Thursday, January 10, 2013

20130110 1001 Global Commodities Related News.

Corn Market Recap for 1/9/2013 (CME)
March Corn finished up 5 1/2 at 694 1/4, 1 3/4 off the high and 7 3/4 up from the low. May Corn closed up 5 at 693 3/4. This was 7 up from the low and 1 3/4 off the high.
March corn traded higher into the closing bell as trader's position ahead of Friday's big USDA report. Firm interior basis levels and active bull spreading in calendar spreads continues to add a supportive tone to the market. Favorable weather in South America that at this point is signaling healthy production levels for Brazil and Argentina is adding a negative bias to the market. Ethanol production saw a nice rebound from last week. Production for the week ending January 4th averaged 826,000 barrels per day, up 2.4% vs. last week and down 12.5% vs. last year. Total Ethanol production for the week was 5.78 million barrels. Corn used in last week's production is estimated at 86.7 million bushels vs. 84.7 last week. This crop year's cumulative corn used for ethanol production for this crop year is 1.54 billion bushels. Corn use needs to average 86.7 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of January 4th were 19.9 million barrels, down 1.8% vs. last week and up 5.8% vs. last year.
January Rice finished up 0.04 at 15, equal to the high and equal to the low.

Wheat Market Recap Report (CME)
March Wheat finished down 5 at 745 1/2, 11 1/2 off the high and 1/2 up from the low. May Wheat closed down 5 3/4 at 754 1/2. This was 1/2 up from the low and 11 1/2 off the high.
KC and Chicago wheat markets traded lower on the day with KC leading to the downside. Kansas City wheat lost ground to Chicago which is likely due to the fact areas of the southwestern plains are seeing moisture which could help soil moisture conditions. Storm systems covered Texas and southeast Oklahoma throughout the day and are expected to move to the northeast which could bring relief to dry areas of the eastern Corn Belt. Basis levels in Kansas City was a touch weaker today but up on the week which adds a supportive tilt to the cash market. Rumors that China has bought US milling wheat cargos from the US this week is seen as a positive to price direction. Concerns earlier this year that China may have been blending milling quality wheat with feed wheat could mean that "food grade" wheat supplies are in low supply which is supportive to the demand outlook long term.
March Oats closed up 4 3/4 at 336 1/2. This was 4 1/2 up from the low and 1/2 off the high.

Corn Supply Dropping Most Since 1995 Signals U.S. Rally (Bloomberg)
U.S. corn supplies, the world’s biggest, are dropping at the fastest pace in 17 years as drought damage exceeds government forecasts and five months of declining prices spurs demand from livestock producers.
Inventories on Dec. 1 were 15 percent lower than a year earlier at 8.22 billion bushels (208.8 million metric tons), the smallest post-harvest stockpile since 2003, according to the average of 26 analyst estimates compiled by Bloomberg. Goldman Sachs Group Inc., Morgan Stanley and Macquarie Group Ltd. expect prices to rebound at least 17 percent to $8.14 a bushel in 2013.
While futures surged to a record $8.49 in August as the drought spread, they then tumbled 18 percent as U.S. exports slowed and buyers sought cheaper supply from Brazil and Ukraine. Prices will rebound because the government overestimated the harvest and probably will lower the figure when it reports tomorrow, the analysts said. The U.S. Department of Agriculture already expects global stockpiles on Oct. 1 to be the smallest relative to consumption since 1974.
“Consumers have become too complacent waiting for lower prices,” said Christopher Gadd, an analyst at Macquarie in London who expects prices to reach $8.50 this year. “The story going forward will be an improvement in U.S. exports. Buyers have nowhere else to turn.”
Corn rose as much as 68 percent from June 15 to mid-August on the Chicago Board of Trade before retreating. It ended the year up 8 percent, compared with a 0.3 percent gain in the Standard & Poor’s GSCI gauge of 24 commodities. The MSCI All- Country World Index of equities jumped 13 percent. A Bank of America Corp. index shows Treasuries returned 2.2 percent.

