Corn (Source: CME)
US corn futures finish mixed, with nearby contracts rising on improved demand. Grain users increased purchases following a recent selloff, with South Korean buyers making their first major purchases in nearly two months. Traders worry the demand will drain already-tight inventories. The USDA announced exporters sold 271,200 metric tons of corn to "unknown destinations" for delivery during the next marketing year, though deferred contracts slipped. CBOT July corn ends up 1 1/2c at $6.82 a bushel; December corn loses 3 1/2c to $6.27.
Wheat (Source: CME)
US wheat futures finish lower as US dollar strength pressures commodities. Rising greenback fuels concerns about reduced demand, as it makes dollar-denominated commodities less attractive to foreign buyers. "The dollar was higher and that sent wheat down," says Larry Glenn, broker and analyst at Frontier Ag. Talk of beneficial rains in dry areas of southern US Plains and Europe apply further pressure. CBOT July wheat falls 7 3/4c to $7.27 3/4 a bushel; KCBT July loses 6 3/4c to $8.69 1/2; MGE July slides 4 1/2c to $9.00 1/4.
Rice (Source: CME)
Nearby US rice futures close unchanged as the market felt some pressure from the rising dollar and falling wheat prices, as both grains are global food staples. Yet, grain users remain concerned about the US crop since planting has been delayed due to rains in the South. The USDA will issue an update on planting progress Monday. CBOT July rice finishes at $13.98 1/2 per hundredweight.
US Corn Planting Delays Could Cut Yields By 5% - Cropcast Exec (Source: CME)
Delays to plantings of the U.S. corn crop this year may cut yields by up to 5%, Cropcast senior agricultural meteorologist Donald Keeney said, citing historical data since 1980. "Since planting has made some rapid advances in recent days, we can assume that the overall 50% planted date will be about a week late," he said. "This would give an expected yield of about 5% below trend." July corn on the Chicago Board of Trade ended up 3 1/4c to $6.80 1/2 a bushel Thursday, bucking a slump in commodity prices, as ongoing concern over delays to plantings may cut U.S. output this year. Corn stocks are abysmally low and demand for the grain as both feed and fuel has continued to rise, prompting fears that even a slight dent to a forecasted bumper crop could leave the U.S. undersupplied next year. Keeney noted that forecast good conditions for the rest of the summer, with near-normal temperatures and a good outlook for precipitation in the Midwest could help improve the state of the harvest.
The bulk of the corn belt is predicted to remain in "good shape through July" although some developing dryness in the southern region of the Midweast could make for a "slightly less than stellar year," he said. "We do expect the combination of planting delays and some late season dryness in southeastern areas, to bring final yields in at about 1-2% below trend," he said.
Grain Prices May Rally Again In 3Q On Weather, Chinese Demand (Source: CME)
The recent decline in agricultural commodity prices is a temporary setback and prices may rally again later this year on adverse weather, tight supply and strong Chinese demand, Barclays Capital Vice President, Sudakshina Unnikrishnan said. Prices of agricultural commodities have fallen to their lowest levels in more than a month with the July corn futures contract on the Chicago Board of Trade hitting an eight-week low of around $6.65/bushel Thursday. But this is only a short-term correction, said Unnikrishnan. Spot-month corn futures on the Chicago Board of Trade may rise above $7/bushel again and are likely to average $7.30/bushel in the third quarter, she said. Fundamentals are still strong, particularly in corn, due to abysmally low inventories, delayed plantings in the United States and strong demand from China, she said in an interview. China is on its way to becoming a regular corn importer and is likely to import around 2.0 million metric tons this year to shore up domestic stockpile, she said.
According to trading executives, Asian importers have been snapping up corn cargoes to take advantage of the recent fall in prices and South Korea, the world's third largest importer, has locked in close to half a million tons of purchases this week alone, for delivery in August and September. "If physical buyers make purchases (during) dips, it is a strong sign that prices may rise again," Unnikrishnan said. She said the recent decline in prices is partly due to the U.S. Department of Agriculture's preliminary forecast showing higher global production of wheat, corn and soybeans in 2011-12. However, due to adverse weather - too dry in some cases and too wet in others - in several major grain producing countries such as the U.S. and the European Union, the key bullish factors are still intact, she said.
In the case of wheat, production in France and Germany is looking increasingly problematic due to prolonged dry weather ahead of the harvest while U.S winter wheat plantings have been hit by a severe drought in Kansas and Oklahoma, Unnikrishnan said. She said CBOT near-month wheat futures may average around $7.70/bushel in the third quarter. CBOT's most active July wheat futures contract is currently trading around $7.35/bushel. Unnikrishnan said corn has greater upside price potential than wheat right now because of tighter supplies and the strong global dependence on just one supplier. The United States accounts for more than 50% of the global export of corn. Corn plantings in the U.S. have been delayed because of unusually wet weather in major growing areas, fueling fears that this could have an impact on overall yields. This led to a situation where corn briefly traded at a premium to wheat on CBOT, the first time in 15 years.
