Slower China growth won't curb commodity imports
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
SINGAPORE, March 6 (Reuters) - Is it time to turn bearish on China's commodity demand because the government has confirmed what everybody knew anyway, that economic growth will be slower in 2012?
Certainly some investors took news that this year's growth target had been lowered to 7.5 percent, an 8-year low, as a sell signal.
Corn (Source: CME)
US corn futures end lower amid broad weakness in grains and soybeans, and uncertainty ahead of the USDA's monthly crop report on Friday. Selling by funds and falling wheat prices weighed on corn, traders said. "The wheat-corn spread needs to narrow up more in order to ensure we see more wheat for new crop in the US," says Mike O'Dea, risk management consultant at brokerage FCStone. Corn and wheat are tied as both crops can be used as animal feed. CBOT May corn, the most actively traded month, falls 15 1/4c, or 2.3%, to $6.38 3/4. March corn falls 14 1/4c to $6.43 3/4.
Wheat (Source: CME)
US wheat futures end down on better US weather and large global supplies, including a big Australian crop, that could make Friday's USDA supply/demand report bearish for wheat. "It's a combination of better chances for rain in the southern wheat areas of the US and just weaker cash markets around the world," says Mike O'Dea, risk management consultant at brokerage FCStone. "Plus there's just a lot of spreading going on," with market participants selling wheat and buying corn or soybeans, he said. CBOT's most-heavily traded May wheat fell 18 1/2c to $6.39 1/4 a bushel; KCBT May wheat dropped 14 1/4c to $6.83 3/4; MGEX May fell 10c to $8.08 3/4.
Rice (Source: CME)
Rice futures end lower, declining in sympathy with sharp declines in other grain markets. Lackluster export demand and the absence of fresh supportive fundamental news provided little incentive for rice buyers, particularly with corn and wheat prices falling, analysts say. CBOT May rice dropped 2 1/2c to $14.23/hundredweight.
Corn, wheat steady after sell-off; soy slips
SINGAPORE, March 7 (Reuters) - U.S. wheat and corn futures steadied on Wednesday after a sell-off in the previous session spurred by fears over global economic growth, while soybeans edged lower but clung near five-month highs. Soybeans, which analysts say have the tightest supply-demand fundamentals in the face of strong Chinese demand and weather-curbed output forecasts in South America, rose on Tuesday, bucking a broad-based decline in commodity and equity markets.
"By comparison to other grains, beans' balance sheet is possibly tighter, but you can argue that U.S. soybean prices will have to do some more work to maintain acreage or to encourage additional planting," said Brett Cooper, a senior manager of markets at FCStone Australia.
Argentine dock strike halts scores of grains ships
BUENOS AIRES, March 6 (Reuters) - Scores of grains ships sat idle outside Argentina's ports on Tuesday as the country's dockers union and port managers' chamber sparred over a strike that threatened to disrupt key soy exports.
Agricultural powerhouse Argentina is prone to labor disputes such as the walkout called by dockworkers on Thursday.
Spain hydro reserves up, agriculture stocks ebb
MADRID, March 6 (Reuters) - Spanish hydropower reserves halted a months-long slide last week, the latest official data showed on Tuesday, but were still below average and leaving a gap in the generation mix to be filled by mostly imported coal and gas.
Water levels fell in reservoirs set aside for agricultural use, the Ministry for Agriculture and the Environment said, amid persistent dry weather which is causing concern for farmers in the major grain-importing country.
Argentine dock works on strike, grains ships halted
BUENOS AIRES, March 6 (Reuters) - Argentine dock workers are still on strike, preventing 150 grain ships from mooring in the country's main shipping hub of Rosario, union official Omar Suarez said on Tuesday.
The country's port chamber, known as CAPYM, said on Friday the workers had ended their strike. But Suarez said the work stoppage continued while the union, known by it Spanish acronym SOMU, demands better work conditions.
Big crop to lift Australia wheat closing stocks 25 pct
CANBERRA, March 7 (Reuters) - Australia's record wheat harvest is forecast to leave the country with 10 million tonnes in closing stocks at the end of the marketing season in September, up 25 percent year-on-year, providing stiff competition to U.S. and Black Sea exporters.
With estimates of another large crop in 2012/13 (July-June), the nations' grain storage capacity and infrastructure is likely to come under pressure, industry officials and analysts said on the sidelines of an agriculture conference in Canberra on Wednesday.
