Prices for rice, a staple for half the world, fell to the lowest since 2010 in Chicago as the outlook for a jump in U.S. production and increased exports from overseas producers signal ample supplies.
Shipments from Thailand, vying with India to be the world’s largest exporter, almost doubled in September, the government said today. Myanmar expects output to increase as much as 15 percent annually as it boosts yields. U.S. rough-rice production will rise to a four-year high, the Department of Agriculture said Oct. 10.
Prices have dropped 19 percent this year, heading for the biggest loss since 2001 and helping keep a lid on global food costs that the United Nations said fell for a sixth month in September. The Bloomberg Agriculture Index of seven commodities slid the most last quarter since 2008 as the USDA projects combined global output of rice, corn, soybeans and wheat will advance to a record this season.
Plunging prices are “a signal that we have plenty of rice,” Dwight Roberts, president of Houston-based U.S. Rice Producers Association, said in interview at a conference in Bangkok today. “Some markets are buying hand-to-mouth.” Rough-rice futures for January delivery fell 1.4 percent to close at $12.305 for 100 pounds at 1:15 p.m. on the Chicago Board of Trade. Earlier, prices dropped by the exchange limit of $1.10 to $11.375, the lowest for a most-active contract since September 2010.
Aggregate trading was more than double the 100-day average for the day, according to data compiled by Bloomberg. An index (BCOMAG) of 55 food items dropped 2.6 percent month-on-month to 191.5 points, the lowest since August 2010, the United Nation’s Rome-based Food & Agriculture Organization said in an online report Oct. 9.
Export Demand
U.S. inventories of rice will rise 26 percent before the 2015 harvest, according to the USDA. Prices may have to fall further to make U.S. exports attractive to foreign buyers, said Dennis DeLaughter, president of researcher and consultant VantageRM in Austin, Texas.
Iraq, the fifth-biggest importer, is tendering Oct. 30 for 90,000 metric tons of milled rice, and U.S. prices are at least 15 percent above offers expected from Thailand and Vietnam, according to DeLaughter. “The U.S. milled-rice price is too high, and we have a big crop to sell,” said DeLaughter, who has been farming and trading rice since 1977.
Rice prices in Texas range from $12 to $12.75 for 100 pounds, with mills bidding lower for new high-yielding hybrids that produce lower-quality finished product, DeLaughter said. U.S. exports are “completely uncompetitive,” Jeremy Zwinger, president and chief executive officer of The Rice Trader, a Durham, California-based researcher, said via e-mail.
Prices for 5 percent broken Thai white rice, an Asian benchmark, slumped 3.6 percent this month after jumping 8.3 percent June through September.
Wheat Gains for Second Day on Australian, Russia Crops
Wheat advanced for a second day in Chicago on concern that harvests in Australia and Russia may drop because of adverse weather. Wheat futures for December delivery gained 1.5 percent to close at $5.3075 a bushel on the Chicago Board of Trade at 1:15 p.m. That took this month’s gain to 11 percent, heading for the biggest increase for a most-active contract since March.
The grain rebounded from a four-year low in September as excessive rain in Australia and dryness in Russia dimmed the crop outlook for both countries, which are major exporters. The harvest in Australia, the world’s fifth-largest shipper, may drop to 22.7 million metric tons in 2014-2015, the lowest in five years, Paris-based adviser Agritel said yesterday. “Russia is clearly signaling its winter-wheat crop is not in prime condition,” and weather conditions in Australia may curb the crop there, Wayne Gordon, an analyst at UBS AG, said from Singapore.
Dry conditions across European Russia will probably cut that country’s harvest to less than 50 million tons in 2015, according to researcher SovEcon.
Ample supply worldwide will limit any price rally, according to UBS’s Gordon. Global wheat production is set to reach a record 721.12 million tons, the U.S. Department of Agriculture said Oct. 10. “There’s plenty of grain around,” Gordon said. “I cannot be bullish on wheat.” Russia will be the biggest exporter of the grain after the European Union and the U.S. this season, according to the USDA.
Gold Futures Closes Near Two-Week Low on Fed Speculation
Gold futures traded near a two-week low as investors awaited the conclusion of the Federal Reserve’s two-day meeting tomorrow.