Cooking Oil Imports by India Seen Surging After Palm Oil Plunge (Bloomberg)
Cooking oil imports by India, the world’s second-largest user, probably jumped in December after palm oil prices slumped to a three-year low and farmers curbed domestic oilseed sales.
Purchases rose 34 percent to 900,000 metric tons in December from 669,912 tons a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. Imports of crude and refined palm oils probably gained 38 percent to 750,000 tons from 543,830 tons, the survey showed. The Solvent Extractors’ Association of India will publish data next week.
Palm oil dropped 23 percent in Kuala Lumpur last year, the worst slump since the financial crisis in 2008, as slowdowns in Europe and China curbed demand, boosting stockpiles in Indonesia and Malaysia, the biggest producers. Increased imports by India, the biggest palm oil buyer, may help pare inventories and stem the slide in futures. Reserves in Malaysia were probably 2.53 million tons in December, near a record 2.56 million tons a month earlier, according a Bloomberg survey.
“Prices have been cheaper than last year and there is good demand,” said Govindlal G. Patel, managing partner at GG Patel & Nikhil Research Co. “The local soybean harvesting is going on, but the oil content in the seed is lower and availability of oil is not comfortable.”

Natural Gas Falls for Third Day as Warm Weather Cuts Use (Bloomberg)
Natural gas futures dropped to a 15- week low in New York on speculation that unusually mild weather next week will curtail demand for the heating fuel.
Gas fell 3.3 percent as forecasts from companies including MDA Weather Services in Gaithersburg, Maryland, turned warmer for the eastern and central U.S. through Jan. 18. Gas has dropped 21 percent from a one-year high on Nov. 23 as stockpiles hovered near seasonal records.
“We are going to have incredibly unseasonably warm temps here in the next week,” said Brad Florer, a trader at Kottke Associates LLC in Louisville, Kentucky. “You couple that with the fact that we have high storage to begin with, it puts gas in a very bearish place.”
Natural gas for February delivery fell 10.5 cents to $3.113 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Sept. 26. Trading volume was 329,359 contracts as of 2:41 p.m., up 12 percent from the 100-day average.
The futures climbed to $3.933 on Nov. 23 before plummeting to $3.05 on Jan. 2, the lowest intraday price since Sept. 26. The futures are up 3.4 percent from a year ago.
The low temperature in New York City on Jan. 15 may be 42 degrees Fahrenheit (6 Celsius), 15 above normal, with the high of the day reaching 50 degrees, 12 above normal, according to AccuWeather Inc. in State College, Pennsylvania. Chicago’s low on Jan. 14 will be 10 above the usual reading at 28 degrees.

Oil Trades Near Three-Day Low as U.S. Crude, Fuel Supplies Rise (Bloomberg)
Oil traded near the lowest level in three days and gasoline fell in New York after a government report showed increasing U.S. crude and fuel inventories.
West Texas Intermediate futures were little changed after slipping for a second day yesterday. Crude stockpiles rose 1.3 million barrels last week, the Energy Department said. They were projected to climb 2 million barrels, according to a Bloomberg News survey. Gasoline supplies surged by 7.4 million barrels, almost three times as much as forecast, to a 22-month high, the report showed.
Crude for February delivery was at $93.20 a barrel, up 10 cents, in electronic trading on the New York Mercantile Exchange at 10:51 a.m. Sydney time. The contract rose to $93.19 on Jan. 7, the highest settlement since Sept. 18. Prices declined 7.1 percent last year.
Brent for February settlement decreased 18 cents to $111.76 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract closed at a premium of $18.66 to WTI futures.
Gasoline for February delivery slid 0.81 cents, or 0.3 percent, to $2.7708 a gallon on the New York Mercantile Exchange. It fell 0.6 percent to settle at $2.7789 yesterday.
U.S. gasoline stockpiles increased to 233 million barrels, the highest since February 2011, the Energy Department report showed. They were projected to gain by 2.5 million barrels, according to the median estimate of 11 analysts in the Bloomberg survey. Distillate inventories increased 6.8 million barrels to 131 million, versus a forecast advance of 1.9 million.

Recap Energy Market Report (CME)
February crude oil registered an inside day trading range with a slightly lower close. Crude oil prices were higher early in the US trading session, supported by favorable US corporate earnings that pointed to improving global demand. The market erased those gains and fell into negative territory following EIA weekly inventory data that showed much larger than expected product builds. EIA data showed a build in crude stocks last week of 1.314, which was slightly lower than expected. The build came from a rather large rebound in import activity, as well as a new record high level of supply in Cushing Oklahoma. The refinery operating rate was down 1.3% to 89.1%. Weakness in the complex was led by February RBOB, which turned sharply lower after logging its seventh consecutive build last week.

