Commodity Blog

Posts Tagged ‘Australia’

Wheat was flat today after falling yesterday on forecasts of increasing supply.

The Grain Industry Association of Western Australia predicted that output from Western Australia may double to 9.24 million metric tons, above the 9.12 million tons estimated last month. Rainy weather in Argentina may help accelerate planting. Oil World forecast that Argentine farmers will increase sowing 6.8 percent to 4.87 million hectares (12 million acres).

Growing production in the Southern Hemisphere added to increasing supply from Russia and Ukraine. As a result, demand for the US wheat shrank. US exports are expected to drop to 26.54 million tons in the 2011–12 season from 35.1 million tons a year ago, according to the Department of Agriculture.

Wheat spot price was near its opening level of $6.1625 per bushel as of 8:09 GMT on CBoT.

Forecasters predict coal may surge to a record on prospects of heavy rains in Australia.

The Australian Bureau of Meteorology estimated the chance for above-average precipitation in Northern Queensland to be 65 to 70 percent. The previous La Nina, which was the most expensive natural disaster for Australia, spurred coal prices to $330 per ton. Forecasters expect rainfall to weaker than the record rains in the previous season, but it’s still remains a reason to worry.

Producers of steel have a particular reason to worry as there is deficit of coal reserves at steel mills. Every ton of crude steel requires about 600 kilograms of coking coal.

Some analysts think that in case of disruption of coal supply prices may jump as high as $350 per metric ton.

Corn fell on the forecast that the US farmers will increase planting this year and on the speculation that the advance of prices weakened demand. Goldman Sachs Group Inc. predicted that the US farmers will sow 92.1 million acres of corn this year. According to the US Department of Agriculture, the farmers have sown 88.2 million acres of corn last year. May delivery for corn fell $0.1 (1.5 percent) to $6.765 per bushel by 12:14 on CBoT.

Cotton jumped by the exchange limit on ICE on the speculation that rains will curb supplies from Australia. The wet weather may slow the harvest that starts this month. Prices have more than doubled in the past year as the global demand rises while the supply declines. May delivery for cotton surged by the limit of $0.07 (3.5 percent) to $2.0596 per pound as of 14:39 on ICE.

Sugar rallied today on the speculation that output will trail consumption, causing a global deficit. Production in India, the second biggest grower after Brazil, may be lower than previously predicted. Balrampur, India’s second-largest sugar company, estimated that production in India in the year ending September 30 will be 24.5 million metric tons, compared to the November forecast of 25 million tons.

Australia, the third biggest exporter, will also have reduced output as the crops were harmed by adverse weather. Rabobank estimated that the next harvest will produce 3.5 million metric tons. That’s compared to the previous harvest of 3.6 million tons and the earlier forecast of 4.2 million for the next harvest.

March delivery for raw sugar rose $0.0041 (1.3 percent) to $0.3305 per pound by 11:17 on ICE. May futures for delivery of refined sugar advanced $11.20 (1.5 percent) to $780.70 per metric ton on NYSE.

Computer programs exaggerated the sell-of of sugar futures that started on the news about the cyclone in Australia, sending sugar prices down 9.3 percent. The speculation that Cyclone Yasi will damage crops in Australia caused selling of futures on sugar that triggered a cascade of computerized “stop losses” (orders to sell). Meanwhile, the cyclone was downgraded from a Category 5 to a Category 2, reducing its potential influence on the output.

A new method of executing prearranged buy and sell orders was scheduled to be implemented at ICE on January 25, but the implementation of the method was delayed and will be announced after “consultation with market participants”. This method should prevent a ”cascading stop effect”. As for the current situation with the wave of sell orders, ICE isn’t planning cancellation of orders as ”trades were executed within reasonability limits and outside the threshold for trade cancellation”.

Jeff Bauml, a senior vice president at R.J. O’Brien & Associates, a broker in New York, said that “today’s fall is basically computer trading at its worst”.

March contract for delivery of raw sugar dropped as much as $0.0327 to $0.3204 per pound as of 14:00 on ICE, the biggest slump after a decline by 10 percent on December 30.

