Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1467
China ‘buying’ fuels rebound in sugar prices
By Agrimoney.com – Published 12/03/2010

Reports of buying by end users as China reportedly added itself to the list of buyers lured out by lower prices, encouraging investors to close bets on the market extending its 30% slump.

White sugar jumped 4.0% in London in morning deals, with New York raw sugar adding 3% to come within an ace of retaking the market landmark of \$0.20-a-pound.

The revivals followed reports that China had bought about 100,000 tonnes of sugar from Australia.

While China, the world’s third-biggest sugar consumer, had been expected to rebuild state stocks, its return had not been forecast until at least next month.

“That was a bit left field for many people,” Nick Hungate, executive director at Rabobank, told Agrimoney.com.

“We knew they have released some reserves, but to come to the market already was a bit of a surprise.”

Buyers return

China added to a list of sugar buyers this week which already included the likes of Pakistan and Tunisia, while Egypt confirmed plans to buy 1m tonnes of raw sugar this year.

Meanwhile, sugar mills in India on Friday urged the government to reverse steps taken to curb domestic sugar prices, which have fallen by below the cost of production, threatening delays in payments to cane farmers.

A perceived fall-off in buying by end users was cited as a main reason by traders for the slump in prices from multi-decade highs in January, with technical factors, such as moving average movements, accelerating the sell-off.

‘Well into oversold territory’

However, David Sadler, at Sucden Financial, noted that many technical factors had now moved in favour of a market, with many fund managers already appearing to have taken short positions, limiting the scope of further selling.

Other technical indicators, such as the relative strength index (RSI), which compares averages of positive and negative closes, also indicated that the market was due for a bounce.

“RSIs are well into oversold territory,” he said.

“We feel it is probably not a bad idea to lock in some profit… as it seems likely that at some point we will see a sizeable technical correction [upwards].”

‘Knife edge’

As to whether prices were poised to return to their highs of earlier this year, Mr Hungate said it would “take a lot of encouragement” to regain the buyers who helped fuel the rally, but who may have been burnt by the last month’s retreat.

“But the fundamentals are still on a knife edge,” he added.

“The forecasts for Brazil look wet. There is a long, long way to go before the Indian [cane] harvest is in the bag. Everyone will be weather watching.”

Financial Post

Friday, March 12, 2010
Loonie hits highest since July 2008 after jobs data

Jennifer Kwan, Reuters

TORONTO – The Canadian dollar rose to its highest level against the U.S. currency since July 2008 on Friday after Canadian employment data came in slightly better than forecasts.

Canada’s unemployment rate fell to 8.2 per cent in February from 8.3 per cent in January as 20,900 more people found work in the month, with all the gains coming from full-time jobs, Statistics Canada said on Friday.

Economists surveyed by Reuters had forecast net job growth of 20,000 jobs in February and an 8.3 per cent unemployment rate.

“It’s a very strong labor report and dollar/Canada has broken into a new 20-month low. Considering it wasn’t released on the same day as (U.S.) nonfarm (payrolls data) it could get even more attention than it usually does. All in all, it’s good for the Canadian dollar,” said Camilla Sutton, currency strategist at Scotia Capital.

The dollar touched C$1.0160 to the U.S. dollar, or 98.43 U.S. cents, from about C$1.0234, or 97.71 U.S. cents just before the report.

At 7:38 a.m. (1238 GMT), the Canadian dollar fell back slightly to C$1.0173 to the U.S. dollar, or 98.30 U.S., still up from C$1.0243 to the U.S. dollar, or 97.63 U.S. cents, at Thursday’s close.

Yields on overnight index swaps, which trade based on expectations for the Bank of Canada’s key policy rate, edged higher after the report, showing the market saw tightening as slightly more likely than before the data.

The Canadian dollar has been rallying in recent weeks on expectations Canada could hike interest rates well ahead of the United States.

The market suggests there are high odds the rate, now at 0.25 per cent, will be around 1 per cent by October.

Bond prices were mostly lower after the domestic data, and were also affected by moves in the United States, where Treasuries prices were soft ahead of U.S. economic data due later in the session and a Federal Reserve interest rate meeting next week.

