Commodities Fall Most in Two Weeks on U.S., Europe Economic Woes (Source: Bloomberg)
Commodities fell the most in two weeks as signs of a faltering U.S. economy and escalating debt woes in Europe signaled less demand for energy and metals. The Standard & Poor’s GSCI Spot Index (MXWD) of 24 raw materials declined 2.4 percent to settle at 605.15 at 4:17 p.m. in New York, the biggest decline since June 21. Crude oil and gold dropped the most in two weeks, and industrial metals including lead, aluminum and copper slumped. Employers in the U.S. hired fewer workers than forecast in June, indicting the labor market is making little progress toward reducing joblessness, government data showed today. Global equities extended losses, and Spain’s 10-year bond yields reached 7 percent as industrial production fell for the ninth straight month. The dollar rallied, eroding the appeal of raw materials.
“We had some weakness in Europe in the form of rising rates on Spanish debt, and then we had the disappointing payroll number here,” Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama, said in a telephone interview. “Going into the weekend, it’s ‘risk off’ for commodities.” The GSCI index has dropped 6.2 percent this year, led by cotton, coffee and oil. The MSCI All-Country World Index has gained 3.9 percent, and Treasuries returned 2 percent, a Bank of America Corp. index showed.
DTN Closing Grain Comments 07/06 14:56 : Grains Take a Breather Friday (Source: CME)
The grain complex took a step back Friday on noncommercial long-liquidation tied in large part to an overbought technical condition. From the mid-June lows through Thursday's close, corn and Chicago wheat had rallied over $2.00; beans had gained almost the same. And while markets have more room to correct, the increasingly bullish fundamental argument should mean renewed buying interest isn't far off.
Wheat Market Recap Report (Source: CME)
September Wheat finished down 31 3/4 at 806 1/4, 30 3/4 off the high and 2 1/4 up from the low. December Wheat closed down 25 1/4 at 821 3/4. This was 3 1/4 up from the low and 24 1/4 off the high. Wheat traded sharply lower heading throughout the trading session today as pressure spilled over from the corn pit and perhaps from a general deterioration of global macro economic expectations. Unwinding of bull spreads might have been prevalent in the market as broad based profit taking might have been taking hold. The market looks ahead to a very volatile next week of trading with Crop Condition reports Monday and the USDA Supply and Demand and Crop Production reports on Wednesday. The trade will likely focus on U.S. demand shifts and world production forecasts for the Black Sea Region. Weekly export sales for the week ending June 28th came in at 418,900 tonnes for the 2012/13 marketing year and none for the next marketing year for a total of 418,900. Reported sales were on the high end of trade estimates. As of June 28, cumulative wheat sales stand at 22.8% of the USDA forecast for 2012/2013 (current) marketing year versus a 5 year average of 23.5%. Sales of 500,000 metric tonnes are needed each week to reach the USDA forecast. Outside markets added pressure to wheat prices today with the U.S. Dollar trading sharply higher and energy markets also tracking moderately lower on the day. September Oats closed down 3 1/2 at 361 3/4. This was 4 1/2 up from the low and 9 1/4 off the high.
Corn Market Recap for 7/6/2012 (Source: CME)
September Corn finished down 13 1/2 at 695 1/4, 12 3/4 off the high and 6 up from the low. December Corn closed down 15 1/2 at 693. This was 5 1/4 up from the low and 14 3/4 off the high. Corn traded sharply lower throughout the trading session but prices generally managed to respect the prior session's low. Pressure in the corn market was linked to a surging U.S. Dollar and broad based commodity price pressures after a poor unemployment report this morning. Weather maps were largely unchanged from previous forecast but cooler temperatures potentials next week seemed to prompt some long profit taking ahead of the weekend. In looking forward the forecasts still call for mostly dry conditions in the Midwest. The southeast and delta are expected to see some showers next week but the coverage and amounts are generally expected to be restricted. A large percentage of the expected precipitation over the next two weeks will likely be light and overall coverage will have limited impact on soil moisture conditions. Traders bought into the weakness this morning on thoughts that crop condition ratings will be revised sharply lower again on Monday afternoon. A private forecast today pegged the average corn yield lower to 153.5, which was 1.4 bushels/acre below that company's prior estimate. Weekly export sales for corn were abysmal; providing additional evidence of the lack of demand at these price levels but at the same time this action displays the strength of this supply driven rally. For the week ending June 28th, net weekly export sales for corn, came in at 19,300 tonnes for the 2011/12 marketing year and 134,200 tonnes for the 2012/13 marketing year for a total of 153,500 tonnes. This was well below trade estimates. As of June 28, cumulative corn sales stand at 92.9% of the USDA forecast for 2011/12 (current) marketing year versus a 5 year average of 95.9%. The market is expecting a volatile trade next week with updated Crop Condition reports on Monday and the USDA Supply and Demand and Crop Production reports on Wednesday. September Rice finished down 0.095 at 15.055, 0.035 off the high and 0.075 up from the low.
