Shanghai rebar holds near 12-week low ahead of China holiday

Mon Sep 30, 2013
* China final PMI slips to 50.2 from initial 51.2

* Macquarie lifits Q4 iron ore forecast to $138 from $125

* India to keep 30 pct tax on iron ore exports
By Manolo Serapio Jr
SINGAPORE, Sept 30 (Reuters) - Shanghai steel futures hovered near their lowest level since early July on Monday, pressured by slow demand ahead of a week-long holiday in top
consumer China that has thinned trading volumes.

The price of Shanghai rebar is set for its first decline in four months as supply outpaced growth in demand, curbing appetite for raw material iron ore which is also set to end
September weaker after a three-month upturn.

The most-traded rebar contract for January delivery on the Shanghai Futures Exchange was little changed at 3,584 yuan ($590) a tonne by the midday break. The contract touched
3,570 yuan on Friday, its lowest since July 3.

For the month, rebar has lost 4.5 percent so far after gaining in June to August.

Data released on Monday showed the final reading of HSBC's China Purchasing Managers' Index for September slipping to 50.2 from last week's preliminary 51.2 suggesting that a firm rebound
for Asia's economic powerhouse remains elusive.

China's daily crude steel output remained near this year's highs above 2.1 million tonnes in early to mid-September even as demand growth failed to keep pace, lifting stockpiles of the raw
material and weighing on prices.

Increased supply of iron ore in the spot market has also dragged down prices of the raw material, which has fallen more than 4 percent so far this month.

Benchmark 62-percent grade iron ore .IO62-CNI=SI dropped 1.4 percent to $131.90 a tonne on Friday, its cheapest since Sept. 20. Trading is likely to be limited this week with Chinese
markets shut for the Oct. 1-7 National Day holiday.

"I'm not receiving enquiries in the market today so far. I think most people are preparing for the holidays and any recent replenishment of stocks has been sufficient," said a Hong
Kong-based iron ore trader.

Iron ore swaps may also come under pressure amid broad-based weakness in industrial commodities and equities fueled by concerns over a looming shutdown of the U.S. government as lawmakers struggled to pass an emergency spending bill.

Despite this month's decline, iron ore prices have risen 13.2 percent for the third quarter ending on Monday and investment bank Macquarie sees the gains being sustained.

Macquarie raised its iron ore price forecast for the fourth quarter to $138 from $125 on optimism that a reform-focused dicussion at China's Congress in November would spur a
restocking cycle that could absorb an expected increase in seaborne supplies.

"While the near term is likely to see the spot iron ore price drifting in line with steel prices, given mills' adequate stock position, positive sentiment emanating from the Chinese
Congress brings the risk of an aggressive restock into year-end," Macquarie said in a note.

Indian supplies are also unlikely to improve any time soon with the government seen keeping a 30 percent tax on exports. India's finance minister said on Friday there was no case to
reduce the tax, a reversal of the government's earlier stance.

  Shanghai rebar futures and iron ore indexes at 0417 GMT

  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN4                   3584     -2.00        -0.06
  THE STEEL INDEX 62 PCT INDEX     131.9     -1.90        -1.42
  METAL BULLETIN INDEX            132.07     -3.29        -2.43

  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.1202 Chinese yuan)

(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)

Shanghai rebar holds near 12-week low ahead of China holiday

Mon Sep 30, 2013
* China final PMI slips to 50.2 from initial 51.2

* Macquarie lifits Q4 iron ore forecast to $138 from $125

* India to keep 30 pct tax on iron ore exports
By Manolo Serapio Jr
SINGAPORE, Sept 30 (Reuters) - Shanghai steel futures hovered near their lowest level since early July on Monday, pressured by slow demand ahead of a week-long holiday in top
consumer China that has thinned trading volumes.

The price of Shanghai rebar is set for its first decline in four months as supply outpaced growth in demand, curbing appetite for raw material iron ore which is also set to end
September weaker after a three-month upturn.

The most-traded rebar contract for January delivery on the Shanghai Futures Exchange was little changed at 3,584 yuan ($590) a tonne by the midday break. The contract touched
3,570 yuan on Friday, its lowest since July 3.

For the month, rebar has lost 4.5 percent so far after gaining in June to August.

Data released on Monday showed the final reading of HSBC's China Purchasing Managers' Index for September slipping to 50.2 from last week's preliminary 51.2 suggesting that a firm rebound
for Asia's economic powerhouse remains elusive.

China's daily crude steel output remained near this year's highs above 2.1 million tonnes in early to mid-September even as demand growth failed to keep pace, lifting stockpiles of the raw
material and weighing on prices.

Increased supply of iron ore in the spot market has also dragged down prices of the raw material, which has fallen more than 4 percent so far this month.

Benchmark 62-percent grade iron ore .IO62-CNI=SI dropped 1.4 percent to $131.90 a tonne on Friday, its cheapest since Sept. 20. Trading is likely to be limited this week with Chinese
markets shut for the Oct. 1-7 National Day holiday.

"I'm not receiving enquiries in the market today so far. I think most people are preparing for the holidays and any recent replenishment of stocks has been sufficient," said a Hong
Kong-based iron ore trader.

Iron ore swaps may also come under pressure amid broad-based weakness in industrial commodities and equities fueled by concerns over a looming shutdown of the U.S. government as lawmakers struggled to pass an emergency spending bill.

Despite this month's decline, iron ore prices have risen 13.2 percent for the third quarter ending on Monday and investment bank Macquarie sees the gains being sustained.

Macquarie raised its iron ore price forecast for the fourth quarter to $138 from $125 on optimism that a reform-focused dicussion at China's Congress in November would spur a
restocking cycle that could absorb an expected increase in seaborne supplies.

"While the near term is likely to see the spot iron ore price drifting in line with steel prices, given mills' adequate stock position, positive sentiment emanating from the Chinese
Congress brings the risk of an aggressive restock into year-end," Macquarie said in a note.

Indian supplies are also unlikely to improve any time soon with the government seen keeping a 30 percent tax on exports. India's finance minister said on Friday there was no case to
reduce the tax, a reversal of the government's earlier stance.

  Shanghai rebar futures and iron ore indexes at 0417 GMT

  Contract                          Last    Change   Pct Change
  SHFE REBAR JAN4                   3584     -2.00        -0.06
  THE STEEL INDEX 62 PCT INDEX     131.9     -1.90        -1.42
  METAL BULLETIN INDEX            132.07     -3.29        -2.43

  Rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.1202 Chinese yuan)

(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)

China's CITIC says close to Australia iron ore production start

Mon Sep 30, 2013
* CITIC says project moving into production phase

* Development is billions of dollars over budget, 4 yrs behind schedule

* Has been marred by legal disputes
SYDNEY, Sept 30 (Reuters) - China's CITIC Pacific said it was moving into the initial production phase at its $8 billion iron ore project in Australia, following years of delays at one of China's costliest offshore mining developments.

Already some four years behind schedule and billions of dollars over budget, commissioning of the first of the project's two production lines has been going on since July, CITIC said in an e-mailed statement.

"We are now moving into the production stage," it said.

The project, one of the largest of its kind undertaken by a Chinese entity outside China, has been marred by legal disputes. It has yet to generate any returns six years after CITIC Pacific bought the rights from Australian tycoon Clive Palmer, prompting Beijing to take a much more cautious approach to approving foreign mining investments.

CITIC last month said the focus over the next six months would be to ensure the stable running of the first production line and ramping it up to full capacity.

CITIC Pacific, controlled by state-owned CITIC Group , had hoped to begin exporting iron ore in May. But problems at its grinding mill, a component in the production of the type of magnetite found in the far west Australian deposits mined by the company, forced it to delay.

The development aims to produce up to 24 million tonnes of iron ore concentrate annually. The material will be used by CITIC Pacific's own steel plants and also sold to other steel producers in China.

The cost of the project has swelled to almost $8 billion from $2.5 billion.

(Reporting by James Regan; Editing by Joseph Radford)

Soybeans Drop as U.S. Shutdown Risk May Threaten Checks on Crops

By Supunnabul Suwannakij - Sep 30, 2013
Bloomberg
Soybeans dropped, paring the first quarterly advance in a year, on concern that a possible U.S. government shutdown may disrupt crop inspections, while favorable weather boosted harvest prospects. Corn and wheat fell.

Soybeans for delivery in November declined as much as 0.8 percent to $13.09 a bushel on the Chicago Board of Trade and traded at $13.1075 at 11:29 a.m. in Singapore. Prices advanced 4.7 percent since the end of June.

The U.S. government faces a risk of the first shutdown in 17 years from tomorrow because of a budget impasse, and unless differences are resolved as many as 800,000 federal employees will be on furlough. Light to moderate rain was seen in the western Midwest through the southeastern Plains on Sept. 28, with a drier trend elsewhere, DTN said in a Sept. 27 forecast.

“Traders may be cautious about trading right now because there is no certainty whether grains inspection will continue at the same rate,” said Joyce Liu, an analyst at Phillip Futures Pte in Singapore, referring to the U.S. Department of Agriculture. The favorable weather in the U.S. will help with rapid harvesting, she said.

Corn for delivery in December dropped 0.2 percent to $4.53 a bushel in Chicago. Prices lost 11 percent since the end of June, heading for a fourth straight quarterly retreat that would be the longest slump since 2009.