China says has enough corn reserves; traders sceptical
BEIJING, March 6 (Reuters) - China will not need to import large amounts of corn this year as it has enough reserves, a senior official said on Tuesday, but traders said the world's second largest consumer was likely talking down prices ahead of a shopping spree.
Expectations that China will import some 4 million tonnes of corn in the 2011/12 crop year that began in October, on top of a record 2011 harvest, have steadily increased U.S. and domestic corn prices since late January.
Vietnam's 2012 rice exports to drop to 6.6 mln T-govt
HANOI, March 6 (Reuters) - Vietnam's rice exports are forecast to fall to 6.6 million tonnes in 2012, down 7 percent from last year, the Agriculture Ministry said on Tuesday.
Global rice trade in 2012 would fall 7 percent from last year to 32.8 million tonnes "due to lower import demand by leading importing countries such as Indonesia and Bangladesh", the ministry said in a report.
India Considering Corporate Farming To Lift Agriculture Output (Source: CME)
In what could revolutionize the country's agriculture sector, India has launched an ambitious program to rope in private companies to produce wheat, corn and other crops in partnership with small farmers. "We have got 37 proposals from corporates for producing 12 commodities in 17 states. We have [passed on the proposals to the provincial] governments," said Sanjeev Chopra, joint secretary in the Ministry of Agriculture. "The first [approval] should happen by May-June," Chopra said. "My feeling is that at least 4-5 projects should start immediately." The project, titled "Public Private Partnership For Integrated Agricultural Development," is aimed at helping lift the country's annual farm output growth to 4%, from an average of just below 3% during the first four years of the government's 2007-2012 five-year plan.
Although agriculture employs about half the country's workforce, growth in the sector has lagged that in the rest of the economy as the majority are small and marginal farmers who lack funds, equipment and the technical know-how to boost farm productivity. Chopra said the investment proposals totalled INR70 billion, including those from large private sector companies such as the ITC Ltd (500875.BY), Godrej and Marico. Swiss food giant Nestle SA, which has an Indian unit, has shown interest in starting a dairy project in the northern state of Punjab, he said. Once approved by the provincial governments, each farm project under the management of private companies will invest at least INR100,000 per farmer. Half of that will be provided by the government in the form of reimbursements for overhead expenses. Each project will aim to bring together about 5,000 farmers so that the land parcels become large enough for commercial farming and scale efficiencies.
Experts say the project could help improve output, but much needs to be done before it can take root as it is not always be possible for big companies to bring together marginal farmers in different provinces. Nor would it always be commercially feasible. Chopra said the project could reduce delays in providing financial support to farmers that hampers the current system, where state governments provide funding under separate heads for crop planting, purchase of equipment and fertilizers, and other items. "If a group of farmers who need technical input is identified, (we can) do it through the company," he said. "The company [on the other hand] has the advantage of an assured supply line." This, he said, would make the supply chain more transparent and reduce delays.
Monsanto: 10M More Acres To Be Sown With Key Corn, Soybean Seeds (Source: CME)
Monsanto Co. is targeting growth of 10 million acres for its key corn and soybean seeds in the 2012 fiscal year, an executive said. The seed company forecasts its reduced-refuge corn will be planted on 22 million to 24 million acres in the current fiscal year, which ends August 31. That would be up from 13 million in the last fiscal year. As for soybeans, Monsanto expects its Roundup Ready 2 Yield product to be planted on 27 million to 30 million acres. Plantings in 2011 was 17 million acres. The forecasts were detailed by Kerry Preete, Monsanto's senior vice president of global strategy, at a Goldman Sachs investor forum. Preete also downplayed potential pest resistance to a Monsanto genetically modified corn trait, saying demand for the product among farmers remains strong. A study by Iowa State University last year found corn rootworms have evolved to resist the company's trait. Monsanto has said the problem is limited to about 100 farmers a year in parts of northeast Iowa and northern Illinois.
Sinograin To Further Expand Into Grain, Oilseed Processing (Source: CME)
China Grain Reserves Corp., the state stockpiler, will further expand into downstream grain and oilseed crushing to help the government manage inflation, General Manager Bao Kexin said. Bao, who made the comment on the sidelines of the National People's Congress, didn't elaborate.
