Wednesday, August 1, 2012

RTRS- Soy price to stay high despite U.S. rain-Oil World

HAMBURG, July 31 (Reuters) - Soybean prices are likely to stay high in coming months even if rain relieves drought-stricken U.S. crops as U.S. suppliers keep soy sales slow, Hamburg-based oilseeds analysts Oil World said on Tuesday.

Global soybean buyers have little choice but continue to purchase U.S. soybeans following poor crops in Brazil and Argentina this year, Oil World said.

"A cautious management of U.S. soybean disposals will still be required in the next five to six months, even if the last-minute rainfall prevents the worst for the U.S. crop,” Oil World said. “This will limit the downward (price) potential for soybeans, at least until there is some certainty that South America will indeed produce record crops in early 2013.”

Rain last week may have helped crops suffering from the worst drought in 56 years in the U.S. Midwest. (nL2E8IRCR4) GRA/ It is now hoped the record soybean prices reached in July will encourage South American farmers to plant more soy for their 2013 harvests, so relieving tight global supplies.

Soybean prices are likely to remain volatile in the near to medium term despite support from scarce supplies because of profit-taking and weakness provided by demand destruction, Oil World said.

“By the end of February 2013, U.S. soybean stocks will be reduced to a level at which domestic demand for soybeans and products will be difficult to satisfy in March/August 2013,” Oil World said.

“This already sparked a debate on whether the U.S. will need to import soybeans from Brazil next year to bridge the looming supply gap.

“But for the time being, this represents only a theoretical option and the market will probably try to enforce the necessary worldwide demand rationing via prices in the first half of next season in order not to run out of supplies.”

RTRS- US soy yields risk further fall if no rain -FCStone

MELBOURNE, July 31 (Reuters) - U.S. soybean yields may fall to as low as 34-35 bushels per acre if no rains fall on the drought-stricken crop in the next two weeks, an official at New-York based trading firm INTL FCStone said on Tuesday.

U.S. soybean yields were currently forecast at between 37-38 bushels per acre, Peter Nessler Jr., executive vice president commodities, told Reuters at a grains conference in Melbourne.

"If we don't get much rain between July and August, yields could fall as low 34-35 bushels per acre," he said.

New crop U.S. corn yields were probably around 132-138 bushels per acre, he added.

"Though there are some people who think we could go as low as 125, which would be fairly catastrophic," Nessler said.

The U.S. Department of Agriculture lowered its corn yield estimate to 146 bushels per acre in June, while forecasting soybean yields at 40.5 bushels per acre.

The U.S. drought has fired up grains markets over the past six weeks, lifting corn and soybean prices to record highs earlier this month.

Corn and soybean conditions in the U.S. Midwest deteriorated further last week as the most expansive drought in more than 50 years ate away at crop yields in major producing states including Iowa and Illinois, the U.S. Department of Agriculture said in a report after the market closed on Monday.

Nessler said that if dry weather in the U.S. Midwest persisted further, "$20 per bushel soybeans, are not out of the question."

The most actively traded November soy SX2 contract was trading at $16.40 a bushel in Asian trade on Tuesday.

RTRS- Lion's share of US crops to swelter into August

CHICAGO, July 31 (Reuters) - The midday weather model suggested a slightly wetter pattern for the U.S. Midwest where corn and soybean crops have withered under an extensive drought, but rainfall will be only scattered and light, agricultural meteorologists forecast Tuesday.

"There's going to be rain, but it's just not going to be heavy enough to dramatically improve the situation in very many areas. There's no general soaking over the next two weeks," said Andy Karst of World Weather Inc.

The midday computer model pointed to wetter weather in parts of the eastern and central Corn Belt over the next 5 days, and more rain than earlier models had suggested in the 5- to 10-day period for portions of the northern Midwest, he said.

High temperatures in the triple-digits Fahrenheit were expected to persist in southwestern areas of the Midwest, but the rest of the region could be slightly cooler, he said.

More than half of the U.S. corn and soybean growing region will see little change from the heat and drought that have withered and degraded crops.

"We still see it as over half of the belt will be struggling with ongoing concerns over the next couple of weeks. The American model suggests there's relief in the forecast, but it's not very likely," said meteorologist Joel Widenor of Commodity Weather Group.

Corn and soybean conditions in the U.S. Midwest deteriorated further last week as the most expansive drought in more than 50 years ate away at crops in major producing states including Iowa and Illinois, government data released on Monday showed.

The U.S. Department of Agriculture rated 24 percent of the corn crop in good-to-excellent condition as of Sunday, and 29 percent of the soybean crop in good-to-excellent shape, both down 2 percentage points from the previous week.

The ratings for each were the worst since the comparable week in 1988, another year of severe drought in the nation's crop-growing mid-section.