Wheat for delivery in December fell 0.3 percent to $6.8125 a bushel in Chicago. Prices gained 3.6 percent since the end of June, poised to snap three straight quarterly losses.

GRAINS-Wheat falls, set for first quarterly gain in a year

Mon Sep 30, 2013
SYDNEY, Sept 30 (Reuters) - U.S. wheat fell for the first time in six sessions on Monday amid a broad-based commodity sell-off but is poised to record its first quarterly rise in a
year, buoyed by strong export demand from China and Brazil.

FUNDAMENTALS

* Front month Chicago Board Of Trade wheat is up nearly 6 percent for the month, the biggest jump since July, 2012.

* Wheat poised to finish the quarter up nearly 5.1 percent, the first quarterly gain for a year.

* Front-month soybeans down more 16 percent for the quarter, the worst performing period in three years.

* Beans down 8 percent for the month, having firmed 3.6 percent in August.

* Spot corn is down more than 33 percent for the quarter, the worst quarter since September 1996 as an expected bumper U.S. crop weighed on prices.

* The U.S. Department of Agriculture said private exporters reported sales of 121,600 tonnes of U.S. wheat to unknown destinations.

* Brazilian millers are looking at Polish wheat as a cheaper alternative to North American supply, milling group Pacifico said Thursday.

* Soybeans under pressure ahead of the USDA's stocks report latert this week, which is expected to show Sept. 1 U.S. soybean inventories at a nine-year low.

MARKET NEWS

*  The euro fell hard in Asia on Monday with Italy in the grip of a fresh political crisis, while investors also sold the greenback as a midnight deadline to avert a shutdown in
Washington loomed large.

  Grains prices at  0035 GMT
  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI
  CBOT wheat     681.25    -1.75  -0.26%    +0.44%     653.47   75
  CBOT corn      453.25    -0.75  -0.17%    -0.77%     467.07   41
  CBOT soy      1311.25    -8.50  -0.64%    -0.42%    1342.53   37
  CBOT rice      $15.40   -$0.01  -0.03%    +0.49%     $15.52   42
  WTI crude     $101.60   -$1.27  -1.23%    -1.39%    $106.43   29
  Currencies                                               
  Euro/dlr       $1.349  -$0.003  -0.20%    +0.04%
  USD/AUD         0.929   -0.003  -0.30%    -0.78%
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential

(Reporting by Colin Packham; Editing by Richard Pullin)

Govt targets coal block auction by Dec

PTI
NEW DELHI, SEPT 29:
The government has set a target to auction at least six coal blocks to private firms by December. “The Coal Ministry has set an internal target to auction the coal blocks by December,” said an official source.

He said that at least six explored blocks with estimated reserves of over 2,000 million tonne would be put up for auction, without giving details of the mines involved.

Coal Minister Sriprakash Jaiswal had said last month that the coal block auction is likely to be held in the next two months.

The Cabinet had recently approved the methodology for auctioning coal blocks, providing for upfront and production- linked payments and benchmarking of coal sale prices.

Coal blocks will be put up for auction after Environment Ministry reviews them and bidders have to agree to a minimum work programme, an official statement had said recently.

The policy provides for production-linked payment on a rupee per tonne basis, plus a basic upfront payment of 10 per cent of the intrinsic value of the coal block.

The intrinsic value will be calculated on the basis of net present value (NPV) of the block arrived at through the discounted cash flow (DCF) method, the statement had said.

The government had earlier said that exploration activities in identified blocks are at an advanced stage and are likely to be completed soon. They will be auctioned under the Competitive Bidding of the Coal Mines Rules, 2012.

The government allocated 14 coal mines to central and state public sector units, including four to NTPC, in July.

It had planned to auction 54 coal blocks with total estimated reserves of about 18 billion tonne.

Evening markets: ags get caught up in commodities retreat

20th Sept 2013, by Agrimoney
Commodities struggled on Friday, and not just agricultural ones.

OK, there is some feeling that the Federal Reserve's decision on Wednesday of plans to withdraw its emergency economic support bodes well for commodity prices, agricultural ones included.

But James Bullard, president of the St Louis Fed, dispelled residual euphoria by saying that the Fed's decision had been "borderline", adding that the central bank could begin tapering its monthly $85bn asset purchases from October, if economic data improves.

The CRB commodities index ended down 1.1%, reflecting losses in a range of raw materials. But farm commodities did their bit.

Yield fears wane

Soybeans, which had been the leader in Chicago for much of August and September, continued their march south, as fears for the US yield continued to ease.

In part, this fading is based on weather, and observations of rains which are seen as reviving soybean hopes (if coming too late for corn).

"Rains overnight in Minnesota, Wisconsin, Iowa and Missouri are offering resistance as the yield outlook on beans is seen improving or at the very least has stabilised," Benson Quinn Commodities said.

But there are also decent, if not outstanding reports from the early US harvest.

'Not as low as feared'

"Early indications" are of better than expected soybean yields, Darrell Holaday at Country Futures said, if adding that there is "not enough data to draw conclusions".

Richard Feltes at Chicago-based RJ O'Brien said: "Early soy yields, while not a good as corn, are not as low as feared in late August."

And the very fact that harvest is happening is a negative for prices, in meaning a jump in supplies which anyway tends to weigh on values, and is already evident in cash markets..

Pressure on prices is "stemming from a steady pick-up in harvest activity, ongoing managed fund liquidation and easing quick shipment basis levels", Mr Feltes said.

'Ideal for harvest'

Furthermore, the harvest looks set to accelerate next week, given a better weather outlook for fieldwork.

"Overnight and morning rains have brought harvest to a halt for the moment. Next week's forecast looks ideal for harvest to hit full stride," CHS Hedging said.

Country Futures' Mr Holaday said: "Next week's weather will allow for a harvest push in corn and soybeans and that has led to some harvest hedge pressure."

'Continue to replenish moisture'

Weather appears to be improving, a little, in Brazil too, where dryness has been delaying the onset of soybean sowings.

"Heavy rains are expected across northern Rio Grande do Sul, Santa Catarina, and Parana through Tuesday, with a few showers also expected in Mato Grosso do Sul, Sao Paulo, and southern Minas Gerais," weather service MDA said.

"Showers in Sao Paulo will continue to replenish moisture there ahead of corn and soybean planting," although "more rains will still be needed in far northern areas in the coming weeks".

'Panic technical selling'

And, as an extra negative for soybeans, technicals turned bleak too, with the closure in the last session of the November contract's chart gap dating from August 26, and the weakness in today's session, ringing chart alarm bells.

"When the November soybean contract traded below $13.31 a bushel, panic technical selling surfaced, as funds see this as a sign of a major trend change," Mr Holaday said.

"Technically, this points to a test of the support at $12.85 a bushel on November futures."

Which indicates some downside from where they closed on Friday, down 1.8% at $13.15 ¼ a bushel in Chicago, the contract's lowest finish in nearly a month.

'Anchoring the market'

For corn, many of the same points applied, with a stronger forecast harvest pace speaking of higher supplies and price pressure, and results from what is being combined continuing to reassure buyers.

Indeed, Informa Economics raised its forecast for US production of both crops, as it came in with its first acreage forecasts for 2014.

However, at least soybeans have decent export demand to count on, unlike corn, which remains uncompetitive compared with rival offers from South America and Ukraine.

"The corn premiums in the US remain large versus both Brazil and the Black sea region," US Commodities said.

"Brazil versus the FOB the Gulf is $0.60 a bushel cheaper and the Ukraine is $0.90 a bushel cheaper. It is the cheaper world values that are anchoring the market."

Corn for December dropped 1.9% to $4.51 a bushel, a one-month low.

Corn vs wheat

And that boded ill for wheat too, despite the improved idea over prices as concerns over Argentine and Russian crops, and overall world quality, have grown this month.

"Wheat now has better fundamentals compared with corn, but the wheat-corn spread is nearing a stiff $2 a bushel, wheat over corn," US Commodities noted.

OK, "the Argentine wheat areas have been dry and many feel that the crop has been trimmed to 12m tonnes," Mr Holaday noted.

And Benson Quinn Commodities flagged that, for wheat, "strong weekly US exports sales reported yesterday and developing weather concerns in South America and quality issues in Russia are seen as supportive factors, along with an improved technical structure".

But wheat for December tumbled 1.6% to $6.46 ¼ a bushel, getting back within 5 cents of that $2-a-bushel premium over December corn.

'Bearish on arabica coffee'

Soft commodities eased too, little helped by a return by Brazil's real to the back foot, losing 0.7% against the dollar, and so lowering in dollar terms values of crops in which Brazil is a major player.

These include arabica coffee, which dropped 1.0% to close at 114.65 cents a pound for December delivery, continuing to feel pressure too from ideas of ample supplies.

"We remain bearish on arabica coffee due to expectations of a bumper crop which would provide abundant supplies," Joyce Liu at Phillip Futures said.

Brazil;s Conselho Nacional do Café also noted continued pressure on prices from data showing comfortable stocks of green coffee in the US, and the "expectation of development-friendly rains for Brazilian coffee plantations".

