Corn (Source: CME)
US corn futures drop over 2% on a combination of broad based fund liquidation across asset classes and fear of declining export demand. Traders had a tough time making a bullish case for corn, with the absence of fresh export demand news and overbought conditions promoting a risk off environment, analysts say. Investors also reduced some length in the market, as traders factor in the potential for large US corn plantings in 2012. CBOT May corn ends down 16c at $6.47 1/2/bushel.
Wheat (Source: CME)
US wheat futures drop to a 1-week low, influenced by widespread selling in commodities. Reduced risk exposure across asset classes encouraged traders to take profits, analysts say, while wheat also saw pressure from fundamental weakness as ample world supplies and improved weather conditions for developing US winter-wheat crops kept buyers sidelined for most of the day. CBOT May wheat falls 9 3/4c to $6.42 1/2 a bushel as May MGEX drops 7 3/4c to $7.99 1/4 and May KCBT declines 11c to $6.80 1/2.
Rice (Source: CME)
US rice futures slide as broad selling in many markets derailed the commodity's 3-day rally. Analysts also note concerns about poor export demand encouraged traders to take profits. CBOT May rice ends down 24c at $14.36 1/2 per hundredweight.
Wheat falls for 2nd day on US weather; corn, soy ease
SINGAPORE, March 20 (Reuters) - Chicago wheat extended losses sliding more than 1 percent as forecasts of crop-friendly weather in the U.S. Plains boosted supply prospects.
"Warm temperatures and scattered rain in the U.S. are promoting rapid development of the winter wheat crop," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia. "Forecast relief to dryness in southwest Europe and western Canada is also weighing on values."
Morocco halts barley import duties until end 2012-traders
PARIS, March 19 (Reuters) - The Moroccan government has suspended import duties on barley until Dec. 31 to ensure adequate supplies to its domestic market in the face of a growing drought, European traders said on Monday.
Morocco, which halted barley import duties on March 15, is bracing for a drop in this year's cereals harvest, as well as other crops, after a shortage in rainfalls and a prolonged cold spell hurt farming.
Zambia commercial farmers cut maize production
LUSAKA, March 19 (Reuters) - Commercial maize production in Zambia will fall by about 80 percent in the 2011/2012 season compared with the previous crop season after farmers turn to more lucrative cash crops, the farmers' union said on Monday.
Zambia's commercial maize farmers produce a fraction of the national output compared to small-scale farmers.
Ukraine exports 865,000 T grain by sea March 1-16
KIEV, March 19 (Reuters) - Ukraine exported about 865,000 tonnes of grain, mostly corn, by sea in the first 16 days of March, Kiev-based consultancy ProAgro said on Monday. It said Ukraine had exported about 636,000 tonnes of corn, 132,000 tonnes of wheat and 96,000 tonnes of barley. No figures for the same period of 2011 were immediately available.
China's rice imports from Vietnam seen tripling
HANOI, March 19 (Reuters) - China could see a three-fold jump in rice imports from Vietnam this year, industry officials said on Monday, as the world's biggest consumer steps up purchases to contain domestic prices.
The demand from China, coupled with an industry-led stockpiling campaign, is keeping a floor under Vietnamese paddy prices even as the harvest of the major crop is peaking in the Mekong Delta food basket.
Russia rules out grain export limits for 2011/12
MOSCOW, March 19 (Reuters) - Russia's government sees no need for grain export restrictions during the current crop year, which saw Russia emerge from a near-total ban to export record volumes, Russia's first deputy prime minister, Viktor Zubkov, said on the government website.
The government has already ruled out export restrictions before the end of April.
