US wheat futures suffer biggest weekly loss since January

US wheat futures plunged 4.7 percent on Friday for their worst daily loss since January and their biggest weekly loss in nearly a year, as investors fled risky assets amid slowing global economies and lower-than-expected job growth in the United States.

The advancing US winter wheat harvest also pressured futures, with Chicago Board of Trade July wheat shedding 31-1/2 cents to $6.12-1/4 per bushel, a two-week low. CBOT July corn lost 3-3/4 cents, closing at $5.51-1/2, the lowest settlement in about 1-1/2 years. Corn earlier rose as much as 3 percent as traders covered short positions a day after futures notched their worst monthly performance in eight months.

But corn gave up all its gains and soybean futures also came off their highs as stock and commodities markets deepened losses. CBOT July soybeans ended up 4-1/4 cents at $13.44-1/4 after rising as high as $13.57-1/4. Corn lost 4.5 percent for the week while soybeans declined about 3 percent. Wheat fell 9.7 percent for the week, the worst since the week ended June 19, 2011.

"There were rumours of China buying (corn) but no follow-through and it wasn't able to hold the gains. Then came the new lows in equities and crude oil, and traders jumped right back out again," said Mike Zuzolo, analyst at Global Commodities Analytics. Despite the drop in CBOT corn futures, exporters in Brazil and Ukraine are offering cheaper shipments than the United States, traders said.

The sharp price drop also makes it more attractive than wheat as animal feed - and that weighed on wheat prices - while some farmers were reporting good yields early in the harvest in the No 1 US wheat state Kansas. "Wheat got smoked once again as it is in the process of re-pricing itself as a feedstuff against the corn," ABN Amro analyst Charlie Sernatinger said in a note to clients.

Grain futures tracked losses in many other commodities, with the Thomson Reuters-Jefferies CRB index of 19 commodities shedding about 1.7 percent amid the debt crisis in the euro zone and lower-than-expected job growth in the United States. Early on Friday, corn benefited from bargain buying while largely dry conditions in the US Corn Belt capped losses in new-crop contracts for both corn and soybeans. The greenback had surged to a 16-month peak amid a steady drum beat of negative news in Europe, which made commodities priced in the dollar less attractive to importers. But the US currency pared gains and turned lower.

However, export demand remains lacklustre. The US Agriculture Department early Friday pegged US corn export sales last week at the lowest in nine weeks, wheat exports the lowest in five months and soy sales the lowest in four months - with each result coming in lower than analysts' estimates.

"There have been rumours of China buying which are not confirmed by any exporter," said AgResource Co analyst Dan Basse of Friday's rumours. "I talked to three major exporters and they had not heard anything; I am dubious about it all." World stocks dipped anew while safe-haven government debt yields dropped to record lows on worries about the Chinese economy and Spain's parlous finances. US job growth braked sharply in May and the unemployment rate rose for the first time since June, putting pressure on the Federal Reserve to ease monetary policy further to shore up a sputtering recovery.

Copyright Reuters, 2012

US Agriculture Futures Trading

Outside market pressure overshadowed strength in the boxed Beef market and hopes for steady to firmer cash Cattle trade later this week.

Grains

Wheat futures were pressured throughout the day. Chicago Wheat ended roughly 0.02 to 0.03 lower. Kansas City closed 0.01 higher in Jul and Sept while deferred months were slightly lower. Minneapolis was 0.06 to 0.08 lower through the Mar contract. While the HRW wheat crop is limping into harvest due to hot and dry conditions in the Southern Plains, fresh supplies are pressuring the market.

Corn futures closed 0.03 to 0.0475 higher in all but the Jul contract, which settled 0.03 lower. All but the Jul contract ended on or near session highs. Futures did not stray far from those levels in after-hours trading. Price action was highly choppy in the corn market today as negative outside markets battled building concerns with this year’s crop given dryness issues, especially in the southern and eastern Corn Belt.

Soybean futures were under pressure much of the day, but they trimmed losses as the day progressed and finished around 0.13 lower in old-crop futures while new-crop futures closed narrowly mixed. Soybean futures continued to improve in after-hours trade. A sharply higher USD and general risk off mode weighed on the Soybean market Wednesday.