A Reuters poll of 10 analysts had expected a 3-percentage-point drop in the corn rating and a 2-point drop in soybeans.

Analysts and crop experts also said further declines in condition ratings could be expected next week because weather is still stressful to each crop.

Commodity Weather Group on Tuesday said the driest areas in the Midwest for the next two weeks would include top corn and soy producing states Illinois and southern Iowa. Major crop producing states Kansas, Missouri and eastern Nebraska also would remain under pressure from the relentless drought.

The southwestern part of the Midwest will continue to be affected not only by dryness but by extreme heat, with highs of 100 F, CWG stated in a note to clients. Additionally, nearly two-thirds of the Delta would see expanding drought, causing losses to soybean, cotton and rice production.

RTRS- US corn crop shrinks further; bottom may be near

CHICAGO, July 31 (Reuters) - The U.S. corn crop has shrunk another 2.5 percent over the past week, but the modest decline suggests damage from the worst drought in half a century may be nearing an end, a Reuters poll of analysts showed on Tuesday.

The soybean crop is also getting smaller, and hot, dry weather forecast for the Midwest farm belt for the next two weeks could do more damage to the crop, according to the analysts.

The poll of 13 analysts found the U.S. corn crop will be the smallest in six years at 11.2 billion bushels, down 2.5 percent from a Reuters poll last week. Yield was pegged at 129 bushels per acre, the lowest in 14 years and down 1.5 percent from last week.

The analysts expect soybean yield per acre to be 38.1 bushels, down 1.2 percent from last week and the lowest figure in nine years. They see soy production at 2.834 billion bushels, down 2.2 percent from last week and a four-year low.

"It's going down, headed for the bottom. The worst-case scenario would be the '88 analog, which would put current corn yields at 118 (bushels per acre), but we don't think we're there yet," said Tim Emslie, director of research for Country Hedging.

"Corn pollination was a real problem and it's difficult to quantify yet how much didn't get pollinated and the degree of poor pollination," he said.

Expansion of the drought and relentless heat in the central and western Midwest is beginning to eat away at soybean production prospects as that crop moves into its critical pod-setting stage of development.

Crop conditions have been declining daily as 90 to 100 degree (Fahrenheit) temperatures in America's breadbasket bake crops that have received miniscule amounts of rain.

A U.S. government report on Monday showed the worst conditions for corn and soybeans since the disastrous drought of 1988.

In addition to dropping their yield forecasts due to the drought's impact, the analysts were beginning to measure the potential acreage that will not be harvested as farmers abandon crops that are not worth garnering.

"At this point, the condition ratings don't mean all that much. The real debate now is how much will be harvested. The number of abandoned acres is the big question," said Chris Manns, analyst for Traders Group Inc.

USDA in its July crop report estimated corn acreage for harvest at 88.9 million, but analysts are slashing their forecasts. Sid Love of Kropf-Love Consulting sees harvested acreage at only 86.9 million.

"The next big question is abandonment, just how bad is that going to be," said Sterling Smith, analyst for Citigroup.

Current weather forecasts indicate further crop losses for corn and soy growing in the central and western U.S. Midwest and in the Delta, or roughly two-thirds of the U.S. crop belt.

Corn prospects have been plunging rapidly and soybeans are now likely to suffer big losses, the analysts said.

"The market remains somewhat optimistic that soybean yield potential in the Delta and eastern Corn Belt will compensate for yield losses in the west," said Ken Smithmier, analyst for The Hightower Report.

"However, the next two weeks will be the most critical period for the U.S. soybean crop, and the August forecast remains troublesome," he said.

RTRS- .S. corn and soy ratings slip 2 pts, worst since 1988

CHICAGO, July 30 (Reuters) - Corn and soybean conditions in the U.S. Midwest deteriorated further last week as the most expansive drought in more than 50 years ate away at crop prospects in major producing states including Iowa and Illinois, government data on Monday showed.

The U.S. Department of Agriculture rated 24 percent of the U.S. corn crop in good-to-excellent condition as of Sunday and 29 percent of the soybean crop in good-to-excellent shape, both down 2 percentage points from the previous week.

The ratings for each were the worst since the comparable week in 1988, another year of severe drought in the nation's crop-growing mid-section.

Crops improved marginally in Ohio and Indiana where condition ratings were already among the poorest in the country and in smaller-producing states such as Wisconsin and Michigan, but those improvements were overshadowed by eroding ratings in the top producing states in the central and western Midwest.

Concerns that the most expansive U.S. drought since 1956 was intensifying in areas that had not been as severely impacted earlier in the season propelled U.S. corn and soybean prices to all-time highs this month.

