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Wednesday, December 21, 2011

Inside Commodities Thursday December 22 2011

Thomson Reuters
Inside Commodities
 

THURSDAY, DECEMBER 22, 2011

 
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COLUMN:
 
Race for 2012 crown set with final oil forecasts: Kemp
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, Dec 21 (Reuters) - Leading oil analysts have issued a clutch of mostly small downgrades for 2012 Brent prices in the latest Reuters survey, but for the most part banks and traders stuck with earlier predictions. 
Predictions in the December survey are particularly important because they are the last out-of-sample forecasts before the forecast period begins, so they provide the best test of accuracy.
 
Euro-gloom saps geopolitics' power over oil-Campbell
-- Robert Campbell is a Reuters market analyst. The views expressed are his own. --  
NEW YORK , Dec 21 (Reuters) - Much to the consternation of the most ardent oil bulls, nothing seems capable of lifting crude out of its euro-zone-crisis-induced funk. 
It used to be the case that the merest hint of political strife that could have even a modest indirect impact on oil flows was enough to get the market going.
 
 
ENERGY:
 
Brent steady above $107; U.S. stocks, euro zone eyed
SINGAPORE, Dec 22 (Reuters) - Brent futures were steady above $107 a barrel, as investors weighed a sharp drop in U.S. crude stocks against persistent worries that the euro zone debt crisis would curtail global oil demand. 
"I was surprised by the size of the drawdown, which is helping support oil prices," said Ken Hasegawa, a derivatives manager with brokerage Newedge in Tokyo. "But there's still a lot of uncertainty over Europe."

Rio police seek to indict Chevron, Transocean officials
SAO PAULO, Dec 21 (Reuters) - Federal police in Brazil on Wednesday recommended the indictment of several Chevron and Transocean officials involved in an oil spill in early November for environmental crimes and withholding information in an investigation. 
The indictment is unrelated to a civil suit brought against the companies by a public prosecutor on Dec. 14, seeking fines of $11 billion for their alleged roles in the spill at Chevron's Frade field off the coast of Rio de Janeiro.
 
Eagle Ford shale Sep. output at record high-Bentek
NEW YORK, Dec 21 (Reuters) - Oil and condensate output from the prolific Eagle Ford shale prospect rose to yet another record high in September, data from consultancy Bentek Energy showed on Wednesday. 
Total crude oil and condensate output in the unconventional prospect rose by 120,000 bpd to just under 375,000 bpd during the month, Bentek data showed.
 
U.S. ethanol tax break ends, Brazil sees an opening
WASHINGTON, Dec 21 (Reuters) - A U.S. ethanol tax credit costing roughly $6 billion a year will expire on Dec. 31, with the U.S. industry declaring itself ready to stand on its own and Brazil hoping for a biofuels bonanza in the years ahead. 
Thanks to the high cost of crude oil, corn-based ethanol is attractively priced. Output and exports are record-high this year and a U.S. law assures renewable fuels a share of the U.S. motor fuel market.
 
Tepco to raise customer rates as fuel costs rise
TOKYO, Dec 22 (Reuters) - Tokyo Electric Power Co  said on Thursday it will raise corporate customers' electricity rates in April and seek approval to hike household rates as soon as possible, as it struggles with hefty thermal fuel costs after the Fukushima crisis curbed its nuclear power output. 
Japan's largest power utility said it would inform customers about the specifics of the rate increases in January, although the Nikkei business daily reported that Tepco planned a one-fifth increase.
 
China bid expected for Australia's Gloucester Coal
SYDNEY, Dec 22 (Reuters) - Trading in shares of Gloucester Coal  was suspended on Thursday, as China's Yancoal was said to be preparing a takeover offer estimated to be worth $2 billion in what would be the latest foreign push into Australia's coal sector. 
The Gloucester Coal and Yancoal boards were due to meet on Thursday to consider a deal, with an announcement expected later in the day or early Friday, a  source close to the talks told Reuters.
 
CNPC says gas well in China's Sichuan catches fire, explodes
BEIJING, Dec 22 (Reuters) - A gas well in southwestern China's Sichuan province caught fire and exploded early on Thursday morning, China National Petroleum Corp (CNPC) said in a report on its website. 
One person was missing and one was lightly injuried, the top Chinese oil and gas producer said.
 