Many of the Brazilian areas for which MDA forecast rain (above), such as Parana and Minas Gerais, are coffee-growing regions.

Rain disruptions

However, such ideas of Brazilian rains were more supportive for raw sugar futures, in speaking of interruptions to cane harvesting, and therefore output of the sweetener.

Raw sugar for October bucked the negative trend, just, by adding 0.01 cent to 17.18 cents a pound.

US soy area to hit record in 2014 as corn declines

20th Sept 2013, by Agrimoney
Corn sowings in the US will fall for the first time in six years in 2014, with farmers turning en masse to soybeans – for which plantings will hit a record high – leaving wheat seedings largely unchanged.

Informa Economics - in its first forecasts for next year's US crops, which came as it revised estimates for the ongoing harvests - pegged corn plantings at 92.7m acres.

While still a high figure by recent standards, exceeded only three times since World War II, that would represent a sharp fall year on year.

The US Department of Agriculture pegs US corn sowings this year at 99.5m acres, although many observers believe that figure is too high, by at least 1m acres, after an unusually wet spring prompted many growers to abandon some fields.

Soybean record

The land freed up from corn will go in the main to soybeans, for which sowings will jump to a record 83.6m acres, the Informa data showed.

That is 6.4m acres above the USDA's current estimate of US plantings this year.

Wheat area will come in at 56.7m acres, all varieties included, compared with the official estimate of 56.5m acres for this year's crop, if still a low figure by historical standards.

How accurate?

Sowings forecasts made so far in advance are unlikely to be wholly accurate, depending in part on weather at the time – this year, for instance, wet weather was seen encouraging some US farmers to plant soybeans, which can be later seeded, rather than corn.

However, some idea of likely allocations can be gauged from futures markets, and the relative prices of the different crops, although these are likely to change as the fate of South American crops to be harvested early in 2014 unwinds.

In Chicago, the much-watched ratio on a 2014 basis for November soybeans, the first new crop contract, to December corn stood at 2.39:1 on Friday, well into the area typically seen as encouraging sowings of the oilseed over the grain.

While traders use different tipping points, 2:1 and 2.25:1 are common ones.

A year ago, Informa forecast 2013 corn plantings at 97.5m acres and soybean area at 79.9m acres, with wheat sowings pegged at 57.1m acres.

Estimates for 2013

Informa's latest forecasts came as the analysis group lifted by 149m bushels to 13.889bn bushels its forecast for this year's US corn crop, a figure 46m tonnes above the USDA estimate.

Informa used a harvested area of 88.1m acres, 1.0m acres below the official estimate, but a more optimistic yield of 157.6 bushels per acre.

For soybeans, the production estimate was raised by 60m bushels to 3.224bn bushels, again reflecting a sub-USDA forecast for area, of 75.99m acres, but a higher yield figure, of 42.4 bushels per acre.

The USDA sees the soybean harvest at 3.149bn bushels.

Wheat rises on forecasts for increased Chinese demand

Mon Sep 23, 2013
* Wheat supported by damage to China crop, demand for U.S. exports

* Soybeans, corn under pressure from harvest estimates -analysts

* Soybeans fall to one-month low
By Colin Packham
SYDNEY, Sept 23 (Reuters) - U.S. wheat rose on Monday, rebounding from losses of more than 1.5 percent in the previous session, as forecasts for increased Chinese demand underpinned
gains.

Soybeans fell, touching a one-month low, and corn slid, both under pressure from the advancing U.S. harvest.

Chicago Board of Trade December wheat futures rose 0.3 percent to $6.48-1/4 a bushel by 0252 GMT, having lost 1.6 percent on Friday.

"The support for wheat prices can be attributed to the forecast for China 2013/14 wheat imports at 7.5 million tonnes after weather ruined China's domestic crops," said Joyce Liu,
investment analyst, Phillip Futures Singapore.

The China National Grain and Oils Information Center on Monday increased its projections for Chinese import demand to 7.5 million tonnes, having previously pegged imports at 6.5
million tonnes.

The revised figure would be the highest imports for China in a decade. The bad weather that damaged the Chinese harvest in May and June has boosted demand for U.S. wheat.

U.S. exporters shipped more wheat to global buyers in the week ended Sept. 12 than in any week for more than two decades, with most of the wheat going to Brazil and China, according to
U.S. Department of Agriculture data.

SOYBEANS, CORN PRESSURED

November soybeans fell 0.15 percent to $13.13-1/4 a bushel, a few cents above the session low of $13.07-3/4 a bushel, the lowest since Aug. 23. Soybeans closed down 1.8 percent on Friday.

December corn fell 0.17 percent to $4.50-1/4 a bushel, having closed down 1.9 percent in the previous session.

Both soybeans and corn remain under pressure from the advancing U.S. harvest, which weighed on cash prices, analysts said.

Spot basis bids for corn and soybeans were lower across the U.S. Midwest on Friday, pressured by expectations the harvest will soon be in full swing, grain merchants said.

Traders have highlighted early findings that showed better-than-expected yields in the United States, prompting a widely watched private forecaster to raise its output estimates
for soybeans and corn for 2013.

The forecaster also projected that U.S. soybean plantings for 2014 would reach 83.6 million acres, topping the 2009 record of 77.5 million acres by 8 percent.

  Grains prices at  0252 GMT
  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI
  CBOT wheat     648.25     2.00  +0.31%    -1.33%     648.46   58
  CBOT corn      450.25    -0.75  -0.17%    -1.32%     468.20   34
  CBOT soy      1313.25    -2.00  -0.15%    -1.96%    1330.54   32
  CBOT rice      $15.58    $0.04  +0.23%    -0.64%     $15.44   50
  WTI crude     $104.65   -$0.10  -0.10%    -0.02%    $107.13   37
  Currencies                                               
  Euro/dlr       $1.352   $0.000  +0.01%    -0.04%
  USD/AUD         0.942    0.003  +0.32%    -0.15%
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential

(Editing by Tom Hogue)

Soybeans Trade Near One-Month Low as U.S. Crop Prospects Improve

By Ranjeetha Pakiam - Sep 23, 2013
Bloomberg
Soybeans traded near the lowest level in a month on speculation that the U.S. harvest will show better-than-expected yields as the weather improves across the Midwest. Corn fell for a second day.

The contract for November delivery declined as much as 0.6 percent to $13.0775 a bushel on the Chicago Board of Trade, the lowest level for the most-active contract since Aug. 23, before trading at $13.145 at 2:05 p.m. in Singapore. Futures dropped 4.8 percent last week.

Soybeans rallied for six straight weeks through Sept. 13 as crop conditions in the Midwest deteriorated amid hot, dry weather, U.S. Department of Agriculture data show. Drier weather expected over the next seven days will favor mature crops and harvests in the region, DTN said in a report on Sept. 20. There are no significant cold-weather threats, the forecaster said.

“The U.S. soybean harvest has commenced and the early yield results seem to be holding up better than expected,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia (CBA), said in a report today. “The oilseed market will be torn between mounting U.S. harvest pressure, changing production estimates and strong export sales results.”

While the USDA lowered its domestic harvest estimate to 3.149 billion bushels this month, that’s still 4.4 percent more than last year’s drought-curbed harvest. Soybean output in India is seen at 11.6 million to 11.8 million tons in 2013-2014, from 10.6 million tons a year earlier, Vijay Data, president of the Solvent Extractors’ Association of India, said Sept. 20.

Corn for December delivery retreated as much as 0.6 percent to $4.485 a bushel in Chicago, the lowest level since Aug. 14, and was at $4.495. Wheat for delivery in December gained 0.3 percent to $6.4825 a bushel.

Berau to invest $300m to boost production

The Jakarta Post | Business | Mon, September 23 2013
JAKARTA: Publicly listed coal mining company PT Berau Coal Energy (BRAU) plans to invest between US$100 million and $300 million to increase production capacity and build a power plant.

“The money will be used to build a conveyor belt and power plant,” said the company’s president director, Eko Santoso Budianto, after the closing of the Derawan Festival in Tanjung Redeb, East Kalimantan, on Friday, as quoted by Antara news agency.

The conveyor belt would be at its mining site, Binungan coal mine, said Eko. Meanwhile, the power plant would have two generator units each with a capacity of 20 megawatts, he added.

Berau Coal expects to produce 34 million tons of coal by 2017. Despite a decline in coal prices from $78 per ton to $60 per ton, the company would still execute the projects, Eko said. The company expects this year’s production to reach 23.5 tons.

Eko believed that conditions would improve in the next two to three
years. “Thus, when the projects are done, [I] hope prices will be at equilibrium,” he said.

Berau Coal operates three mining sites – Lati, Binungan and Sambarata – all in East Kalimantan. The company’s concession is around 118,400 hectares.

East coast ports may take shine off western cousins

CH. R. S. SARMA, THE HINDU BUSINESS LINE
22 SEPTEMBER, 2013
East coast ports in the country have long been treated as poor cousins of the western ports, as the latter have enjoyed some historical advantages. However, the tide has turned in the last few years. Now, the Government has also adopted a “Look East” policy. So, exciting times are ahead for the ports on the east coast, but there are still many challenges to be overcome and the path is by no means smooth and straight. This was the general view of speakers at the two-day east coast maritime business summit held in Visakhapatnam, last week.