China wants US reassurance over dollar

Sun Mar 14, 12:01 am ET

BEIJING – China’s premier expressed concern about the U.S. dollar and called on Washington on Sunday to take “concrete steps” to reassure Beijing about the safety of its huge Treasury bond holdings.
“Any fluctuation in the value of the U.S. currency is a big concern for us,” Premier Wen Jiabao said at a news conference.
“We cannot afford any mistake, how slight it is, when running our financial assets,” he said. “I would like the United States to take concrete steps to reassure investors.”
China has pressed Washington to control its yawning budget deficit and prevent inflation that would erode the value of the dollar and China’s holdings.
The premier said Treasury values were a matter of the “national credibility” of the United States.

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Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1356
Deficit in sugar supplies ‘could match record’
By Agrimoney.com – Published 16/02/2010

The global sugar deficit in 2009-10 could be on its way to matching last year’s record, as weak crops in Asia and Central America compound Brazil’s disappointing output, Czarnikow has said.

The sugar merchant and consultancy raised by 1.3m tonnes to 14.8m tonnes its forecast for the shortfall in global production, compared with demand.

And Czarnikow, which last June had estimated the shortfall at just 6m tonnes, said there was a danger that the deficit could end up “as great as” the record 15.6m-tonne deficit in 2008-09.

‘Not delivering’

“Despite early hopes for a strong recovery in production during the 2009-10 season, it is now becoming clear that those hopes will not be realised,” London-based Czarnikow said.

Evolution in in Czarnikow forecasts for the global sugar deficit , 2009-10

Feb 16 2009: 14.8m tonnes

Nov 25 2009: 13.5m tonnes

Sept 8 2009: 9.0m tonnes

Jun 1 2009: 6m tonnes
“The key northern hemisphere cane crops in Asia and Central America… are not delivering the growth in production that had been initially expected.”

The disappointment at cane crops in countries such as China, Mexico and Thailand follows a significantly worse-than-expected harvest in Brazil’s Centre South region, the biggest cane-producing area of the biggest sugar-producing country, where rains hampered harvests and caused lower yields.

But thanks to the dearth of supplies from elsewhere, “the market is again looking to the new Centre South Brazil crop for much-needed supply”, Czarnikow said.

‘Hefty retracement’

Nonetheless, the merchant flagged the fall in prices this month, which it attributed to global economic scares, such as the Greek sovereign debt crisis, which had “weakened investors’ appetite for risk”.

“Combined with rumours of forced selling this has led to a hefty retracement” in New York’s nearer raw sugar contracts.

However, talk of a raised deficit, combined with a weaker dollar, helped sugar close up 1.7% at 26.73 cents a pound for May delivery, New York’s best-traded contract.

London white sugar for May ended 0.8% higher at \$739.00 a tonne.

* Key Brazil sugar region could raise output by 19%
* Forecast of bigger deficit revives sugar price
* Ethanol to save India sugar mills from 2011 slump
* Goldman lifts sugar price hopes, but market slumps

Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1406
Sugar retains ‘very bullish’ market dynamics
By Agrimoney.com – Published 26/02/2010

The case for investors to buy into sugar remains “fairly intact” despite this week’s sell-off, which paid little heed to the crop’s supply and demand fundamentals, Fortis Nederland has said.

This week’s sugar price drop, which topped 10% on Friday to pass the recognised mark for a “correction”, reflects largely one-off technical factors, such as a sell-off by speculators, the bank said.

On a supply-and-demand basis, the market retained its tightness prompted by a second successive year of production falling behind demand, taking the key stocks-to-use ratio to a 20-year low of 32%.

“The futures prices have become disconnected with the physical side of the market,” Fortis said in a monthly report.

“The bullish case… remains fairly intact”.

‘Very bullish factors’

Besides noting that sugar prices in China remained near contract highs, the bank forecast that the US would probably need to “step up” its imports “in the next few months” given the prospect of weak production in Mexico, a key supplier.