Germany's Solar Millennium files for insolvency
FRANKFURT/LOS ANGELES, Dec 21 (Reuters) - Solar Millennium AG  became the second German solar company to file for insolvency this month, as the company ran out of cash before it was able to finalize deals to sell large projects in the United States and Spain. 
It still expects, however, to complete a transaction to sell its biggest U.S. projects to German developer solarhybrid AG  early next year.
 
 
AGRICULTURE:

 

Soy eases from 4-wk top on Europe funding doubts
SINGAPORE, Dec 22 (Reuters) - U.S. soy slid 0.7 percent, snapping five straight sessions of gains as broad weakness in global markets, fed by doubts over funding of European banks, weighed on agricultural futures. 
"The euro is under pressure on concerns over the European situation, which is having some negative impact on the agricultural markets,"  said Ker Chung Yang at Phillip Futures in Singapore.

Top Brazil soy state on brink of record harvest
SAO PAULO, Dec 21 (Reuters) - Producers in Brazil's largest soy producing state, Mato Grosso, are days away from beginning the harvest of record corn and soy crops, while tenacious dry weather elsewhere in Brazil's grain belt threaten to hurt yields. 
Rainfall patterns this season are exhibiting how a typical La Nina phenomena affects Brazil's grain belt: Moisture in the southern states such as Rio Grande do Sul falls below average, while tending toward above average further to the north in the center-west states such as Mato Grosso.
 
Cocoa flows from Brazil's Bahia faster than average
SAO PAULO, Dec 21 (Reuters) - Deliveries of cocoa to warehouses in Brazil's Bahia state kept up a swift pace in the last week at a time when the October-April main crop is usually beginning to decline, Bahia Commercial Association data showed. 
Bahia-based cocoa analyst Thomas Hartmann said forecasts indicated that the final outturn of the main crop could reach 850,000 bags, the middle of a range of 800,000-900,000 bags projected at the outset of the main crop.
 
Shipper dispute cuts Ghana cocoa exports - Cocobod
ACCRA, Dec 21 (Reuters) - A dispute over port fees slashed Ghana's cocoa exports to 33,000 tonnes in November from 90,000 tonnes in October, but talks are underway to resolve the impasse, the head of cocoa regulator Cocobod said on Wednesday. 
"Our cocoa shipments are going out but at a slower pace because our major shippers are not loading due to differences between them and the port authorities," Tony Fofie, head of Cocobod, told a news conference.
 
Brazil's '11/12 coffee crop biggest ever off-year
BRASILIA, Dec 21 (Reuters) - Brazil's now-finished 2011/12 coffee harvest produced 43.5 million 60-kg bags this year, government crop supply agency Conab said on Wednesday, a record for an off-year in the biennial up-and-down cycle in the world's top coffee producer. 
Conab raised its previous estimate from September of 43.15 million bags due to higher-than-expected productivity of plantations towards the end of the harvest which runs from May to September.
 
 
BASE METALS:

 

Copper snaps two days of gains on doubts over ECB move
KUALA LUMPUR, Dec 22 (Reuters) - Copper fell y, snapping two days of gains, on investor concerns that  the latest round of European Central Bank loans to banks were insufficient to help pull the euro zone out of a two-year-old sovereign debt crisis. 
The most-traded March copper contract on the Shanghai Futures Exchange <SCFc3> declined 0.77 percent to 54,200 yuan ($8,600) a tonne. Shanghai copper has lost a quarter of its value in 2011.

PNG rejects appeal to block Ramu nickel ocean dumping-Highlands
SYDNEY, Dec 22 (Reuters) - A move to block deep sea dumping of waste from the Ramu nickel mine in Papua Guinea has been rejected in an appeals court, ending a lengthy legal battle delaying the Chinese-backed project, junior partner Highlands Pacific  said on Thursday.  
The $1.5 billion project, one the biggest Chinese investments ever in the impoverished South Pacific nation, has been plagued by protests over plans to dump 100 million tonnes of waste into the Bismarck Sea.
   