U.S. Corn Growers Farming in Hell as Midwest Heat Spreads (Source: Bloomberg)
The worst U.S. drought since Ronald Reagan was president is withering the world’s largest corn crop, and the speed of the damage may spur the government to make a record cut in its July estimate for domestic inventories. Tumbling yields will combine with the greatest-ever global demand to leave U.S. stockpiles on Sept. 1, 2013, at 1.216 billion bushels (30.89 million metric tons), according to the average of 31 analyst estimates compiled by Bloomberg. That’s 35 percent below the U.S. Department of Agriculture’s June 12 forecast, implying the biggest reduction since at least 1973. The USDA updates its harvest and inventory estimates July 11. Crops on July 1 were in the worst condition since 1988, and a Midwest heat wave last week set or tied 1,067 temperature records, government data show. Prices surged 37 percent in three weeks, and Rabobank International said June 28 that corn may rise 15 percent more by December to near a record $8 a bushel.
The gain is threatening to boost food costs the United Nations says fell 15 percent from a record in February 2011 and feed prices for meat producers including Smithfield Foods Inc. (SFD) “The drought is much worse than last year and approaching the 1988 disaster,” said John Cory, the chief executive officer of Rochester, Indiana-based grain processor Prairie Mills Products LLC. “There are crops that won’t make it. The dairy and livestock industries are going to get hit very hard. People are just beginning to realize the depth of the problem.”
Corn dips after drought-led rally, up 38 pct in 3 weeks
SINGAPORE, July 6 (Reuters) - Chicago corn slid almost 2 percent after recent steep gains, although prices were set for their biggest three-week rally in 3-1/2 years, sparked by the worst U.S. Midwest drought in nearly a quarter century.
"It is a little bit of a quiet which is not unexpected, given the extent of the rally that we have seen, although fundamentally the core issues within the grain market remain firmly entrenched," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.
U.S. crops shrivel in record heat, rains coming-forecasters
CHICAGO, July 5 (Reuters) - The U.S. Midwest will remain extremely hot and dry the next few days, adding more stress to crops already damaged by a summer heat wave, but some relief rains are expected over the weekend, forecasters said.
All-time high temperatures were forecast for many Midwest c ities on Thursday. The midday temperature in Chicago was 99 degrees Fahrenheit (37 Celsius) and forecast to break 100. It was 100 F in Des Moines, Iowa, at midday and 97 in Columbus, Ohio.
Poor rains may cut India's pulses output, rice unhurt
MUMBAI, July 6 (Reuters) - Poor rains in India's key pulse-producing southern and western states have affected sowing and could trim output in the 2012-13 year that began on July 1, the country's farm minister said on Friday.
Lower output of pulses could force India, the world's largest producer and consumer, to import more lentils thereby adding to inflation woes.
Brazil corn output to jump as U.S. crop suffers
BRASILIA/SAO PAULO, July 5 (Reuters) - Brazil boosted its corn harvest estimate by 2.5 percent to a record 69.48 million tonnes on Thursday, a welcome increase as a heat wave threatens United States grains.
The estimate for the corn crop would represent a leap of more than 20 percent from the previous season, when output reached 57.4 million tonnes, and is up from a June estimate of 67.8 million tonnes, government crop supply agency Conab said in its 10th revised estimate for 2011/12 grain output.
FranceAgriMer sees wheat crop rising to 35.9 mln t
PARIS, July 6 (Reuters) - Farm office FranceAgriMer expects this year's French soft wheat crop to rise 5.7 percent to 35.9 million tonnes from 34 million harvested in 2011, data published by the office on Friday showed.
The forecast was the office's first official projection of the 2012 wheat crop in France, the European Union's top producer and exporter of the staple grain.
Ukraine to pay off China loan with maize - minister
KIEV, July 6 (Reuters) - Ukraine will supply 2.0 million to 2.5 million tonnes of maize to China every year to pay off a $3 billion loan, Ukrainian Farm Minister Mykola Prysyazhnyuk was quoted as saying on Friday.
China's Eximbank plans to lend Ukraine up to $3 billion to finance agricultural projects. The farm ministry and the bank signed a memorandum of understanding on June 28 and are now finalising the deal. It gave no details of the loan.
