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Nearby Futures WSJ

June 1, 2015 (WSJ.com) by  Christian Berthelsen

Oil Prices Ease From Prior Session's Surge Investors turn their attention to this week's OPEC meeting


Oil prices pulled back Monday from their surge in the previous session as investors took profits and the dollar strengthened, and the market looked ahead to Friday's meeting of the world's oil cartel.


Both the U.S. and global benchmarks rose more than 4% Friday after weekly rig count data showed a larger-than-expected decline in the number of rigs drilling for oil in the U.S., which some investors have looked to as a loose indicator of domestic production. U.S. production has eased somewhat amid the dramatic drop in drilling activity in recent months but remains well above 9 million barrels a day.


On Monday, light, sweet crude for July delivery was down 60 cents, or 1%, at $59.70 a barrel on the New York Mercantile Exchange. The global Brent crude contract was down 76 cents, or 1.1%, at $64.80 a barrel on the ICE Futures Europe exchange.


Analysts pointed to the strengthening U.S. currency and a weaker-than-expected reading on Chinese economic activity as reasons for the price declines.


Oil and the dollar often move in inverse directions, as a stronger greenback makes dollar-denominated oil more expensive for buyers using other currencies. Meanwhile, China's official purchasing managers index registered at 50.2, barely indicating expanding economic activity and below analysts' projections.


Traders are also looking ahead to Friday, when ministers from member nations of the Organization of the Petroleum Exporting Countries are scheduled to meet in Vienna. OPEC is widely expected to keep current production quotas in place. The cartel has been producing more than 30 million barrels a day of oil despite surging U.S. output, as it fights to maintain market share rather than cutting production to shore up prices. Surveys by Bloomberg and Reuters said OPEC continued to increase production in May, including near-record production by Saudi Arabia.


Despite the bearish backdrop, financial investors have been bullish on the market, with U.S. data showing money managers such as hedge funds maintaining positions on balance that pay off if prices rise.


"The market has been overzealous about a rapid U.S. production decline," Morgan Stanley said in a note.


Refined fuel markets were also on the decline Monday. Gasoline futures fell 0.5% to $2.0532 a gallon on the Nymex. Diesel futures fell 0.2% to $1.9467 a gallon.



Nearby Futures WSJ

May 21, 2105  (Bloomberg.com) By Marvin G Perez
Coffee Declines to Lowest in 15 Months on Global Supply Outlook


Arabica-coffee futures fell to the lowest in more than a year amid signs of increasing global supplies and improved crop prospects for Brazil, the world's biggest producer.


In the season starting Oct. 1 in most countries, output will probably be 154.5 million bags, up 1.7 million bags from a February estimate, Keith Flury, head of coffee research at Winterthur, Switzerland-based Volcafe, wrote in e-mailed report. The analyst also boosted the forecast for the current season by 1.6 million bags as Brazil recovers from a drought last year, and cut the outlook for demand.


In 2014, parched Brazilian crops sent arabica futures surging 50 percent in New York, the biggest gain among 22 raw materials tracked by the Bloomberg Commodity Index. Arabica, favored by specialty roasters such as Starbucks Corp., is the worst performer in the index this year, as ample rains boost the outlook for South American harvests.


"There's going to be a lot more supply in Brazil and the world than anyone had expected," Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. "That's pushing prices lower."


Arabica coffee for July delivery slumped 5.6 percent to settle at $1.2845 a pound at 1:30 p.m. on ICE Futures U.S. in New York, after dropping to $1.2785, the lowest since Feb. 3, 2014. The drop was the largest for a most-active contract since March 3, and extended a rout in the past year to 29 percent.


Losses accelerated after prices broke support at about $1.29, and the technical breakdown points to a decline to as low as $1.25 in the next few days, Smith said.

Volcafe predicts Brazil will collect 51.9 million bags in 2015-2016, up from 49.2 million a year earlier. That will help world output of all coffee varieties top use by 1.3 million bags, compared with a deficit of 6.4 million in 2014-2015.


Volcafe is ED&F Man's coffee unit. A bag weighs 60 kilograms or 132 pounds.


In London, robusta coffee, used widely for instant drinks by companies such as Nestle SA, slid 2.5 percent to $1,682 a metric ton on ICE Futures Europe.