USDA Says Morocco Wheat Imports Will Exceed 5M Tons In 2012-13 (Source: CME)
Morocco's wheat imports could by far exceed 5 million metric tons in the 2012-13 marketing year, according to the U.S. Department of Agriculture's Rabat attache, as unusual cold spells have hampered the current crop's development after a lack of rainfall initially delayed grain sowing. Morocco's 2011-12 cereal crop has entered a precarious period as farmers and government officials brace for a difficult time ahead, with the USDA estimating total production will not exceed 3.2 million tons. Meanwhile, Moroccan agricultural experts expect cereal output to be higher, at around 4 million tons, but still just half of last year's harvest. The USDA expects Morocco's wheat imports to hit 3.2 million tons in 2011-12, as the government deals with the crisis by suspending duties on cereal imports and providing support to affected cereal farmers and livestock producers.
Morocco's consumption of wheat is among the highest in the world per capita, with imports from the European Union exceeding 2 million tons in 2011, coming mainly from France. U.S. wheat exports totaled 287,600 tons in the calendar year and accounted for about 8% of the Moroccan market, the USDA said.
India May Remove Caps On Wheat Product Exports -Officials (Source: CME)
The Indian government is considering the removal of controls on wheat product exports, as frequent policy changes in the past have scared away buyers, two senior government officials said. A ministerial panel scheduled to convene March 26 will likely consider a trade ministry proposal to scrap time limits and caps on quantities of wheat products that may be exported, the officials said. The meeting occurs ahead of a government-mandated deadline for the export of a limited volume of wheat products on March 31. India, the world's second-largest wheat producer, opened up exports of wheat products in 2009 and has extended the deadline several times, as buyers have been reluctant to enter deals with Indian exporters given the potential for the flow of flour to be suspended by government fiat on short notice. Exports between July 3, 2009 and Jan. 23, 2012 totaled just 127,982 tons against the original 650,000-ton limit, according to government data.
Denmark, Dubai, the Middle East, Indonesia, Sri Lanka, Nepal and the Maldives are usually the main buyers of Indian wheat products, such as semolina and wheat flour, which are used to make bread and bakery items. The food ministry has proposed extending the current deadline for exports to March 31, 2013, while the trade ministry has argued against any limits. Local flour mills have asked the government to put an export policy into place for at least three years to ensure that overseas buyers are assured continuous supplies as part of long-term contracts.
Deutsche Bank Rules Out New Food Investment Products This Year (Source: CME)
Deutsche Bank AG said it won't launch any new investment products in staple agricultural commodities this year, as it continues to examine whether such products have a negative affect on rising, volatile food prices. Food price inflation climbed toward the top of the international agenda after hitting successive record highs in the early part of 2011, amid global supply concerns for cereals, sugar and cocoa. French President Nicholas Sarkozy made the issue a priority of his leadership of the Group of 20 industrial and developing nation, with plans to limit the influence of speculative investors--whom he blames for pushing up prices--expected to be put forward by finance ministers in July. "We recognize that the proper functioning of agricultural markets have wide social ramifications. Therefore we intend to proceed with caution and we will refrain from launching new staples-based public exchange-traded products this year," Deutsche Bank said in its annual Corporate Social Responsibility Report.
The bank said it agrees with international policymakers that transparency in agricultural commodity derivatives markets should be enhanced and measures to avoid misconduct strengthened, with significant regulatory changes already decided upon or under consideration in both Europe and the U.S. The bank said it supports efforts to implement appropriate regulation across all relevant futures exchanges, and believes this is essential to allow those markets to function well as instruments of hedging and price discovery. Such reforms aim to tighten conduct requirements and avoid manipulation, by increasing transparency through the introduction of additional reporting stipulations, position limits and new trading and clearing rules for over-the-counter derivative contracts. However, Deutsche Bank said more research is needed to assess the true effect of speculation on food prices.
"Some academic research suggests an impact on prices from speculative activity; but most of the peer-reviewed, academic literature suggests that the fundamentals of demand and supply are the dominant drivers of commodities prices," it said. Deutsche Bank said that its review shows agricultural prices are reliant upon fundamental factors, with increasing demand driven by population and income growth, dietary shifts in developing countries and biofuel production. Yet this hasn't been met by output growth, the bank said, leaving prices on an upward trend with agricultural production and food availability constrained by water scarcity, climate change, inequitable land access and harvest waste. Meanwhile, Deutsche Bank said restrictions on international trade and national subsidization policies exacerbate the effects of these trends, so these issues need to be addressed on a coordinated basis, with "the Action Plan on Agriculture adopted by the G20 at the Cannes Summit an important step."
