News

AUGUST 12, 2013
By: Bloomberg
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Aug. 12 (Bloomberg) — West Texas Intermediate crude fell for the sixth time in seven days as Japan’s economy slowed in the second quarter and the dollar strengthened.
Prices fell as much as 0.8 percent as Japan’s gross domestic product rose an annualized 2.6 percent, down from 3.8 percent the prior quarter, the Cabinet Office said. The dollar gained versus the majority of its 10 most-traded peers, reducing crude’s investment appeal. Bijan Namdar Zanganeh pledged to raise Iran’s output if he becomes the country’s oil minister.
“We had weak GDP data out of Japan,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The strong dollar is probably where some of the pressure is coming from. We are back to the trading band between $103 and $108.”
WTI for September delivery slid 76 cents, or 0.7 percent, to $105.21 a barrel at 9:14 a.m. on the New York Mercantile Exchange. The volume of all futures traded was 20 percent below the 100-day average.
Brent for September settlement dropped 60 cents, or 0.6 percent, to $107.62 a barrel on the London-based ICE Futures Europe exchange. Volume was 4.4 percent below the 100-day average. The European benchmark ’s premium to WTI was as little as $1.62, the narrowest on an intraday basis since Aug. 5.
Japan’s Economy
Second-quarter growth in Japan, the third-largest oil- consuming country after the U.S. and China, was slower than the 3.6 percent gain predicted by 32 economists in a Bloomberg survey. Consumer spending, which accounts for about 60 percent of the economy, contributed 1.9 percentage points to the annualized real growth rate.
The Bloomberg U.S. Dollar Index rose for the first time in seven days before a report tomorrow that may show a fourth straight monthly gain in retail sales, based on the median estimate of 64 economists. An increase might back the case for the Federal Reserve to reduce stimulus.
Fed Bank of Chicago President Charles Evans, who has been among the most vocal proponents of record monetary accommodation, said Aug. 6 that the central bank may begin curbing the $85 billion a month bond purchases in September.
Iranian Output
Zanganeh, a former Iranian oil minister nominated by President Hassan Rohani to take the post, said his “first action will be to bring the country’s oil production capacity back to 2005” levels, according to Shana, the Oil Ministry’s news website.
Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia, has slipped to sixth place, producing 2.56 million barrels a day in July, according to a Bloomberg survey of producers and analysts. Its 2005 production averaged almost 4 million barrels a day.
Money managers reduced their bullish positions on WTI for a second week on speculation that the Fed will scale back stimulus. Hedge funds cut net-long positions, or wagers that prices will rise, by 2.5 percent to 310,827 futures and options combined in the seven days ended Aug. 6, the Commodity Futures Trading Commission said in its […]

JULY 26, 2013
Cooler temperatures put a damper on corn prices.
This was not a good week to be a corn producer, at least not when it comes to prices. December corn set new contract lows on both Tuesday and Wednesday, and the price declines are likely to continue for until the harvest lows are hit.
“From a technical standpoint the market is clearly in a downtrend,” says Adam Stout, risk management consultant with INTL FCStone, Kansas City. “Traditionally the corn market bottoms out prior to harvest.”
Improving weather conditions were the main driver that sent December corn prices to lows not seen since November 2010.
“The bull is running out of time,” says Jerrod Kitt, director of research with the Linn Group, Chicago. He expects lows to hit over the next two weeks on corn as the weather premium is removed from the market.
Cooler Temps Cool Prices
Temperatures across the Corn Belt fell have plunged just in time for pollination. As of July 21, less than half of the nation’s corn was silking. This week and next week will be critical periods for the corn crop, and weather forecasts, for the most part, are calling for moderate temperatures.
“Even though it has been dry, temperatures have been so moderate that there is not as much concern over the lack of precipitation,” says Stout.
Heading for Record Yields
While harvest in the heart of the Corn Belt is still several weeks away, new-crop corn from Texas and the Southeast has started to hit the market. By mid-August corn producers should be harvesting in Arkansas, Tennessee, and Kentucky, with Missouri and Illinois harvest getting under way in early September.
“We would not be surprised to see record yields in the eastern Corn Belt,” says Kit. That would mean corn yields above 180 bushels per acre in Illinois, 171 bushels in Indiana, and 174 bushels in Ohio. “We could easily eclipse those levels,” he adds.
Longer term, the question is how low can corn prices go, particularly if the 2014 harvest is large
If this year’s corn crop is as large as expected and the carryout builds to 1.4 billion bushels, Stout does not rule out corn prices below $4/bu. in the 2014-15 marketing year.
“Land prices have seen their best days,” Stout adds.

