Corn (Source: CME)
CBOT corn ends sharply lower on good US planting weather and outside market pressure. Combination of rapid planting progress, particularly in Iowa, and pressure from a broad-based recent plunge in commodities, "is a death trap for corn," Prime Ag Consultants analyst Chad Henderson says. Market tumbled 9.3% on the week as crude oil plunged to an eight-week low. While corn supplies remain very tight, improved weather eases worries that the soggy weather would lead to fewer corn acres and lower yield. CBOT July corn ends down 22 1/2c, or 3.2%, to $6.86 1/4.
Wheat (Source: CME)
US wheat futures end higher, managing to recover from midday slide as fears of lost production and planting troubles underpinned the market, analysts said. Short-covering buoyed prices as well, allowing futures to recover after renewed global economic concerns pressured commodities at mid session, analysts said. The threat of smaller production prospects amid declining winter-wheat crop conditions and wet weather idling spring-wheat seedings in the northern Plains provided strength to prices. Signs of stability in outside markets later in the day opened the door for prices to rebound as well. CBOT July wheat up 5 1/2c or 0.7% at $7.59 1/2 a bushel.
Rice (Source: CME)
US rice futures rebound amid short-covering as pressure from outside markets eases. Despite today's gains, rice fell 3.9% this week, due largely to broad-based commodity selling. The US crop is threatened by soggy conditions and flooding in southern growing areas. July CBOT rice ends up 1.5% at $14.35/hundredweight.
Wheat Futures Climb 2% as Corn, Soybeans Advance Up to 0.7% in Chicago (Source: Bloomberg)
Wheat for July delivery advanced as much as 2.4 percent to $7.78 a bushel and traded at $7.7625 a bushel at 8:16 a.m. in Singapore. Corn increased 0.7 percent to $6.9125 a bushel and soybeans gained 0.3 percent to $13.305 a bushel.
Goldman Sees Commodities Recovery as Week-Long Rout Wipes Out $99 Billion (Source: Bloomberg)
The commodities rout that knocked off $99 billion of market value last week is driving out speculators and leading Goldman Sachs Group Inc., which forecast the plunge, to predict a possible recovery. The combination of slower growth in U.S. service industries and fewer German manufacturing orders helped drive the Standard & Poor’s GSCI Index of 24 commodities down 11 percent in five days, the most since December 2008, and erased all the gains since mid-March. Wheat, zinc and gold rebounded at the end of the week as U.S. payrolls exceeded economists’ forecasts, reducing concern that demand will weaken. “Given the magnitude of the pullback, it does create an opportunity for more upside potential, particularly in the second half of this year, when fundamentals are expected to tighten,” Jeffrey Currie, the London-based head of commodity research at Goldman, said in a May 6 interview. A month ago, Currie told investors they should be “underweight” in commodities.
“In the very near-term, we’d be a little cautious,” he says now.
Roubini directs clients to cut commodities exposure
NEW YORK, May 5 (Reuters) - Roubini Global Economics, a major investment advisory firm, told clients on Thursday they should take profits from commodities markets, cutting exposure to raw goods to neutral from overweight, the firm's head commodities strategist told Reuters.
In a note to clients, the New York-based consultant to hedge funds, private equity houses, sovereign wealth funds and other investors advised paring broad commodities exposure for the first time since at least mid-2010.
Food Prices Remain High, Weather Threatens Grains Crop (Source: Bloomberg)
Global food prices hovered near record highs in April, and the United Nations' food body warned weather problems in the world's top grain exporters could keep prices high next year as well. The Food and Agriculture Organization's food-price index, which tracks a basket of commodity prices, averaged 232 points last month, little changed from March but still 36% higher than the same time the year before. The index hit 236 points in February, the record high in real and nominal terms since the FAO started monitoring prices in 1990. Grain prices climbed sharply in April, with the FAO's cereal-price index rising 5.5%, led by an 11% gain in the price of corn and a 4% increase in wheat. Prices are now 71% higher than the same time last year after a series of weather problems cut global output and sent markets soaring. However, while grain prices remain at historically high levels, a 7% decline in the FAO's sugar index and a 2.4% fall in the price of dairy helped to keep the overall index stable at its high level.