Among Deutsche Bank's existing agricultural investment products are four exchange-traded products known as the PowerShares DB Agriculture ETNs, which "provide investors with a cost-effective and convenient way to take a short or leveraged view on the performance of the agriculture sector."
Thai 2011/12 sugar crushing season to end late May
BANGKOK, March 20 (Reuters) - The current 2011/12 Thai sugar crushing season is expected to end in late May, slightly later than normal, due to record output, a senior official said on Tuesday.
"At first, we expected crushing to end in June, but things have proceeded quite smoothly despite a rise in output so we think we can finish crushing by May which is slightly later than a normal year," said Prasert Tapaneeyangkul, secretary of the Office of Cane and Sugar Board (OCSB).
Ivorian cocoa arrivals seen lower, acid level up
ABIDJAN, March 19 (Reuters) - Cocoa arrivals at ports in top grower Ivory Coast were 1.3 percent lower at around 1,025,000 tonnes for the season to March 18, compared with 1,039,121 tonnes in the same period of the previous season, exporters estimated on Monday.
The figures showed around 10,000 tonnes of beans were delivered to the West African state's two ports between March 12 and March 18, up from 1,941 tonnes in the same week a year ago.
E.African countries sit on sugar glut-Ecobank
LONDON, March 19 (Reuters) - Several East African countries including Uganda and Kenya are sitting on surpluses of sugar and are seeking homes for supplies imported after last year's drought, a senior analyst said on Monday.
"Late last year Kenya, Tanzania and Uganda banned exports of sugar and allowed duty-free imports, but unfortunately some traders got a bit carried away and imported far too much," said Edward George, head of the soft commodities research desk at pan-African banking group Ecobank.
India seals deals to export 60,000 T sugar to Iran
NEW DELHI, March 19 (Reuters) - Indian traders have struck deals to export 60,000 tonnes of raw sugar to Iran for March-April delivery, three trade sources said on Monday, marking their first sales of the sweetener to Tehran since western sanctions were tightened at the start of 2012.
The exports are within the ceiling of two million tonnes of sales already allowed by New Delhi under the open general licence (OGL) scheme.
Record Cotton Harvest Seen Cutting Prices for Gap: Commodities (Source: Bloomberg)
Record cotton crops from India to Brazil are exceeding demand by the most in more than two decades, driving prices lower for Gap Inc. and Abercrombie & Fitch Co. Farmers will reap 123.6 million 480-pound bales in the 12 months ending in July, exceeding demand by 15 million bales and expanding stockpiles by 32 percent to the second-biggest on record, the U.S. government estimates. Futures will extend this year’s 4.2 percent retreat in New York by a further 15 percent to 75 cents a pound by Dec. 31, according to the median of 15 analyst estimates compiled by Bloomberg. Prices rose to $2.197 a year ago after cold weather and floods from China to Pakistan ruined crops, the highest since America was recovering from the Civil War more than a century earlier. Farmers worldwide planted more acres, creating a glut that the International Cotton Advisory Committee in Washington says may increase by a further 12 percent next season.
“Cotton is a cub right now and can grow into a fully- fledged bear,” said Sterling Smith from St. Paul, Minnesota- based Country Hedging Inc., a unit of CHS Inc., the largest U.S. farmer-owned co-operative. “We’re going to have exceptional production next season, and that will weigh on prices significantly.”