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Agriculture: Drought parches wheat fields worldwide

Bloomberg News 

CHICAGO -- Droughts withering wheat crops from the United States to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year.

Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state's climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg.

Wheat traded in Chicago rose as much as 18 percent in the 10 days through May 21 on concern that the market is returning to the droughts of 2010. Russia and Ukraine curbed exports that year and prices more than doubled to $9.1675 a bushel by February 2011, the month when world food costs tracked by the United Nations rose to a record. Analysts surveyed by Bloomberg expect futures to gain 12 percent to $7.51 by mid-July.

"In 2010, everyone was talking about dryness in Russia even in May, but no one was paying attention," said Chris Gadd, an analyst at Macquarie Group in London. "Because you've had the history of 2010, people are going to the other extreme and overreacting a little. If weather conditions deteriorate further, production estimates could go a lot lower."

Futures surged to an eight-month high of $7.22 on May 21 on the Chicago Board of Trade. The grain's 2.6 percent advance this year makes it the third best performer in the Standard & Poor's GSCI Index of 24 commodities behind soybeans and gasoline. The gauge's 4.1 percent drop since the start of January compares with a 0.2 percent gain in the MSCI All-Country World Index of equities. Treasuries returned 1.4 percent, a Bank of America Corp. index shows.

The USDA said May 10 that global wheat output will decline 2.5 percent to 677.56 million metric tons in the crop year beginning June 1, leaving stockpiles of 188.1 million tons at the lowest relative to demand since 2009. The department will probably cut the production forecast to 669.15 million tons in its June 12 report and reduce the inventory estimate to 183.3 million tons, according to the Bloomberg survey.

Kansas got 0.39 inch (0.99 centimeter) of rain in the first 20 days of May, according to Mary Knapp, the state's climatologist. The record low of 0.98 inch for the entire month was set in 1966, the Manhattan, Kansas-based scientist said. Analysts were predicting record wheat yields for the state as recently as three weeks ago.

As much as 30 percent of the grain harvest in eastern and southern Ukraine may be lost because of damage from dry weather, said Tetiana Adamenko, the head of the agro-meteorology department at the National Meteorology Center in Kiev. Russian wheat output may drop 15 percent this year if below-average rainfall persists in southern regions during the flowering period for the next two weeks, Macquarie estimates.

While dry weather is depriving winter plants of the water needed to develop kernels, there's still time for improvements before harvesting starts next month. Futures jumped 29 percent in July and August last year because of concern about drought, before tumbling 23 percent in the following month as rainfall revived crops and harvests exceeded analysts' estimates.

Winter wheat accounted for about 75 percent of U.S. output last year and is the main variety grown in the Black Sea region.

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Modi address captivates NRGs and NRIs in Chicago