Large exports of rice also helped to keep prices for the world's most widely consumed grain subdued, the FAO said. Secretary of the FAO's Intergovernmental Group on Grains, Abdolreza Abbassian, said dryness and delays to plantings in Europe and the U.S. could cause more production problems in the 2011-12 crop year. And with world cereals stocks forecast to fall to their lowest level since the food crisis of 2008 this year, markets will be vulnerable to any supply shocks. "Early indications are again good for cereals but with a big qualifier that our inventories are run down so our total supply situation is very exposed to what the weather will bring," he said. "The food index shows the uncertainty of what's ahead." While forecasters expect an expansion in world production of many crops next season as farmers seek to cash in on high prices, especially in cereals, ongoing weather problems in the U.S. and Europe now threaten to cut production in the world's two biggest grain exporters next season.
"As we go into May with the weather situation as it is, the longer is takes to make up for the delay [in plantings] the less of the expectation we will get the crop that we need," Mr. Abbassian said. Adding to potential supply problems are pressures from a weak dollar and high crude-oil prices.
April food price up slightly, new crops key-FAO
MILAN, May 5 (Reuters) - World food prices rose slightly in April, the UN's food agency said on Thursday, adding that worries about this U.S. grains crop were balanced by hopes for better yields in Russia and Ukraine after the 2010 drought.
Rising food prices have become hugely sensitive around the world after fuelling protests that toppled the rulers of Tunisia and Egypt earlier this year, with unrest spreading across North Africa and the Middle East.
Commodities Gain, Snapping Five-Day Slump; Stocks, Euro Advance (Source: Bloomberg)
Commodities rallied, rebounding from the biggest weekly slump since 2008, and Asian stocks gained as concerns over the strength of the global recovery eased. The euro rose on prospects the region’s debt crisis won’t keep the European Central Bank from increasing interest rates further. The Standard & Poor’s GSCI Index of 24 raw materials jumped 1.3 percent as of 12:40 p.m. in Tokyo after an 11 percent slump last week. Oil and silver futures rose for the first time in five days, and lead rallied 2 percent. The euro appreciated 0.6 percent to $1.4402, and Australia’s dollar and the won also gained. Treasuries fell, snapping a seven-day winning streak. The MSCI Asia Pacific Index advanced 0.4 percent and futures on the S&P 500 Index increased 0.5 percent.
Long-term commodity volatility seen like equities'
FRANKFURT, May 5 (Reuters) - Investors should buy directly into commodities that offer attractive returns and exposure to growth markets, do not correlate to risky equities and act as an inflation hedge, a Highbridge asset manager said on Thursday.
"As we're seeing in the markets today, commodity prices can react very quickly and dramatically. However over the long-term, their volatility is very similar to the long-term volatility of equities," Catherine Vaughn, Highbridge Capital Management's global head of asset management, told Reuters.
China Spring Sowing Head Of Last Year (Source: CME)
China's spring sowing is proceeding well, with progress so far considerably faster than last year thanks to ample soil moisture and sufficient availability of inputs such as diesel and fertilizer, the Ministry of Agriculture said. Farmers had sown 35.5 million hectares of grain as of Friday, or 58% of the total area planned for this season, a rise of 8 percentage points from a year earlier, it said on its website. The country has sown 76% of the area it plans for spring corn, up from 62% at this time last year and 82% of its spring wheat area, up from 72%, it said. It has sown 91% of the planned cotton area, up 0.7 percentage point, and has almost completed the planting of sugar crops. Oilseed sowing is 48% completed, down from 55% at this time last year, it said, without elaborating.
The ministry previously forecast soybean area will fall 11% this year. China's soybean output this year may fall sharply to 13.5 million metric tons from last year's 15 million tons due to the reduced acreage, the Chinese Grain Network, which is owned by China National Grain Reserves Corp., said in a report Friday. Corn output this year may increase slightly, to 170 million tons, from last year's 167 million tons thanks to increased acreage, it said.
Asian Nations Plans Emergency Rice Pool (Source: CME)
The 10 members of the Association of South East Asian Nations along with China, Japan and South Korea will officially launch the formation of an emergency rice reserves system in October, an Indonesian official said Friday. Deputy Trade Minister Mahendra Siregar said that 720,000 metric tons in rice stocks will be put aside so that any of the 13 countries can tap them when necessary. "We are also proposing to step up the (size), so we can also tap the rice pool not only in emergency situations like adverse weather, but also when global prices soar, which make it difficult for some countries to secure their food supply," Siregar said. The proposed expansion will be discussed in the future, he said, but he didn't provide a timetable. The emergency rice reserves system was envisioned to cope with recent unusual price fluctuations as a result of natural disasters such as flood and drought.