JULY 18, 2013
By: Beef Today Editors

July 18 (Bloomberg) — Corn fell for a second day to the lowest level in more than a week as rain in the U.S. Midwest is forecast to reduce crop stress, easing concerns dryness will hurt a record harvest in the world’s largest grower.
Rain across the north-central and western Midwest will improve moisture this week, MDA Weather Services wrote in a forecast today. Corn conditions worsened amid persistent dry weather, with 66 percent of the crop rated good to excellent as of July 14 from 68 percent a week earlier, government data show.
“There’s certainly been a potential improvement in forecasts over the last 24 hours, particularly in the drier parts of the U.S. western Corn Belt,” Michael Pitts, a commodity sales director at National Australia Bank Ltd., said by phone from Sydney today. “If that comes to a fruition, and we don’t get any heat, then that should push us most of the way through the most dangerous part of the corn season.”
Corn for delivery in December fell 1 percent to $4.97 a bushel by 5:23 a.m. on the Chicago Board of Trade. Earlier it touched $4.95 a bushel, the lowest price since July 8.
A storm will move through the Corn Belt in the middle of next week, helping ensure rainfall will be near normal in most areas, Accuweather.com forecast yesterday.
About 16 percent of corn was at the silking stage as of July 14, behind an average of 35 percent in the previous five years, the U.S. Department of Agriculture said July 15. Silking is part of the pollination stage when drought and high temperatures can hurt yields, according to the Ohio State University Extension website.
Corn futures have dropped 29 percent this year as U.S. farmers planted a record crop, estimated by the USDA to climb to 13.95 billion bushels.
Soybeans for November delivery fell 0.6 percent to $12.7575 a bushel. Wheat for delivery in September added 0.3 percent to $6.67 a bushel in Chicago. Milling wheat for delivery in November traded on NYSE Liffe in Paris was unchanged at 194.50 euros ($255) a metric ton.

JULY 2, 2013
By: Bloomberg
(Bloomberg) — West Texas Intermediate crude rose to the highest level this year on speculation that U.S. stockpiles shrank for the first time in a month and as orders placed with U.S. factories rose in May.
Crude gained for the sixth time in seven days as inventories may have dropped last week to the lowest level since May 31, according a Bloomberg survey before government data tomorrow, signaling increased demand in the world’s largest oil- consuming country. Factory bookings rose 2.1 percent, the Commerce Department said. Brent’s premium over WTI narrowed to the lowest since January 2011.
“There is still some room for some bullish supply numbers,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “You really want to sell oil ahead of inventory data that may show some sharp drops? There is a lot of price chasing going on.”
WTI for August delivery gained 99 cents, or 1 percent, to $98.98 a barrel at 10:33 a.m. on the New York Mercantile Exchange after reaching $99.17, the highest intraday level since Sept. 17. The volume of all futures traded was 139 percent above the 100-day average.
Brent for August settlement rose 65 cents, or 0.6 percent, to $103.65 a barrel on the London-based ICE Futures Europe exchange. Volume was 1.6 percent above the 100-day average. The European benchmark grade’s premium to WTI narrowed to as little as $4.56 a barrel.
Crude Supply
U.S. crude stockpiles fell 2.25 million barrels, or 0.6 percent, to 391.9 million in the week ended June 28, the Bloomberg survey showed. Refineries probably increased operating rates to the highest level in more than 10 months as motor fuel production climbed before the U.S. Independence Day holiday on July 4, the survey showed.
Total petroleum consumption in the U.S., the world’s biggest oil consuming country, increased 3 percent in the week ended June 21 to 19 million barrels a day, the EIA, the Energy Department’s statistical arm, reported last week.
Motor-fuel demand is highest from the last weekend in May to the Labor Day weekend in early September, the prime vacation season in the U.S.
“It’s the peak demand season,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “The path of least resistance is higher.”
Factory Orders
Growth in May factory orders is faster than the 2 percent increase forecast by economists surveyed by Bloomberg. Factory orders excluding the volatile transportation component climbed 0.6 percent after a 0.2 percent increase the prior month, the Commerce report showed.
The U.S. accounted for 21 percent of global oil demand last year, according to the International Energy Agency’s monthly oil market report published on June 12.
“We are looking at a decline in inventories,” said Gordy Elliott, a risk-management specialist at Intl FC Stone LLC in St. Louis Park, Minnesota. “Brent is having more challenges to find a reason to rally. You’ll probably see WTI trading even at a premium to Brent.”
Goldman Sachs Group Inc. has forecast since February 2012 that the Brent-WTI spread would shrink, even while the differential moved […]