Bulls Proven Wrong as Prices Slump Into Bear Market: Comm (Source: Bloomberg)
Speculators increased bets on a rally in commodities for a second consecutive week, just as prices tumbled into a bear market after the Federal Reserve refrained from expanding monetary stimulus. Hedge funds and other money managers raised net-long positions across 18 U.S. futures and options by 7 percent to 628,560 contracts in the week ended June 19, Commodity Futures Trading Commission data show. That’s the highest in four weeks and the first consecutive gain since the end of February. Commodities slumped into a bear market June 21, a day after the Fed extended its Operation Twist program while refraining from a third round of debt buying known as quantitative easing. Reports last week showed that Americans filed for more jobless claims than forecast, sales of previously owned U.S. homes fell in May and manufacturing in the Philadelphia region contracted this month at the fastest pace in almost a year.
“People were thinking that we’d see the next stimulative event, and they started to front-run the trade, and that got reversed quickly,” said Jeffrey Sherman, who helps manage $37 billion of assets for DoubleLine Capital in Los Angeles. “We’re in for a volatile time in commodities as people try to ascertain what’s going to drive growth.”
DTN Closing Grain Comments 06/25 14:54 : Grains Post Strong Gains (Source: CME)
Grain contracts rallied throughout the session with corn closing limit up through the May 2013 contract. Wheat and soybeans were supported by the sharp rally in corn, with moves in all three tied to weather. Outside markets were mixed throughout the day, highlighted by a stronger U.S. dollar index and lower Dow Jones Industrial Average.
COLUMN-Wheat set to regain crop market limelight
--Gavin Maguire is a Reuters market analyst. The views expressed are his own--
CHICAGO, June 22 (Reuters) - Corn has been hogging most of the headlines and trader attention in recent weeks as dry fields across key U.S. farmland sparked concerns over potential crop problems over the remainder of the 2012 growing season.
But after much-needed rains finally alleviated many stressed U.S. corn fields in recent days, the wheat market looks likely to take over some of the limelight as global wheat growers suffer dryness concerns of their own and import demand starts to pick up in key markets.
Pro Farmer: After the Bell Wheat Recap (Source: CME)
Chicago and Kansas City wheat finished high-range with gains of 40- to 50-plus cents. Minneapolis wheat ended mid- to high-range with gains of 21 to 38 cents. Strong gains in the corn market due to weather concerns made it easy for wheat to rally. Fundamentally, the market continues to benefit from crop concerns in areas of the Former Soviet Union, Europe, China and Australia.
Wheat Market Recap Report (Source: CME)
September Wheat finished up 53 at 740 1/2, 1 1/2 off the high and 44 1/4 up from the low. December Wheat closed up 50 1/4 at 757. This was 40 up from the low and 3 off the high. The Chicago wheat complex traded sharply higher early today trading as much as 51 3/4 higher on the day early. The market found more technical support on the move through the May highs and after a minor set-back into the mid-day, futures pushed back up to make new highs for the day into the close. The U.S. Dollar was trading slightly higher while stocks were sharply lower on the day ahead of the European Summit later this week. Short covering and outright buying in wheat was noted, following the gap higher open in corn. Wheat futures extended gains after the Russia Agriculture of Ministry revised their wheat crop forecast for 2012/13 at 46 to 49 million tonnes vs. current USDA estimate of 53 million tonnes. Russian wheat exports were also revised lower to 16 to 18 million tonnes, from 20 million tonnes. The USDA currently has Russian wheat exports at 16 million tonnes for 2012/13. The Paris Matif wheat futures climbed to a new one year high on the news. Furthermore, Statistics Canada will release crop planting estimates on Wednesday. Early indications suggest Canadian farmers will trim wheat plantings in favor of canola due to higher oilseed prices and expected increases in international demand. Weekly Net Export Inspections, released for the week ending June 21st, were reported in the range of market estimates at 19.48 million bushels. Inspections need to average 22 million per week to reach the USDA projection for the marketing year. September Oats closed up 20 at 324. This was 19 up from the low and equal to the high.
Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures closed sharply to their 40-cent limit higher on weather concerns. Limits expand to 60 cents for the next session. Today it was all about the weather, as strength in the U.S. dollar index due to ongoing euro-zone worries was put on the backburner (for now). Disappointing weekend rains and forecasts for building heat and continued dryness this week and into the July 4th timeframe have traders concerned about the crop as pollination has begun early this year.