US corn at 1-month low, wheat slips on economic concerns
SYDNEY, May 6 (Reuters) - U.S. corn futures fell more than 2 percent, sliding to their lowest in over a month, while wheat and soybean lost more ground as the agricultural markets remained under pressure amid a recent sell-off in commodities on mounting economic concerns. "The fundamentals around grains and oilseeds complex haven't changed, it's very bullish for corn in the near term," said Adam Davis, senior grains trader at Merrick Capital in Melbourne which invests in agricultural commodities.
AGROKHLEB-Russian 2011 wheat area seen down, output up
MOSCOW, May 6 (Reuters) - SovEcon sees the area to be sown with wheat for the 2011 harvest at 25.9-26.4 million hectares, down from 26.6 million in 2010, which may raise the crop to 48.5-50.8 million tonnes from 41.5 million if there is no drought.
The decline in the acreage is a consequence of last year's severe drought, which cut the winter wheat area to 11.5-11.8 million hectares from 12.7 million hectares in 2010, mainly in the Volga district.
Chile grain output, imports seen up - attache
WASHINGTON, May 5 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Chile: "Higher quantity and quality wheat and corn production is expected this year. Imports are also expected to increase as the industry intends to restore stocks...
For the coming 2012 marketing year, the total planted area and production can be expected to increase as prices of both commodities are rising."
Drought worsens in US Southwest as floods hit Midwest
KANSAS CITY, May 5 (Reuters) - The severe drought ravaging Texas and other parts of the U.S. Southwest was getting worse, weather experts said Thursday, with little respite seen for farmers, ranchers and others whose livelihoods and properties are suffering.
The latest report from a consortium of national climate experts dubbed the Drought Monitor said while Texas remained the epicenter for devastation, "exceptional drought," which is the worst category, expanded not only there but through parts of Oklahoma, Kansas, New Mexico and Louisiana.
Kansas wheat crop smallest since 1996
KANSAS CITY, Mo., May 5 (Reuters) - The Kansas wheat crop is smaller than expected, field scouts determined this week, raising the risk of a shortfall from the top winter wheat producing state that could drive prices higher.
A drought across the southern states has eroded the hard red winter wheat crop, which accounts for about half of wheat exports from the United States, the top supplier to the world.
Kansas Wheat Yield Seen At 37.4 Bushels/Acre (Source: CME)
The 2011 Kansas wheat crop is expected to have an average yield of 37.4 bushels per acre, according to figures released by the Wheat Quality Council. The yield estimate was issued at the conclusion of a three-day crop tour sponsored by the council. The annual tour assesses wheat across Kansas, which is the country's top producer of hard red winter wheat, the variety that is milled into flour used to make bread. The average of participants' crop estimates puts Kansas wheat production at 256.7 million bushels. The tour's estimate is lower than last year, when the state produced 360 million bushels, with an average yield of 45 bushels an acre, according to the U.S. Department of Agriculture. In 2010, the tour estimated the Kansas wheat crop at 333.5 million bushels, with an average yield of 40.7 bushels an acre.
The tour's estimates are meant to represent a snapshot of the crop in early May and are not intended to predict the government's final crop estimates. The annual wheat tour kicked off Tuesday morning in Manhattan, Kan., and ended Thursday with a meeting at the Kansas City Board of Trade. Tour participants, including representatives from food companies, the government, universities and the media, fanned out to survey the state's crop, which has struggled with dryness since it was sown last fall.
Sugar at 8-month low, coffee slips
LONDON, May 6 (Reuters) - ICE sugar hit a fresh eight-month low as commodity markets remained weak following the previous session's sharp sell-off, while ICE arabica coffee prices fell further from the 34-year high hit earlier in the week. Sugar futures hit eight-month lows in early trading, breaking below the key 20.50 cents a lb level, as commodity markets extended losses after tumbling on Thursday.
