DTN Closing Grain Comments 12/04 14:41 Soy Complex Storms Back Late (CME)
The last half hour of Tuesday's session saw the soy complex erase most of its early loss, storming higher in both beans and meal. Following along behind, the other grains were able to cut deeply into daily losses.
Wheat Market Recap Report (CME)
March Wheat finished down 4 1/4 at 856 1/2, 8 1/2 off the high and 5 up from the low. May Wheat closed down 4 at 865 1/4. This was 5 1/4 up from the low and 7 3/4 off the high.
March Chicago and KC wheat traded slightly lower the day. Bear spreading was seen in both markets and thoughts that the USDA may revise all wheat export demand lower in next week's Supply and Demand report favored the bear camp. The weather conditions in the western plains remain very poor with very little to no relief in sight for the next 7-10 days. There is a chance for a quarter inch of rainfall in areas of eastern Colorado, southern Nebraska, and northwestern Kansas later this week but the accumulation will bring almost no relief. The eastern Midwest and delta should see scattered showers this week which should help soil conditions. ABARES cut their Australian wheat production estimate to 22.03 million tonnes vs. prior estimates 22.54 million tonnes. The cut was not as extreme as many analysts expected and is above the current USDA estimate of 21 million tonnes. Short term the market is focused on demand which is not impressive at the moment but long term support may come from the worsening conditions in the western plains.
March Oats closed up 1/2 at 385. This was 3 3/4 up from the low and 1 1/2 off the high.
Corn Market Recap for 12/4/2012 (CME)
March Corn finished down 2 3/4 at 752, 5 off the high and 5 1/4 up from the low. May Corn closed down 1 1/4 at 753. This was 6 1/4 up from the low and 3 off the high.
March corn traded lower into the closing bell on active bear spreading and a weaker wheat market. Domestic supply concerns and very wet conditions in Argentina continue to add support to the market but export demand remains very weak and Brazil continues to sell corn at nearly a $30 per tonne discount to the US. Ukraine officials stated they hoped commercial grain traders would slow the pace of wheat sales and instead switch to other commodities such as corn. Ukraine has exported 4.5 million tonnes of corn so far this crop year vs. 2.4 for the same period last year. Some reports suggest Ukraine may begin exporting larger quantities of corn to China after signing a deal in which they will receive a credit line for supplying corn. Outside market instability continues to keep the trade choppy as politicians negotiate the fiscal dilemma at year end.
January Rice finished up 0.035 at 15.41, 0.09 off the high and 0.035 up from the low.
CFTC Says Broker Tried to Manipulate Wheat Futures Prices (Bloomberg)
Trader Eric Moncada and firms BES Capital LLC and Serdika LLC were accused by U.S. regulators in a lawsuit of attempting to manipulate wheat futures contract prices. While trading for the companies, Moncada placed and immediately canceled orders in December 2009 wheat futures with the intent of raising or lowering prices, the U.S. Commodity Futures Trading Commission alleged in a complaint filed today in federal court in Manhattan. The transactions occurred between Oct. 6 and Oct. 30, 2009, and involved futures traded on the Chicago Board of Trade, the CFTC said. Moncada is a CFTC-registered floor broker with trading privileges at the New York Mercantile Exchange, according to the regulator’s website. “The illegal scheme alleged in the complaint, entering and quickly canceling large-lot future orders without any intent to consummate a trade, undermines the integrity of the market,” David Meister, director of the CFTC’s division of enforcement, said in a statement.
Contact information for the defendants couldn’t immediately be found. The agency is seeking disgorgement, financial penalties and injunctions preventing Moncada and the companies from engaging in further commodities trading. The case is U.S. Commodity Futures Trading Commission v. Moncada, 12-cv-8791, U.S. District Court, District of New York (Manhattan).