EASTERN CHALLENGES

According to Kolkata Port Trust Chairman R.P.S. Kahlon, who is also in charge of the Visakhapatnam port, with the addition of the new capacity, the traffic share of east coast ports is expected to go up in the near future.

Quoting a KPMG report, he said the share of ports on the west coast in the maritime trade would go down to 66 per cent from the present 77 per cent by next year and the trend is likely to continue.

Two major ports are coming up on the east coast, one at Sagar Island in West Bengal and the other at Dugarajapatnam in Andhra Pradesh. RITES has completed the feasibility study for the Sagar port and it is expected to take up the study for Dugarajapatnam shortly. Besides, many other ports are adding to their capacities. The capacity of Visakhapatnam port will cross 100 million tonnes after the completion of the ongoing projects taken up in public-private-partnership (PPP) mode and it will be better placed to face the competition from private ports, such as Gangavaram and Krishnapatnam.

Draft (water depth), is a problem faced by many ports and they are taking up dredging to deepen the channels to receive bigger vessels. Kahlon said, “Kolkata and Haldia are, of course, riverine, estuarine ports and, therefore, there is no escaping the problem of low draft. Continual dredging is required and it becomes expensive for the users. We have, therefore, taken up the Sagar port. Roughly, Rs 8,000 crore may be invested on the port. The first phase may be over in three years or so. The total project may be completed by 2019,” he said. When the problems of connecting Sagar Island with the mainland and the hinterland were brought to his notice, he said they would have to be tackled.

MANY HURDLES

Containerisation of cargo was another critical issue discussed at the two-day summit. Concor Chairman and Managing Director Anil K. Gupta said that containerisation of cargo was low in the country and it was lower on the eastern ports.

“Cargo shift from the west coast to the east coast is taking place all right, but we also have to focus on containerisation. Ports on the east coast have to create facilities for handling containers. We are setting up 15 new terminals during the current plan period, nine of which will be linked to the eastern ports. Four of them will be located in Odisha and three in Andhra Pradesh, and we will be spending Rs 1,150 crore on these nine terminals alone. Overall, we will spend Rs 3,000 crore on the 15 terminals and Rs 3,000 crore on creating other facilities. A sum of Rs 3,000 crore will be invested by the private sector during the period,” he said, adding that these measures would give a boost to containerisation on the east coast.

Dhruv Kotak, Director of JM Baxi & Co, made a forceful plea that the Government should also consider relaxing cabotage norms for Visakhapatnam as it did in the case of Vallarpadam.

He said, “I believe Visakhapatnam is the true trans-shipment hub in the country. The port is currently handling 1,50,000 tonnes of trans-shipment cargo without any cabotage relaxation. If the norms are relaxed, it will not only help Visakhapatnam port, but Kolkata and Chennai as well.” He further added that 2.3 million containers were available in the Bay of Bengal region and “if Visakhapatnam gets cabotage relaxation, the country can save up to half a billion dollars.”

According to Dredging Corporation of India Chairman and Managing Director D.K Mohanty, poor rail/road connectivity with hinterland is the main reason for many ports, such as Paradip and Ennore, not making any headway. “Their performance does not match their potential. Take Paradip, for instance. In fifty years, the port is now able to handle only 50 million tonnes. It is poorly connected by rail with the hinterland and the cargoes have been diverted to Haldia, in spite of all the draft problems at Haldia. Ennore is also poorly connected by road and it takes nearly four to five hours to cover a distance of 100-120 km. It is a real nightmare. Things may improve for Ennore, if the Chennai-Bangalore dedicated freight corridor is completed,” he said.

He said that no port could now claim exclusive hinterland as in the past, which is a good trend. “Many non-major ports, as they are now called, are coming up in the private sector and, therefore, port users now have a choice. They will now go to the cheapest and most user-friendly port,” Mohanty said.

Gross neglect of coastal shipping and inland waterways for all these years is seen as one of the factors for poor connectivity with the hinterland. Urgent steps would have to be taken to correct the situation, said speakers at the seminar.

“I require 5,000-6,000 tonnes of material for my refractory in Visakhapatnam and it is available on the west coast but I find it cheaper to import it from China than from the west coast. It is an example of how we have neglected coastal shipping,” said R.V.S. Raju, an entrepreneur participating in the debate.

Some of the speakers were also critical of the role of the Tariff Authority for Major Ports and alleged that the authority had become a bit of a hindrance to attracting private investment into the port sector and it was hindering public sector ports from competing with the private ones effectively.

India proposes new financial institution to fund overseas assets acquisition

By: Ajoy K Das
23rd September 2013
KOLKATA (Mining Weekly) – The India government was considering creating a developmental financial corporation dedicated to fund mineral and energy acquisitions overseas.

According to an official involved in drafting a note on the subject, the proposed financial corporation or overseas investment corporation would have the primary objective to offer equity and debt financing to enable Indian government-owned companies to higher leverage their balance sheets in funding overseas acquisition of mineral and energy assets.

The structure of the new overseas investment corporation would be different from the previously-considered sovereign wealth fund ,which was rejected earlier this year by the Finance Ministry, the official said.

In June 2013, the Finance Ministry informed government-owned companies, which included oil exploration and production major ONGC Limited, iron-ore miner NMDC and steel producer Steel Authority India Limited (SAIL), that the creation of a sovereign wealth fund to acquire overseas assets by drawing on India’s foreign exchange reserves would be risky given the governments’ high current account deficit (CAD).

The adverse CAD would also not permit the government to offer sovereign guarantees to companies raising foreign exchange to fund foreign acquisitions, the Ministry informed the companies.

Under such circumstances, the new structure proposed for the overseas investment arm, which would be administered and managed by the Department of Economic Affairs of the Finance Ministry, would be empowered to source foreign exchange resources from the Reserve Bank of India (RBI) on spot basis and to raise long-term debt funds from domestic markets.

But the government would not make any fund available from the annual budgetary allocations to the investment arm, the official added.

Citing reports prepared by India’s Planning Commission, the officials said that the China model of acquiring mineral and energy assets overseas was the single biggest competitive hindrance to Indian efforts to acquiring similar assets.

Acquisition of overseas assets by Chinese companies were backed by well established and extensive bank financing, government undertakings and guarantees and diplomatic bi-lateral relations with target countries that were not available to India companies venturing overseas, the officials added.

During two consecutive financial years ending March, 2012, Indian companies were successful in concluding $5-billion of foreign acquisitions in mineral and mining sectors, while Chinese companies were able to conclude $21-billion worth deals during the same period,.

Edited by: Esmarie Swanepoel

Glencore Agrees to Study $3 Billion Congo Iron Ore Mine

By Jesse Riseborough - Sep 13, 2013
Bloomberg
Glencore Xstrata Plc (GLEN), the global commodity trader and metals producer run by billionaire Ivan Glasenberg, agreed to proceed with a study into an iron ore mine in the Republic of Congo that may cost as much as $3 billion.

The assessment, with partner Zanaga Iron Ore Co., “is now being advanced on the basis of a staged development, substantially reducing the initial capital requirement and including the potential for initial production using existing infrastructure,” Baar, Switzerland-based Glencore said today in a statement.

The development cost is now estimated at $2.5 billion to $3 billion, down from $7.4 billion, Zanaga said in a presentation on its website. Glencore’s Glasenberg has led a call for an industrywide crackdown on over-spending on new mines, which he blames for a glut of some raw materials that has trimmed prices and profits for producers.

The revised agreement between Glencore and Zanaga “should increase the likelihood of project finance,” London-based Liberum Capital Ltd. analyst Richard Knights wrote today in a note. “The company now has a materially more palatable project for potential investors and debt providers given its lower and more efficient capex number.”

Glencore owns a stake of 50 percent plus one share in the project and Zanaga the rest. An examination of the proposed development is due to be completed in the second quarter of next year,
with a decision on investment following that.

The mine may initially produce as much as 14 million metric tons of iron ore a year, Zanaga said. The previous plan was for a mine producing 30 million tons a year.

Zanaga Surges

Zanaga jumped 7.1 percent to close at 28.375 pence in London, the highest since Dec. 19. The stock has more than doubled in the last month, giving the company a market value of 79 million pounds ($125 million).

Glencore, which acquired the stake in the project with Zanaga through the $29 billion takeover of Xstrata Plc in May, dropped 1.8 percent to 337.55 pence.

The biggest mining companies including Glencore, BHP Billiton Ltd. (BHP), Rio Tinto Group and Vale SA are set to spend about $244 billion on expansions through 2015, according to forecasts compiled this month by Bloomberg from the 20 largest mining companies by market value.

Glencore is the world’s biggest exporter of power-station coal. It’s the third-biggest producer of mined copper, third in nickel and biggest in zinc and lead.

The company this week estimated savings of $2 billion next year through the takeover of Xstrata by closing 33 offices, firing workers and reducing costs at existing operations.

Glencore reviewed 88 projects acquired from Xstrata and decided to suspend 44 of them, it said Sept. 10. It also raised the cost estimate for its Koniambo nickel project, inherited from Xstrata, by $1 billion to $6.3 billion.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a non-executive director of Glencore Xstrata.

