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In news, India’s Food Minister expects India’s sugar output to be unlikely to fall below 23mn tonnes in the 2012-13 season. Meanwhile, ICE coffee prices soared to a 10-week high on Tuesday, but has since p..

06 Oct 2012

LONDON(Commodity Online): After closing higher following the release of the 28 September USDA quarterly Grain Stocks report, grains prices have posted a mixed performance. Corn prices closed limit up on the day following the release of the report, which showed stronger-than-expected feed demand, leading to a larger-than-anticipated drop in US stocks that at 988mn bushels are at their lowest since 2003.

With feed usage looking better than expected in the report and US production estimates holding the potential to be revised lower still, the fundamental backdrop for the corn market remains positive.

Ethanol demand, however, continues to weaken, with the latest EIA data showing that in the week ending 28 September, US ethanol production averaged 785Kbpd, down 24Kbpd from the prior week and the lowest level in more than two years (since the EIA started releasing weekly production figures).

Corn prices have remained firm through the week in contrast to soybean prices, which fell mid-week to their lowest level since end-June before posting a recovery. Soybean prices have been under pressure since mid-September, weighed by seasonal harvest pressure and the expectation that rains in late August have led to a pickup in yields. However, low prices have seen an uptick in demand as reflected in the latest w eekly USDA export sales data.

We continue to view corn, wheat and soybean prices with a positive bias, said Barclays.

Across soft commodities, sugar prices were the strongest performer, up 10% this week, buoyed by the weaker dollar. However, Barclays expects the global surplus will cap upside.

In news, India’s Food Minister expects India’s sugar output to be unlikely to fall below 23mn tonnes in the 2012-13 season. Meanwhile, ICE coffee prices soared to a 10-week high on Tuesday, but has since pulled back as weathe r concerns in Brazil eased.

“We expect the coffee market to be weighed by Brazil’s “on-year” crop, which reflects an upturn in yields in Brazil’s biennial crop cycle.” the Bank added.

Finally, ICE cocoa prices bucked the trend and have fallen 3.5% this week as expectations of poor Q3 12 grind data coming from Europe to be released at the end of this month have been weighing on prices.

Further, initial fears that unresolved issues surrounding the Ivory Coast reforms would result in merchants threatening to block cocoa supplies have dissipated.

The government announced on Tuesday that the exporters and middlemen will receive 22% of the CIF (cost, insurance, freight) price for the 2012-13 season, up from 18% last year (Reuters).

Additionally, the Ivory Coast has fixed its government-guaranteed cocoa farmgate at 725CFA francs ($1.43) per kg for the 2012-13 season. While this is more than the average price received by growers last season, it is significantly lower than the price typically fixed in Ghana.


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