European Corn Imports Seen Expanding to Second-Highest on Record (Bloomberg)
European Union corn imports may be the second-highest on record this season after drought parched crops and a surge in wheat exports curbed domestic grain supply. The EU issued licenses to import 3.6 million metric tons of corn since the marketing year began July 2, more than twice the amount a year ago, data from the 27-nation bloc show. Purchases will rise 59 percent to 10 million tons, the second highest for data to 1999, the International Grains Council says. Shipments may reach 12 million tons, said Dan Basse, president of AgResource Co., a research company in Chicago. EU buyers are competing in a market roiled by dry weather from Australia to Europe to the U.S. Futures traded in Chicago, a global benchmark, reached a record in August. Prices for wheat, an alternative livestock feed, also surged because of concern that grain from the Black Sea region will run out, boosting demand for EU supply. Licenses to export wheat rose 34 percent in the past four weeks, European Commission data show.
“There were problems in the southern areas, especially Romania, where crops looked very poor, and in Italy and Hungary as well,” said Nathan Kemp, an economist with the London-based IGC. “There’s a shortfall this year, plus with the wheat market price differential, it makes sense to export wheat, so that takes it away from feed channels.” Corn surged 28 percent this year on NYSE Liffe in Paris, outpacing the 17 percent increase on the Chicago Board of Trade. U.S. futures reached a record $8.49 on Aug. 10 and averaged $6.86 since the start of January, exceeding last year’s all-time high. The Standard & Poor’s GSCI Agriculture gauge of eight commodities rose 11 percent this year.
Record Brazil Coffee Crop Cuts Costs for Starbucks: Commodities (Bloomberg)
Record coffee harvests in Brazil, the biggest grower, are compounding a global glut of arabica used by Starbucks Corp. (SBUX) and Dunkin’ Donuts Inc. Brazilian farmers will reap 50.8 million bags in 2013, a record for a so-called low-crop season, according to the median of nine analyst estimates compiled by Bloomberg. The harvest reached 55.9 million 60-kilogram (132-pound) bags in 2012, an all-time high for a peak year. Output usually drops in alternate years because of growing cycles. Prices may fall 12 percent to $1.311 a pound by June 30, the average of 14 predictions shows.
Futures slumped about 50 percent since May 2011, as the highest prices in 14 years spurred Brazilian farmers to boost supply. Their exports jumped 54 percent to $8.7 billion in 2011. The flood of beans has continued and stockpiles tracked by the ICE Futures U.S. exchange are headed for the biggest annual gain in more than a decade. Rising costs and concern that economies are slowing encouraged roasters and consumers to favor cheaper robusta beans. “There’s a significant crop coming from Brazil if the weather continues to be favorable,” said Claudio Oliveira, the head of trading at Castlestone Management LLC in New York, which manages about $500 million of assets. “Abundant supply is the driving force in the market.”
Recap Energy Market Report (CME)
January crude oil prices trended lower during the US morning hours, registering a lower low in the process. The crude oil market appeared to come under pressure from renewed concerns over the US budget battle, especially what demand might look like if the economy fell back into a recession. Comments from OPEC's secretary General this morning indicated that global oil supplies are at comfortable levels, and that seemed to put added pressure on the market. January crude oil prices managed to pare a good portion of the morning losses and closed the session in the middle of the day's range. Some traders indicated that rising tensions in Egypt might have caused some of the mid-day lift. Expectations for this week's EIA crude oil report are for a draw of around 750,000 barrels.
U.S. Crude Output Near 15-Year High on Shale Boom (CME)
By U.S. Energy Information Administration - Tue 04 Dec 2012 14:08:00 CT
North Dakota, Texas Account for Bulk of Surge
U.S. crude oil production reached the highest level in nearly 15 years during September, driven by a shale-drilling boom in North Dakota and Texas, the Energy Information Administration said.
Crude output, including drilling byproducts known as lease condensates, averaged about 6.5 million barrels a day in September, the highest monthly production since January 1998, according to an Energy Information Administration update released December 4. September’s production was up 900,000 barrels, or 16% from the same month in 2011.
“Most of that increase is due to production from oil-bearing rocks with very low permeability through the use of horizontal drilling combined with hydraulic fracturing,” the administration said.