The metal rose as much as 0.5 percent today before erasing gains after a government report showed orders for U.S. durable goods unexpectedly fell in September. The metal’s 30-day volatility has climbed in the past month as investors followed economic data to predict how quickly the Fed will begin raising borrowing costs. Traders had a “knee-jerk reaction” to the “disappointing” durable-goods data, Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. Prices fell from the highs as investors went back to “waiting for tomorrow. The market is in a wait-and-watch mode,” he said.
Bullion rebounded as much as 6.1 from this year’s low reached on Oct. 6 after the Fed cited slowing foreign economies as a risk to the U.S. Traders have cut the probability the central bank will raise borrowing costs by October 2015 to a 50 percent chance from 79 percent odds on Sept. 30. Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains.
Gold futures for December delivery gained less than 0.1 percent to settle at $1,229.40 an ounce at 1:35 p.m. on the Comex in New York. Prices reached $1,222.20 today, the lowest for a most-active contract since Oct. 15.
Bullion climbed 70 percent from December 2008 to June 2011 as the U.S. central bank bought debt and held borrowing costs near zero percent in a bid to shore up growth. The Fed is expected to end monthly asset purchases at this week’s meeting.
Silver futures for delivery in December added 0.4 percent to $17.226 an ounce on the Comex. On the New York Mercantile Exchange, palladium futures for delivery in December advanced 0.8 percent to $793.35 an ounce. Prices rose for eighth straight sessions, the longest rally since Aug. 18. Platinum futures for January delivery gained 0.9 percent to $1,266.30 an ounce.
Freeport Sees Lower Copper Output at Indonesian Mine
Freeport-McMoRan Inc. (FCX) said output fell at its Grasberg copper and gold complex, its largest mine, after Indonesian employees failed to report for work following a fatal accident last month. Production at the open-pit mine was interrupted for about two weeks after a Sept. 27 collision between a light vehicle and a truck left four workers dead.
While authorities said normal operations could resume Oct. 13, a “large percentage” of Grasberg open-pit operators have not reported to their scheduled shifts, resulting in reduced production during October, Phoenix-based Freeport said today in its third-quarter earnings statement. The shares fell as much as 4.9 percent in New York, the most intraday since March 7.
Freeport, the largest publicly traded copper producer, has struggled to maintain operating levels at Grasberg, which faced a lengthy strike in 2011 and was closed for months following a tunnel collapse last year that killed 28 people. Sales this year suffered amid a dispute with the Indonesian government after export restrictions and duties were introduced in mid-January. A deal to resolve the dispute was reached in late July.
Strike ‘Unlawful’
Output may be further affected after the union representing workers at Grasberg said yesterday it had notified the company it plans to strike over concerns about worker safety. Production at Grasberg already may be at 60 percent to 70 percent of capacity as a result of stoppages by some workers, R. Sukhyar, director general of coal and minerals at Indonesia’s Energy and Mineral Resources Ministry, said by phone today.
Operators’ failure to report to work conflicts with the collective labor agreement and Freeport’s local union is working with union leadership to resume normal operations as soon as possible, the company said today. The planned strike is “unlawful,” Eric Kinneberg, a Freeport spokesman, said yesterday by e-mail.
Freeport today reported a third-quarter profit excluding one-time items of 64 cents a share, topping the 61-cent average of 20 analysts’ estimates compiled by Bloomberg. Sales declined 7.6 percent to $5.7 billion, still beating the $5.62 billion average estimate. The company also reduced its 2014 copper sales forecast to 3.9 billion pounds, from a July prediction of 4.1 billion, and lowered its gold forecast to 1.2 million ounces from 1.3 million.
‘Previous Sensitivity’
“We believe the weak October production is the reason for lower annual guidance,” Fraser Phillips, a Toronto-based analyst at RBC Capital Markets, said in a note. “If a strike commences, Grasberg’s output would likely be impacted by 50 million pounds of copper and 80,000 ounces of gold, the previous sensitivity Freeport provided for each month of a strike.”
