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Monday, 30 September 2013

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

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.

Monday, 23 September 2013

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.