Unnikrishnan said this could repeat although wheat can't trade for long at a discount to corn as that would lead to a large-scale shift in physical demand towards wheat for use as animal feed. Soybean prices are currently subdued because of weak demand and a bumper crop in South America, but prices could move up later this year as high corn prices and the switch to corn leads to a fall in soybean acreage in China and the U.S, she said. China, for example, is expected to see an 11% shift in acreage to corn which could boost soybean imports to 58 million-60 million tons in 2011-12, she noted. China's soybean imports in the current marketing year to September are likely to be around 52 million tons, according to market estimates. Amid expectations of rising Chinese demand, CBOT near-month soybean futures are likely to average $14.30/bushel in the third quarter, Unnikrishnan said. The most active July soybean contract is currently trading around $13.50/bushel.
Farmland Values Up 20% In 1Q - Kansas City Fed Bank (Source: CME)
Farmland values in much of the U.S. Midwest rose 20% in the first quarter of the year, though prices are seen stabilizing in a move that could ease concerns over an asset bubble, according to a regional Federal Reserve report. A surge in grain prices has fueled a sharp rise in farmland prices, which are approaching record levels seen in 2008. The majority of farmland deals have been between farmers, yet interest from institutional investors is increasing, since the sector is seen as one of the few asset classes with a strong outlook. During the first three months of the year, Nebraska and Kansas saw the largest jump in values, with nonirrigated land values up 24% from a year ago, according to the quarterly report from the Kansas City Federal Reserve Bank. All other areas covered in the report including Oklahoma, Colorado, Wyoming and parts of New Mexico and Missouri saw increases in the quarter. Values also have been rising further east in the heart of the U.S. corn belt.
The Chicago Federal Reserve Bank in February reported farmland values were up 6% in the fourth quarter of last year and 12% for the full year, the second-biggest jump in the past 30 years. The bank is expected to release first quarter data later this month. The Kansas City report said bankers see prices stabilizing over the next three months. Yet others, including Kansas City Fed President Thomas Hoenig, have warned farmland values could fall by a third when the Fed tightens monetary policy and ends near-zero interest rates. The timing of this is much debated, but many expect a change in policy in the first half of next year. Farm lenders in interviews ahead of Friday's report said they are preparing for likely fallout from tightening monetary policy.
Lenders, for example, have typically loaned up to 65% of the appraised value of farmland, but some are now reducing that to 60% or even 50%, said Ross Anderson, senior vice president and chief credit officer for AgriBank, a St. Paul, Minn.-based wholesale lender to rural lending associations from Wyoming to Ohio. In a recent interview, he said banks also are reducing loan repayment periods or no longer lending to riskier applicants. Farm Credit Services of Mid-America, a Louisville, Ky.-based lending cooperative that serves the eastern corn belt, recently decided to increase collateral requirements as a precaution. Senior Vice President Philip Kimmel said he doesn't think there is a bubble, which would indicate a decline of more than 20%, but said farmland values could drop 10% to 15%. "We don't make loans based on what we think is going to happen, we make loans based on what may happen," he said in a recent interview. Anderson doesn't expect land values to decline in the short term.
"There's a potential for them to remain strong, and maybe even strengthen further," he said. The Kansas City Fed said most bankers in its quarterly survey expect farmland values to stabilize during the next three months. Overall, farm credit conditions in the district were stable, with strong loan repayment rates and few loan renewals or extensions, the Fed said. Most bankers in the survey expect farm incomes to remain "at elevated levels" and added that demand for loans has been low as farmers pay for fertilizer, fuel and land with cash. Ranch land values in the Kansas City district were up 11% from the prior year, driven by strong profits for livestock operators as well as a boom in energy exploration, which lifted land values in Oklahoma and the mountain states. The biggest concern among bankers surveyed was in Oklahoma, where a drought is hurting the wheat crop. That could hurt farm revenues and loan repayments rates, the Fed said.
Corn extends gains on U.S. planting delays
SYDNEY, May 13 (Reuters) - Chicago corn futures continued to trend up as concerns mount over delays in planting "Everyone is skeptical about the USDA numbers
-- there are likely to be further delays in planting the U.S. crop," said Brett Cooper, senior manager, markets at FCStone Australia.