Much of the U.S. corn crop was largely beyond repair, but soybeans were moving into their critical flowering and pod-setting phase of development when heat and moisture stress can be devastating to yields.

In Iowa, Illinois, Nebraska and Minnesota, the top 4 corn and soybean producing states, corn crop ratings fell by 2 to 5 points and soybean ratings dropped 3 to 4 points.

A Reuters poll of 10 analysts had expected a 3 percentage point drop in the corn rating and a 2 point drop in soybeans.

The U.S. corn crop was rated 41 percentage points below the five-year average and 5 points above the 19 percent good-to-excellent rating in the comparable week during the drought of 1988.

The soybean rating was 34 points below the five-year average and 10 points above the same week in 1988.

Analysts and crop experts also said further declines in condition ratings could be expected next week as weather remained stressful to each crop.

Dry and hot weather in the U.S. Midwest for the next week or two will further erode crop conditions, trimming this year's corn and soybean production, an agricultural meteorologist forecast on Monday.

"It looks like a continued trend of below-average precipitation in the Midwest for the next week to 10 days," said John Dee, meteorologist for Global Weather Monitoring.

Temperatures this week will warm into the upper 80s to low 90s degrees Fahrenheit (30-35 degrees Celsius), with only a few light showers in the east on Monday and some rainfall later in the week, he said.

"There are no widespread soaking rains in sight. Thursday and Friday there could be scattered showers, and by the weekend from 0.30 to 0.80 inch (0.8-2 cm) with coverage of about 75 to 80 percent," Dee said.

"There won't be as much stress as recently, but crops will continue to deteriorate," Dee said.

Analysts have rapidly been lowering their outlooks for this year's corn and soybean crops, boosting the price of each to record highs.

Trader's Highlight

DJI- NEW YORK, July 31 (Reuters) - U.S. stocks fell on Tuesday with traders' sights set again on Wednesday's Federal Reserve statement on the economy and a possible new round of stimulus.

The Nasdaq Composite, which underperformed on Monday, was the smallest decliner among the three major U.S. stock indexes in Tuesday's session, thanks in part to Apple AAPL.O shares' gain of 2.6 percent after a source said a new product will makes its debut at an event in September. (Full Story) Apple closed at $610.76.

Volume was below average as Wall Street wrapped up its second consecutive positive month, with most of the monthly gains accumulated last week on hopes for more action from both the Fed and the European Central Bank. The ECB will meet on Thursday.

"Markets seem to be moving on talk, but I don't think that's going to be enough in the next few days," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto. "I think the market risks being disappointed in terms of substance."
For the month of July, the Dow rose 1 percent, while the S&P 500 climbed 1.3 percent and the Nasdaq added 0.2 percent. After seven months, the S&P 500 has gained nearly 10 percent for the year, despite a slowing world economy.

In Tuesday's session, the Dow Jones industrial average .DJI fell 64.33 points, or 0.49 percent, to 13,008.68 at the close. The S&P 500 Index .SPX dropped 5.98 points, or 0.43 percent, to 1,379.32. The Nasdaq Composite .IXIC lost 6.32 points, or 0.21 percent, to 2,939.52.

About 6.5 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, below the 2012 daily average of 6.74 billion through Monday's close.

Roughly seven issues fell for every five that rose on both the New York Stock Exchange and the Nasdaq.
Facebook FB.O shares slid 6.2 percent to $21.71, their third consecutive record closing low, after a lackluster quarterly report last week showed decelerating user growth.
According to Thomson Reuters data through Tuesday morning, of the 321 companies in the S&P 500 that have reported second-quarter earnings to date, 67.3 percent have reported earnings above analysts' expectations. Over the past four quarters, the average beat rate is 68 percent.

U.S. home prices rose for the fourth month in a row in May, suggesting the housing market's recovery kept gaining traction, even as the broader economy is still struggling. Other data showed consumer confidence unexpectedly rose in July but spending fell in June for the first time in nearly a year as Americans saved more.

NYMEX- NEW YORK, July 31 (Reuters) - U.S. crude oil futures fell for a second straight session Tuesday as investor hopes were fading that potential stimulus measures from the U.S. and Europe would be enough to lift economic growth.

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade ended mixed after a choppy session, with the front four contracts down on profit-taking at the end of the month, traders said.

* Front-month soymeal SMc1 set an all-time high at $554.20 per ton before paring gains.

• For the month, CBOT soybeans Sc1 unofficially rose 13.7 percent. Soymeal SMc1 rose 25 percent -- its biggest monthly gain in four years -- while soyoil trailed, gaining 0.7 percent.

