More Questions than Answers (Source: CME)
By DTN/The Progressive Farmer - Tue 12 Jun 2012 14:40:00 CT
The latest round of USDA numbers provided more questions than answers. In the end, the corn and wheat markets had sustained sharp losses while soybeans closed to the plus side led by the old-crop July contract.
Wheat Market Recap Report (Source: CME)
July Wheat finished down 14 at 616 1/2, 23 1/4 off the high and 3 1/4 up from the low. December Wheat closed down 12 3/4 at 659. This was 3 up from the low and 20 1/4 off the high. July wheat closed 14 1/2 cents lower on the session and just a few cents up from the lows. Aggressive fund selling in corn and a lack of new demand news helped to keep sellers active and buyers at bay. Hard red winter cash basis levels were down slightly today as the Kansas crop is already 53% harvested as compared with 8% last year and 4% as the 20-year average. The USDA reports this morning were considered bullish for the wheat market. Production was a bit higher than expected but the lower beginning and ending stocks numbers for the 2012/13 season looks supportive. The USDA pegged winter wheat production at 1.684 billion bushels which was about 34 million above trade expectations and compares with 1.694 billion last month. All wheat production was pegged at 2.234 billion bushels which is 12 million above expectations and compares with 2.245 billion last month. The USDA pegged US ending stocks for the 2011/12 season at 728 million bushels which was 25-30 million below trade expectations and down from 768 million last month. For the 2012/13 season, ending stocks were pegged at 694 million bushels which is 35 million below trade expectations and compares with 735 million last month. This would be the lowest ending stocks since the 2008/09 season. World ending stocks for the 2011/12 season came in at 195.56 million tonnes as compared with 197.03 million last month. For the 2012/13 season, world ending stocks were pegged at 185.76 million tonnes from 188.13 million last month and this would be the lowest since the 2008/09 season. Outside market forces are positive but funds are active sellers and the sharp break in corn is helping to pull the market lower. July Oats closed down 2 at 293 1/4. This was 2 1/2 up from the low and 7 1/2 off the high.
Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures settled 12 1/4 to 14 1/2 cents lower in Chicago, 10 1/2 to 13 1/4 cents lower in Kansas City and mostly 12 1/4 to 13 1/2 cents lower in Minneapolis. Futures ended on or near session lows. Losses were modestly trimmed in after-hours trade. USDA's winter wheat production figures came in higher than anticipated. In combination with spillover from corn and seasonal pressure, that overshadowed declines to USDA's domestic and global carryover forecasts.
Corn Market Recap for 6/12/2012 (Source: CME)
July Corn finished down 10 3/4 at 581 1/4, 17 3/4 off the high and 5 3/4 up from the low. December Corn closed down 15 1/4 at 518 3/4. This was 2 up from the low and 18 off the high. December corn closed 11 1/2 lower on the but up from the mid-session lows while July corn closed 8 cents lower on the day and up 8 1/2 cents from the lows hit right into the USDA release. Strong cash basis levels helped to support the market while fund traders were aggressive sellers. A bearish USDA report as compared with expectations sparked aggressive selling from fund traders to push the market lower. In addition, the extended forecast models show more rains coming to the US which may help ease stress on the crop into the key pollination period ahead. The USDA pegged ending stocks for the 2011/12 season at 851 million bushels which was about 25 million above expectations and unchanged from last month. For the 2012/13 season, ending stocks came in at 1.881 billion bushels, unchanged from last month and up from expectations around 1.74 billion. There were no changes for demand numbers, and the USDA stuck with a record high yield estimate of 166 bushels per acre. This surprised traders as the weekly update showed that just 66% of the crop is rated good/excellent compared to 72% last week and 69% last year. Last year yield was 147.2 bushels per acre and the 20 year trend yield is at 160.5. Ratings in Illinois and Indiana were down sharply. Illinois topsoil moisture was 78% short to very short and Missouri was 87% short to very short. Indiana is 74% short to very short and even Iowa was 66%. If we plug in a trend yield instead of the record yield, ending stocks come in at 1.387 billion bushels and stocks/usage is 10.1%. World ending stocks for the 2011/12 season came in at 129.19 million tonnes as compared with 127.56 million last month. New crop ending stocks were revised to 155.74 million tonnes from 152.34 million last month. China production was revised higher by 2 million tonnes to 195 million tonnes. July Rice finished up 0.045 at 14.1, equal to the high and 0.1 up from the low.