Iron ore futures get CSRC go-ahead

2013-09-14
By Chen Jia
(China Daily)
China's top securities regulator said on Friday that it has approved iron ore futures trading on the Dalian Commodity Exchange.

The approval came one week after the relaunch of treasury-bond futures on the China Financial Futures Exchange in Shanghai.

"The commodity exchange in Dalian must still complete all of the pre-listing procedures and choose a proper debut according to market conditions," a spokesman for the China Securities Regulatory Commission said.

Iron ore futures will foster a pricing system for the product based on actual supply-demand conditions and reduce price volatility in the global commodity market, the spokesman added.

The Dalian exchange has already completed margin and risk-management systems for the new contracts. The exchange is seeking to prevent huge abnormal transactions and market fluctuations.

Iron ore is the most important raw material for iron and steel producers. In 2012, the world's total output of iron ore was about 1.86 billion metric tons and the trade volume reached 1.13 billion tons.

Four countries - Australia, China, Brazil and India - produce about 80 percent of the world's iron ore. China is the second-largest producer, the biggest importer and the largest spot trading market for iron ore.

Last year, China produced 440 million tons of iron ore, imported 740 million tons and consumed 1.05 billion tons. More than 60 percent of the nation's consumption was imported.

Liu Xingqiang, president of the Dalian exchange, said that a variety of futures products can reduce the potential risks for industries by signaling changes in global commodity prices.

"The exchange will research and provide more financial derivatives for the commodity market and support the transformation of the nation's economic growth pattern," Liu said.

On Friday, the CSRC also approved steam coal futures for the Zhengzhou Commodity Exchange.

Zhang Fan, president of the Zhengzhou exchange, said that simulated trading in sugar futures will start this month and the application will be sent to the CSRC soon.

Asphalt futures and crude oil futures for the Shanghai Futures Exchange are awaiting final approval.

The State Council, China's cabinet, released a statement in March, in which it said that a major task in financial system development was "to build a multi-level capital market and accelerate the construction of the futures market".

Iron ore shortage, rising cost of production hit small steel companies

SURESH P. IYENGAR, ANIL URS
THE HINDU BUSINESS LINE

Larger ones re-jig debt, rework product mix to beat slowdown
MUMBAI/BANGALORE, SEPT. 15: 
The economic slowdown has hit the small steel companies more than the established ones. Small and medium units, especially in iron ore-rich Karnataka, are the worst hit.

The Karnataka Iron and Steel Manufacturers’ Association claims that almost half of the 60 sponge iron plants in the State have shut shop for want of iron ore. A few, such as Sathavahana Ispat, Kirloskar Ferrous, Kalyani Steels, Unimetal Ispat, Sandur Manganese and Iron Ore and Sandur Laminates, have suspended their operations partially.

K.R. Shetty, Vice-President (Exports), Vibhutigudda Mines (Bellary), said about 50 per cent of the small-scale units, especially in the Bellary, Hospet and Sandur region, are on the verge of closure due to iron ore shortage.

The Association has requested NMDC to earmark some quantity of iron ore that is e-auctioned for the small units as they create employment at the local level.

The mining operations in Karnataka resumed recently after an year-long ban imposed by the Supreme Court.

Appreciating the transparent iron ore e-auction, Narendrakumar Baldota, Chairman and Managing Director, MSPL, said the steel and pellet plants with captive mines should be exempted from iron ore e-auction and be allowed to use their own ore to feed to their plants.

NO MORE ATTRACTIVE

Speaking at the recent Mining Engineers’ Association of India summit, he said mining is no more an attractive business with the cost of production and royalty rates increasing tremendously in the last few years and 15 per cent of the price dedicated for social activities.

While small companies are struggling to keep their head above water, the larger ones are busy re-jigging debt to reworking product mix. JSW Steel, one of the largest steel plants in Karnataka, recently commissioned a two-million-tonne per annum beneficiation plant to enhance the quality of low-grade iron ore being supplied at the e-auction conducted in Karnataka. The company has been operating its Vijayanagar unit at 80 per cent utilisation due to iron ore shortage.

Tata Steel saved Rs 1,100 crore last fiscal by implementing cost saving measures and spotting improvement opportunity across the value chain.

Nicolas J. Sowar, Global Metal Sector Leader of Deloitte, feels companies should manage their balance sheet by reducing working capital besides improving efficiency to beat the slowdown blues.

“You need to look at supply chain from the start to finish, logistics, on maintaining the fixed assets, on how those are operating. Every employee has to understand the key matrix to achieving cost advantages,” he said.

MARKETING STRATEGY

With steel imports turning costlier after the sharp depreciation of the rupee against dollar, JSW Steel targets to cater this burgeoning demand.

Jayant Acharya, Director, Commercial and Marketing, JSW Steel, said though the conventional steel demand has slowed down, there is ample opportunity in the import replacement segment. “We are targeting to produce high-grade steel that commands better margin,” he added.

Tata Steel, which has been adding a million tonne capacity since last year, tweaked its marketing initiative to expand its market share in the automobile sector, which has been hit by poor demand. The company’s production capacity at Jamshedpur is expected to touch nine million tonnes this year going up to 10 million tonnes next year.

“Despite slowdown in the automobile sector, our share in the automotive segment has actually gone up. In fact, it is being used in more and more new models that are being launched,” said H.M. Nerurkar, Managing Director, Tata Steel, in a recent interaction with this newspaper.

TIGHTENING COST

Having done what it takes to maintain the market share, steel companies are tightening their cost of funds. Ruia-owned Essar Steel, which is known for rolling out specialised steel from its Hazira plant in Gujarat, has raised $3 billion (Rs 18,000 crore) in the last two months to repay its high-cost rupee debt.

The company expects to save Rs 1,300 crore per annum by prepaying some of the rupee loan and extending the loan maturity period to 6.5 years from 3.5 years.

The expansion of the facilities at Hazira was undertaken when the rupee was trading at Rs 40 a dollar and now the exchange rate has exceeded Rs 60 a dollar, said Ashutosh Agarwala, CFO and Director (Finance), Essar Steel, which is a low cost steel producer in India.

However, many small companies find it difficult to raise funds abroad. They embark on cost-cutting mode by curbing travel expenses and postpone annual salary hike for employees, besides reducing capacity utilisation.

Basant Poddar, Vice-President, Federation of Indian Mineral Industries and Managing Director of MEL, Chitradurga, said about 30-50 per cent of the steel mills in Karnataka have resorted to periodic shut down due to uncertainty of raw material supplies.

“While 50 per cent of the small and medium steel plants are on the verge of closure, many of them have reduced their workforce by half,” he added.

STEEL PRICE HIKE

The slowdown in demand has not deterred companies from raising prices. Essar Steel increased prices by Rs 1,000-1,200 a tonne from August 1, while JSW Steel plans to follow suit.

Steel companies are dependent on imported coking coal to meet their fuel needs. The weak rupee has pushed by the import bills. Besides, the cost of domestic iron ore prices have gone up due to acute shortage in supply after ban on iron ore mining in Goa. BMM Ispat, for example, is expected to put up a coal gassifier to reduce coal consumption in the next 15-20 days.

(With inputs from Shishir Sinha in New Delhi)

Evening markets: slump in expiring futures rattles grains

13th Sept 2013, by Agrimoney

Anyone want some corn at cut price?

Apparently not.

The day brought, besides further thoughts on the much-watched monthly US Department of Agriculture Wasde report released on Thursday, the expiry of September futures contracts in Chicago.

'Absolutely tanked'

It was not a happy affair for those still holding corn lots, with the contract going off the board at $4.50 a bushel - down 6.1% to its lowest close ever. And it ended at a discount to the best-traded December contract for the first time.

In wheat too, Chicago's expiring September contract underperformed, dropping 2.2% to $6.27 ¾ a bushel, very nearly a close low.

"The expiration of the Sep corn and wheat contracts has been very bearish," Darrell Holaday at Country Futures said.

"The September contracts have absolutely tanked. The longs obviously want nothing to do with taking delivery."

The move in the September contract below December was "not a bullish signal", he added.

'Larger-than-expected yields'

And certainly, December corn struggled too, not setting a foot in positive territory all day, and closing down 1.6% at $4.59 a bushel, its lowest close in a month.

And after all, the US harvest continues to beat expectations, albeit from southern areas less affected by summer drought.

"Farmers are surprised by the larger-than-expected yields results from early planted corn," Paul Georgy, president of broker Allendale, said.

And of course, as CHS Hedging noted, corn was "feeling pressure from yesterday's bearish report", with the Wasde lifting US yield, production and end-stocks estimates for 2013-14, when investors had forecast a decline in all three data points.

'Added pressure'

For wheat, the pressure from the Wasde was not so severe, with the report raising estimates for world stocks, but against a backdrop of ideas, that it was overestimating Argentina, Australian and Brazilian harvests.

However, with fellow grain corn falling, it was hard for wheat to do anything but drop too, especially with moisture reaching many areas which are preparing to plant winter crop, boding well for germination.

"Rains in Colorado have wheat markets getting added pressure," CHS Hedging said.

Wheat for December fell 1.8% to $6.41 ½ a bushel in Chicago, within an ace of a contract closing low.

'Growing concern'

That pressed on prices in Europe too, offsetting growing talk of the poor quality of Kazakh and Russian crops, and the huge European Union export data this week, of 715,000 tonnes.