Analyst cuts Ukraine 2012/13 grain export f'cast
KIEV, July 6 (Reuters) - Analyst ProAgro revised down on Friday its forecast for Ukraine's grain exports to 20.9 million tonnes in the July-June 2012/13 season from the previous outlook of about 23 million tonnes due to a possible fall in harvest.
The agriculture consultancy said in a report it expected that the exports of wheat would total 4.6 million tonnes, barley 1.8 million tonnes and maize 14 million tonnes.
Argentina wheat plantings seen falling 20 percent
BUENOS AIRES, July 5 (Reuters) - Argentina's 2012/13 wheat plantings are set to fall 20 percent this season to 3.7 million hectares, even less than previously forecast, despite favorable crop weather, the Buenos Aires Grains Exchange said on Thursday.
Argentina is the world's sixth-biggest wheat exporter and the key supplier to neighboring Brazil but growers have been planting less of the crop in recent years because of poor prices in the local market that they blame on government export curbs.
EU soft wheat exports fall to 12.5 mln t in 2011/12
PARIS, July 5 (Reuters) - The European Union cleared a total of 12.5 million tonnes of soft wheat export licences in the 2011/12 season to June 30, down from 18.5 million tonnes in 2010/11, official data showed on Thursday.
The EU awarded 3 million tonnes of maize export licences in 2011/12, up from 1 million in 2010/11, and 2.9 million tonnes of barley export licences, down from 4.6 million, the data showed.
Sugar rises, weather concerns eyed, coffee slips
LONDON, July 6 (Reuters) - Raw sugar futures on ICE rose as adverse weather in top producers Brazil and India underpinned prices, while coffee and cocoa futures edged lower. Sugar futures rose as dealers eyed weather concerns in top producers including Brazil, where harvest has been hampered by unseasonably wet weather, and India, where poor monsoon rains caused worry.
ICO pegs '11/12 world coffee output at 131.3 mln bags
LONDON, July 6 (Reuters) - World 2011/12 coffee output was trimmed slightly to 131.3 million 60-kg bags, from the previous month's estimate of 131.9 million bags, the International Coffee Organization (ICO) said. This is 2.3 percent down on 2010/11 global production.
Thailand seeks regional benchmark rubber export price
BANGKOK, July 6 (Reuters) - Thailand, the world's biggest rubber producer and exporter, is asking other major producers Malaysia and Indonesia to help it set a benchmark rubber export price, which has fallen by almost a fifth since its peak this year due to weak demand.
"Attempts by Thailand alone can not push up prices as there are external factors weighing on rubber prices, especially the euro zone debt crisis," Thai Deputy Agriculture Minister Nattawut Saikuar told reporters on Friday.
Brazil’s Cocoa Processing Declined 4.8% in Second Quarter (Source: Bloomberg)
Brazil’s cocoa grindings in the second quarter totaled about 57,702 metric tons, 4.8 percent lower than the same period a year earlier, according to an e- mail from Thomas Hartmann, an analyst who compiles the nation’s cocoa statistics. The total for June was 19,136 tons, down 5.6 percent from the same month last year, according to the e-mail. “The drop of volume for the second month in a row could be a signal of the falling demand on the domestic market,” he said. Hartmann is a board member of the Commercial Association of Bahia, Brazil’s biggest growing region, and is in charge of the group’s statistical service on the nation’s cocoa output.
Sugar Bulls Strongest in Six Months on Brazil Rain: Commodities (Source: Bloomberg)
Sugar traders are the most bullish in six months after prices moved to within five percentage points of exiting a year-long bear market as rain delayed cane processing in Brazil, the biggest producer. Nine of 11 analysts surveyed by Bloomberg said they expect raw sugar to keep rallying next week and two were bearish, the highest proportion of bulls since Jan. 6. Futures reached an 11- week high of 22.69 cents a pound in New York yesterday. Hedge funds increased wagers on rising prices by 29 percent to the highest since April in the week ended June 26, U.S. Commodity Futures Trading Commission data show.
The sweetener has been in a bear market since September as forecasters from Rabobank International to Macquarie Group Ltd. predicted a third annual glut. Prices rallied 15 percent since the start of June after above-average rainfall in Brazil’s main growing region increased concern about shortages. Copersucar SA, which owns mills in the country, said July 2 it took delivery of about 112,000 metric tons of raw sugar against the ICE Futures U.S. exchange’s expired July contract. “The sugar turnaround has been fast because the short-term supply issues in Brazil are bullish,” said Keith Flury, an analyst at Rabobank in London. “We are in a weather market.”