Rain delays may cut US corn crop by 6-12 pct-firm
CHICAGO, May 12 (Reuters) - WeatherBill, a weather insurance firm, has estimated that 834 million to 1.6 billion bushels of corn may be lost due to heavy rains and planting delays so far in the eastern U.S. Corn Belt.
The figures are equal to 6 to 12 percent of the U.S. corn crop, using the U.S. Department of Agriculture's initial 2011 production forecast of 13.5 billion bushels.
Argentina wheat area to grow in 2011/12-exchange
BUENOS AIRES, May 12 (Reuters) - Argentina's 2011/12 wheat area is seen expanding to 4.95 million hectares from 4.7 million hectares the previous season, thanks to good weather, the Buenos Aires Grains Exchange said on Thursday.
The report left 2010/11 soy and corn harvest estimates unchanged. Wheat crops have received more rainfall than last month when there was a lack of rain in the country's western farming region and most of the wheat belt, the exchange said.
EU cleared 264,000 tonnes wheat exports this week
PARIS, May 12 (Reuters) - The European Union this week granted export licences for 264,000 tonnes of soft wheat, taking the total since the beginning of the 2010/11 (July-June) season to 17.0 million tonnes, official data showed on Thursday. The total so far this season compared with 15.4 million tonnes of export licences cleared by the same stage in 2009/10.
The EU also granted this week licences to export 126,000 tonnes of durum, bringing the total so far this season to 1.7 million tonnes, compared with 709,000 tonnes a year earlier.
Floods to delay start of U.S. grain export season
CHICAGO, May 12 (Reuters) - The grain harvest in the U.S. South typically kicks off in August, and supplies are quickly grabbed by exporters to be shipped across the globe.
But not this year. Massive flooding that has submerged about 3 million acres (1.2 million hectares) of crop land will delay the start of the export season in the world's top grain supplier.
US ethanol exports helped by cheap corn vs sugar
SEVILLE, Spain, May 12 (Reuters) - U.S. ethanol producers expect to dominate the world market in coming years due to high prices for sugar, the feedstock in major producer Brazil, an industry spokesman said on Thursday. Bon Dinneen, president of the Renewable Fuels Association, said U.S. ethanol was competitive because it was made from maize rather than sugar.
"Having seen some of the issues with cane production in Brazil, weather-related, and their own demand issues for sugar and fuel in their own country, I just don't anticipate a recovery in that market in the next four to five years," he said.
Thailand extends sugar crushing due to record output
BANGKOK, May 12 (Reuters) - Thailand's cane production was higher than expected at a record of 93 million tonnes, prompting the extension of its current 2010/11 sugar crushing season by a month to the end of May, a senior official said on Thursday. That could result in record sugar exports this year but traders were not too concerned about the impact on prices, expecting the surplus to be absorbed by demand, especially from new client Russia.
Prasert Tapaneeyangkul, secretary-general of the Office of Cane and Sugar Board (OCSB), told Reuters the cane output should give record sugar production of around 9.45 million tonnes, 38 percent above the previous forecast of 6.8 million tonnes made at the start of the crushing season last November.
Sugar, coffee, cocoa rise as dollar falls
LONDON, May 13 (Reuters) - ICE raw sugar, arabica coffee and cocoa futures rose on a weaker dollar in early trading, with benchmark second-month arabicas well below a 34-year high of $3.0890 per lb touched on May 3. Sugar futures edged higher in early trading, underpinned by tight new-crop sugar supplies from Brazil, with an improving supply outlook limiting gains. Producers including Thailand, Pakistan and Brazil are expected to see increased output on the previous year.
El Salvador coffee output seen rebounding-attache
WASHINGTON, May 12 (Reuters) - Following are selected highlights from a report issued by a U.S. Department of Agriculture attache in El Salvador: "After a historically low production cycle, El Salvador's coffee production is expected to rebound in 2010/11 and reach 1.7 million 60 Kg. bags. Favorable international coffee prices are providing relief to El Salvador's depressed coffee sector. Continued efforts to promote specialty coffee are paying off as exports of higher quality coffee are increasing, and now account for approximately 30 percent of total exports.
El Salvador continues to use activities such as the Cup of Excellence to promote coffee abroad. In addition, El Salvador once again had a stand at the 2011 Specialty Coffee Expo, where various coffee brands were exposed to quality coffee buyers.
Brazil sugar output down by rains, ethanol priority
SAO PAULO, May 12 (Reuters) - Sugar output in Brazil's center-south in 2011/12 through May 1 fell 69 percent from a year ago, as rains through mid-April
hindered cane harvesting and mills prioritized ethanol production.
Sugar production totaled 795,000 tonnes, down from 2.55 million tonnes in the same period last season, when harvesting started exceptionally early, data from
the sugar cane industry association Unica showed on Thursday.