Nearby Futures WSJ

Corn Market Outlook in May 2015

May 18, 2015 (agmanager.info) by Daniel O'Brien


Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on May 12th, corn futures prices have moved sideways-to-higher. This is a temporary change from the downtrend in corn futures prices since January that had resulted in lows during late April-early May. With 1) a record high 2014 U.S. corn crop of 14.216 billion bushels (bb), and 2) prospects for another large U.S. crop in the 13.2-13.7 bb range in 2015, the likelihood of corn futures prices having a strong rally to $5.00 or above in coming months appear limited - unless unexpected, substantial crop production or export availability problems occur in either the U.S. or in other major coarse grain production and exporting regions of the World in coming months. As a caveat, IF major geopolitical conflicts and/or financial market problems occurred, it would could cause grain markets to be extremely volatile, but the direction of such potential price changes is difficult to predict.


USDA U.S. Corn Market Forecast: The USDA made it first official WASDE forecast of U.S. corn supply-demand and prices for the "new crop" 2015/16 marketing year in the May 12th report. The USDA projected lower production and marginally lower ending stocks, stocks-to-use, and U.S. prices for "new crop" MY 2015/16 than for the "current" 2014/15 marketing year. Projected 2015 U.S. corn production of 13.630 bb and total supplies of 15.506 bb (billion bushels) in "new crop" MY 2015/16 are both down from record high levels of 14.216 bb production and 15.472 bb total supplies in "current" MY 2014/15. Projected MY 2015/16 total corn usage of 13.760 bb is a record (up from 13.622 bb in MY 2014/15), with ethanol use of 5.200 bb (same as a year ago), non-ethanol FSI use of 1.360 bb, exports of 1.900 bb (up 100 mb vs last year), and feed and residual use of 5.300 bb (up 50 mb vs last year). Ending stocks are forecast at 1.746 bb (12.69% S/U) - down from 1.851 bb (13.59% S/U) in "current" MY 2014/15, but still up from 1.232 bb (9.2% S/U) in MY 2013/14, and 821 mb (7.4% S/U) in MY 2012/133. "New crop" MY 2015/16 U.S. average cash prices are  forecast the range of $3.20-$3.80 per bu. (midpoint of $3.50) - which compares to $3.65 /bu in "current" MY 2014/15, and $4.46 in MY 2013/14.


KSU (Kansas State University) U.S. Corn Market Forecasts: Projected supply-demand and price scenarios by KSU for "new crop" MY2015/16 are as follows:

a) "2015 "Normal Crop" 13.262 bb Production" Scenario (55% prob.): 89.199 ma planted, 81.715 ma harvested, KSU long term trend yield of 162.25 bu/ac, 2015 U.S. corn production of 13.262 bb, total supplies of 15.138 bb, total use of 13.730 bb, ending stocks of 1.408 bb, 10.25% S/U, & $4.25 /bu U.S. corn MYA prices;

b) "2015 "Smaller Normal Crop" 13.190 bb Production" Scenario (25% prob.): 88.750 ma planted, 81.295 ma harvested, KSU long term trend yield of 162.25 bu/ac, 2015 U.S. corn production of 13.190 bb, total supplies of 15.006 bb, total use of 13.730 bb, ending stocks of 1.336 bb, 9.73% S/U, & $4.35 /bu U.S. corn MYA prices;

c) "2015 "Short Crop" 12.666 bb Production" Scenario (20% prob.): Planted and harvested acres unchanged Scenario (a) above, but with a KSU low yield forecast of 155.0 bu/ac, U.S. corn production of 12.666 bb, total supplies of 14.542 bb, total use of 13.450 bb, ending stocks of 924 mb, 6.87% S/U, & $6.75 /bu U.S. corn MYA prices.


OrangeOrange Juice
Nearby Futures WSJ

May 12, 2015 (theLedger.com) by Kevin Bouffard 

New Orange Forecast Hits 50-Year Low
First time in 49 years it's below 100 million boxes


WINTER HAVEN | If the fatal citrus greening disease hasn't already driven a citrus grower to the psychiatrist's couch, the latest 2014-15 crop report may do it.