Pre-election protests hit Libyan crude output
TRIPOLI, July 6 (Reuters) - Libyan oil output has been reduced by 300,000 barrels per day (bpd) as protests by groups demanding greater autonomy for eastern Libya a day before national elections have blocked operations at some oil terminals, an official said.
The protests, combined with other storage and market-related factors, have pushed output down to 1.3 million bpd from the level of nearly 1.6 million bpd to which production has steadily climbed since the end of last year's civil war.
India cuts June Iran oil imports 18 pct y/y -trade
NEW DELHI, July 6 (Reuters) - India's oil imports from Iran fell 18.2 percent in June from a year earlier in a third straight monthly decline, although the pace slowed as refiners built stocks ahead of Western sanctions against Tehran's nuclear programme that took effect by July.
The sanctions are designed to restrict the flow of funds to Iran because the West believes the Islamic Republic is trying to build nuclear weapons, but Tehran says its nuclear program is for civilian purposes.
Norway government seen intervening to end oil strike
OSLO, July 6 (Reuters) - The Norwegian government could wade into a dispute between offshore oil workers and employers over pensions as early as Friday, analysts said, to force an end to a strike which has cut crude and gas output and kept oil markets on edge.
Such a move would avert a total shutdown of production on the Norwegian continental shelf after the oil industry upped the ante on Thursday with a lockout of offshore workers, easing nerves over production in the world's eighth-biggest crude exporter.
OIL-Oil drops below $100 as Norway strike nears end
LONDON, July 6 (Reuters) - Oil fell below $100 a barrel on expectations the Norwegian government would end an oil workers' strike and as enthusiasm over central bank rate cuts waned.
"Brent is supported by the escalation of the labour dispute in Norway, but the focus remains on demand," said Victor Shum, a senior partner at oil consultancy Purvin & Gertz.
Oil Trades Near One-Week Low on Concern Slowdown to Curb Demand (Source: Bloomberg)
Oil traded near the lowest level in a week in New York on speculation fuel demand may falter amid a global economic slowdown. Futures were little changed after declining 3.2 percent on July 6. Japanese machinery orders fell the most in more than five years in May, while the U.S. added fewer jobs than forecast in June, separate reports showed. Downward pressure on the Chinese economy is still “relatively large,” Premier Wen Jiabao said, according to the official Xinhua News Agency. Three Libyan oil ports resumed export operations after a halt because of protests, according to National Oil Corp. “Downward momentum would come from problems with the economy, and those aren’t going away,” Jarmo Kotilaine, the chief economist at Jeddah-based National Commercial Bank who forecasts Brent crude will trade in a range of $90 to $110 a barrel, said by telephone yesterday. “We will continue to see volatility without any obvious trend.”
West Texas Intermediate oil for August delivery was at $84.55 a barrel, up 10 cents, in electronic trading on the New York Mercantile Exchange at 11:18 a.m. Sydney time. The contract slid $2.77 on July 6 to close at $84.45, the lowest settlement since July 2. Prices are 14 percent lower this year.
Indonesia’s Tin Exports to Drop as Low Prices Curb Output (Source: Bloomberg)
Refined-tin shipments from Indonesia, the largest exporter, probably dropped to the lowest level in five months in June as miners reduced production because of lower prices and bad weather disrupted ore supplies to smelters. Exports fell 7.2 percent to 7,300 metric tons last month from 7,866 tons in May, according to the median estimate of four smelter executives and an analyst in a Bloomberg survey. That’s the least since shipments of 5,380 tons in January and compares with sales of 10,875 tons in June 2011. The Trade Ministry is expected to release the data next week.
Prices have plunged 27 percent from a six-month high in February on concern the debt crisis in Europe and slower growth in China may erode demand for the metal used in soldering and packaging. Falling supplies may limit the slump, helping boost revenues at producers including Malaysia Smelting Corp. (SMELT) and PT Timah (TINS), the world’s second and third-largest producers. Prices below $20,000 ton have some adverse impact on small-scale production in Indonesia, according to ITRI Ltd. Last month’s shipments may be as low as 7,000 tons, Peter Kettle, research manager at the St. Albans, England-based ITRI, said by e-mail July 2. “My reason is lower prices resulting in lower volumes through the independent smelters.”
Copper Futures Decline in London for Fourth Day, Falling 0.2% (Source: Bloomberg)
Copper for three-month delivery dropped as much as 0.2 percent to $7,513 a metric ton on the London Metal Exchange, falling for a fourth day. The metal traded at $7,519.75 at 8:06 a.m. Singapore time.
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