Commodity Blog

Posts Tagged ‘harvest’

Coffee may rise 21 percent in two months on lack of high quality supplies. The output in Columbia, the second largest grower in the world, fell to the lowest in 33 years because of adverse weather. Analysts predict that global demand will be about 131 million bags, while world production will be around 124 million bags in 2010. May futures for Arabica-coffee delivery slid $0.0515 (3.8 percent) to $1.319 per pound today in New York.

Corn and soybean prices advance with rising gasoline price, boosting the attractiveness of fuels produced from grain and oilseeds. Gasoline prices reached the highest level in five weeks, increasing demand for corn-based ethanol and biodiesel made from soybeans. May futures for corn delivery gained $0.11 (3 percent) to $3.8275 per bushel on the Chicago Board of Trade. May futures for soybean delivery rose $0.145 (1.5 percent) to $9.69 per bushel.

Corn is the most widely grown crop in the United States. 332 million metric tons of the crop are harvested annually in the U.S. What prospects are for the corn in 2010?

By the end of 2009 future seemed to be bright for corn prices as adverse weather caused late planting in the U.S. But everything has turned upside down when the U.S. Department of Agriculture predicted that US corn production will reach a new record. USDA estimated 2009 corn crop as much as 13.15 billion bushels, while analysts forecast yield to be about 12.82 billion bushels. U.S. corn exports forecast went down by 50 million bushels to 2.1 billion bushels, further pushing down outlook for corn prices. U.S. exporters also have to deal with competition from Argentinean corn. Production of corn in Argentina may reach 17 million bushels, compared with estimated 12 million bushels, and at least 9 million bushels will be available for export. Slow recovery of U.S. economy does not help demand, and therefore prices, either.

Yet not everything looks dim for corn. Low prices improved exports by 20 percent this month. Recent reports about low soil moisture in Argentina corn growing areas are also supportive for corn prices. As you see, conditions can change significantly over small amount of time, making hard to say which price should be expected. USDA forecasted the price for the corn to be in a range of $2.90-$4.50 per bushel, suggesting with such a wide range that Department is unsure too. Analysts say that “there are not many fundamental reasons for high corn prices” and “technical support should not allow prices to fall much more”.

Coffee gained in New York on speculation that declining production in Colombia and Mexico will increase global demand. Coffee crop in Mexico may be harmed by cold weather. Analysts say that harvest in Columbia will be 9 million bags of coffee beans in the year through September, 26 percent down from June forecast. March futures for Arabica-coffee delivery rose $0.004 (0.3 percent) to $1.435 per pound as of 10:06 on ICE.

Orange-juice futures slid on speculation that warm weather in Florida, the second largest orange grower in the world, is lowering the risk that cold will harm citrus plants. As concern about frost damage recedes volatility is returning to the market. March futures for orange-juice delivery dropped $0.027 (2 percent) to $1.337 per pound by 12:31 on ICE Futures U.S. in New York.

Sugar jumped on speculation that low temperatures harmed cane crops in Florida. The cold was especially harmful to cane planted between September and December. The exact appraisal of damage done to plant is not yet done. March futures for raw-sugar delivery jumped 2.3 percent to $0.2736 per pound on ICE Futures U.S. in New York today.

Crude oil tumbled to the lowest in two months as China, the biggest consumer in the world, have taken measures to prevent the economy from “overheating” and slow a credit boom. Oil prices also dropped after forecasts that temperature in the U.S. will rise this week, curbing demand for heating oil. February delivery for crude oil slid $1.73 (2.1 percent) to $80.79 per barrel at 14:30 on NYMEX. Futures went up to $83.95 per barrel yesterday.

Copper gained in New York and London after imports of the industrial metal into China rose for a second month and the dollar fell. Shipments of copper into China increased to 369,400 tons in December. March futures for copper delivery gained $0.0405 (1.2 percent) to $3.441 per pound on the Comex division of the New York Mercantile Exchange. Delivery for copper in three months rose $106.50 (1.4 percent) to $7,567.50 a ton ($3.43 a pound) on LME.

Corn futures slid and soybeans declined on speculation that demand for supplies from the U.S. will decline as rains will increase crop yields in Argentina and Brazil. Rainfall will aid crops in Brazil in the next 10 days and will increase soil moisture for developing corn and soybeans in the next two days in Argentina. March futures for corn delivery declined $0.005 to $4.225 per bushel on the Chicago Board of Trade. March futures for soybean delivery slid $0.115 (1.1 percent) to $10.105 per bushel in Chicago.

Sugar tumbled to the lowest in nine weeks after speculators increased sales as prices last week reached the record in almost 29 years. Hedge-fund managers and other speculators boosted net-long positions by 25 percent in the last six weeks. March futures for raw-sugar delivery dropped $0.0078 (2.8 percent) to $0.2675 per pound on ICE.

Analysts predict that crude oil’s rally will stop at $88 level. The level of $88 was a support in 2007 and at the end of 2008. Price support level at a falling market may become resistance when prices are beginning to rise. Oil rose to $83.52 per barrel (a highest level in 14 months) on January 6th.