Oil extended its gains for a second day on concerns about the situation in Egypt. Yesterday clashes broke out between the protesters and the supporters of the current government. The contract for delivery of crude oil in March rose $0.41 (0.5 percent) to $91.27 per barrel on NYMEX.

Cotton jumped to the record as floods in Australia and Pakistan cut supplies. According to reports, Australia lost 300,000 bales, while Pakistan has a shortfall of 2.5 million bales. March futures for cotton delivery gained $0.04 (2.3 percent) to the record price of $1.7622 per pound as of 14:49 on ICE.

Copper prices also climbed to the record as the global economic growth have put strain on stockpiles. LME copper inventories dropped by 150 metric tons to 393,775 tons yesterday. Copper for delivery in Copper for March advanced 0.8 percent to $4.58 per pound on COMEX.

Wheat slipped today to the lowest level in a month as demand for the commodity waned after prices reached the highest level in four months. Previously prices jumped 13 percents on concerns that dry weather in the US and rains in Australia would damage crops. March futures for wheat delivery slid $0.1875 (2.4 percent) to $7.615 per bushel by 10:29 on CBoT.

Copper fell today from the record high on concerns that China may introduce austerity measures to cool its economic growth. Growth of consumer prices in China reached 5.1 percent in November, demanding from China’s government to take some actions to slow inflation. March futures for delivery copper went down $0.009 (0.2 percent) to $4.198 per pound at 10:57 on COMEX after previously the price reached $4.229, the highest level since May 2008.

Crude oil fluctuated today ahead of the meeting of the Federal Reserve policy makers. Fed’s Chairman Ben Bernanke suggested that Fed may expand its bonds purchasing program. January delivery for crude oil rose $0.04 to $88.65 per barrel as of 11:49 on NYMEX. January futures for Brent crude oil gained $0.31 (0.3 percent) to $91.50 per barrel on the ICE.

Wheat futures fell today on speculation that floods in Australia is over and the damage may be already priced in. Still, the harm was done and prices may yet rise again if more damage was done than was estimated. March futures for wheat delivery fell $0.015 (0.2 percent) to $7.8325 per bushel as of 12:03 on CBoT.

Gold fell from a record and silver declined today as the dollar gained, decreasing attractiveness of the precious metals as an alternative investment. US currency gained for a third consecutive day against the basket of six major currencies on speculation that extended tax cuts will support US economy. February futures for gold delivery slipped as much as $26.70 (1.9 percent) to $1,382.30 at 12:43 on COMEX. March futures for silver delivery slid $1.422 (4.8 percent) to $28.355 per ounce.

Cotton futures gained as demand in China may grow. Global demand may also outpace supply. March delivery for cotton rose $0.0176 (1.4 percent) to $1.3213 per pound by 13:22 on ICE.

Oil fell as traders were selling the commodity to take profit from the 26-month high prices. Oil also dropped as disagreement of European leaders on how to deal with the sovereign-debt crisis caused speculation that demand for the fuel will dwindle. Concerns about European problems intensified after Moody’s Investors Service cut Hungary’s credit rating yesterday. The January contract for oil went down $0.55 (0.6 percent) to $88.83 per barrel on NYMEX.

Wheat gained on concerns that rainy weather in Australia will decrease output. Australia’s production may total 26.8 million metric tons in the 2010–11 season compared with a September prediction of 25.1 million tons. Exports may be 16 million tons, while they were predicted to total 18.4 million. March delivery for wheat rose 2.1 percent to $8.0950 per bushel on CBoT.

Wheat rose today on speculation that floods may decrease supplies of the grain. This summer crop was harmed by droughts, now wet weather became an issue. Floods in Thailand and Australia threaten global supply and increase demand for the commodity. March futures for wheat delivery rose $0.085 (1.1 percent) to $7.485 per bushel by 13:15 on CBoT.

Cocoa supplies are also threatened, though not because of nature’s, but by humans’ actions: namely, because of a political tension in Ivory Coast. The Constitutional Court said that the ruling of Ivory Coast’s electoral commission to name Alassane Ouattara a winner of the election, which was held on November 28th, was invalid. Last night at least six people were killed and 17 were wounded in a shooting at the party office of Ouattara. March delivery for cocoa added $110 (4 percent) to $2,868 per metric ton at 14:00 on ICE.