Not that this is the end of the battle to get shot of EU wheat, as Gleadell, the UK grain merchant, pointed out.

"The increase in the French crop to 37m tonnes is a growing concern, as more non-EU wheat exports will be required, and at present there seem enough non-EU supplies to meet importers' requirements," Gleadell managing director David Sheppard said.

In the UK itself, "farmers have seen a sharp recovery in the quality of their wheat, and while the extra yield is a benefit, they may struggle to reap much of a premium given the overall quality of the UK crop".

In short, "markets remain in a downward trend", and given forecasts of "plentiful supplies of corn and wheat around the globe… it remains difficult to envisage a sustained or significant rally in wheat prices".

Paris wheat for November closed down 0.6% at E186.00 a tonne, with its London peer shedding 0.8% to £152.50 a tonne.

'Bulls have control'

The prospects for soybeans looked better than for grains, after the surprisingly large downgrade by the USDA in the Wasde to estimates for domestic stocks at the close of 2013-14.

And there is talk of further downgrades to come, given the methodology used in getting to Thursday's number.

"The pod count and pod weight used by the USDA seem to leave some room for adjustments on upcoming reports," Allendale's Paul Georgy said, noting that, technically, if the November contract could get above $14.09 a bushel, "that would suggest a move to the $15.00-a-bushel level".

"Bulls have control of the market at the moment."

CHS Hedging that with bulls getting "a pretty good meal" out of the Wasde, there is "some argument for extending higher prices is on the table. Retesting the recent highs at $14.09 a bushel is very conceivable".

September soybeans expired strong too, up 3.2% at $14.95 a bushel.

'Increasing amounts of rain'

However, while the November soybean contract touched $14.00 a bushel, it quickly fell back when that failed to spark any further buying.

Indeed, weaker grains acted as a depressant, with traders focusing on a November soybean: December corn ratio which is already elevated by historical standards.

And the weather forecast was hardly helpful to bulls either, in indicating rains ahead, largely for Plains states, but also moving into the western Corn Belt, so boding well for a late yield recovery.

The European weather model "shows increasing amounts of rain over the next 4- 5 days for central and eastern Colorado, the north west one-third of Kansas and the south west one-third of Nebraska, with rainfall amounts of 1-3 inches in these areas", WxRisk.com said.

"By Sunday night and Monday, some of the rain is room moving into northern Missouri and the southern third of Iowa.

US vs Brazil

US Commodities pointed out that "the bullish soybean story in the US is countered by the increased production in Brazil", which as Agrimoney.com reported on Thursday is now in 2013-14 forecast to become the top producer of the oilseed for the first time, overtaking the US.

"Big South American exports are expected in February," the broker said.

"Without a drought in South America, world supplies will be ample to surplus. The demand will shift to South America."

Soybeans for November ended down 1.0% at $13.80 ½ a bushel in Chicago, if giving back only a portion of their gains of the last session.

Strong cocoa

Among soft commodities, it was not such a strong day either, although cocoa for December did add 0.4% to close at $2,601 a tonne in New York, its first finish above $2,600 a tonne for nigh on a year.

Bulls continued to take succour in estimates from Marex Spectron on Thursday of production shortfalls of 161,000 tonnes in 2012-13, and 143,000 tonnes in 2013-14, which starts next month.

And thereafter, "should demand continue to grow at the pace of global GDP growth as currently forecast by the IMF and World Bank, we believe only a rare combination of extremely favourable weather and significantly higher prices will be sufficient to prevent a series of consecutive deficits", the broker said.

Weaker coffee

However, raw sugar for October dropped 0.5% to 17.09 cents a pound in New York, pressed in part by a weak real, but also by comments from Kingsman, the influential consultancy, which raised doubts over ideas of stronger-than-thought demand, as proposed by Czarnikow last week.

Kingsman cut its forecast for the 2013-14 world surplus, but not by much.

Arabica coffee for December eased 0.5% to 120.00 cents a pound, also dented by the real, and the subject of a less bullish analysis by Marex.

Soybeans Decline as Rain Seen Aiding Dry Midwest; Corn Retreats

By Phoebe Sedgman - Sep 16, 2013
Bloomberg
Soybeans dropped for a second day on speculation that rain in parts of the Midwest may halt a decline in crop conditions. Corn fell to the lowest level in a month on expectations domestic production will reach a record.

Soybeans for November delivery lost as much as 1.4 percent to $13.62 a bushel on the Chicago Board of Trade and were at $13.64 at 12:07 p.m. in Singapore. Corn for delivery in December dropped as much as 1 percent to $4.545 a bushel, the lowest since Aug. 15, and traded at $4.555.

Soybeans rallied for six straight weeks through Sept. 13, the best run since 2009, as hot and dry weather across the Midwest boosted concern that yields may drop. Rain should return to the region early this week, with more precipitation expected in northwestern areas later in the week, helping to rebuild moisture, MDA Information Systems LLC said on Sept. 13.

“Forecasts for beneficial rain in the U.S. this week weighed on sentiment” for soybeans, Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note. “The market is still coming to terms with the USDA’s surprise upgrade to U.S. corn-production prospects,” he said, referring to the U.S. Department of Agriculture by its initials.

Domestic corn output will rise 28 percent to a record 13.843 billion bushels in 2013, helping send global reserves to a 12-year high, according to the USDA. The local output forecast was revised upward from 13.763 billion bushels on Sept. 12.

Wheat for December delivery declined 0.2 percent to $6.405 a bushel, extending two weeks of losses.

Record crop likely in coarse cereals

M. R. SUBRAMANI, THE HINDU BUSINESS LINE
CHENNAI, SEPT. 15: 
Currenty, maize (corn) for delivery to exporters in November is quoted at $220 or Rs 13,950 a tonne f.o.b. If this is worked backwards, then its price could be lower than the minimum support price of Rs 1,310 a quintal fixed for this year. In turn, it could leave the Government, which is headed for elections in six months time, in a fix to ensure that growers get at least the support price.

Excess and even spread of rainfall during the current monsoon could have brought smiles to the faces of farmers. But in the case of coarse cereals, it is also bringing in an additional problem on the prospect of a higher, if not a record, production.

“Rains have been good in areas where coarse cereals are grown,” says Amit Sachdev, a consultant for the industry on cereals.

“There are some reports of damage in a few places but I don’t see that affecting the final outcome,” said Sachdev.

“Good rains could ensure a bumper crop in States such as Maharashtra. Compared with 2011, when we had a record crop, it could be one-and-a-half times,” said E. Govindarajan, an exporter.

According to the Ministry of Agriculture, 80.74 lakh hectares (lh) have been brought under maize against 73.37 lh last year and the normal 72.28 lh. Bajra has been planted on 74.42 lh against 60.64 lh last year and the normal 89.27 lh.

Overall, coarse cereals coverage has increased to 192.14 lh against 173.85 lh last year. This is marginally lower than 195 lh covered at this time of the year.

Maize cultivation has increased sharply in the last 4-5 years with the introduction of new hybrids whose yield is high. Also maize, being a sturdy crop, requires less amount of water and is generally free from pest attacks.

Some of the coarse cereals have lost out to crops such as guar in States such as Rajasthan as farmers find the latter more profitable. On its part to encourage farmers grow more coarse cereals, the Government raised the support price of maize and bajra to Rs 1,310 a quintal from Rs 1,175 last year. For ragi, the price has been left unchanged.

“The problem with maize this year is the projection of record crop in the US. The Black Sea region crop, particularly Ukraine, is also good. The world could face a glut as far as maize production is concerned,” said Govindarajan.

US corn is quoted at $235-45 a tonne for November delivery in the Far-East, while Indian corn is offered at $230-35.

One advantage India enjoys is that it is able to delivery in smaller lots, while exports from the US and other American countries are in bulk only.

“But this year, the crop in Myanmar is good. It enjoys far better advantage being a least developed nation,” says Govindarajan.

Countries such as Vietnam and Indonesia allow imports of Myanmar corn at 5 per cent Customs duty, whereas the duty for Indian corn is 35 per cent.

“We see maize prices under pressure this year and you can see the trend,” says Sachdev.

On the National Commodities and Derivatives Exchange, maize November contracts are currently ruling at Rs 1,269 a quintal and December at Rs 1,270.

In the spot, maize is ruling at Rs 1,515 a quintal in centres such as Davengere in Karnataka.

“Even other coarse cereals, particularly Bajra, could head towards a record crop,” said a trader.

“This year being one when we are facing elections, the Government may have to come up with a market intervention operations to keep the prices at the support level,” said Govindarajan.

The last time the Government intervened in the maize market was in 2007 when the produce was procured by the National Agricultural Marketing Federation from growers in Orissa. Since then, Indian maize has found many takers abroad with exports totalling 48.66 lakh tonnes last fiscal. In addition, the poultry industry’s consumption of maize as feed has increased rapidly, reducing the need for any Government intervention in the market.

On the Chicago Board of trade, corn prices which had ruled at over $6 a bushel at one point of time are now ruling below $5. On Friday, corn futures maturing in December ended at $4.59.

“The fall could have an impact here,” said a trader.