Push By Ethanol Producers Into Corn Oil Raises Concerns Over DDGs (Source: CME)
A push by U.S. ethanol companies into corn oil is starting to give the livestock industry indigestion. Corn oil, which is used both for cooking oil and to make biodiesel fuel, has emerged over the last year as a lucrative niche product for ethanol producers looking to add new revenue at a time of weak returns. Corn-oil production, though, comes with a downside: extracting the oil cuts into the fat content of the ethanol industry's major byproduct--distillers dried grain. The yellow, powdery substance known as DDGs is ubiquitous in the feed rations for cattle, hogs and poultry. Yet extracting corn oil makes DDGs less effective at helping animals grow ahead of slaughter. Researchers said concerns over the decreasing DDG fat content are just starting to emerge. Livestock producers could start to reduce their use of DDGs in favor of soybean meal, analysts and livestock nutritionists say.
As corn-oil extraction "becomes more widespread, livestock producers, particularly of hogs, will begin to shift feeding back to meal," said Don Roose, president of U.S. Commodities, a Des Moines, Iowa-based brokerage that advises both livestock producers and ethanol plants. Prices for soy meal hit six-month highs last week, rising on concerns over global supplies in the face of a disappointing South American soybean crop. The soy product pulled back 1.5% at the Chicago Board of Trade on Thursday. University researchers and animal nutritionists across the Midwest said they are hearing concerns from cattle and hog producers about DDGs and are trying to determine the effects of corn oil production on the nutritional value of DDGs. Researchers at large state universities from Nebraska to Illinois to Minnesota all plan to release findings in the weeks and months ahead.
So far, demand for DDGs has held up, said Steve Markham, head DDG merchandiser for farmer co-op CHS Inc., the nation's biggest marketer of the feed. He said exports to Asia have climbed, with several major shipments recently. Still, Markham acknowledged that a large international customer complained about the falling fat content in DDGs during a recent meeting with CHS executives. Many hog producers in the U.S. and abroad have just gotten used to DDGs, with supplies exploding in recent years as ethanol production surged. The changes in DDGs for livestock producers are "kind of throwing them a curve ball," said Jay O'Neil, agricultural economist with Kansas State University. Most of the industry's largest ethanol companies--including Valero Energy Corp., Archer Daniels Midland Co., Green Plains Renewable Energy Inc. and privately held POET LLC--have retrofitted plants in the past year to produce corn oil.
Valero spokesman Bill Day said the company, which extracts corn oil at two of its Iowa plants, actually has seen a recent jump in demand for DDGs. He explained that buyers have become dissatisfied with rival suppliers who are more aggressive about corn oil output, producing DDGs with less fat than what Valero sells. Corn oil provides a hefty margin for ethanol producers because costs, after the initial investment in equipment, are low. A backlash from livestock producers is unlikely to cause plants to rethink their corn-oil strategy. Ethanol margins have weakened due to slow demand growth and high corn prices. Since the start of 2011, corn futures at the Chicago Board of Trade are up 5.5% and well above historical averages, while ethanol futures are down 1.8%. Still, few expect ethanol producers to sacrifice corn oil for DDG. "It makes dollars and cents to yank out as much fat as you possibly can," Markham said.
Brent falls below $125 on Libyan supply, China fuel hike
SINGAPORE, March 20 (Reuters) - Brent crude fell below $125 a barrel as global supply concerns eased and a hike in Chinese fuel prices sparked fears of lower energy demand in the world's second-largest oil consumer.
"The move might sap demand growth. Higher prices tend to discourage wasteful consumption," said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong.
Global: Coal slump worst in three years seen on gas drop
Coal for Asia’s power stations is headed for the worst slump since the global financial crisis cut prices 3 years ago as slowing economic growth tempers demand and U.S imports threaten to flood the market. Thermal coal at the Australian port of Newcastle is set for the steepest drop over two quarters since the period ended March 2009. The fuel at Richards Bay in South Africa, a terminal for supplies to Asia and Europe, is poised for the longest run of quarterly declines in a decade. Prices are unlikely to recover in the next six months amid a glut of the fuel and slowing consumption, according to eight analysts, traders and producers surveyed by Bloomberg News. Coal with an energy value of 6,700 kilocalories per kg cost $104.90/ mt on Mar 16 at Newcastle, down 14% from Sept 30, according to data from IHS McCloskey. The decline is poised to be the biggest over two quarters since the 57% drop from Sept 2008 to Mar 2009, when global financial markets plunged following the collapse of Lehman Brothers Holdings Inc. (Bloomberg)
Oil Rebounds From Biggest Decline in Three Months in New York (Source: Bloomberg)
Oil for May delivery rose as much as 38 cents, or 0.4 percent, to $106.45 a barrel in electronic trading on the New York Mercantile Exchange at 11:19 a.m. Sydney time. Futures dropped $2.49 percent yesterday to $106.07, the lowest close since March 15. The April contract, which expired at the end of floor trading yesterday, fell 2.3 percent to $105.61, the biggest decline in three months.