Global Wheat Stockpiles Forecast Lower as Drought Curbs Crops (Source: Bloomberg)
Global wheat stockpiles as of June 1, 2013, will be 1.3 percent lower than forecast a month ago as drought curbs production in countries including Russia and the U.S., the world’s biggest exporter, the government said. Inventories at the end of the marketing year will total 185.76 million metric tons, the U.S. Department of Agriculture said today in a report, down from 188.13 million tons forecast on May 10. Analysts surveyed by Bloomberg expected 185.06 million tons. Production will reach 672.06 million tons, compared with 677.56 million tons estimated last month, the USDA said. Daily harvest reports from parts of Kansas, the biggest U.S. producer of winter grain, show that “yields were worse than they thought,” Dan Manternach, a wheat economist at Doane Advisory Services in St. Louis, said in a telephone interview before the report was released. “We’ve had reports out of several Black Sea countries where they’ve lowered their own export-availability forecasts.”
Wheat has gained 4.9 percent on the Chicago Board of Trade since May 10, when the USDA forecast that global supplies at the end of May 2013 will be 4.5 percent smaller than a year earlier. Since then, little rain has fallen in parts of Kansas, Missouri, Illinois, Indiana and Ohio, where winter varieties are grown. Futures for July delivery yesterday closed at $6.305 a bushel, up less than 0.1 percent. Prices will average $7.80 in the third quarter, Societe Generale SA predicted in May.
Corn dips on euro zone crisis, USDA report eyed
SINGAPORE, June 12 (Reuters) - U.S. corn slid for a second straight day, while wheat edged lower with pressure from broad-based weakness in financial markets as a bailout of Spain's debt-stricken banks failed to convince investors.
"We did see in the weekly crop report reasonable deterioration in the corn crop conditions, which is pretty significant but all of that information will be overshadowed by tonight's USDA report," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.
Kazakhstan ups record grain export f'cast to 14 mln T
ASTANA, June 12 (Reuters) - Kazakhstan expects to export up to 14 million tonnes of grain this marketing year, the agriculture ministry said on Tuesday, raising its earlier forecast from a record 13 million tonnes.
"Around 11 million tonnes of grain, including flour in grain equivalent, has so far been loaded for exports during this marketing year," the ministry said in a statement. Kazakhstan's preferred marketing year is September to September.
Morocco's s.wheat imports at 2.9 mln T before drought
RABAT, June 12 (Reuters) - Morocco closed the 2012 import season with 2.9 million tonnes in soft wheat and 1.74 million tonnes in maize, official data showed on Tuesday, as Rabat gears up for higher import needs after drought slashed this year's harvest.
State cereals authority ONICL also said imports of durum wheat and barley stood at 650,000 and 620,000 tonnes respectively in the 12 months to the end of May, when the harvest stood at close to 8.4 million tonnes.
Cheaper US, Indian grains curb Australian wheat sales in Asia
SINGAPORE, June 12 (Reuters) - Asian grain importers are turning to the United States for cheaper milling wheat supply and Indian corn for animal feed, threatening to slow Australian wheat exports that have been running at a near-record pace in recent months.
The region's biggest grain buyers led by Indonesia and Japan are expected to book more U.S. wheat cargoes in the months ahead for milling, giving stiff competition to Australia, the world's second largest wheat exporter.
China wheat imports could double after crop damage - analysts
BEIJING, June 12 (Reuters) - China, the world's top wheat consumer, is expected to more than double its imports of the grain this year as domestic crop production dwindles under the onslaught of bad weather and disease, analysts said.
China imported 1.25 million tonnes of wheat last year, and that figure will surge in 2012 as the country is forced replenish supplies, particularly of high-grade wheat, in the second half, they said.
Australia wheat stocks at all-time high for April
SYDNEY, June 12 (Reuters) - Australian wheat stocks at the end of April were at their highest level on record for the month, government data showed on Tuesday, after recent bumper harvests filled silos and despite exports increasing to key Asian markets such as China.
Wheat in bulk storage was 18.9 million tonnes at the end of April, up 9 percent on the same month last year although down 11 percent, or 2.3 million tonnes, from the end of March, the Australian Bureau of Statistics said.
Argentine farm strike slows flow of grain to port
BUENOS AIRES, June 11 (Reuters) - Grain trucks entering Argentina's main port of Rosario slowed to a trickle on Monday because of a five-day-old sales strike by farmers, but exports remained uninterrupted due to ample dockside reserves.
The sales strike, set to end at midnight on Tuesday (0300 GMT Wednesday), was called last week by growers angry about government agricultural policies and a recent tax increase in No. 1 soy- and corn-producing province Buenos Aires.