Typhoon Man-yi hits Japan

PTI
TOKYO, SEPT 16:  
Typhoon Man-yi hit central Japan today as officials issued a “special warning” of heavy rain, amid fears the storm could go on to hit the crippled Fukushima nuclear plant.

The typhoon made landfall in Toyohashi, Aichi prefecture, shortly before 8:00 am local time (0430 IST), packing gusts of up to 162 kilometres (100 miles) per hour, the Japan Meteorological Agency said.

Public broadcaster NHK said a woman in her 70s was missing following a landslide in Shiga prefecture, while at least six people were injured in other areas due to strong wind.

The typhoon, moving north-northeast at a speed of 45 kilometres per hour, is expected to head towards the capital and its surrounding region later in the day, the agency said.

The agency issued the highest alert for “possibly unprecedented heavy rain” in Kyoto and its adjacent prefectures, warning residents in danger zones to evacuate to shelters.

About 350 domestic flights scheduled for today, a public holiday, were cancelled, mainly those departing Tokyo, and train services were also reduced, NHK reported.

The typhoon was expected to cross the north-east, including the Fukushima area, today afternoon possibly bringing heavy rain to areas near the crippled nuclear power plant, according to its predicted track.

Crews have struggled to contain the nuclear plant after the March 11, 2011 earthquake and tsunami that triggered the atomic disaster and led to the contamination of groundwater with radioactive materials as it flows to the Pacific Ocean.

With torrential rains expected today more contaminated water was feared to seep into the groundwater and workers pumped water from around highly radioactive tanks at the plant.

The typhoon had already brought heavy rain and strong winds to the south and east before even hitting Japan.

Soybeans Extend Climb Before USDA Report as Dryness Curbs Crops

By Phoebe Sedgman - Sep 9, 2013
Bloomberg
Soybeans advanced for a third day as dry weather in the Midwest curbed crop yields, boosting speculation the U.S. Department of Agriculture will lower its production estimate in the world’s biggest grower.

The contract for November delivery gained as much as 1.2 percent to $13.84 a bushel on the Chicago Board of Trade and was at $13.745 by 10:09 a.m. in Singapore. Prices rose for a fifth week in the five days to Sept. 6, the best run since May.

Futures surged 13 percent last month as hot weather in the Midwest harmed crops. Significant rain isn’t expected in the region in the next 10 days with dryness remaining widespread across the central and western Midwest, especially in western Illinois, northern Missouri, Iowa and Minnesota, curbing yield potential, MDA Information Systems LLC said Sept. 6. The U.S. soybean harvest may be 3.13 billion bushels, 3.7 percent below the USDA’s August estimate, a Bloomberg survey shows.

“The USDA is the focus this week and we’re expecting another downgrade to U.S. soybean production prospects,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone today. There’s been a deterioration “in U.S. seasonal conditions in the last couple of months and a subsequent decline in crop conditions and therefore yield prospects,” he said from Sydney.

The USDA updates its forecasts on Sept. 12.

Corn for December delivery fell 0.5 percent to $4.66 a bushel after gaining and losing 0.6 percent. Wheat for delivery in December declined 0.4 percent to $6.4525 a bushel, erasing a 0.6 percent advance.

Kharif set to register record rice output this year

VISHWANATH KULKARNI, THE HINDU BUSINESS LINE
Production may exceed 92.78 million tonnes

NEW DELHI, SEPT 8: 
After an erratic monsoon affected plantings last year, kharif rice output is set to rebound to a record this year. This, in turn, is set to boost exports with a weak rupee aiding the Indian grain’s competitiveness in the global market.

The general consensus among the rice trade, Agriculture Ministry officials and exporters is that the production this kharif would touch a new high, exceeding the record 92.78 million tonnes in 2011. This is despite deficient rainfall affecting transplantation in States such as Bihar, Odisha and Jharkhand.

The timely arrival of the South-West Monsoon and the excess precipitation across the country prompted farmers to bring more area under rice, mainly in Uttar Pradesh and West Bengal. The total area under rice is up 3.7 per cent at 365.50 lakh hectares this year against 352.49 lakh hectares during the corresponding period a year ago.

Though flooding in several areas of Andhra Pradesh affected the crop to some extent, officials say that it would be made up by other States. Also, in some of the affected areas replanting has been taken up by farmers, they said. “The crop is definitely better than last year in the State,” an AP Rice Millers’ Association official said.

Until the first week of this month, the country received eight per cent excess rainfall from the monsoon’s influence. Rains which were deficient in the early part of the season in Bihar and Jharkhand revived last week. This should boost transplantation over the next couple of weeks. Also in Orissa, where rice is the only crop planted by farmers, the transplantation can go on till September-end, officials at the Directorate of Rice Research Institute said.

The crop conditions are satisfactory and no major cases of endemic or epidemic disease has been reported so far anywhere in the country.

Officials in the Agriculture Ministry expect the output to be higher than last year, though they are not putting a figure on the actual crop size. In the recent past, Agriculture Minister Sharad Pawar and his deputy Tariq Anwar have expressed confidence that the bounteous monsoon this year would help the country produce record foodgrains, including rice.

A bumper output would help the Government implement the Food Security Programme.

The Government is expected to procure 34.5 million tonnes of rice this year.

The London-based International Grains Council, in its latest estimate, has pegged India’s rice output at 107 million tonnes, up 2.5 per cent from last year. Last year, production, both kharif and rabi seasons, was 104.40 million tonnes, according to the Government’s 4{+t}{+h} Advance Estimates.

ADDED AROMA

Also, in the case of Basmati, the initial field surveys point to a good crop. “The rains have been good and transplanting was done on time. The crop is currently in the flowering stage in some areas. Overall, we expect a higher yield this year,” said Rajen Sundaresan, Executive Director of the All-India Rice Exporters’ Association. Basmati production in 2012 was a little over 7.1 million tonnes. In the current year, the production is expected to be higher by 10-40 per cent.

While basmati exports have taken off on a positive note, non-basmati rice shipments have been sluggish.

According to the Directorate-General of Commercial Intelligence and Statistics, basmati exports during April-June this year were up 17 per cent at 11.16 lakh tonnes.

In terms of value, shipments were up 67 per cent at Rs 7,756 crore compared with last year.

Non-basmati exports were down by a tenth in volume for the April-June period to 14.16 lakh tonnes against 15.84 lakh tonnes.

In value, the non-basmati rice shipments were estimated at Rs 3314.12 crore against Rs 3365.06 crore.

According to IGC, rice exports this year are estimated at at 8.5 million tonnes, down 5.5 per cent from last year.

Ore exporters in Goa optimistic of retaining buyers

By PTI | 8 Sep, 2013
PANAJI: Mineral exporters from Goa feel they will not have to scout for new buyers if Supreme court lifts the ban on mining exports, "due to their unblemished relationship with the companies in buyer countries."

"The mining firms which had 5-6 decades of unblemished track records in exports would not have serious concerns in reassuring their established markets," Glenn Kalavampara, secretary, Goa Mineral Ore Exporters Association told PTI.

The companies, including all GMOEA members, have taken years to nurture their buyers and therefore it will not be difficult to get the buyers, he said.

The worries were expressed in the mining industry circle that the one-year-long gap in exports might turn away traditional buyers from countries like China and Japan, which are markets for the low grade ore produced in Goa.

The apex court order has kept on hold mining export in the state since last year.

Goa Chief Minister Manohar Parrikar had earlier indicated that mining might resume within next three months.

Kalavampara felt that only after the state government, the Centre and the Supreme Court lift suspension, can exports commence in Goa.

He expressed hope that all authorities would look into the seriousness of the issue and ensure that the industry is resumed at the earliest.

While all ores produced in Goa are low grades with no domestic demand, it is best suited for exports, he said.

Over 7 to 8 million tons may be lying at jetties and ports and possibly few more at mining sites which can be ascertained by the government to find a possibility to ship it out and help in earning foreign exchange in these troubled times, he said.

Kalavampara also expressed hope for early resumption of mining operations in Goa.

He claimed that almost eight million tones of ore lying at jetties and port is ready for export, as the royalty on it has already been paid.

"There will be more ore which is extracted and lying in various mining leases and yards," he said, adding that royalty has been paid on the bulk of ore.

On the policy drafted to convert land used for mining dumps by the state government, Kalavampara felt that the same was long due and a step in the right direction.

He, however, expressed concerns on high charges levied on it. 

Goa to lift suspension on mining leases after Ganesh festival

Press Trust Of India  |  Panaji  September 6, 2013

In the first phase, around 24 leases would be signed, mostly belonging to major mining giants like Sesa Goa, Chowgules, Salgaoncars and others

The Goa government will begin the process of lifting suspension on the mining leases only after the ten-day long Ganesh Chaturthi festival beginning from Monday, a senior official said today.

Assistant Director of Mines and Geology Department Parag Nagarcekar said that the process to sign lease agreements with mine owners will begin only after Ganesh Chaturthi festival.

Goa Chief Minister Manohar Parrikar recently announced that the Mines and Geology Department would sign lease agreements with mine owners, after which suspension on their leases would be withdrawn. In the first phase, around 24 leases would be signed, mostly belonging to major mining giants like Sesa Goa, Chowgules, Salgaoncars and others.

The state government has clarified that withdrawal of the suspension order does not mean that mining activity in those leases could resume.

