worries over Iranian supply and upbeat U.S. economic data offset concerns that high oil prices could snuff out demand growth.
"There's still a risk premium to be built in oil prices because of Iran," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
China Jan crude runs pull back from record highs
BEIJING, Feb 24 (Reuters) - Chinese refineries processed 36.2 million tonnes of crude oil in January, or 8.52 million barrels per day (bpd), 1.9 percent more than a year earlier, the National Development and Reform Commission said on Friday.
The daily throughput was about 8 percent less than in December when refiners in the world's second-largest consuming market processed a record 9.24 million bpd of crude oil after running at the second-highest rate of 9.22 million bpd in November.
Euro Coal-Prices stable despite oil modest gain
LONDON, Feb 23 (Reuters) - Prompt physical coal prices were little changed on Thursday on muted trading activity, and bid-offer spreads for fixed price cargoes widened by around $1, too far apart for trades to seem likely, utilities and traders said.
"The market's moved sideways, if anything, just looking at the wider spreads," one trader said.
China May Double Rare Earth Exports This Year as Demand Rebounds on Price (Source: Bloomberg)
China, the biggest supplier of rare earths, may almost double exports this year and meet quotas set by the government as lower prices stimulate demand. Chinese exports were 49 percent of the goverment-alloted quota in the first 11 months of last year because the slowing global economy sapped demand, the Ministry of Commerce said in a Dec. 27 statement. Overseas sales quotas may be virtually unchanged this year at 31,130 metric tons, based on Bloomberg calculations. “Export quotas may be met this year as overseas demand recovers,” Wang Caifeng, a former official overseeing the rare- earth industry with the Ministry of Industry and Information Technology, said in an interview in Beijing. “High prices last year had deterred purchases and led to inventories depletion. Smuggling also hampered exports through illegal channels.”
Prices of rare earths have tumbled since the third quarter as consumers including makers of electric cars and wind turbines sought to reduce use. The average price of lanthanum oxide, a rare earth used in rechargeable batteries and refining catalysts, was 129,167 yuan ($20,508) a metric ton in the fourth quarter, 15 percent less than in the third quarter, according to data from Shanghai Steelhome Information.
Iron Ore-Spot extends gains as traders bet on China demand
SINGAPORE, Feb 24 (Reuters) - Spot prices of imported iron ore in China rose on Friday as traders bid up the market, betting on a recovery in domestic steel demand when construction projects resume next month.
Global miner BHP Billiton sold several cargoes this week at prices around $3 more than previous deals, traders said, adding the bulk of the buyers could be traders positioning ahead of an expected rebound in China's steel prices.
Copper Traders Most Bullish in Two Months as Hedge Funds Buy: Commodities (Source: Bloomberg)
Copper traders are the most bullish in two months on speculation that demand will strengthen from the U.S. to China at a time when stockpiles monitored by the world’s biggest metals exchange are at a 2 1/2 year low. Fourteen of 29 analysts surveyed by Bloomberg expect the metal to gain next week and 10 were neutral, the highest proportion since Dec. 23. Inventories tracked by the London Metal Exchange are set for a fifth consecutive monthly drop and money managers have their biggest bet on rising prices since early August, Commodity Futures Trading Commission data show. Global equities and commodities climbed to at least six- month highs this week after euro-area finance ministers approved 130 billion euros ($173 billion) in aid for Greece to avert an economic collapse. China said Feb. 18 that it will cut banks’ reserve requirements to boost growth and U.S. indicators pointed last week to sustained economic expansion as Barclays Capital anticipates a third consecutive copper shortage this year.
The BalticBaltic index turns positive, capesizes support
Feb 23 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose on Thursday, snapping a six-day losing streak, as rates firmed for capesize vessels.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, rose 2 points or 0.28 percent to 706 points.