Corn Market Recap for 6/25/2012 (Source: CME)
September Corn finished up 40 at 591 1/4, equal to the high and 25 1/2 up from the low. December Corn closed up 40 at 594. This was 23 3/4 up from the low and equal to the high. The corn complex traded sharply higher on the day, posting limit higher moves in September, December, and March corn. July corn lost to the December contract on bullish new crop weather data, however, even July corn was trading near limit-up late in the session. December corn gapped higher on the open and touched fresh 5 month highs. Trade volume was above average today. Demand remains sluggish for U.S. corn as reports surfaced today that China continues to have strong interest in Argentinean corn. Furthermore, our research shows that while Ethanol Margins are marginally higher, week over week, they continue to run at some of the lowest levels we have on record. Afternoon weather models show a cooler and wetter pattern for the southern Midwest, beginning next Monday. Confidence and accumulation is low at this point in time. Western Corn Belt regions, especially southern areas, look to turn very hot in the next two weeks with mid-90's and even 100 degree temperatures common in the week ahead. This has traders nervous over yield loss due to stress for pollination. Traders expect the corn good to excellent ratings to be revised lower in the afternoon Crop Progress Report by 2%. Weekly Net Export Inspections, released for the week ending June 21st, were reported above market estimates at 27.01 million bushels. Inspections need to average 34.4 million per week to reach the USDA projection for the marketing year. September Rice finished up 0.215 at 14.94, equal to the high and 0.14 up from the low.
US new-crop corn hits 4-mth high on dry weather
SINGAPORE, June 25 (Reuters) - Chicago new-crop December corn jumped more than 4 percent to its highest since early February, while November soybeans climbed to a contract high as dry weather in parts of the U.S. Midwest threatened crops.
"It is very much a weather-related rally in this session," said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia in Sydney. "Corn and soybeans are drawing support from dryness in the eastern corn-belt in the United States and wheat is drawing support from dryness in Ukraine and Russia."
Rains in China's corn, cotton provinces to ease drought concerns
BEIJING, June 25 (Reuters) - Rains in China's major corn and cotton producing provinces this week will give much needed
relief to drought-stricken fields, although some areas risk being hit by floods, the country's weather bureau said.
Drought concerns in China, the world's second-largest consumer and producer of corn, have already pushed domestic corn
futures to their highest since early May. Wet weather will support output and curb additional U.S. imports.
Ukraine's 2012 grain crop to fall 22 pct to 43-44 mln t
KIEV, June 25 (Reuters) - Ukraine's 2012 grain harvest is likely to total 43 million to 44 million tonnes,compared with a record 56.7 million tonnes in 2011 due a sharp decrease in wheat output, a senior weather forecaster said on Monday.
Tetuana Adamenko, the head of the agriculture department for Ukraine's state weather centre told a news conference the ex-Soviet republic could harvest 12.2-12.3 million tonnes of wheat this year against 22.3 million in 2011.
Argentine corn harvest slowed by wet or flooded fields
BUENOS AIRES, June 22 (Reuters) - Argentina's 2011/12 corn harvest advanced slowly in the country's top growing province of Buenos Aires due to damp or flooded fields, the Agriculture Ministry said on Friday.
The South American country is the world's second-biggest corn supplier after the United States, but this year's crop has been plagued by drought early in the season and more recently by torrential rain.
Rains offer some respite for eastern Europe grain crops
SOFIA, June 22 (Reuters) - Rain showers boosted wheat and barley crops in large parts of eastern Europe in May and June, but the damage from a dry autumn and winter frosts will keep 2012 harvests below last year's levels.
Heavy rains in May could have a negative impact on crops in western Ukraine and Romania, both large Black Sea grain producers, while lighter rainfalls helped plantings in Poland, Hungary and Bulgaria, officials and farmers said.
Toepfer raises forecast of German 2012 wheat crop
HAMBURG, June 22 (Reuters) - Germany's leading grain trading house Toepfer International on Friday raised its forecast for the country's 2012 wheat crop to 22.71 million tonnes from the 21.49 million tonnes it estimated in May.
This would make the 2012 crop slightly above the 22.70 million tonnes harvested in 2011.
Asia Softs-Sugar premiums at 11-mth high; rubber in range
SINGAPORE, June 25 (Reuters) - Thai raw sugar premiums are likely to stay this week at their highest in almost a year after New York futures resumed their downtrend, while a rebound in Tokyo rubber futures could be short-lived on weak fundamentals, dealers said.
"The demand environment around the world remains uncertain. We continue to hear varying reports around global sugar demand, and the supply side of the equation is equally uncertain," said Luke Mathews, a commodities strategist at CBA in Sydney.