Drought Tightens Corn Supply Before Biggest Harvest on Record: Commodities (Source: Bloomberg)
Droughts from Mexico to Argentina are shrinking corn stockpiles to a five-year low, raising the prospect of a bull market before U.S. farmers start reaping the biggest crop ever. Global reserves will drop 4.2 percent to 123.43 million metric tons by Oct. 1, according to the average of 21 analyst estimates compiled by Bloomberg. That’s equal to 52 days of consumption, the fewest since 1974. Goldman Sachs Group Inc. expects prices to rise 9.6 percent to $7 a bushel before the U.S. harvest starts in September, 21 percent above the one-year closing low reached on the Chicago Board of Trade in December. Prices fell 16 percent in the last four months of 2011 as the USDA predicted Brazil and Argentina, accounting for almost 10 percent of global supply, would produce their biggest crops ever. Futures then rallied as drought spread across Central and South America, spurring the USDA to cut its forecasts twice in as many months.
While prices may keep rising for now, analysts anticipate declines by the end of the year as U.S. growers harvest the most acres planted since at least 1944. “There is no doubt that crops in South America were hurt by the hot, dry weather and that means more demand for U.S. supplies,” said Alberto Alvarez, the managing director of Chicago-based grains brokerage Fintec Group Inc. “There is an imminent explosion in corn prices.”
Australia set for another year of bumper grains harvests
CANBERRA, March 6 (Reuters) - Australia is on track for another year of bumper grains and oilseed harvests, the government's chief agricultural forecaster said on Tuesday, which could boost exports and weaken prices.
Australia is expected to produce an above-average crop after two straight years of record output, even though farmers will reduce wheat plantings in the year to the end of June 2013 due to lower prices, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said.
India's farm minister challenges cotton export ban
NEW DELHI/CANBERRA, March 6 (Reuters) - India's farm minister called for the lifting of a "highly objectionable" ban on cotton exports on Tuesday, less than 24 hours after it was announced and sparked a sharp rally on global cotton markets.
U.S. cotton futures raced to end limit up on Monday after India said it had stopped exports with immediate effect to ensure supplies for domestic mills, fuelling speculation that main consumer China would have to turn to other sources.
Philippines sees 2011/12 sugar exports at 300,000 T to non-U.S. buyers
MANILA, March 7 (Reuters) - The Philippines' Sugar Regulatory Administration said on Wednesday that 2011/12 raw sugar exports to non-U.S. buyers are likely to reach 300,000 tonnes and could even exceed that level because of high global prices.
The projected export volume included approved raw sugar exports of 55,590 tonnes for March delivery, the agency said.
Uganda coffee exports rise to 244,319 bags in Feb
KAMPALA, March 7 (Reuters) - Uganda's coffee exports rose to 244,319 bags of 60 kg each in February from 193,965 bags shipped in the same month a year ago, a source at the state-run Uganda Coffee Development Authority (UCDA), told Reuters on Wednesday.
Ranked as east Africa's third largest economy, Uganda was Africa's leading exporter of the beans behind Ethiopia last year, according to statistics from the International Coffee Organisation (ICO).
Indian ministers to discuss cotton exports-textile secretary
NEW DELHI, March 6 (Reuters) - A panel of Indian ministers will meet on March 9 to discuss the issue of cotton exports, Textile Secretary Kiran Dhingra said on Tuesday.
India's farm minister has requested the prime minister to lift a ban on cotton exports announced this week, saying he had been kept in the dark about the decision.
Euro Coal-Dips 20 cents, more stockpiling seen
LONDON, March 6 (Reuters) - Prompt physical coal prices held fairly steady on Tuesday, dropping by only 20 cents a tonne on Tuesday despite continued tepid buying interest in Europe and a steep fall earlier in the day in oil prices.
A prompt Russian cargo traded at $95.00 a tonne DES ARA on Tuesday, a price which was seen as aggressively low by some players and indicative of further weakeness to come. Russian high-quality coal can trade at a premium to generic South African or Colombian material.
