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February 10th, 2012
U.S. corn stockpiles in the 2011-12 marketing year will tighten further and price gains will outpace increases in other commodities in six months, Goldman Sachs said.
Corn will rise 9 percent in six months, Goldman said in an e-mailed report dated yesterday. U.S. inventories are expected by the U.S. Department of Agriculture to fall to 20.3 million metric tons, the lowest level in 16 years. Global stockpiles may fall to the lowest since 2006-07, according to the USDA. Soybeans may gain 6 percent to $12.90 a bushel on reduced South American production, Goldman said.
“We expect further tightening of the 2011-12 U.S. corn balance, lower South American corn and soybean production and a 2012-13 U.S. soybean balance in deficit,” New York-based analyst Damien Courvalin said. “Corn prices will remain high relative to other crops in coming months in order to secure sufficient acreage gains in the U.S. to help rebuild U.S. inventories.”
Corn futures have declined 11 percent in the past year, partly on speculation that demand would decline amid economic crises in the U.S. and European Union. Soybeans declined 15 percent and wheat has plunged 26 percent.
Soybean acreage may suffer as farmers plant corn in the U.S., Goldman said. Dry weather in Brazil and Argentina will reduce production of both crops, improving export demand for inventories from the U.S., according to the report.
Because of the increased corn planting in the U.S., the biggest exporter of the grain, prices may decline after the harvest in August and September. Gains in soybean futures are expected to outpace corn in the 12-month timeframe, Goldman said in the report. Corn may drop to $5.25 a bushel in a year while soybeans may rise to $12.90 a bushel.
- Tony C. Dreibus in London at Bloomberg.
February 13th, 2012
Crude oil futures climbed after the Greek parliament approved an austerity plan, easing Europe’s debt crisis, and on concern that Iranian supplies will be disrupted. Trading was halted by technical issues late in the session.
Crude oil futures rose as much as 2.3 percent and global equities advanced after passage of the package needed for 130 billion euros ($172 billion) in aid. Companies controlling more than 100 supertankers said they would stop loading cargoes from Iran, tightening sanctions on the second-biggest crude producer in the Organization of Petroleum Exporting Countries.
“We popped overnight on the Greek austerity measures and have maintained the gains,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “Crude is aping the equity market. If equities continue to move higher, crude will follow.”
Crude oil futures for March delivery increased $2.23 to $100.90 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures are up 18 percent from a year ago.
CME Group Inc.’s Globex crude and products markets have been halted “due to technical issues,” the company said in a notice posted on its website. There are no oil price ticks after 2:04 p.m. CME is the parent company of Nymex.
Brent oil for March settlement rose 48 cents, or 0.4 percent, to $117.79 a barrel on the London-based ICE Futures Europe exchange.
European Union finance ministers are scheduled to meet on Feb. 15 in Brussels to decide whether to approve the aid package. Resolution of the negotiations would help contain the threat that speculators will target debt-saddled countries, including Italy and Portugal.
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February 10th, 2012
Crude oil dropped from a three-week high as euro-area finance ministers refused to approve a rescue package for Greece, boosting concern that the European debt crisis will reduce fuel demand.
Futures fell 1.2 percent after Luxembourg Prime Minister Jean-Claude Juncker, chairman of the group of euro-area finance chiefs, said yesterday that Greece won’t get financial aid until it implements an austerity plan. The International Energy Agency also cut its 2012 global oil demand forecast for a sixth month, citing a “darkening” economic outlook.
“The market rallied earlier this week on signs that the Greek situation was about to be settled and is now giving back those gains,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The longer this crisis continues, the more it will diminish European economic growth and along with that the oil demand outlook.”
Crude oil for March delivery decreased $1.17 to settle at $98.67 a barrel on the New York Mercantile Exchange. The contract rose for a third day yesterday, climbing 1.1 percent to $99.84, the highest close since Jan. 19. Prices increased 0.8 percent this week and are up 14 percent in the past year.
Brent oil for March settlement fell $1.28, or 1.1 percent, to end the session at $117.31 a barrel on the London-based ICE Futures Europe exchange. It was the first decline in nine days, ending the longest stretch of moves higher since October 2009. The European benchmark contract’s premium to New York-traded West Texas Intermediate crude was at $18.64, 11 cents narrower than yesterday’s settlement.
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February 7th, 2012
Commodities rose to the highest level in more than five months as the dollar declined after Federal Reserve Chairman Ben S. Bernanke said that the U.S. jobs market is far from healthy.
The Standard & Poor’s GSCI Index of 24 commodities gained 0.8 percent to 673.99 at 1:20 p.m. in New York, the highest level since Aug. 31.
Oil futures advanced as much as 2.3 percent after Bernanke’s comments sent the dollar to its lowest level against the euro since Dec. 12, making assets priced in the U.S. currency more attractive. Bernanke said in testimony prepared for the Senate Budget Committee that the U.S. has a long way to go before the jobs market operates “normally.” Gold, aluminum and copper also advanced.
“There’s general improvement in risk sentiment and strong weakness in the dollar,” said Nic Johnson, who helps manage about $30 billion in commodities at Pacific Investment Management Co. in Newport Beach, California. “Equities are higher, commodities are higher, so people are generally putting on risk.”
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February 3rd, 2012
Commodity Brokers – Orange-juice futures fell, heading for the biggest weekly drop since mid-August, as tests by the U.S. Food and Drug Administration for a banned fungicide in some domestic supplies indicated no health risk. Cotton rose.