The states with the largest increases were North Dakota and Texas, the respective homes to much of the Eagle Ford and Bakken shale formations. Oklahoma, New Mexico, Wyoming, Colorado, and Utah also contributed to rising domestic crude oil production.
Copper Drops From Six-Week High as Metals Fall on Budget Impasse (Bloomberg)
Copper declined for the first time in four days after touching the highest level in more than six weeks as U.S. manufacturing unexpectedly shrank and a budget standoff intensified. Aluminum, zinc and lead retreated. Copper for delivery in three months fell as much as 0.5 percent to $7,963.50 a metric ton on the London Metal Exchange and was at $7,977 at 4:30 p.m. in Tokyo. The industrial metal touched $8,045 yesterday, the highest level since Oct. 19. U.S. manufacturing contracted last month amid concern about the potential economic fallout from the so-called fiscal cliff. Budget talks became more confrontational as House Republicans rejected President Barack Obama’s demand for higher tax rates, countering with a $2.2 trillion deficit-cutting plan that would trim Medicare and Social Security. “The U.S. manufacturing data and concern over the fiscal cliff weighed down the metals market,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul.
The Institute for Supply Management’s factory index fell to 49.5, the lowest since July 2009, from 51.7 in October. The median forecast in a Bloomberg survey called for 51.4. Fifty marks the dividing line between expansion and contraction. “A sustained improvement in prices looks unlikely until there is evidence of draws in Chinese inventories,” Barclays Plc analysts wrote in a report today. Stockpiles in the main Waigaoqiao bonded area in Shanghai have risen to 600,000 to 700,000 tons, the analysts wrote, citing warehouse executives. The contract for March delivery fell 0.5 percent to $3.639 a pound on the Comex in New York. March futures closed 0.5 percent lower at 57,280 yuan ($9,201) a ton on the Shanghai Futures Exchange.
Gold Slumps to Four-Week Low on U.S. Budget Impasse (Bloomberg)
Gold futures slumped to a four-week low, closing under $1,700 an ounce, as a stalemate in U.S. budget talks drove commodities down. Silver, platinum and palladium also dropped. Twenty-one of 24 raw materials in the Standard & Poor’s GSCI Spot Index fell. Democrats and Republicans have four weeks left before more than $600 billion in tax increases and federal spending cuts are triggered. Gold slid about $12 an ounce in about a minute during Asian trading, data compiled by Bloomberg show. “Gold is being sold along with just about everything else in commodities with the worries on the fiscal cliff,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. The metal “is usually said to be a safe haven, but the threat to economies globally from the fiscal cliff is having knock-on effects.”
On the Comex in New York, gold futures for February delivery dropped 1.5 percent to settle at $1,695.80 at 1:37 p.m. Earlier, the price touched $1,692.60, the lowest for a most- active contract since Nov. 6. If the so-called fiscal cliff isn’t averted, the U.S. may face a recession, according to the Congressional Budget Office. The slump in Asia amid low volume probably was spurred by “frustration” that prices remain below $1,750, UBS AG said in a report. Silver futures for March delivery fell 2.8 percent to $32.808 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for January delivery declined 1.9 percent to $1,582.90 an ounce, the biggest drop since Oct. 23. Palladium futures for March delivery fell 1.2 percent to $682.70 an ounce.
Silver Market Recap Report (CME)
March silver prices came under renewed liquidation pressure today and in the process prices fell below the 50 day moving average. At times silver was attempting to draft some support off strength in copper prices but ultimately a pattern of weakness in physical commodity markets prevailed and silver slumped to the lowest level since November 19th. It probably goes without saying that a noted portion of the decline in silver prices today was the result of technical knock on selling pressure.
Gold Market Recap Report (CME)
February gold fell sharply through a series of potentially critical chart support levels and at times today, gold seemed to be dominated by technical pressure. Some traders suggested that gold was under pressure off ideas that the US fiscal cliff debate was at least going to go the distance to the end of the lame duck Congress on December 14th. Others suggested that Weakness in a host of commodities and declines in equities simply fostered a risk off vibe. In the end, February gold prices fell down to the lowest level since November 6th and they also fell below the 100 day moving average.