Chile court keeps freeze on more Anglo stake sales
SANTIAGO, Dec 21 (Reuters) - A Chilean court on Wednesday maintained a sales freeze on Anglo American's  Chilean properties, after Codelco filed an appeal to safeguard them, preventing the London-listed miner from selling another part of its coveted assets. 
Anglo shocked Codelco and investors in November when it announced it sold a 24.5 percent stake in its southern Chilean copper properties to Japan's Mitsubishi Corp  for $5.4 billion, undermining an option Codelco had to buy a 49 percent stake.
 
Chinese producers key to 2012 nickel prices
LONDON, Dec 21 (Reuters) - High-cost nickel producers in China will limit price moves in either direction next year, even while the market accelerates a move into over-supply as several new projects start up and demand falters. 
Chinese producers of nickel in pig iron (NPI), a lower grade of nickel used to make stainless steel, will exert a major influence on the market as those with the highest costs turn output on and off swiftly according to their profit margins.
 
 
PRECIOUS METALS:
 
Gold inches down as Europe debt worries persist
SINGAPORE, Dec 22 (Reuters) - Gold prices inched down in thin trade as investors remained sceptical of the euro zone's ability to tackle its debt crisis after the European Central Bank's latest moves to keep credit flowing in the region. 
"We will probably be trapped in the range of $1,575 and $1,650 until the year-end," said a Hong Kong-based dealer, "The market is still focused on the euro zone -- if there will be new agreement, if the euro zone economy will slide next year, etc."
 
 
GLOBAL MARKETS:

 

Shares, euro ease as bank funding doubts persist
TOKYO, Dec 22 (Reuters) - Asian shares and the euro eased as doubts remained over how much of the funds banks raised from an inaugural long-term European Central Bank tender will actually flow into struggling euro zone economies and help restore confidence. 
"The ECB's funding operation is not a fundamental fix to the euro zone's debt problems and is only a way to buying time, so flight-to-safety bids remain firmly in place," said Shinsuke Kanabu, general manager at Central Tanshi, a Japanese money brokerage.
 
 
CHART OF THE DAY:
 
SHANGHAI COPPER - 24 HRS TECHNICAL OUTLOOK
 
 
BEYOND THE HEADLINES:
 
Fragile US economy to rein in hog herd expansion
CHICAGO, Dec 21 (Reuters) - For hog producer Everett Forkner, 2011 was a good year.  
Prices for hogs in the cash market hit a record high and could forge further gains in 2012. And corn prices are down nearly 25 percent from record highs near $8 set in June, a good omen for feed costs.
  
Aflatoxin feed recalls point to tighter rules ahead
CHICAGO, Dec 21 (Reuters) - A series of recent recalls for pet and livestock feed in the United States for a corn-based toxic substance increases the pressure to tighten government food safety rules in proposals now being weighed by the Food and Drug Administration, scientists say. 
"With the Food Safety Modernization Act coming into play into the grain industry, we are going to be talking about these things a lot more often," said Charles Hurburgh, a grain quality specialist for Iowa State University.
 
Ukraine sees 11/12 grain export capped at 23 mln T
KIEV, Dec 21 (Reuters) - Ukraine's grain exports are unlikely to exceed 22-23 million tonnes in the 2011/12 season despite a record harvest because of aggressive exports from neighbouring Russia, Ukraine's Farm Minister Mykola Prysyazhnyuk said on Wednesday. 
"We have lost time in the first months of this season, allowing Russia to earn a lot (from exports) without  competition from our side," Prysyazhnyuk told Reuters in an interview.
 
Indonesia's Indo Tambangraya eyes $100 mln coal mine buy
JAKARTA, Dec 21 (Reuters) - Indonesia's PT Indo Tambangraya Megah  plans to spend around $100 million in 2012 on a new coal mine as it jumps back into the race to buy concessions in the world's top thermal coal exporter, the company said on Wednesday. 
Increased competition for new mines since 2010 has driven up prices, prompting Indonesia's fourth largest coal miner to hold back on fresh buys, chief executive Somyot Ruchirawat told Reuters.
  
 
Inside Commodities
 

EVENTS TO WATCH TODAY (GMT)
 
U.S. EIA NATURAL GAS STOCKS WEEKLY (1530)
 
U.S. COLD PORK BELLY STOCKS OCT (2000)
 
U.S. COLD STORAGE-BEEF STOCKS OCT (2000)
 
U.S. COLD STORAGE- FCOJ STOCK OCT (2000)
 
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