Freeport sold 258 million pounds of copper and 505,000 ounces of gold from its Indonesian operations in the third quarter, the company said today. Grasberg was the third-largest copper mine by capacity as of 2012, according to Bloomberg Intelligence data. BHP Billiton Ltd.’s Escondida and Codelco’s Codelco Norte facility, both in Chile, were the largest.
source: Bloomberg
Shipments from Thailand, vying with India to be the world’s largest exporter, almost doubled in September, the government said today. Myanmar expects output to increase as much as 15 percent annually as it boosts yields. U.S. rough-rice production will rise to a four-year high, the Department of Agriculture said Oct. 10.
Prices have dropped 19 percent this year, heading for the biggest loss since 2001 and helping keep a lid on global food costs that the United Nations said fell for a sixth month in September. The Bloomberg Agriculture Index of seven commodities slid the most last quarter since 2008 as the USDA projects combined global output of rice, corn, soybeans and wheat will advance to a record this season.
Plunging prices are “a signal that we have plenty of rice,” Dwight Roberts, president of Houston-based U.S. Rice Producers Association, said in interview at a conference in Bangkok today. “Some markets are buying hand-to-mouth.” Rough-rice futures for January delivery fell 1.4 percent to close at $12.305 for 100 pounds at 1:15 p.m. on the Chicago Board of Trade. Earlier, prices dropped by the exchange limit of $1.10 to $11.375, the lowest for a most-active contract since September 2010.
Aggregate trading was more than double the 100-day average for the day, according to data compiled by Bloomberg. An index (BCOMAG) of 55 food items dropped 2.6 percent month-on-month to 191.5 points, the lowest since August 2010, the United Nation’s Rome-based Food & Agriculture Organization said in an online report Oct. 9.
Export Demand
U.S. inventories of rice will rise 26 percent before the 2015 harvest, according to the USDA. Prices may have to fall further to make U.S. exports attractive to foreign buyers, said Dennis DeLaughter, president of researcher and consultant VantageRM in Austin, Texas.
Iraq, the fifth-biggest importer, is tendering Oct. 30 for 90,000 metric tons of milled rice, and U.S. prices are at least 15 percent above offers expected from Thailand and Vietnam, according to DeLaughter. “The U.S. milled-rice price is too high, and we have a big crop to sell,” said DeLaughter, who has been farming and trading rice since 1977.
Rice prices in Texas range from $12 to $12.75 for 100 pounds, with mills bidding lower for new high-yielding hybrids that produce lower-quality finished product, DeLaughter said. U.S. exports are “completely uncompetitive,” Jeremy Zwinger, president and chief executive officer of The Rice Trader, a Durham, California-based researcher, said via e-mail.
Prices for 5 percent broken Thai white rice, an Asian benchmark, slumped 3.6 percent this month after jumping 8.3 percent June through September.
Wheat Gains for Second Day on Australian, Russia Crops
Wheat advanced for a second day in Chicago on concern that harvests in Australia and Russia may drop because of adverse weather. Wheat futures for December delivery gained 1.5 percent to close at $5.3075 a bushel on the Chicago Board of Trade at 1:15 p.m. That took this month’s gain to 11 percent, heading for the biggest increase for a most-active contract since March.
The grain rebounded from a four-year low in September as excessive rain in Australia and dryness in Russia dimmed the crop outlook for both countries, which are major exporters. The harvest in Australia, the world’s fifth-largest shipper, may drop to 22.7 million metric tons in 2014-2015, the lowest in five years, Paris-based adviser Agritel said yesterday. “Russia is clearly signaling its winter-wheat crop is not in prime condition,” and weather conditions in Australia may curb the crop there, Wayne Gordon, an analyst at UBS AG, said from Singapore.
Dry conditions across European Russia will probably cut that country’s harvest to less than 50 million tons in 2015, according to researcher SovEcon.
Ample supply worldwide will limit any price rally, according to UBS’s Gordon. Global wheat production is set to reach a record 721.12 million tons, the U.S. Department of Agriculture said Oct. 10. “There’s plenty of grain around,” Gordon said. “I cannot be bullish on wheat.” Russia will be the biggest exporter of the grain after the European Union and the U.S. this season, according to the USDA.
Gold Futures Closes Near Two-Week Low on Fed Speculation
Gold futures traded near a two-week low as investors awaited the conclusion of the Federal Reserve’s two-day meeting tomorrow.