Modi

CHICAGO: A large number of Gujaratis and a good number of well wishers of Gujarat and Chief Minister Narendra Modi flocked to Bartlett Jain Mandir Hall to participate in a grand celebration of Gujarat Day organized here on Friday May 19. The big attraction of the near three-hour function attended by over 1500 Non-Resident Gujaratis (NRGs) and Non Resident Indians (NRIs) was a live chat with and live televised address by Gujarat Chief Minster Narendra Modi. The attendees were highly impressed with the progress of Gujarat in the past decade under the leadership of Modi and the consensus was that not only Gujarat but India needed a capable leader like Modi to notch big progress and be a force to reckon with in the international community of nations. Among non-Gujarati and non-Indian dignitaries attending the event was William Joseph Walsh a Republican U.S. Representative for Illinois’ northwest suburban 8th congressional district. He has served in Congress since January 2011 after defeating three-term incumbent Democrat Melissa Bean in a surprising upset. Rep. Walsh is one of the top US political leaders who feels that denial of visa to Modi is gross injustice. In his brief address, he praised Modi’s leadership and presented congratulations to Gujarat and Gujaratis in USA and across the world on Gujarat Day celebrations The program started with a welcome address for a community activist Dr Bharat Barai followed by singing of Indian and American national anthems by Meena Purohit, an India TV anchor. Bharati Desai sang Jai Jai Garvi Gujarat followed by a cultural program by Northwestern University students headed by Hetal Patel. Dr Indrajit Patel briefed about Statue of Unity and Sardar Patel coins. Youth Yogi Divine Society presented Atmiya Raas and Beena Patel presented Fast Track Gujarat 2012. Gujarati leader Kanti Patel thanked sponsors while Bhailal Patel, former head of National FIA, acknowledged presidents of 50 plus Gujarati associations for their support and presence. This was followed with Subhash Bhatt organizing live conference call with CM Narendra Modi. A front ranking Indian community leader Niranjan Shah offered a well-knit introduction of CM Modi and this was followed with live speech of Modi who dwelt on achievements of the State in the last 10 years during his premiership in Gujarat. Modi’s oration left the audience spell bound. The event was televised live in 12 US cities including Chicago, Florida, Houston, Bay Area and even Canada and all across Gujarat. Modi stated that his Mantra is the development of Gujarat for the development of India and added that whatever Gujarat is today, the credit for it must go to 6 crore people of Gujarat who have dreamt and worked hard to realize these dreams. 

He affirmed that Gujarat had contributed in both strands of the freedom struggle. If Mahatma Gandhi and Sardar Patel led the non-violent struggle, Gujarat is also home to Shyamji Krishnavarma who inspired revolutionary nationalists. He also believed that Gujaratis are a global community who imbibe cultures from all over the world. He dwelt at length about the decade of peace and development in Gujarat. He brought out that in 2001 Gujarat was facing a revenue deficit of Rs 6700 crore but in ten years it has become a surplus state, that too without imposing additional taxes on the people. The Chief Minister shared that Gujarat has achieved balanced growth in all three sectors – Agriculture, Industry and Services. Talking about agriculture, Shri Modi said that at a time when India’s agriculture is not growing beyond 3%, Gujarat’s agriculture is growing at 11%. This despite the fact that unlike the rest of the country, Gujarat is not blessed with perennial rivers and is home to a vast Rann. While agricultural income was Rs. 14,700 crore a decade ago, it is now Rs. 96,000 crore and the money is going in the pockets of the farmers. Gujarat’s milk production rose by 68% and so is cotton production which stands at 1 crore 23 lakh bales of cotton, showing a near four time surge. Potatoes from Gujarat are now being exported. Gujarat is surging ahead in the manufacturing sector also and the state is all set to be Asia’s auto-hub with all cars across the world having at least one part or another made in the State. Gujarat is among the four governments in the world that have a dedicated department for climate change and today the water table in Gujarat has risen from 3m to 13m! Villages of Gujarat have 24/7 electricity and 18,000 villages enjoy broadband connectivity. On tourism front, it has notched handsome gains. Tourism in India is growing at 10% while Gujarat has gains of 16%. The Government put focus on maternal health through initiatives such as the Chiranjeevi Yojana and today, 98% of deliveries are held in hospitals thus saving so many mothers and babies in Gujarat. The Gujarat Government has given a renewed impetus to education. Drop out rates in Gujarat are now at 2% and there is a cent percent enrolment rate in the state. He spoke about Gujarat’s advances in solar energy and how it dedicated 600 MW to the nation while the rest of the country is producing only 120 MW of solar energy. Gujarat has 1600 km coastline where the Government will develop ‘New Gujarat within Gujarat’. Projects such as DMIC will change the face of Gujarat too, he said. While concluding his speech, Shri Modi said that Gujarat is a land of Shanti, Sadbhavana and Vikas. He expressed joy in the fact that people from all states are working in Gujarat and living very happily. He stated that it is our responsibility to make the dreams of our forefathers into a reality The speech was followed with an eloquent tribute to a grean Gujarati poet Jhaverchand Meghai whose most liked poem Kasumbi No Rang had audience nostalgic and emotional. Naen Patel, head of Vishwa Gujarati Parishad, proposed a vote of thanks and the event concluded with the singing of Vande Matram.

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