Commodities Market Impact Weather: Midwest Cold Continues

 

  OMAHA--Short-term stressful cold in the Midwest, and below-average rainfall in central Brazil, are
the primary weather items for the commodity trade's attention Thursday.
SHORT-TERM WINTER STRESS IN MIDWEST
  The DTN ag weather forecast calls for some short-term winter stress in the Midwest due to snow and
blizzard conditions in the northern areas. Elsewhere, some scattered damage from bitter cold is
possible in soft red winter wheat areas. A much milder trend is in store during the next week to 10
days.
MILD PATTERN FOR SOUTHERN PLAINS
  Southern Plains wheat has likely escaped cold-weather damage in the short range. In the longer
range period, temperatures moderate somewhat.
DRIER AND WARMER IN CENTRAL BRAZIL
  Across central Brazil, a drier trend with warm to somewhat hot conditions during the next week
will reduce soil moisture and increase stress to developing corn and soybeans. Prior rains may
maintain favorable growing conditions early in this period before the soils dry enough to increase
stress to the crop.
FAVORABLE SOUTHERN BRAZIL MOISTURE
  In southern Brazil, soil moisture due to prior rains and at least some showers will favor crops in
Rio Grande do Sul and southern Parana for a while. Conditions are mostly favorable in northern
Parana and Mato Grosso do Sul as well, but there may be a tendency for net drying in these
locations.
WARM AND DRY IN BRAZIL COFFEE AREAS
  Southeastern Brazil will have below-normal rainfall and above-normal temperatures during the next
seven days. The driest and warmest conditions will likely be in Minas Gerais. Stress to sugarcane,
coffee trees and row crops in the region will increase during this period.MOSTLY FAVORABLE IN ARGENTINA
  In central Argentina, scattered rains and less hot weather favors corn and soybeans crops.
Episodes of heat and dryness may be affecting wheat in the southwest as well as some sunflower in
the area.
LIMITED COLD-WEATHER STRESS IN RUSSIA WHEAT
  Temperatures have dropped below zero Fahrenheit through much of the Ukraine and Russia wheat belt.
Snow cover should protect most of the wheat from the lowest of these temperatures. However, some
areas with low snow cover may be somewhat affected.
SEASONAL CONDITIONS IN CHINA WHEAT
  Central China wheat areas will have seasonally-dry conditions during the next week. Temperatures
trend somewhat higher during this period. There are no significant concerns at this time.
DRIER PATTERN IN SOUTH AFRICA
  In South Africa, a drier trend will develop during the next week, along with above-normal
temperatures. Scattered showers have occurred in southern areas during the past 24 hours.
Temperatures Wednesday averaged near to above normal.

Brazil Coffee Weather

Restricted Rainfall, Warm Through Jan. 18

By Drew Lerner

Kansas City, January 8 (World Weather, Inc.) – Very little rainfall of significance

occurred across coffee areas of Brazil Wednesday and similar conditions were likely over

the next ten days. Daily precipitation will rarely be great enough to counter evaporation

with temperatures in a seasonable range. Soil conditions will continue to dry out and

increasing crop stress is likely in those areas with already poor soil moisture. The most

stressful conditions are likely for unirrigated crops from Bahia into Zona de Mata and

central Minas Gerais where there is already a notable dry bias in place.

BRAZIL

Rain Wednesday was limited to brief showers of mostly insignificance in Sao Paulo,

northern Parana, a few far southern Sul de Minas locations in eastern Bahia. Rainfall reached 13

millimeters along the central Bahia coast and the port city of Sao Paulo received 19 millimeters

while no more than 4 millimeters resulted elsewhere. Nearly all of the precipitation proved

insignificant in light of the warm temperatures reported. Highest afternoon temperatures were in

the upper 20s and lower 30s with one northern Sao Paulo location, outside of coffee areas,

reaching 36. Most of the temperatures were very close to normal.

Limited rainfall and net drying will occur in Brazil’s coffee region through the next ten

days. Totally dry weather is not anticipated in all areas, but there will be quite a few locations

that will be missed by the isolated to scattered showers and thunderstorms that occur. Many of

the crop areas that get rain will fail to get enough to counter evaporation resulting in a generalized net

loss in soil moisture. Crop stress will slowly evolve and intensify resulting in a

growing threat to cherry development, which is similar to what occurred last year at this time.

The drier bias is not expected to prevail as long as that of last year, but there is very little sign of

change for the coming ten days. Daily rainfall will vary from 1 to 10 millimeters with some

potential for greater amounts in a few locations. The region from Rio de Janeiro and Sul de

Minas southward to Parana will have the highest frequency of rainfall, but the amounts will still

be too light to counter evaporation most of the time.