Sugar prices increased the fourth time this week reaching the highest level in almost three decades on expectation that countries including India, the greatest buyer in the world, are going to raise imports to ease a growing supply shortage. As a result of surge in global prices sugar mills in India are forced to delay imports because high prices made overseas purchases unprofitable. Sugar futures more than doubled in the past year, touching a 29-year high yesterday in New York, as adverse weather damaged cane crops in India and Brazil, biggest growers in the world. March futures for raw-sugar delivery gained $0.0031 (1.1 percent) to $0.2831 per pound by 11:19 on ICE Futures U.S. in New York.

Soybeans tumbled to the lowest in two weeks on outlook that demand for supplies from the U.S will wane as farmers in South America may harvest record crops next month. Argentina and Brazil, the two greatest growers after the U.S., may harvest a record 116 million tons. Rainfall next week will boost soybean filling and pod development in both countries. Analysts say that speculation about “demand shifting away from U.S. supplies, especially from China” caused “some selling”. January futures for soybean delivery slid $0.045 (0.4 percent) to $10.565 per bushel by 10:25 on the Chicago Board of Trade.

Wheat reached the highest level in a month after report that fewer acres were planted with winter varieties in the U.S. because of unusually wet weather. Some farmers were prevented from sowing wheat by muddy fields delaying corn and soybean harvests. The price also aided by speculators buying contracts with expectation on rising demand for raw materials. March futures for wheat delivery increased $0.1425 (2.6 percent) to $5.6725 per bushel on CBT.

Sugar futures gained for the third time in four sessions as traders increased buying to profit from growing supply deficit. Speculators were interested mostly in remaining in the long positions. Unfavorable weather conditions cut crops in Brazil and India increasing a global deficit. March futures for raw-sugar delivery increased $0.0046 (1.7 percent) to $0.2723 per pound as of 9:57 on ICE.

Orange-juice prices dropped to the week low after report that citrus harvest won’t be damaged by a cold weather. Possibility for some frosts remains but citrus harvest will be mostly untouched by a harsh weather. Orange-juice previously rose as hedge funds and other speculators were buying on concern that frosts will harm the fruits. March futures for orange-juice delivery fell $0.0275 (2 percent) to $1.379 per pound by 12:06 on ICE Futures U.S. in New York.

Sugar rallied in 2009 amid tight supplies, becoming the top performing commodity in the past six months. Adverse weather conditions damaged crops in Brazil and India, the two largest producers in the world, causing sugar prices to double this year. And how the commodity is going to perform in 2010?

Fundamentals can be considered bullish for the sweetener. Investment funds, limited production in India and a weak dollar are major supporting factors for sugar prices. The commodity also helped by demand for ethanol from Brazil’s flex fuel car fleet.

Global supplies of sugar will remain low for the first half of 2010. The world is using more sweetener than it is producing, causing a deficit for two consecutive years. The global sugar supply deficit is estimated as much as 13.5 million metric tons in the 2009–2010 season. There is some pending dryness in regions including India and Australia, curbing the commodity productions in these countries. On the other side, a favorable weather conditions are expected in Brazil’s Center-South, where increasing production may start to ease the current global deficit.

Beet growers in France and Germany, the two largest producers in the Europe, expect the greatest harvest since 2006. But EU regulations state that farmers may produce no more than 13.3 million metric tons of sugar for food for the domestic market, and surplus beet is considered out-of-quota and turned into export sugar or products such as ethanol. For the foreseeable future the European Commission is not going to authorize the export of out-of-quota sugar in excess of the fixed quantitative limit. Beet harvest of French growers is highest in 50 years, adding to this year’s EU oversupply of 550,000 tons. In case European growers will convince Commission to loose regulation the commodity deficit can be significantly reduce by European sugar.

Considering all factors, the outlook for sugar is rather optimistic. Most analysts agree that next target price for the commodity should be about $0.30. Yet some analysts argue that price as low as $0.13 more realistic. They point that such factors as possibility that mills will produce more sweetener than previously predicted and probability for unloading of funds positions in case if sugar prices will fall may put downward pressure on sugar. Even considering this factors its price is not likely to fall below $0.10. As always caution is advised when dealing with commodities.

Wheat slid today on concern that growing global inventories will cut demand for supplies from the U.S. Analysts forecast that global supplies will rise as much as 17 percent to 190.9 million tons by May 31st. March futures for wheat delivery slid $0.03 (0.6 percent) to $5.25 per bushel by 10:12 on the Chicago Board of Trade.

Orange-juice futures jumped to a highest rate in 23 months on expectation that citrus yield may decline in Florida, the second largest grower of the fruit in the world. Orange harvest in Florida is expected to fall 17 percent compared to the last season because of drought and low temperatures. Analysts say that Florida may produce 135 million boxes of oranges in the year ending June 30th, the lowest total in three years. March futures for orange-juice delivery climbed $0.0375 (2.8 percent) to $1.381 per pound as of 10:56 on ICE.