Ivory Coast due to resume cocoa exports Saturday
ABIJDAN, May 6 (Reuters) - Ivory Coast will resume cocoa beans exports on Saturday, more than three months after they were halted for by the West African country's post-election political crisis, industry officials said on Friday.
Last week exporters resolved a row with the new government of Alassane Ouattara over how to make customs payments, paving the way for exports to resume.
Torrential rains threaten Colombia's coffee crop
TENA, Colombia, May 5 (Reuters) - Colombia's rainiest April on record drenched Ismael Garcia's hillside coffee farm, causing a landslide that wiped out thousands of his trees in one swoop.
The loss would sting any year but hurts more now that coffee prices hit their highest levels in more than three decades this week.
Coffee supply up from Vietnam, Indonesia; but prices resilient
HANOI/BANDAR LAMPUNG, May 5 (Reuters) - Vietnam raised coffee export forecasts for 2011 by 4 percent and exports from Indonesia nearly doubled last month, but the increase may have little impact on global prices that are underpinned by concerns about scarce good-quality beans.
A rally in New York arabica futures to 34-year peaks pushed up London robustas to a new contract high at $2,624 a tonne this week, and high coffee prices have also forced retailers to pass on the cost to consumers.
Mexico sugar output at 4.86 mln tonnes to April 30
MEXICO CITY, May 5 (Reuters) - Mexico has so far produced 4.86 million tonnes of sugar in the 2010/11 harvest, 13 percent more than in the same period last year, the national sugar industry chamber said on Thursday.
Mexico's sugar harvest is expected to recover to 5.3 million tonnes, according to official estimates, after two cycles of lower production due to bad weather.
Oil Gains in New York as U.S. Economic Data Signals Slump Was Exaggerated (Source: Bloomberg)
Oil rose in New York, rebounding from the biggest weekly decline since 2008 as signs of an improving economy in the U.S., the world’s largest crude consumer, stoked speculation last week’s slump was exaggerated. Futures climbed as much as 1.9 percent today, snapping a five-day losing streak, after Labor Department data on May 6 showed payrolls expanded more than forecast. The global economy isn’t weak enough to justify a freefall in prices, Qatar Oil Minister Mohammed bin Saleh al-Sada said yesterday. Oil’s 14-day relative strength index, a measure of how rapidly prices are rising or falling, dropped to 29.2 on May 6. A reading below 30 typically indicates prices may rebound.
Czarnikow: Brazil Could Run Out Of Bio-Ethanol (Source: CME)
Brazil could potentially run out of ethanol supplies, needing a further 100 million tons of cane to meet peak demand in 2011, one of the U.K.'s oldest sugar trade houses said.
"As a result of ethanol output disappointing for the second season in succession, supply has been unable to match the rise in demand resulting in a chronic shortfall in availability," Czarnikow said. In Brazil, a lack of new investment in cane production, rising sugar prices and production, and underlying weaknesses in the earnings structure resulted in ethanol production falling short of 2010/11 forecasts, reaching only 25.3 billion litres, only 3% higher than 2009/10. In Europe, member states face supply issues given the implementation of higher blend rates as the European Union targets to source 20% of energy from renewable sources by 2020, Czarnikow said. But Czarnikow analyst Henry Toller said despite the bio-ethanol market facing challenges to expand, the history of the market since 2003 shows growth is always achievable. The U.S. meanwhile has swung from a net-importer to exporter over the last 18 months, to become the most reliable hub of ethanol supply for other nations.
Czarnikow estimates that U.S. exports will continue in 2011 as U.S. production now exceeds gasohol demand by 5%. "Even Brazil has had to turn to the U.S. to supply ethanol due to the temporary shortage being faced in its domestic market today."
Commodity rout no threat to Australia mine projects -- yet
SYDNEY, May 6 (Reuters) - Billions of dollars in investments in Australian mining may need a rethink if the sudden collapse in world commodities markets signals an end to the post-global financial crisis boom in the asset class.
Australia is the world's biggest exporter of iron ore and coking coal, ranks second in uranium, third in nickel and fourth in copper. Its biggest miners have placed big bets on the commodities boom - they have committed over $30 billion so far this year to expand to meet rising demand in Asia led by China.
China base metal users avoid spot buys, expect more price falls-trade
HONG KONG, May 6 (Reuters) - End users for base metals in China are staying out of the spot market for now, expecting prices to fall further after sharp declines this week, industry players said on Friday.