The U.S. Department of Agriculture reduced this season's orange crop by 5.6 million boxes, or 5 percent, to just 96.4 million boxes, according to a report released Tuesday. It was the first time in 49 years the Florida orange crop fell below 100 million boxes and the lowest total since 1964-65.


"It's breaking a psychological barrier," said Tom Spreen, a retired professor of agricultural economics at the University of Florida familiar with the citrus industry. "It's like breaking 10,000 on the Dow-Jones Industrial Average. Whether that means anything (for citrus growers), I'm not enough of a psychologist to know."

It could make more growers reluctant to invest in future seasons, he said.


The production decline came entirely in the Valencia orange crop, harvested from March to June, which sank by 6 million boxes to 49 million boxes, down 11 percent, according to the USDA crop update. It added 400,000 boxes to the early and mid-season orange harvest, which ended in March, based on deliveries to Florida juice processing plants, which buy 95 percent of the state's oranges.


The USDA lowered the 2014-15 grapefruit crop by 100,000 boxes (1 percent) to 12.9 million boxes, the lowest in 79 years for a nonhurricane season. The tangerine ­harvest, largely completed, remained at 2.3 million boxes while the completed tangelo harvest stayed at 700,000 boxes.


The crop reductions are ­attributed to greening, which has spread to virtually every commercial grove across the state. Greening makes it harder for citrus trees to hold mature fruit before they can be harvested and also leads to smaller size, which means more fruit required to fill the standard field box.


At least one grower, Kyle Story, remains standing tall against greening and still committed to investing in the future.


"It's not a psychological thing for me," said Story, an executive in his family's Lake Wales company that owns and manages more than 5,000 grove acres. "Growers still need to be concerned with maintaining a high, consistent level of care in their groves and being good stewards of the land."


Still, Story said he was not surprised at the USDA reduction because pre-harvest drop in Valencia groves had increased significantly in early April, when harvesting was beginning to ramp up.


Additionally many oranges remaining on the tree were "unwholesome" and could not be picked, he added. The oranges had withered on the tree and turned brown.

Those problems were not uniform across the state, Story said.


"It is literally field by field. It's never been like that before," he said.


Among the factors affecting tree health are the historic level of grove care, particularly since greening was discovered in Florida in 2005; the tree's rootstock, some of which show more resistance to greening damage; and the grove's location, Story said.


Groves in South Florida, where greening first surfaced, appear healthier and have better production, he said. Story and other growers speculate the trees that caught greening earlier on might have adapted to the disease.


Spreen and Story agreed the new USDA estimate will likely have little effect on 2014-15 farm prices for oranges, almost all of which had been sold under contract before the report came out.


But there's more bad news on the farm price front as juice processors continue to hold large inventories of orange juice, which pushes down demand for the current crop. Inventories have been building because, despite declining harvests, OJ sales in U.S. supermarkets have declined at nearly the same pace.


Valencias sold for as much as $2.45 per pound solids earlier in the season, Story said. Processors pay growers according to pound solids, a measure of the amount of juice squeezed from the fruit.


But a Florida Citrus Mutual market report on Monday showed an average Valencia price of just $2.03 per pound solids. The Florida Department of Citrus had predicted an average $2.33 for Valencias at the beginning of the season in October.





Nearby Futures WSJ
WASDE: Wheat Supplies Up 6% from a Year Ago
May 12, 2015 USDA WASDE

U.S. wheat supplies for 2015/16 are projected up 6 percent from 2014/15 on higher beginning stocks and production.  All wheat production is projected at 2,087 million bushels, up 3 percent.  The all wheat yield is projected at 43.5 bushels per acre, down slightly from the previous year.  The survey-based forecast for 2015/16 all winter wheat production is up 7 percent with both higher yields and harvested area.  A decline in Soft Red Winter wheat harvested area is more than offset by increased Hard Red Winter (HRW) wheat harvested area.  This year's HRW yield is above last year's low level, but drought and winterkill have adversely affected the crop again.  White Winter wheat production is projected up 10 percent from last year mainly on higher yields.  Spring wheat production for 2015/16 is projected to decline 5 percent on an assumed return to trend yields from last year's near-record level, more than offsetting a slight increase in harvested area.