Oil Trades Near Two-Day High as U.S. Economy Counters Rising Stockpiles (Source: Bloomberg)
Oil traded near a two-day high as speculation that U.S. economic growth will boost fuel demand countered concern rising supplies will limit price gains. Futures were little changed after climbing 1.4 percent yesterday. Prices advanced after U.S. companies added 216,000 workers last month, data based on payrolls from ADP Employer Services showed. Supplies at Cushing, Oklahoma, the delivery point for New York-traded oil, rose 2.4 million barrels to the highest level since July, according to the Energy Department. Oil for April delivery was at $106.14 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 10:39 a.m. Sydney time. The contract yesterday increased $1.46 to $106.16 a barrel, the highest close since March 5. Prices are 7.4 percent higher this year.
Brent oil for April settlement climbed $2.14, or 1.8 percent, to $124.12 on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to New York-traded West Texas Intermediate closed at $17.96. It reached a record of $27.88 on Oct. 14
Brent climbs above $122 on China demand, Iran concerns
SINGAPORE, March 7 (Reuters) - Brent crude climbed above $122 after China said it would boost energy imports this year while concerns persist over supply risks and Iran's nuclear program, despite the country's offer for talks with major powers.
"I think China's comments are a timely reminder that the Chinese and Asian economies are still growing strongly," said Ric Spooner, chief market analyst at CMC Markets. "Even though China's target growth rates are down for this year, it's still growing and that means more energy needs overall."
Indonesia to Limit Foreign Ownership in Local Mines to 49% (Source: Bloomberg)
Indonesia, Southeast Asia’s largest economy, will limit foreign companies from owning more than 49 percent of some mines, potentially limiting investment in the world’s largest thermal-coal and tin exporter. Foreign holders of mining licenses will have to cut their stakes to 49 percent within 10 years of starting production, from 80 percent, according to a decree signed by President Susilo Bambang Yudhoyono on Feb. 21. The change in regulation may deter overseas investment in the country that’s also rich in nickel, copper and bauxite. Indonesia is seeking to increase participation by domestic investors in mining projects, according to the decree. “Mining is a long-term and capital-intensive investment,” said Syahrir Abubakar, executive director of the Indonesia Mining Association, whose members include the local units of Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. (NEM)“If they have to divest within 10 years, they are not yet reaching the break-even point of their investment.”
Gold Trades Little Changed After Rebound, Silver Futures Decline by 0.4% (Source: Bloomberg)
Gold for immediate delivery traded little changed at $1,685.13 an ounce at 10:21 a.m. Melbourne time, while bullion for April delivery in New York was also little changed at $1,685.50 an ounce. Gold rebounded from a five-week low yesterday amid renewed optimism that Greece will be able to tame its debt crisis and as a report showed increased U.S. hiring. Silver for May delivery fell 0.4 percent to $33.465 an ounce.
India cuts railway freight on iron ore exports
MUMBAI, March 6 (Reuters) - India has reduced the railway freight on iron ore meant for exports by 16 percent effective Tuesday, an industry body official said, a move expected to help exporters who have come under pressure after an increase in export duty in January.
The new freight has been set at 2,425 rupees ($48.48) per tonne of iron ore, down 475 rupees from the previous freight cost, said H.C. Daga, vice president with the Federation of Indian Mineral Industries.
China nickel demand to drop on lower stainless steel output -trade
HONG KONG, March 6 (Reuters) - China's nickel consumption may drop in March and imports are likely to take a hit as stainless steel producers, the top users of the metal, cut output, traders and analysts said on Tuesday.
Fewer orders amid a weak Chinese property sector have prompted several stainless steel mills to lower production, eating into demand for the raw material -- refined nickel and nickel pig iron (NPI) which is a low-grade ferro-nickel in China made from laterite ore imports.
Iron Ore-Cautious buyers seek lower-grade cargoes
SINGAPORE, March 7 (Reuters) - Spot iron ore prices were subdued on Wednesday as Chinese buyers sought lower-grade, cheaper cargoes given the murky outlook for steel demand, with the Shanghai steel futures dropping for a third day in a row.
Stockpiles of imported iron ore at major Chinese ports, which stood at 98.72 million tonnes last week, have fallen for four straight weeks after hitting a record 101 million tonnes in early February.
Baltic sea index rises on higher grain demand
March 6 (Reuters) - The Baltic Exchange's main sea freight index tracking rates for ships carrying dry commodities rose on Tuesday for the ninth straight day, as higher demands for grains pushed smaller dry bulk segments.
The main index that reflects the daily freight market rates for capesize, panamax, supramax and handysize dry bulk transport vessels rose 5 points or 0.64 percent to 787 points.