India's 2012/13 natural rubber imports seen down 27 pct
MUMBAI, June 25 (Reuters) - India's natural rubber imports in the year ending March 2013 are likely to drop by 27 percent from a year ago to 150,000 tonnes as local output rises and as international prices are not very attractive for importers, a senior government official said.
The world's fourth-biggest producer of natural rubber imported 205,433 tonnes of the tyre-making raw material last year, taking advantage of lower prices in the world market.
Indonesia rubber output, exports seen down 10 pct -group
JAKARTA, June 25 (Reuters) - Rubber output and exports this year in Indonesia, the world's second-biggest producer, are expected to fall by as much as 10 percent, an industry group said on Monday, due to dry weather conditions and falling global prices.
Rubber output is seen down by 8-10 percent from 2.95 million tonnes last year, while exports are forecast to drop 10 percent versus 2.45 million tonnes in 2011, said Asril Sutan Amir, chairman of the Indonesian Rubber Association (Gapkindo).
COLUMN-Iran standoff to slow Saudi's oil slide response
--Robert Campbell is a Reuters market analyst. The views expressed are his own.--
NEW YORK, June 22 (Reuters) - Amid this week's carnage in crude oil markets with Brent futures slumping to 18-month lows, bullish traders have held out hope that Saudi Arabia will bail out the market with a quick cutback in oil production. They are likely to be disappointed.
Saudi Arabia has driven oil into a supply surplus this year by ratcheting up its own production to near 10 million barrels per day.
Iraq Kirkuk exports expected to fall in July
London, June 25 (Reuters) - Exports of Iraqi Kirkuk crude oil are expected to fall to about 399,000 barrels per day in July, a loading programme showed on Monday, from 417,000 bpd in June.
Turkey's Tupras will be the largest buyer of Iraqi Kirkuk crude next month, according to the programme, with plans to lift 1.8 million barrels of the grade.
NORWAY GAS-No impact on flows from oil workers strike
OSLO, June 25 (Reuters) - An oil workers' strike on the Norwegian continental shelf had no immediate impact on the country's gas exports to Europe on Monday morning, data from the gas system operator showed.
About 700 oil workers went on strike from Sunday, shutting down oil and gas production at two major fields offshore Norway that account for about 4 percent of the country's total gas output.
Euro Coal-Prices rise but near-term still looks grim
LONDON, June 22 (Reuters) - Prompt physical coal prices shot up by over $1.50 a tonne on Friday, bid higher on both swaps and physical led by a European utility, but the outlook during the summer remains grim, traders and utilities said.
"Almost everywhere looks bearish from a macro perspective, almost every origin of coal is close to pricing-in to Europe but coal prices went up sharply today," one utility said.
Russia cuts coal output as margins squeezed-exporters
LONDON, June 22 (Reuters) - Russia is likely to lose 6-8 million tonnes of thermal coal exports in 2012 due to production cuts begun in the past month by miners who are being squeezed by slumping prices and rising costs, exporters said.
Russia's thermal coal exports have been fairly stable at around 70-75 million tonnes for the past few years, limited by logistics, but export prices are now significantly below what it costs to mine coal and move it to port.
S.Korea May Iran crude imports down 40 pct on year
SEOUL, June 25 (Reuters) - South Korea's imports of Iranian crude oil fell nearly 40 percent in May from a year earlier, reflecting Seoul's efforts to reduce purchases in return for a waiver from U.S. sanctions targeting Iran's controversial nuclear programme.
The north Asian nation, currently the world's No.4 buyer of Iranian crude, could also see imports suspended from July due to a European insurance embargo on Iranian oil shipments.
Oil-Oil falls as investors unconvinced on EU growth talk
LONDON, June 25 (Reuters) - Brent crude slipped further and U.S. crude turned negative as trade moved to European trading hours with concerns about faltering global growth and Europe's intractable debt crisis hitting investor confidence.
"Another round of European sovereign debt issues ... and bearish fundamentals have already started to weigh on oil prices," Morgan Stanley said in a research note.
Oil Stocks Biggest Losers With Valuations Lowest Since 2009 (Source: Bloomberg)
At a time of record fuel demand, bountiful oil and natural gas, and expanding economies, no stocks are doing worse in the world than energy producers from BP Plc to Hess (HES) Corp. The MSCI World Energy Index (MXWO) has declined 11 percent this year, more than any other group, according to data compiled by Bloomberg. The gauge has climbed 42 percent since equities bottomed in 2009, less than any industry with earnings tied to economic growth. In the U.S., the stocks are at the cheapest levels relative to the Standard & Poor’s 500 Index since 2009. The divergence reflects the transformation of an industry where growing consumption of energy has been met with even bigger gains in supply. U.S. crude inventories are the highest since 1990 and natural gas prices have lost 36 percent in 12 months amid a glut spurred by hydraulic fracturing. Bears say energy producers, making up about 10 percent of global stocks, will keep equities from advancing. Bulls say the market will rally when their shares rebound.