Benchmark three-month London Metal Exchange copper fell more than 3 percent on Thursday, and five percent this week, to its lowest level since December at $8,819 a tonne, but failed to spark buying interest, traders said.
PIMCO maintains outlook for higher commodity prices
CHICAGO, May 5 (Reuters) - PIMCO, the manager of the world's largest commodity mutual fund, said on Thursday it still expects commodity prices to rise despite the markets' sharpest sell-off since 2008.
Mihir Worah, manager of PIMCO's largest commodity fund, restated the company's outlook on the day commodity markets -- from oil to gold to grains -- took their worst pounding in nearly three years as many financial investors bailed out.
Polish miners attack KGHM guards in pay dispute
WARSAW, May 5 (Reuters) - Several hundred miners attacked company security guards with wooden clubs and threw eggs outside the headquarters of mining group KGHM where CEO Herbert Wirth was meeting union leaders over a pay dispute.
Unions want more than the 4.6 percent rise offered by Europe's No. 2 copper miner, which sees its profit doubling this year to a record 8.4 billion zlotys ($3.16 billion).
Turkey steel consumption seen up 15 pct in 2011
ISTANBUL, May 5 (Reuters) - Steel consumption in Turkey is seen rising 15 percent this year to 27 million tonnes, on higher demand from the construction, automobile and white goods industry, the Turkish iron and steel producers association said.
The group's general secretary Veysel Yayan told Reuters long steel consumption would rise 10 percent and flat steel use would gain 15 percent.
Profit down 29 pct at Brazil's Gerdau; costs jump
SAO PAULO, May 5 (Reuters) - Brazilian steelmaker Gerdau posted a 29 percent drop in net profit in the first quarter as a large spike in costs outstripped double-digit revenue growth.
Gerdau, Brazil's largest producer of steel for the construction industry, on Thursday reported net income of 409 million reais ($255 million), down from 573 million reais in the year-earlier period and 420 million reais in the last quarter of 2010.
METALS-London copper extends losses, U.S. jobs eyed
LONDON, May 6 (Reuters) - Copper extended losses to reach a five-month low as worries about economic growth led to another day of a broad commodities sell-off ahead of the release of U.S. jobs data due later on Friday.
Copper for three-month delivery on the London Metal Exchange fell to $8,657 a tonne, its lowest since December.
PRECIOUS-Silver slides more, bargain hunters help gold
LONDON, May 6 (Reuters) - Gold bounced on Friday as bargain hunters entered the fray, but silver slid to a two-month low on selling sparked by higher margin requirements and expectations of a stronger dollar.
Spot gold was bid at $1,481.39 a troy ounce at 1136 GMT from $1,471.70 late in New York on Thursday when it saw $1,462.40 an ounce, its lowest since April 14. It is down about $100 since a record high of $1,575.79 hit on May 2.
Silver Futures Rally From Worst Weekly Loss Since 1975 as Investors Return (Source: Bloomberg)
Silver futures rebounded from the worst weekly slump since at least 1975 on speculation investors will return to commodity markets as concerns over the global recovery eased and the dollar weakened. Gold also gained. Silver for July delivery jumped as much as 2.9 percent to $36.31 an ounce after plunging 27 percent last week, while cash silver added 1.4 percent to $36.12. Immediate-delivery gold rose as much as 0.6 percent to $1,504.80 an ounce before trading at $1,503.75 an ounce at 12:50 p.m. in Singapore. The metal rallied 1.4 percent on May 6, paring last week’s loss to 4.4 percent.
Copper Futures in London Advance by as Much as 0.3% to $8,860 a Metric Ton (Source: Bloomberg)
Copper in London gained as much as 0.3 percent today to $8,860 a metric ton. It traded at $8,855 a ton by 8:13 a.m. in Shanghai.
Zambia to start building 120 MW power plant in 2011
LUSAKA, May 5 (Reuters) - Zambia will this year start building a new 120 megawatt (MW) power plant, which is expected to mitigate a power deficit that has hit the country, the energy minister said on Thursday.
The Itezhi-tezhi hydroelectric project, about 260 km south of Lusaka, is being developed by the Itezhi-tezhi Power Corporation (ITPC), a company jointly owned by Zambian state power company, Zesco and TATA Africa of South Africa.