Total U.S. wheat use for 2015/16 is projected up 4 percent from the previous year on higher exports, feed and residual use, and food use.  The 2015/16 exports are projected at 925 million bushels, up 65 million bushels from the previous year's low level but still below the 5 year-average.  Large supplies in several major competing countries will continue to limit U.S. exports.  Feed and residual use is projected up 20 million bushels on increased supplies.  U.S. ending stocks are projected to rise 84 million bushels to 793 million, the highest since the 2010/11 crop year.  The all wheat season-average farm price is projected at $4.50 to $5.50 per bushel.


Global wheat supplies are projected to rise fractionally from 2014/15 as increased beginning stocks more than offset a slight decline in production from the previous year's record.  Total wheat production is projected at 718.9 million tons, the second highest total on record.  Foreign production is down 9.2 million tons with reductions for EU, India, Russia, and Ukraine more than offsetting increases for China, Turkey, Morocco, Australia, Iran, and Syria.  Global wheat consumption for 2015/16 is projected slightly higher than in 2014/15 with higher food use more than offsetting a reduction in world wheat feeding.  Global import demand for 2015/16 is lower with the largest reductions coming from Turkey, Iran, Morocco, and Syria all on greatly improved crop prospects.  Exports are lower for Canada, India, EU, Russia, and Ukraine, but higher for Argentina and Australia.  Global ending stocks for 2014/15 are projected at 203.3 million tons, up 2.4 million from 2014/15.

DairyDairy Products
Brian Gould, Agricultural and Applied Economics, UW Madison

MADISON, WI May 15, 2015 (REPORT 19)



Butter Highlights
Brian Gould, Agricultural and Applied Economics, UW Madison

MADISON, WI March 15, 2015 (REPORT 19)




Butter production varies throughout the country, remaining fairly active in the Midwest and Northeast, while slowing in the West. Most manufacturers are churning available cream and storing the butter, but others are selling excess cream supplies. Most companies want to increase inventories with current production and some are able to. Demand is balanced as end users are taking contract loads but spot butter sales were limited. Current pricing levels have most manufacturers perplexed. The CME Group price reached $2.06 on Wednesday. Prices have not been over the $2.00 mark since November 24, 2014. Cream supplies are varied. Most of the country is finding there is excess cream, but some manufacturers in the West are having trouble finding enough. This is partly due to ice cream manufacturers pulling heavy. Bulk butter prices are at 4 to 6 cents over market in the Northeast, from even to 6 cents over in the Central region and 4 cents under to 5 cents over market in the West. Friday at the CME Group, Grade AA butter closed at $1.9725, down $.0125 from last Friday. 



Cheese Highlights
Brian Gould, Agricultural and Applied Economics, UW Madison

MADISON, WI May 15, 2015 (REPORT 19)




Heavy seasonal milk supplies continue to support full cheese production schedules. Cheddar and provolone sales are good while mozzarella has slowed. Spot milk is selling below Class in some areas and is being purchased to increase cheese output. The week began with manufacturers having tighter barrel availability than blocks, but each is more readily available than in recent weeks. Some manufacturer inventories are building intentionally, with those cheesemakers being interested in holding an inventory cushion moving forward. Cheese import volumes from Europe have expanded, while Argentine imports have declined. Barrels closed Friday at $1.6225, up $.0025 from last Friday, and 40# blocks closed at $1.6200, up $.0075.




          Copyright 2015 The Plastics Exchange. LLC. 

May 22, 2015 (Chicago, IL) The Plastics Exchange


Spot Polypropylene trading still only sputtered along while prices were steady on average. Several production is-sues continue to challenge PP supply; generally tight availability and high prices relative to contracts have kept most large buyers at bay. Despite a penny decrease in contract PGP monomer, PP resin contracts will likely roll flat in May. Since peaking at $.765/lb in October, PGP costs have fallen $.345/lb to $.42/lb in May. This precipitous fall was largely due to the dramatic plummet in oil prices, exacerbated by PP producers' inability to consume the sur-plus monomer as many reactors were offline for both planned and unexpected maintenance. The limited resin pro-duction restricted material availability, buoying spot polymer prices to the point that spot PP shifted from a tradi-tional discount to contracts to a premium, which is rare, especially in a falling market. After years of fruitless at-tempts to disengage the direct correlation between PGP monomer costs and PP resin prices, this unique situation has enabled PP producers to finally expand margins by decreasing contracts about $.05/lb less than the drop in their feedstock costs. While contract prices have essentially stabilized over the past few months, spot prices have been easing a bit, to somewhat close the premium gap now held to contracts.