Colombia coffee exports fall April on heavy rains
BOGOTA, May 12 (Reuters) - Colombia's coffee production in April fell 19 percent from a year earlier to 523,000 60-kg bags as heavy rains damaged crops, the nation's coffee federation said on Thursday. Coffee exports from the world's No. 1 producer of washed arabica fell 2 percent to 574,000 60-kg bags, the federation said. Tight supplies in Colombia, a key producer for the top-quality coffee market, have been driving a rally in Arabica prices, with ICE July arabica contract touching a 34-year peak of $3.0890 a lb on May 3.
Russia sugar beet sowing exceeds year ago-industry
MOSCOW, May 12 (Reuters) - Russia sowed 1.093 million hectares with sugar beets by May 11, up from 1.025 million a year ago despite a delay in the start of the campaign, the Russian Sugar Producers' Union said on Thursday.
The industry lobby said the sowing was finished in practically all regions in the south and in the centre of the European part of the country, while in Siberia the campaign had just started.
Mexico sugar output at 4.98 mln tonnes to May 7
MEXICO CITY, May 12 (Reuters) - Mexico has so far produced 4.98 million tonnes of sugar in the 2010/11 harvest, 11.5 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.
Gold-Coin Sales Reaching One-Year High Signal No End to Rally in History (Source: Bloomberg)
Sales of gold coins are on track for the best month in a year amid the worst commodities rout since 2008, a sign that bullion’s longest bull market in nine decades has further to run, if history is a guide. The U.S. Mint sold 85,000 ounces of American Eagle coins since May 1 as the Standard & Poor’s GSCI Index of 24 raw materials fell 9.9 percent. The last time sales reached that level, bullion rose 21 percent in the next year. Gold will advance 17 percent to a record $1,750 an ounce by Dec. 31 and keep gaining in 2012, the median estimate in a Bloomberg survey of 31 analysts, traders and investors shows.
METALS-Copper extends gains ahead of U.S. data
LONDON, May 13 (Reuters) - Copper rose on Friday, moving further away from five-month lows hit in the previous session as the dollar weakened, but investors remained cautious of a still volatile market. Copper for delivery in three months on the London Metal Exchange (LME) was untraded in LME rings but bid at $8,879 a tonne, adding to modest gains on Thursday when it bounced off five-month lows.
The metal used in power and construction closed at $8,725 a tonne on Thursday, rising back from its lowest since Dec 1 hit earlier in that session.
PRECIOUS-Gold, silver prices rise as dollar retreats
LONDON, May 13 (Reuters) - Gold prices climbed and silver rose as much as 5 percent in Europe on Friday, recovering some of this week's heavy losses, as a drop in the dollar encouraged a rebound in the beleaguered commodities complex. Oil prices rose more than $1 a barrel and base metals like copper also recovered, after commodities were hit by broad-based selling on Thursday on growth concerns and a rally in the U.S. currency, which made dollar-priced assets more expensive.
Spot gold was bid at $1,509.39 an ounce at 1138 GMT, against $1,502.35 late in New York on Thursday, while U.S. gold futures for June delivery rose $2.40 an ounce to $1,509.20. Silver was at $35.61 an ounce against $34.60.
Copper demand from China to stay strong- Aurubis
HAMBURG, May 13 (Reuters) - Copper demand from China is likely to remain strong despite the country's moves to slow growth to control inflation, the CEO of Europe's largest copper producer Aurubis said on Friday.
China's moves to restrain its economy would only slow its rate of growth, which would still remain at a high level, Bernd Drouven told a telephone press conference after the company posted a sharp rise in earnings on Friday.
China imported iron ore stockpiles rise in week ending May 13
BEIJING, May 13 (Reuters) - Inventories of imported iron ore at Chinese ports hit 82.96 million tonnes on Friday, up 0.7 percent on the week and just short of the 83.11 million tonne record of April 22, data from industry consultancy Mysteel showed.
Slight declines in ores originating in India and Brazil were offset by an increase in deliveries from Australia.
Oil Drops After Obama Debt Warning; Louisiana Opens Mississippi Floodgates (Source: Bloomberg)
Oil dropped for the first day in three in New York after President Barack Obama said failure to raise the U.S. debt ceiling by early August may unravel global finances, stoking speculation fuel demand may slow. Futures slipped as much as 1 percent after Obama said in a segment taped for today’s “Face the Nation” program on CBS that “we could have a worse recession than we’ve already had” if investors think the credit of the U.S. wasn’t being backed up. Obama also announced plans to boost domestic oil production in the world’s biggest crude consumer.