Global year-end sugar inventories and (stocks-to-use ratio)

2009-10: 53.06m tonnes (32%)

2008-09: 60.73m tonnes (37%)

2007-08: 71.99m tonnes (45%)

2006-07: 64.46m tonnes (41%)

Source: ISO, VM Group
Mexico may be able to supply only 400,000 tonnes of the 540,000 tonnes the US Department of Agriculture has anticipated.

“In the immediate term, there remain some very bullish supply-demand factors taking place,” the bank said.

Meanwhile comments last Friday from the Indian prime minister’s economic advisory panel that white sugar stocks could “rapidly approach the nil level”, and urging imports of 3m-5m tonnes should, Fortis said, “have put even more fire into the futures market”.

Turnaround imminent?

“All-in-all, [this is] hardly the sort of fundamental news that provokes a sell-off – but as with other commodities, sugar futures’ prices are currently under the sway of factors other than the physical markets,” the report added.

“That may not last too long, however.”

New York raw sugar for May closed 0.4% lower at 23.60 cents a pound, while London’s May white sugar contract ended 1.3% higher at \$670.50 a tonne.

* Brazil output jump helps sugar to two-month low
* Deficit in sugar supplies ‘could match record’
* Key Brazil sugar region could raise output by 19%
* Forecast of bigger deficit revives sugar price

Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1371
US wheat harvest to slump 12% this year, USDA says
By Agrimoney.com – Published 19/02/2010

American farmers will harvest a record corn crop this year, but in part at the expense of wheat production, which will slump by 12%, the US Department of Agriculture has said.

The USDA has pegged the corn harvest at 13.16m bushels, 200m bushels more than proposed earlier this month in its so-called baseline forecast.

The rise, which puts the crop marginally ahead of last year’s, was attributed in part to cheaper fertilizer costs, a particularly big input cost for corn.

“Net returns to corn production are expected to be much improved from 2009 as fertilizer prices have fallen from their highs during the fall and winter of 2008-09,” the USDA, adding that it was nonetheless factoring in a “return to trend yield” from last year’s bumper result.

The department also edged its forecast for soybean output 30m bushels higher to 3.26bn bushels, while noting the crop would lose acreage to corn and cotton.

Out of favour

However, the estimate for wheat production was lowered by 55m bushels (7.4m tonnes) to 1.945bn bushels (52.9m tonnes), reflecting a plunge in plantings.

US crop production forecasts, 2010-11 (implied year-on-year change)

Corn: 13.16bn bushels (+10m bushels)

Soybeans: 3.26bn bushels (-3.0%)

Wheat: 1.945bn bushels (-12.2%)

Cotton: 16.0m bales (+29%)

Rice: 226.0m hundredweight (+2.8%)
Output at that level would mean a slump of 12.2% in US wheat harvest this year, taking the equivalent of an Argentine crop out of its production.

It would almost certainly mean America falling further behind Russia in the global wheat output league.

Russia is expected in 2009-10 to have taken the third spot from the US among producing countries, behind China and India.

US farmers cut winter wheat sowings to their lowest since 1913 because of weak prices, and delays to autumn corn and soybean harvest which left fields tied up with standing crops.

“The sharp reduction in winter wheat area cannot be completely made up by spring plantings,” the USDA added.

Missing acres

The report also underlined the healthy prospects for US cotton output, which is expected to rise by 29% to 16.0m bales this year, encouraged by prices boosted by tight supplies at a time when global economic recovery is boosting demand.

US year-end stocks forecasts, 2010-11 (implied year-on-year change)

Corn: 1.65bn bushels (-3.8%)

Soybeans: 330m bushels (+57%)

Wheat: 940m bushels (-4.2%)

Cotton: 3.4m bales (+29%)

Rice: 49.8m hundredweight (+25%)

“Less land is expected to be cropped in 2010 as prices continue to ease from their record levels,” the USDA said,

However, many analysts questioned estimates that overall plantings of major crops would fall far this year, noting the considerable amount of land emerging for planting from conservation programmes.

“The surprise is that the USDA said this next year in all eight commodities… that acres would be down 6.5m acres,” broker US Commodities said, quoting a figure adjusted for conservation acres.

The USDA report said that wet autumn weather “provided little opportunity to put idled land back into production and historically only a limited portion of former [conservation programme] land actually returns to production, particularly in the first year”.