KingThe King Nut Report
May 27, 2015 (Solon, OH) King Nut 


ALMONDS - The annual subjective Almond estimate is completed each May based on a sampling of surveys from Almond growers.  The results were released last week and estimate this year's crop to be 1.85 billion pounds.  This is 1% below last year's production of 1.87 billion pounds and 8% below 2013 production of 2.01 billion pounds.  This is the net result of the bearing acreage increasing 2% each year while the yield per acre has decreased by 9% in 2014 and another 3% forecasted for 2015.  Demand for Almonds remains strong with April shipments setting a new record compared to the same month in previous years.  The April shipment numbers and the annual subjective estimate have added fuel to an already heated market.  Prices are anticipated to move upward at least through the end of the summer.


CASHEWS - The Cashew market has firmed in the last month with pricing for all grades trending upward.  Pricing for certain grades (splits, butts and pieces) has been rising faster than the remainder of the market due to those grades being tougher to source.  Consequently, over the past year the spread between whole Cashews and the lower grades has narrowed significantly.


PEANUTS - Last year's South American Peanut crop was heavily affected by late season rains, which delayed its availability to the European market and has shifted additional European volume to the U.S. crop.  The additional volume coupled with the ongoing limited blanching availability is pushing spot Peanut pricing higher.  Meanwhile, early planting indications for this year's crop are positive, leading to future contract pricing at a lower level than spot pricing.


PECANS - Forecasted demand and supply of Pecans remain nearly identical through the end of 2015.  Prices have been firming and are expected to push higher throughout the year.  Industry consensus is that contracts should be executed as soon as possible for any commodity needed during this year.


WALNUTS - The Walnut market has mostly stabilized in the past few weeks.  The smaller packers are indicating that they expect to have sold their supply within the next month.  Prices may rise slightly once the smaller packers are off the market and the remaining supply of Walnuts is all in the hands of the larger packers. 






HotHot Topics
May 20, 2015 (PSFK.com) by Emma Hutchings
Coca-Cola capped off the series finale and now a digital billboard features bottles with the characters' names

As Coca-Cola played a big part in the Mad Men series finale, the company has returned the favor with a digital billboard in New York's Times Square featuring the names of the characters.


During the last scene of Mad Men, which came to an end on Sunday night following a run of seven seasons, the main character Don Draper was seen meditating at a spiritual retreat. Inspiration strikes and he opens his eyes and smiles, with the screen fading to a famous Coca-Cola commercial from 1971 featuring the jingle I'd Like to Buy the World a Coke. The suggestion is that Draper got the idea for the brand's iconic 'Hilltop' ad after his soul-searching journey ending on top of a hill overlooking the ocean.


'Hilltop' was in fact thought up by Bill Backer at McCann Erickson, the ad agency which acquired Draper's firm in Mad Men's final season. Surprisingly, its appearance on the AMC show wasn't paid product placement. Executives gave permission for footage of the classic ad to be used but the brand knew little about how it would be featured.



After the episode concluded, Coca-Cola tweeted "A bright idea indeed, Don. Thanks for thinking of us." They included a link to a post on its corporate blog telling the story behind the making of the 'Hilltop' ad as well as the video for I'd Like to Buy the World a Coke. Another tweet from Coca-Cola's VP of Global Design James Sommerville showed a Coke bottle featuring the name 'Don.'


As Coca-Cola didn't spend any money on its appearance in Mad Men, the company has since been paying tribute to the popular series. A digital billboard in Times Square now features six personalized Coke bottles with the names of the show's characters Don, Betty, Peggy, Pete, Joan and Roger. The outdoor advertising encourages consumers to 'Share a Coke with Mad Men.' The screen also changes at regular intervals to focus on each individual character.





Contact Paul Normand | pnormand@haco.us.com

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