• Soybeans were underpinned by worries about declining U.S. crop prospects. USDA on Monday said 29 percent of the U.S. soybean crop was rated good/excellent, down two points from the previous week and the lowest rating in 24 years. (nL2E8IU493)

• A Reuters poll of 13 analysts pegged the U.S. 2012 soybean yield at 38.1 bushels per acre, down 1.2 percent from last week and the lowest figure in nine years. They poll projected soybean production at 2.834 billion bushels, down 2.2 percent from last week and a four-year low. (nL2E8IVA2J)

• Updated midday weather models suggested a slightly wetter pattern for the U.S. Midwest where crops have withered under an extensive drought, but rainfall will be only scattered and light - agricultural meteorologists. (nL2E8IV33Q)

• An official with trading firm INTL FCStone said U.S. soybean yields may fall to as low as 34-35 bushels per acre without rain in the next two weeks, below the firm's current forecast of 37-38 bushels per acre. (nL4E8IV2ED)

• Soybean prices are likely to stay high in coming months even if rain relieves drought-stricken U.S. crops as U.S. suppliers limit sales to manage supplies - analysts Oil World. (nL6E8IU7LI)

• India, facing drought, took steps to cut irrigation costs and increase fodder supplies for livestock farmers but held off from imposing any curb on exports of agricultural products or a ban of futures trading in them. India is the world's No. 4 soymeal exporter, after Argentina, Brazil and the United States.

• CBOT reported no deliveries of soybeans or soymeal on first notice day for August futures contracts, as traders expected. Soyoil deliveries totaled 3,052 contracts, above trade expectations for 1,000 to 2,000 lots.

FCPO- SINGAPORE, July 31 (Reuters) - Malaysian crude palm oil edged lower on Tuesday, posting its third successive monthly loss, as weak July exports offset a downgrade of soy crop conditions by the U.S. Department of Agriculture that fed fears of tighter global oilseed supplies.

The USDA rated 29 percent of the soybean crop as good-to-excellent on Monday, down 2 percentage points from the previous week, reflecting damage from persistent drought in the U.S. Midwest. (nL2E8IU493)

But palm oil futures retreated from a one-week high hit the previous day as traders priced in a monthly decline in Malaysian palm oil exports that could ease stocks.

"Exports are worse than expected," said a dealer with a foreign commodities brokerage in Kuala Lumpur. "Hopefully crude palm oil exports will pick up after the release of the tax-free quota or else stocks might climb back up to the 2-million-tonne mark."

Benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange lost 0.8 percent to close at 2,980 ringgit ($953) per tonne. Prices touched 3,007 ringgit on Monday, the highest level since July 23.

Crude palm oil futures lost 1.3 percent in July, marking their third monthly loss in a row.

Traded volumes stood at 34,609 lots of 25 tonnes each, higher than the usual 25,000 lots.

On the technicals front, palm oil will retrace to 2,930 ringgit as it has completed a rebound from 2,880 ringgit, Reuters market analyst Wang Tao said. (nL4E8IV1FE)

Cargo surveyor Intertek Testing Services reported July export numbers at 1.23 million tonnes, down 15 percent from 1.45 million in June. Another cargo surveyor, Societe Generale de Surveillance, reported a 19 percent decline for the same period. PALM/ITS PALM/SGS

Reuters reported on Monday that Malaysia would increase shipping quotas for tax free crude palm oil by up to 2 million tonnes this year to help planters cope with higher output in the next few months as the world's No.2 supplier struggles to maintain its export momentum. (nL4E8IU1CT)

In response, industry body the Palm Oil Refiners Association of Malaysia (PORAM) said late on Monday that Malaysian palm oil refining capacity use will fall to less than 60 percent if the government continues with the plans, and the move will jeopardise the refining industry's competitiveness.

REGIONAL EQUITY- BANGKOK, July 31 (Reuters) - Singapore stocks hit their highest in almost a year on Tuesday, posting the best monthly gain since January while Indonesian shares climbed to a nearly three-month high, racking up the biggest monthly gain in nine months amid foreign buying.

Singapore's benchmark Straits Times Index .FTSTI edged up 0.12 percent to 3,036.40, the highest close since August 4. For the month, the index was up 5.5 percent, Southeast Asia's best performer.

Jakarta's Composite Index .JKSE ended up 1.05 percent at 4,142.34, the highest close since May 9. It gained 4.7 percent in July, the second best. This compares with 2 percent, 2.3 percent and 1.2 percent monthly gain for Malaysia, Thailand and the Philippines, respectively.

Indonesia showed a net foreign purchase of $355 million so far in the month to July 30, after two consecutive months of net foreign selling for a combined $1 billion, according to Thomson Reuters data.

The Philippines recorded $551 million worth of net foreign purchase in the month to July 30, including a number of block trades while Thailand posted $38 million worth of net foreign selling for the same period, adding to $650 million of net foreign selling of the past two months, data showed.