Turkey Beating Norway as Biggest Regional Oil Driller: Energy (Bloomberg)
Turkey is drilling for oil and natural gas with more rigs than any European country and plans new rules in 2013 to speed exploration of energy supplies for the fastest-growing major economy after China.
The country fielded 26 rigs at Dec. 31, according to data compiled by Bloomberg, and the number has since risen to 34, Energy Ministry officials said yesterday. Turkey has leapfrogged Norway as offshore drilling increased in the Black and Mediterranean seas. Spending on exploration jumped to $610 million last year from $42 million a decade earlier.
With economic growth forecast at 3.5 percent this year and about twice the pace of the most advanced economies to 2017, Turkey is drilling for its own energy to ease reliance on imports from Iran, Iraq and Russia. State-owned Turkish Petroleum Corp. has taken Royal Dutch Shell Plc (RDSA) and Exxon Mobil Corp. (XOM) as partners, after neighboring Israel and Cyprus made some of the decade’s biggest gas finds in the past three years.
“If there’s one country that needs energy, it’s Turkey,” said Darren Engels, an analyst at FirstEnergy Capital in Calgary. “Their domestic business doesn’t scratch the surface.”
Turkish Petroleum, which is known as TPAO and has operations in Libya, Iraq, Azerbaijan and Kazakhstan, needs to boost domestic output as it pursues a target of supplying all of Turkey’s energy needs by 2023.
Turkey had proved reserves of 307 million barrels of oil and gas in 2010, 88 percent of which is oil, according to FirstEnergy’s Engels. In 2011 alone, the country consumed about 258 million barrels, according to the EIA.

Alcoa Sees Aluminum Use Climbing on China Recovery: Commodities (Bloomberg)
Alcoa Inc. (AA), the largest U.S. aluminum producer, sees global demand growth for the commodity recovering to 7 percent in 2013 as China’s economic rebound drives demand for cans, transport and office buildings.
Aerospace demand will increase by as much as 10 percent as planemakers face record backlogs, the company said yesterday in its fourth-quarter earnings presentation. It also predicted aluminum consumption may climb 19 percent in China’s heavy-truck and trailer industry, while U.S. commercial building and construction expands for the first time in four years.
“The fundamentals are pretty positive,” Chief Executive Officer Klaus Kleinfeld said on a conference call. “We will absolutely see the rebound” in aluminum prices.
Demand in China, the world’s largest aluminum user, will grow 11 percent this year to 23 million metric tons as stimulus spending announced by the country’s new leadership begins to show its effect, Kleinfeld said. He also forecast an acceleration of consumption in Brazil, India and Russia. Global demand advanced 6 percent last year, according to Alcoa.
China’s economic growth probably quickened to 7.8 percent in the fourth quarter from a year earlier, up from a three-year low in the previous period, according to a Bloomberg News survey last month. The government will release quarterly gross domestic product data as well as December industrial production, retail sales and fixed-asset investment on Jan. 18.

Iron Ore Seen Set for Bear Market as Restocking Rally Fades (Bloomberg)
Iron ore, which posted the biggest quarterly climb on record in the final three months of 2012, may extend gains from a 14-month high as Chinese mills restock, then tumble into a bear market, according to Deutsche Bank AG.
Prices may rise to $170 a ton in the first half on demand in the biggest buyer, before falling to less than $120 as supply expands, Deutsche Bank said in a report. Ore with 62 percent content delivered to Tianjin rose to $158.50 a dry ton yesterday, the highest since October 2011, according to data from the Steel Index Ltd. A drop from $170 to $120 implies a 29 percent fall, more than the 20 percent that typically defines a bear market.
The steelmaking raw material rallied 39 percent in the three months through December, the biggest gain since at least 2009, as demand in China rebounded on optimism the world’s second-largest economy is recovering. Gross domestic product is poised to expand 8.1 percent this year, from 7.7 percent in 2012, according to the median estimate of economists surveyed last month by Bloomberg. Baoshan Iron & Steel Co. (600019), China’s largest steelmaker, said on Jan. 7 that it will raise product prices.
“We could see a minor pullback if steel mills aren’t able to pass on the full extent of these rising input costs to end users and if demand doesn’t adequately match the recent build in supplies,” Natalie Rampono, an analyst at Australia & New Zealand Banking Group Ltd., said in an interview today, without providing a specific forecast. “There could be some risk to the downside from higher input costs.”