Analyst cuts Ukraine '12 grain crop forecast 1.7%
KIEV, June 11 (Reuters) - Analyst UkrAgroConsult on Monday cut its forecast for Ukraine's 2012 grain harvest to 45.5 million tonnes from the previous estimate of 46.3 million tonnes due to a smaller output of barley.
The consultancy said in a report the former Soviet republic could harvest 7.32 million tonnes of barley this year. In May, the consultancy predicted a barley harvest of 7.95 million tonnes in 2012.
ICE coffee dips to two-year low, cocoa edges up
LONDON, June 12 (Reuters) - Arabica coffee futures on ICE slid to a two-year low in early trade as bearish technicals, ample supplies and risk aversion linked to the euro zone debt crisis helped to keep the market on the defensive.
“Thin coffee stocks in Vietnam have been keeping prices high, making it difficult for exporters to secure beans for fresh deals, while foreign buyers have already switched to taking beans from Indonesia's peaking harvest," traders said on Tuesday.
Australia's QSL sees sugar exports rise 25 pct in 2012/13
BANGKOK, June 12 (Reuters) - Australia's biggest exporter of raw sugar, Queensland Sugar Ltd (QSL), expects exports to rise a quarter, to 3 million tonnes this year, Brent Casey, the company's general manager for sales and business development said on Tuesday.
Australia is the world's third-largest exporter of raw sugar, with Queensland Sugar accounting for most of the country's total foreign sales.
Macquarie cuts 2012/13 Brazil CS cane output estimate
BANGKOK, June 12 (Reuters) - Macquarie Bank cut its estimate for the 2012/13 cane output of Brazil's key centre-south sugar producing region to about 506 million tonnes, down 2.7 percent from a forecast in February because of erratic weather, a bank official said on Tuesday.
Weather problems in Brazil, the world's largest sugar producer, and an increase in demand in Asia, drove a rebound in New York futures from their weakest level since August 2010, Carlos Murilo Barros de Mello, a managing director at Macquarie in Brazil, said.
Philippines sees marginal increase in 2012/13 sugar output
BANGKOK, June 12 (Reuters) - The Philippines, one of Asia's main exporters of sugar, could see a small increase in production of the sweetener in the crop year to August 2013 after incessant rains hit plantations, Regina Bautista-Martin, chief of the country's Sugar Regulatory Administration (SRA), said on Tuesday.
"There will be a marginal increase," Bautista-Martin told Reuters on the sidelines of a sugar conference in the Thai capital, adding that the output forecast for the crop year to August 2012 was unchanged, at 2.2 million tonnes.
Global sugar market in huge surplus, looks to Asia
BANGKOK, June 11 (Reuters) - The global sugar market may see supply vastly exceeding requirement in the next crop year, leaving producers at the mercy of seasonal demand from Asia and weather-related output disruptions, industry experts said on Monday.
Weak prices have spurred demand for the sweetener from consumers in Asia, especially China, while erratic weather in top producer Brazil could offer the market much-needed support.
Brazil sugar cane gets break before rain returns
BRASILIA, June 11 (Reuters) - Skies cleared over Brazil's center-southern cane belt on Monday and at the two main ports for sugar exports, forecasters and industry representatives said, enabling harvesting work and loading to progress again after unseasonably wet weather.
Fears that last week's torrential rains across the cane belt in the world's top sugar producer could restrict the flow of the sweetener to consumers, helped push New York sugar futures 6 percent higher last week and the July contract gained a further 1.8 percent on Monday.
China's high oil imports are all about Iran
(Clyde Russell is a Reuters market analyst. The views expressed are his own)
LAUNCESTON, Australia, June 12 (Reuters) - The gain in China's crude oil imports in May to a record high is a reflection of increased stockpiling rather than a sign of rising demand and economic strength.
Imports surged 14.5 percent from April to 25.48 million tonnes, equivalent to about 6 million barrels a day, the first time daily imports have started with the number six.
On oil, Goldman sees reasons to be bullish
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, June 11 (Reuters) - The overdone selloff in commodity prices, especially crude oil, has created the potential for a strong rally once fundamentals reassert themselves and hedge funds re-enter the market, according to researchers at Goldman Sachs.
"We believe that the selloff in commodity prices is likely overdone and the price risks are shifting more to the upside," Goldman wrote in a note published on Monday ("Commodity Watch: Stepping back into the markets" June 11, 2012).
OIL-Oil down on global impact of eurozone crisis
LONDON, June 12 (Reuters) - Crude oil futures fell below $98 a barrel on Tuesday, extending losses due to fears that the euro zone debt crisis will worsen and hurt the global economy, threatening growth in oil demand.