Saudi Arabia Can Raise Output 25% If Needed, Naimi Says (Source: Bloomberg)
Saudi Arabia (OPCRSAUD) can increase crude production by as much as 25 percent immediately if needed, the country’s oil minister said, seeking to allay the concern over supplies that has driven prices to the highest in three years. Brent crude has gained 15 percent in London this year to about $124 a barrel. Iran has threatened to shut the Strait of Hormuz at the entrance to the Persian Gulf, a transit point for a fifth of the world’s traded oil, in response to sanctions on its crude exports imposed over its nuclear program. “If you believe Hormuz will be closed, I will sell you the Empire State or the Egyptian pyramids,” Ali al-Naimi said in a briefing with reporters in Doha, Qatar today. “I want to assure you that there is no shortage of supply in the market. OPEC is supplying what it needs, we have capacity, additional reserves of 2.5 million barrels” a day.
Saudi Arabia increased production to 10.047 million barrels a day in November, the highest in at least three decades. The kingdom, the world’s biggest crude exporter, has the capacity to produce 12.5 million barrels a day and will pump about 9.9 million barrels a day this month and in April, al-Naimi told reporters at the Ritz Carlton hotel in the Qatari capital.
Vietnam's Mar-Apr diesel imports up nearly three-fold from Feb
SINGAPORE, March 20 (Reuters) - Vietnam is set to import nearly three to four times more diesel in March and April than in February, as importers seek additional volumes to fill a demand build-up after an import tax was scrapped this month, industry sources said on Tuesday.
The country's top oil importer and distributor, Petrolimex, and state-owned oil marketer, PV Oil, are seeking a total of 78,000 tonnes of gasoil for delivery over March and April in two separate tenders, they said.
Full return of Libyan oil to ease global pressure
LONDON, March 19 (Reuters) - Libya's oil exports are set to return to full pre-war levels by April this year, beating even the most optimistic estimates and potentially easing a global shortfall of oil caused by outages and conflicts.
Libya plans to export almost 1.4 million barrels of oil per day (bpd) in April, a senior National Oil Corp (NOC) official said. At that level, its exports will exceed deliveries in February 2011 before the uprising that ousted Muammar Gaddafi began.
China Steel Growth Has Flattened as Economy Shifts, BHP Says (Source: Bloomberg)
BHP Billiton Ltd. (RIO), the world’s biggest mining company, said China’s steel production is slowing as the world’s fastest-growing major economy starts to shift to focus more on consumers than large building projects. “The big infrastructure build clearly will come to some end,” Ian Ashby, the Melbourne-based company’s president of iron ore, told reporters today in Perth. “Steel growth rates will flatten, and they have flattened, and we still see positive growth out to the middle of the next decade.” The Australian dollar dropped for the first time in four days after the comments as Rio Tinto Group, the world’s second- largest iron ore exporter, said at a conference in Perth that it’s seeing a slowdown in China, its biggest customer. Premier Wen Jiabao this month cut the nation’s economic annual growth target to 7.5 percent and an official at the China Association of Automobile Manufacturers said vehicle sales this year may miss the industry group’s forecast.
“The rate of GDP growth in China is more immediately slowing,” Rio’s David Joyce, managing director of expansion projects, said at the conference. “We remain confident on the basis of the figures we have seen, of a soft landing, with solid growth for this year.”