The metal rose as much as 0.5 percent today before erasing gains after a government report showed orders for U.S. durable goods unexpectedly fell in September. The metal’s 30-day volatility has climbed in the past month as investors followed economic data to predict how quickly the Fed will begin raising borrowing costs. Traders had a “knee-jerk reaction” to the “disappointing” durable-goods data, Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. Prices fell from the highs as investors went back to “waiting for tomorrow. The market is in a wait-and-watch mode,” he said.
Bullion rebounded as much as 6.1 from this year’s low reached on Oct. 6 after the Fed cited slowing foreign economies as a risk to the U.S. Traders have cut the probability the central bank will raise borrowing costs by October 2015 to a 50 percent chance from 79 percent odds on Sept. 30. Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains.
Gold futures for December delivery gained less than 0.1 percent to settle at $1,229.40 an ounce at 1:35 p.m. on the Comex in New York. Prices reached $1,222.20 today, the lowest for a most-active contract since Oct. 15.
Bullion climbed 70 percent from December 2008 to June 2011 as the U.S. central bank bought debt and held borrowing costs near zero percent in a bid to shore up growth. The Fed is expected to end monthly asset purchases at this week’s meeting.
Silver futures for delivery in December added 0.4 percent to $17.226 an ounce on the Comex. On the New York Mercantile Exchange, palladium futures for delivery in December advanced 0.8 percent to $793.35 an ounce. Prices rose for eighth straight sessions, the longest rally since Aug. 18. Platinum futures for January delivery gained 0.9 percent to $1,266.30 an ounce.
Freeport Sees Lower Copper Output at Indonesian Mine
Freeport-McMoRan Inc. (FCX) said output fell at its Grasberg copper and gold complex, its largest mine, after Indonesian employees failed to report for work following a fatal accident last month. Production at the open-pit mine was interrupted for about two weeks after a Sept. 27 collision between a light vehicle and a truck left four workers dead.
While authorities said normal operations could resume Oct. 13, a “large percentage” of Grasberg open-pit operators have not reported to their scheduled shifts, resulting in reduced production during October, Phoenix-based Freeport said today in its third-quarter earnings statement. The shares fell as much as 4.9 percent in New York, the most intraday since March 7.
Freeport, the largest publicly traded copper producer, has struggled to maintain operating levels at Grasberg, which faced a lengthy strike in 2011 and was closed for months following a tunnel collapse last year that killed 28 people. Sales this year suffered amid a dispute with the Indonesian government after export restrictions and duties were introduced in mid-January. A deal to resolve the dispute was reached in late July.
Strike ‘Unlawful’
Output may be further affected after the union representing workers at Grasberg said yesterday it had notified the company it plans to strike over concerns about worker safety. Production at Grasberg already may be at 60 percent to 70 percent of capacity as a result of stoppages by some workers, R. Sukhyar, director general of coal and minerals at Indonesia’s Energy and Mineral Resources Ministry, said by phone today.
Operators’ failure to report to work conflicts with the collective labor agreement and Freeport’s local union is working with union leadership to resume normal operations as soon as possible, the company said today. The planned strike is “unlawful,” Eric Kinneberg, a Freeport spokesman, said yesterday by e-mail.
Freeport today reported a third-quarter profit excluding one-time items of 64 cents a share, topping the 61-cent average of 20 analysts’ estimates compiled by Bloomberg. Sales declined 7.6 percent to $5.7 billion, still beating the $5.62 billion average estimate. The company also reduced its 2014 copper sales forecast to 3.9 billion pounds, from a July prediction of 4.1 billion, and lowered its gold forecast to 1.2 million ounces from 1.3 million.
‘Previous Sensitivity’
“We believe the weak October production is the reason for lower annual guidance,” Fraser Phillips, a Toronto-based analyst at RBC Capital Markets, said in a note. “If a strike commences, Grasberg’s output would likely be impacted by 50 million pounds of copper and 80,000 ounces of gold, the previous sensitivity Freeport provided for each month of a strike.”
Freeport sold 258 million pounds of copper and 505,000 ounces of gold from its Indonesian operations in the third quarter, the company said today. Grasberg was the third-largest copper mine by capacity as of 2012, according to Bloomberg Intelligence data. BHP Billiton Ltd.’s Escondida and Codelco’s Codelco Norte facility, both in Chile, were the largest.
source: Bloomberg