"Europe is significantly affecting the growth outlook and, given China is already weak, further deterioration in the Eurozone crisis could tip the global economy into a recession," said Guy Wolf, macro strategist at Marex Spectron.
Oil Trades Near Two-Day High on Stimulus Outlook, OPEC (Source: Bloomberg)
Oil traded near the highest close in two days after OPEC cut production last month and the Federal Reserve Bank of Chicago President said he would support stimulus measures in the U.S., the world’s biggest crude consumer. Futures were little changed after climbing for the first day in four yesterday. The Organization of Petroleum Exporting Countries, which meets in Vienna tomorrow, trimmed output in May for the first time in eight months, it said in a report. The Fed’s Charles Evans would support measures to generate faster job growth, he said in a Bloomberg Television interview. Oil for July delivery was at $83.21 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 9:40 a.m. Sydney time. The contract rose 0.8 percent yesterday to $83.32, the highest close since June 8. Prices are down 16 percent this year.
Brent oil for July settlement slipped 86 cents, or 0.9 percent, to $97.14 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $13.82. OPEC, responsible for 40 percent of global crude supplies, pumped 31.58 million barrels a day last month, the group’s secretariat said in its Monthly Oil Market Report yesterday. That’s down from 31.64 million barrels a day in April and exceeds its quota of 30 million agreed on in December. U.S. crude stockpiles climbed 1.6 million barrels last week, the American Petroleum Institute said. An Energy Department report today may show supplies slipped 1.5 million barrels, according to the median estimate of 12 analysts in a Bloomberg News survey.
No need for OPEC ceiling change-Iran OPEC governor
VIENNA, June 12 (Reuters) - OPEC should not raise its oil output ceiling when it meets on Thursday, Iran's OPEC governor told Reuters on Tuesday.
"The first and most important issue is we agree to stick to the 30 million (barrels per day)," Mohammad Ali Khatibi said. "If this ceiling needs to be changed, we need strong justification."
Sinopec turns down cut-price Iran crude - source
BEIJING, June 12 (Reuters) - Chinese refiner Sinopec has turned down offers of bargain Iranian crude and will cut imports by up to a fifth this year, a senior Chinese oil executive said, insisting ties with the United States are more important than cut-price oil as the West squeezes Tehran over its controversial nuclear programme.
And, with just 20 days to go until European Union sanctions against Iran's oil trade - effectively cutting off tanker insurance - major Asian buyers of Iranian crude were still scrambling on Tuesday for a solution to keep the oil flowing.
China oil imports to top May record on low prices, stockpiling
BEIJING, June 12 (Reuters) - China's oil imports will likely surge past last month's record in either June or July as falling prices and expanding storage capacity encourage the world's second-largest buyer to boost its emergency stockpiles.
Higher overseas purchases by China would be a bright spot in an otherwise grim outlook for oil demand amid uncertainty about the strength of the Chinese economy and the euro zone debt crisis, which pushed oil prices down in May by the most in more than three years.
Gold Futures Decline 0.2%; Silver Futures Trade Little Changed (Source: Bloomberg)
Gold for August delivery in New York declined 0.2 percent to $1,611.20 an ounce at 8:11 a.m. in Melbourne, while immediate-delivery bullion was little changed at $1,610.22. Gold gained for the third straight session yesterday on speculation that U.S. policy makers will announce additional stimulus measures to boost growth. Silver for July delivery was little changed at $28.925 an ounce.
Gold Climbs for Third Straight Session on Stimulus Bets (Source: Bloomberg)
Gold gained for the third straight session in New York on speculation that policy makers will announce additional stimulus measures to boost growth, increasing demand for bullion as a hedge against inflation. Federal Reserve Bank of Chicago President Charles Evans said he would support a variety of measures to generate faster job growth, underscoring his preference for more action. Spain has a “fair chance” to demonstrate its capacity to solve its banking woes after indicating it will require a bailout, Finland’s Prime Minister Jyrki Katainen said. “The market is expecting more stimulus, and that is supportive of gold,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. Gold futures for August delivery advanced 1.1 percent to settle at $1,613.80 an ounce at 1:57 p.m. on the Comex in New York. Prices gained 0.6 percent in the previous two sessions.
Bullion surged 70 percent from the end of December 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $2.3 trillion of debt in two rounds of so-called quantitative easing. Silver futures for July delivery jumped 1.2 percent to $28.949 an ounce in New York, gaining for the second straight day.