The FDA said yesterday that nine of 14 samples contained carbendazim in concentrations of less than 80 parts per billion, a safety benchmark set by the government. The agency, which will conduct follow-up tests, said it “does not believe there is a need to continue” screening juice already in the U.S. A probe on imports still is under way. Futures headed for the first weekly decline since mid-December.
“A good chunk of the rally was because of this probe,” Jack Scoville, a vice president for Price Futures Group in Chicago, said in a telephone interview.
Orange-juice futures for March delivery declined 1.5 percent to $2.01 a pound at 9:58 a.m. on ICE Futures U.S. in New York. The price has dropped 4.7 percent this week. On Jan. 23, the commodity rose to a record $2.2695.
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January 26th, 2012
Commodity Brokers – MF Global (MFGLQ) Holding Ltd.’s clients may be the losers no matter who wins a $700 million dispute between bankruptcy administrators in London and New York that threatens the return of money locked in customer accounts.
The trustee of MF Global Inc., the New York brokerage unit, is seeking the return of money used as margin for American customers trading in Europe. It wants U.K. administrators KPMG LLP to tap into $1.2 billion it had set aside for customers with segregated accounts, which are supposed to be protected.
MF Global Inc. trustee James Giddens “is prepared to use all legal avenues available to him in recovering the customer funds, including litigation,” Kent Jarrell, a spokesman for Giddens, said in an e-mailed statement.
If successful, the trustee’s claim would significantly reduce KPMG’s client money pool and lower returns for U.K. customers, said two people with knowledge of the discussions who declined to be identified because they are confidential. Should KPMG win, U.S. customers will be treated as unsecured creditors and face a lengthy wait for any payout.
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January 12th, 2012
Commodity Brokers – One of the hottest debates raging from Wall Street to the farm belt is destined to stretch into next month, as the trustee overseeing the bankruptcy of broker MF Global Inc collects the final claims by customers who are missing some $1.2 billion – or, maybe, only half as much.
Once a Jan 31 deadline for customer claims comes and goes, trustee James Giddens plans to “sharpen” his longstanding estimate of a $1.2 billion “hole” in customer money. It’s an estimate that has been challenged, publicly or privately, by other agencies involved in the investigation who say the gap may be only half as large.
Some say the discrepancy is technical: Giddens’ estimate includes foreign funds, while others only include U.S. collateral, for instance. Other bankruptcy lawyers and advisors say it may be a case of Giddens, who is responsible for liquidating the brokerage and returning money to customers, managing expectations, hoping to keep anxious traders at bay until he can recover more funds.
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December 1st, 2011
Commodity Brokers – Dennis Magnuson is a farmer, not a gambler. He trades in the commodity futures markets hoping to stabilize the cost of feed for the pigs he sells. The Austin, Minn., resident said he would never put his money into bonds issued by European countries flirting with economic collapse.
But the now-collapsed MF Global Holdings Ltd. may have done that for him.
Magnuson is among more than 100 Minnesota farmers estimated to have assets frozen as a result of MF Global’s bankruptcy filing and an estimated $1.2 billion in missing customer funds. Most of the farmers didn’t choose to do business with the huge brokerage house that has become one of the biggest financial failures in U.S. history. They invested through brokers or financial advisers who eventually used MF Global to clear trades.
On Thursday, members of the Senate agriculture committee, including Minnesota Democrat Amy Klobuchar, grilled the heads of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) over apparent loopholes in rules that allowed farmers’ commodity trades to end up in risky European bonds.
“[Regulators] are still investigating if what [MF Global] did was illegal,” Klobuchar said in an interview after the hearing. “And it may well have been illegal. We don’t know that yet. But what we know is that the law is inadequate when it comes to disclosing transactions like they made … it is possible that they were able under existing law to hide those risky transactions.”
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December 1st, 2011
Gold futures fell for the first time in four days after a report showed U.S. manufacturing expanded in November at the fastest pace in five months, damping demand for the metal as a haven.
The Institute for Supply Management said its factory index increased to 52.7 from 50.8 in October, with readings over 50 indicting expansion. Economists surveyed by Bloomberg projected 51.8. Gold jumped 3.7 percent in the previous three days, the longest rally in five weeks, after central banks from the U.S. to China moved to ease strains in the financial market.
“When people feel better about the economy, they’ll sell gold,” Fain Shaffer, the president of Infinity Trading Corp. in Medford, Oregon, said today in a telephone interview. “We’re also seeing some profit-taking after gold rallied above its 20- day moving average” at $1,745 an ounce, he said.
Gold futures for February delivery fell 0.6 percent to close at $1,739.80 at 1:45 p.m. on the Comex in New York. Earlier, the most-active contract reached $1,758, the highest since Nov. 17.
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November 11th, 2011
Gold future traders and analysts are the most bullish in at least seven years as investors accumulate metal at the fastest pace since August to protect their wealth from a widening European debt crisis.
Twenty-one of 22 surveyed by Bloomberg expect bullion to rise on the Comex in New York next week, the third consecutive increase and the highest proportion in data going back to April 2004. Holdings in exchange-traded products backed by gold rose 27.5 metric tons this week, within 1 percent of the record set almost three months ago, data compiled by Bloomberg show.
Gold futures exceeded $1,800 an ounce for the first time in seven weeks on Nov. 8 and hedge funds are holding their biggest bet on higher prices since mid-September, Commodity Futures Trading Commission data show. The metal is rebounding after tumbling as much as 20 percent in three weeks in September on demand for what are perceived as the safest assets. Almost $9 trillion was wiped off the value of global equities since May and yields on Italian and Greek bonds rose to euro-era records this week.
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