Indian Steel Revival as Tata Said to Seek Cheapest Coking Coal (Bloomberg)
India’s biggest steel producers, from Tata Steel Ltd. (TATA) and Steel Authority of India Ltd. to JSW Steel Ltd. (JSTL), are in talks to buy coking coal at the lowest price since 2010, according to three people familiar with the matter.
They expect to contract the steelmaking ingredient at as low as $160 a metric ton for the first quarter, 32 percent below year-ago prices, the people said, asking not to be identified as talks continue. Steelmakers in Korea and Japan that set a benchmark for India have negotiated similar cuts, they said.
Swelling global supply and Europe’s slumping demand have undercut prices, adding to the improving outlook for steelmakers, which jumped an average 11 percent in December. Prime Minister Manmohan Singh last month unveiled plans to accelerate infrastructure approvals and to make buying land easier, all to garner $1 trillion of investments by 2017 in roads, ports and power plants that will use the metal.
“This quarter will probably be the best in the fiscal year for all major Indian steel producers in terms of earnings,” Abhisar Jain, a Mumbai-based analyst at Centrum Broking Ltd., said in a phone interview. “Lower coking coal costs coupled with higher steel prices and an expected surge in demand after a probable interest rate cut are all good news.”
A predicted cut in benchmark interest rates this month may fuel car and home sales.
Charudatta Deshpande, a spokesman at Tata Steel, and R. Jayaraman, spokesman at JSW Steel, didn’t respond to e-mails seeking comment. Arti Luniya, a spokeswoman at Steel Authority, declined to comment before the contract prices are finalized.

China Shipyards Set to Spark Price War Among Rigmakers (Bloomberg)
China’s shipbuilders are set to spark a price war in the oil-rig market.
With orders for new ships plunging to an eight-year low in 2012, China Rongsheng Heavy Industries Group Holdings Ltd. (1101) and its local rivals are foraying into the offshore business, lured by a market that will reach about $328 billion in 2017. The new entrants are lowering prices to grab contracts, hurting margins at Singapore-based Keppel Corp. (KEP) and Sembcorp Marine Ltd. (SMM), the world’s two-biggest rig makers.
“It’s like moving from one bottomless pit to another,” said Park Moo Hyun, an analyst at E*Trade Securities Co. in Seoul. “Chinese shipyards are competitively trying to get into what they see as a lucrative business. But the consequence of that is they could end up distorting the whole market.”
China Rongsheng, the nation’s biggest yard outside state control, announced in October its first order to make a tender barge and rival Yangzijiang Shipbuilding Holdings Ltd. (YZJ) got its first rig contract last month. Shanghai-based China Rongsheng warned in December of posting a loss in 2012 after three straight years of profits.
Jinhai Heavy Industry Co., based in Zhejiang province, China, also secured its first offshore equipment contract last month.
“Whether or not the Chinese yards can earn money from the current orders is pretty much in the air,” said Vincent Fernando, an analyst at Religare Capital Markets in Singapore. “There’s a steep learning curve.”

Silver Market Recap Report (CME)
The silver market temporarily carved out an upside breakout on the charts, but surrendered that upward bias well ahead of mid session. Weakness in the Euro and gold prices might have undermined silver today but March silver did make some noted afternoon attempts to recover, with the early afternoon highs sitting as much as 23 cents an ounce above the morning lows. As in the gold market, the silver market just didn't seem to be overly interested in classical physical market fundamentals today.

Gold Market Recap Report (CME)
The gold market started out on a positive track but the trade wasn't able to hold those gains for long. While some players blame renewed Dollar strength for the slide in gold prices today, gold hasn't seemed to be tightly tied to the currency markets recently. In fact, gold prices sagged in the mid morning trade right in the face of a noted rally in US equities and that in turn seems to suggest that macro economic expectations aren't even providing support to gold prices. As suggested in the morning and mid day coverage, gold approached a critical longer term moving average and failed somewhat definitively and that could have emboldened the bear camp from a technical perspective.

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