“The S&P 500 will have a tough time making meaningful progress until the energy sector bottoms and begins to move higher,” Jim Russell, the Cincinnati-based chief equity strategist at U.S. Bank Wealth Management, which oversees about $116 billion, said in a phone interview on June 20. “Even though the valuations of the stocks are cheap, the fundamentals have not yet bottomed.”
Iron Ore-Spot rally may stall on weak China steel market
SINGAPORE, June 25 (Reuters) - Spot iron ore prices may struggle to stretch gains this week, as supply outpaces demand with China's steel market staying sluggish, raising the risk for traders hoping to resume a recent 10-day rally.
"It seems we are in an oversupplied market but there are some people out there who have a lot of cargoes and are trying to keep the market artificially up," said a Singapore-based iron ore trader.
Steel overcapacity will spur plant shutdowns
NEW YORK, June 22 (Reuters) - The director of Turkish steelmaker Colakoglu Metalurji expects steel production cuts and plant shutdowns in the United States, in Turkey, Russia, Ukraine and elsewhere as margins get squeezed by weaker demand and oversupply, he told Reuters this week.
"This a tendency I am expecting for the next 2-3 months: shutdowns not only in the U.S. but almost everywhere...because there is still oversupply, that's for sure," Ugur Dalbeler, managing director of Colakoglu Metalurji, said in an interview on the sidelines of an American Metal Markets steel conference.
METALS-London copper rebounds from 6-month low
SHANGHAI, June 25 (Reuters) - Copper prices rose on Monday after European leaders calmed the markets with promises of reforms to combat the euro zone debt crisis, and after Germany, France, Spain and Italy agreed a 130 billion euro ($156 billion) package to revive growth.
Limited restocking of copper by Chinese investors in order to exploit favourable arbitrage between London and Shanghai also supported prices, but London copper's fall to a six-month low on Friday showed markets were still worried that the problems faced by Europe, the U.S. and China may crimp demand for metals.
PRECIOUS-Gold inches up after weekly drop; EU summit eyed
SINGAPORE, June 25 (Reuters) - Gold edged up on Monday after falling more than 3 percent last week, but interest in the precious metal could be limited by a steady U.S. dollar and deflation worries stemming from a global economic slowdown.
Inflation fears have helped fuel several years of strong gains for gold, but investors are now starting to worry about deflation after recent reports showed signs of slowing global economic activity, already dented by the debt crisis in Europe. Bullion has shed most of its early gains and is trading almost flat for the year.
Shipping Bears Ascendant as Fleet Growth Swamps Cargoes: Freight (Source: Bloomberg)
Shipping analysts are getting more bearish on the outlook for rates to haul iron ore and coal as China, the biggest consumer of both commodities, grows at the slowest pace in three years at a time of record fleet expansion. Capesizes, each holding about 180,000 metric tons of cargo, will earn an average of $11,709 a day in 2012, the lowest in at least 14 years, the median of 10 analyst estimates compiled by Bloomberg shows. They predicted $15,000 in a December survey. The fleet will expand 13 percent this year, compared with a 4 percent advance in cargo volumes, according to London-based Clarkson Plc (CKN), the world’s biggest shipbroker. Rates tumbled 85 percent since the start of January, more than for any other type of commodity carrier, as everyone from the World Bank to the Federal Reserve cut growth estimates.
China, which imports more iron ore than all other nations combined, is expanding at the slowest pace since 2009 and the 17-nation euro region returned to recession this quarter, the median of 16 economist forecasts shows. “China’s growth hasn’t been as good as some people had hoped,” said Rahul Kapoor, a Singapore-based analyst at RS Platou Markets AS, who cut his 2012 forecast to $10,000 from $13,000 in December. “That’s being compounded by rather negative demand for iron ore in Europe. Fleet growth has also been huge and above most people’s expectations.”
Baltic index flat as activity slows
June 22 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, was unchanged on Friday due to a slowdown in vessel activity.
"We saw a temporary increase in cargoes but things are starting to slow down again," said George Lazaridis, head of research with Greek shipbroker Intermodal.