Mine owners would have to wait for the Supreme Court to lift the ban on exports and fresh extractions which was imposed an year ago. The Supreme Court is likely to speed up hearing of the Goa mining case from September 17 onwards.

Almost 25 per cent of Goa's population is dependent on mining and the state is the biggest exporter of iron ore to China and Japan.

India’s NTPC scouts for overseas coal equity

By: Ajoy K Das
9th September 2013
KOLKATA (Mining Weekly) - India’s NTPC Limited, the country’s largest power producer, would start scouting for equity in overseas coal assets to equip the utility company to compete in bidding for setting up ultra-mega power plants (UMPP) across the country.

NTPC would be looking to set up UMPPs, competitive bids for which would be invited by the Indian government from private and public companies. But for setting-up imported coal based plants, it would be necessary to have investments in coal assets overseas, according to a company official.

NTPC’s free cash reserves on balance sheet of around $2.75-billion would be leveraged to fund equity acquisition in coal assets overseas linked to the company’s UMPP plans, the official added.

The largest power producer, however, was not successful in bagging any UMPP projects in the first round of tariff-based competitive bidding.

The UMPP projects based on super critical technology, awarded by the Indian government through bids based on tariffs was first conceived in 2005 for each power plant of minimum capacity of 4 000 MW each. Four projects had already been awarded and under various stages of implementation while bids for three more projects in the provinces of Chattisgarh, Orissa and Tamil Nadu were expected to open before month-end.

The shortage to coal feedstock has been the biggest roadblocks to thermal power plants in the country, including UMPPs. Coal-based power projects in the country imported about 30-million tonnes of the dry fuel in April-July this fiscal.

Around 27 projects using domestically produced coal purchased 14.6-million tonnes of the fuel from overseas until July 31, due to a shortage of supplies at home, according to data of regulator Central Electricity Authority data.  In current fiscal total imports was forecast at 50-million tonnes.

Power plants designed to use imported coal received about 15- million tonnes of imported coal during the period with 32-million tonnes forecast for the full fiscal.

About 82-million tonnes of coal imports are needed this fiscal to meet the requirements of power plants using indigenous coal and projects relying on imported fuel.

Officials in NTPC said that equity in overseas coal assets was an imperative in ensuring viability of imported coal-based UMPPs pointing out that with Indonesia benchmarking its coal export to international prices, project costs of UMPPs would be unviable at current coal prices.

Moreover, since success in bidding for UMPPs would depend on quoting competitive power tariffs, having own source of imported coal would be an important imperative to being competitive, the official added.

Edited by: Esmarie Swanepoel

Experts warn of more trouble in mining; call for urgent steps

By PTI | 1 Sep, 2013
MUMBAI: Experts have warned that the mining and quarrying segment is likely to suffer further after a contraction by 2.8 per cent in the first quarter of the fiscal, if the issues plaguing the sector are not resolved immediately.

While iron ore mining approvals issue can be expedited, coal production could be ramped up to boost not only the mining sector but also to help the investment cycle, they said.

"We are assuming a negative growth figure in the mining sector in the current fiscal. However, we are also watching statements coming out from government regarding restarting mining in some regions, which may turn things towards a positive growth territory," Crisil Chief Economist D K Joshi told PTI.

He also said that the mining sector is a binding constraint to the growth of the economy for now, degrowth of which is also posing a risk to the current account deficit numbers.

GDP growth has slipped to 4.4 per cent in the first quarter of the current financial year with mining and quarrying witnessing a degrowth of 2.8 per cent during this period.

The mining sector has shown a paltry growth of 0.4 per cent during Q1 of last fiscal.

"Unless approvals are expedited to open iron ore mines in Karnataka along with steps to restart operations in Goa, the sector will contract further," Federation of Indian Mineral Industries (Fimi) vice-president Basant Poddar said.

As per Fimi officials, despite the Supreme Court approval to open iron ore mines in Karnataka, only 14 mines have reopened till date out of over 100 mines in the state.

On this matter, an official from the Goa Mineral Ore Exporters Association said the low GDP figure in the first quarter indicates the urgency of resolving mining issues.

"The Q1 GDP figure shows the need for urgent resolution of issues plaguing the industry. If immediate steps are not taken, contraction may worsen further," Goa Mineral Ore Exporters Association secretary Glenn Kalavampara said.

An official from Icra also said there is uncertainty in the mining sector as of now, which makes it difficult to predict the direction.

"It is very difficult to predict a near-term trend in the mining sector given the many uncertainties surrounding regulatory issues. However, quick approval for opening iron ore mines and ramping up coal production will definitely help in boosting the sector over the medium to long-term," senior vice-president and co-head of corporate sector ratings at Icra Jayanta Roy said.

Bangladesh gets lowest bid of $282.66/T in wheat tender

Sun Sep 1, 2013
* Offer lower than the price Bangladesh pays for wheat from Ukraine

* State buyer plans to import 850,000 T of wheat in year to June 2014
(Reuters) - Bangladesh's state grains buyer received a lowest offer of $282.66 per tonne from a domestic firm in an international tender to import 50,000 tonnes of wheat, an agency official said on Sunday.

Ismail Food Products was the lowest bidder among 12 suppliers participating in the tender, the first issued in the fiscal year which started in July. The price included cost, freight, insurance and other expenses.

The offer has to be approved by the cabinet's purchase committee after verification, with the grain to be shipped within 40 days of signing the deal.

The state agency has introduced tougher delivery rules to ensure supplies are delivered on time by the winning bidder.

The offer is lower than the price Bangladesh is paying for wheat in a government-to-government deal with Ukraine.

Bangladesh's government is buying 200,000 tonnes of wheat from Ukraine at $307 a tonne CIF liner out amid a drop in government reserves.

India's LMJ International submitted the second-lowest offer of $286 a tonne in the tender.

The state agency plans to import 850,000 tonnes of wheat in the current financial year, up from around 350,000 tonnes the previous year and against a previously planned 800,000 tonnes.

Another tender is due to open on Sept. 9.

The government imports wheat to run welfare programmes for the poor and to keep domestic prices stable. Flour prices have gone up in recent months despite a drop in global markets.

Apart from the government, private traders also import about 2.5 million tonnes of wheat a year to help meet local demand of 4 million tonnes. Domestic output amounts to about 1 million tonnes.

(Reporting by Ruma Paul; editing by Jason Neely)

Deals to export 5 lakh tonnes soyameal from new crop signed

M. R. SUBRAMANI, THE HINDU BUSINESS LINE

On expectations of output matching last year’s record 115 lt

CHENNAI, SEPT. 1:
Deals to export at least five lakh tonnes of soyameal from the new soyabean crop have been signed so far with expectations of production matching last year’s record 115 lakh tonnes boosting hopes.

“We expect to sign soyameal export deals close to 10 lakh tonnes by the middle of September,” said Davish Jain, Managing Director of Prestige Group and former President of Central Organisation for Oil Industry and Trade.

According to Rajesh Agrawal, spokesman of Soyabean Processors Association of India, Iran has signed deals to buy at least one lakh tonnes.

Japan has reported signed to buy a similar amount of soyameal, while the rest is head to the Far-East.

Most of the deals have been done at $515 a tonne f.o.b. This is lower than the average $571 a tonne realised for soyameal exports in July and $619 in June.

During April-July period of the current fiscal, 5.16 lakh tonnes of soyameal have been exported against 8.05 lakh tonnes during the same period a year ago.

Last fiscal, 34.39 lakh tonnes of soyameal were exported against 38.29 lakh tonnes during 2011-12.

OILMEAL EXPORTS

According to the Solvent Extractors Association of India, exports of oilmeals dropped to 48.46 lakh tonnes last fiscal from 55.99 lakh tonnes the previous year.

During the current fiscal, oilmeals are lower on slower economic growth world-wide.

In the case of soyameal, prices above $600 a tonne have also proved a dampener.

“We can touch 50 lakh tonnes soyameal exports this year,” said Jain.

DEMAND

“Demand for soyameal is good this year. The price trend is in line with the one prevailing in the global market,” said Agrawal.

“On the Chicago Board of Trade, soyameal for delivery this month was quoted at $516.10 a tonne.

“India has two advantages in exporting soyameal to the Far-East and West Asia.

“One, freight charges are lower from India due to the shorter distance.

“Two, India can ship in smaller lots compared with the US or other South American origins which insist on bulk exports.

“The current trend is bullish for soyameal going by reports from the US and South America,” said Jain.

Late plantings of soyabean in the US could result in lower yield.

Also, the prevailing hot weather in the US could affect production despite mild showers over the next couple of days offering a little respite.

There is also a threat of frost to soyabean, thus keeping the oilseeds complex firm.

“There may not be additional shipments coming out of the US,” said a trader, pointing to weather forecasts for US Midwest.

“Normally, November-March is a period that supports our oilmeals exports to the maximum.

“The rupee’s fall will offer additional advantage,” said B.V. Mehta, Executive Director of Solvent Extractors Association of India.

The bright prospect for oilmeal exports has driven up soyabean prices to Rs 3,650 a tonne current from Rs 3,425 a month ago.

They are, however, lower than the average price of Rs 4,381 in August last year when prices surged on dry weather in the US affecting the crop.