Soybean stocks

A forecast of a rise in US soybean inventories to a four-year high of 330m bushels by the end of 2010-11, below trade estimates of 600m bushels, also provoked questions.

“The USDA is using a very strong demand base,” US Commodities said.

The report added that “intense competition from Argentina and Brazil in 2010-11 is projected to scale back US exports of soybean meal and soybean oil from this year’s record levels”.

Commodities Corner
Myra P. Saefong

Feb. 19, 2010, 7:03 a.m. EST · Recommend (1) · Post:
Natural-gas prices settle in for the long haul
Supply outlook good news for consumers, bad news for producers

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But oil and gas rig counts have been climbing recently. As of Feb. 12, there were 1,346 rigs actively exploring for or developing both oil and natural gas in the U.S., up 11 from a week earlier, according to data from Baker Hughes Inc. /quotes/comstock/13*!bhi/quotes/nls/bhi (BHI 49.76, +0.90, +1.84%) .

“We can anticipate some extra [natural-gas] supply to show up sometime soon, or at least supply shouldn’t be a problem this year,” said Ben Smith, president of First Enercast Financial, an information vendor serving energy markets.

He believes that natural-gas prices above $5 should spur new supply to enter the market, while sub-$5 levels could curtail supply.
‘Elephants in the room’

The endless shale potential is just one of the “elephants in the room,” according to Feshbach & Sons’ Feshbach, referring to issues that are often ignored or go unaddressed.

VisMedia

The U.S. also has the second-highest import capacity in the world and perhaps the most storage for LNG, according to Perry.

So one of the “wild cards” for the natural-gas market is all the LNG on the water that’s looking for a home, said Sewell.

Europe and China have been “soaking up all the excess LNG floating around recently,” said Smith. That “may change as soon as winter comes to an end” and if Europe experiences any sort of economic setback, LNG prices there may suffer, sending shipments to the U.S.

Even if prices fall, don’t expect LNG producers to cut back production in the near-term.

“They need the revenue no matter what the price and the U.S. has the most underground storage facilities in the world,” Sewell said.

There have already been reports of LNG tankers being diverted to the U.S. to “take advantage of the storage here and these loads of LNG are being dumped at whatever price they will bring,” said Perry.

“Of course, this does not bode well for natural-gas prices for producers,” he said. “Gas consumers are the ones who should be optimistic now.”
Weather prop

But how can consumers be optimistic when the weather outside is so miserable?

Parts of the U.S. are getting “hit hard with cold, windy weather that boosts gas use in home heating,” said analysts at Deutsche Bank, in a note to clients last week.

In the South census region of the nation where 60% of households use electricity as their primary space-heating fuel, heating-degree days, a measure of energy demand for heating, climbed 13% in January year-on-year, they said.

The Energy Information Administration, in a report issued last week, estimated that January electric-power-sector natural-gas consumption will be at a new record for the month.

“As cold weather and arctic temps continue, supplies will draw down even more,” said Kevin Kerr, president of Kerr Trading International. “Historically, this year will stand out, and EIA [weekly supply] numbers will be invalid or significantly inaccurate.”

But in order to bring natural-gas prices back to the $13 levels seen in 2008, the market would need to see a “prolonged winter and then a quick foray into summer with high temps,” said Kerr.

That quick foray might not even happen.

“The mid-Atlantic and Northeast will probably have a slow start to the summer season as far as warmth,” said Paul Pastelok, a senior meteorologist at AccuWeather.com.

“After a possible flip from a cold ending to winter to a warm up in April, temperatures will cool back off again in May and June to below normal across the Great Lakes, Northeast and possibly mid-Atlantic states,” he said, using a forecast that’s based off a series of analogs he and Bastardi researched recently. And “the usage of natural gas may not be as high this coming year for the central and southern Plains.”

Besides, betting on weather would be pretty risky.

“Gambling on weather is, over time, a sure-fire way to lose money,” said Feshbach. “Sooner or later, the weather always becomes uncooperative.”

Myra P. Saefong is MarketWatch’s assistant global markets editor, based in Tokyo.