The driest areas in Brazil coffee country will occur from Zona de Mata and central

Minas Gerais northward to Bahia where most unirrigated crops will see a steady rate of drying

resulting in increasing stress and some threat to production.

Daily high temperatures will be in the 30s most often over the next full week to nearly

ten days. A few upper 20s will also occur periodically. Morning lows will be in the upper teens

and lower 20s most often with a few middle 20s possible.

The month of January will end up notably drier than usual in much of the nation’s most

important coffee production areas.

Early Ag Weather Watch - Jan 8

 

EARLY LOOK WEATHER REPORT

 

NATIONAL TEMPERATURE/RAINFALL EXTREMES:
HIGH WED...87 AT FILLMORE CA
LOW  WED...30 BELOW ZERO AT 13 MILES NORTHEAST OF POPLAR MT
24 HOUR RAINFALL ENDING AT 06:00 PM CDT: ST STE MARIE MI 0.12 INCH

 

US OUTLOOK AND MODEL DISCUSSION 6-10 DAY PERIOD:

 

The US and European models are in somewhat better agreement today, however
the European model still features more trough over the Midwest and northeast US
for a time...along with a storm moving off the east coast. At the end of the
period the models are in better agreement  as the European model has given up
on it's deep trough from yesterday's run.
The mean maps covering the 8-10 day period feature much less high latitude
ridging in favor of a mid latitude ridge over the northern Rockies of the US,
across the northern plains and in the southwest Canadian Prairies. There is
still a strong polar trough over northeast Canada on these maps. There are also
signs of a weak southern branch trough over the southeast US on the European
model and over the southern plains on the US model. Cold weather is likely for
central and east Canada and the Great Lakes region of the US based on the
northeast Canada trough. Warm weather is likely over the western US and
possibly southwest Canada as well based on the mid-latitude ridge. The north
and east plains, the Midwest and the Delta may be on the cool side but probably
not as cold as it is currently. Today's US model does not show much
precipitation, outside of the northwest US area. The European model does show a
system that may bring heavier precipitation to the southeast and middle
Atlantic areas and possible to New England...if this system verifies.

 

MAJOR WORLD HIGHLIGHTS/IMPACT:

 

SOUTH AMERICA: The mean ridge position continues over east-central and
sometimes south Brazil during the next 7-10 days. It is not a strong ridge but
it does appear to be strong enough to limit rain chances in Mato Grosso, MGDS,
Parana, Sao Paulo and Minas Gerais Brazil and it may eventually reduce the
shower threats for RGDS as well. It may also promote temperatures at somewhat
above normal levels.

 

MATO GROSSO, BRAZIL: Drier, warm to somewhat hot weather during the next 5-7
days will reduce soil moisture and increase stress to developing crops. Prior
rains may maintain favorable growing conditions early in this period before the
soils dry enough to increase stress to the crop.

 

SAO PAULO/MINAS GERAIS, BRAZIL: Rainfall averages below normal and temperatures
average above normal during the next 7 days. The driest and warmest weather
will likely be in Minas Gerais. Increasing stress to sugarcane, coffee trees
and corn and soybeans in the region during this period.

 

SOUTH BRAZIL (CORN, SOYBEANS): Soil moisture due to prior rains and at least
some shower activity will favor crops in RGDS and southern Parana for awhile.
Conditions are mostly favorable in northern Parana and MGDS as well but there
may be a tendency for net drying in these locations.

 

ARGENTINA (CORN,SOYBEANS,WHEAT): Periodic scattered rains and less hot weather
favors corn and soybeans crops. Episodes of heat and dryness may be impacting
wheat in the southwest as well as some sunflower in the area.

 

EAST MIDWEST/DELTA (WHEAT): The coldest temperatures in Soft Red Wheat areas
are occurring in areas where snow cover should be adequate to protect the crop.
Areas in the south where snow cover is much less are probably not cold enough
to harm the crop.

 

WEST MIDWEST (TRANSPORTATION): No significant storms during the next 7 days.

 

CENTRAL/SOUTH PLAINS: Temperatures should not be cold enough in the wheat belt
to harm the crop in the short range. In the longer range temperatures moderate
somewhat.

 

SOUTH AFRICA (MAIZE/SUGARCANE): A developing moderate upper level ridge may
tend to limit the potential for significant shower activity during the next 5
to 7 days and to promote above normal temperatures. Scattered showers have
occurred in southern areas during the past 24 hours. Temperatures yesterday
averaged near to above normal.

 

UKRAINE/WEST AND SOUTH RUSSIA: Temperatures have dropped below zero F through
much of the wheat belt. Snow cover should protect most of the wheat from the
coldest of these temperatures. However, some areas with low snow cover may be
somewhat impacted.

 

CENTRAL CHINA (WINTER WHEAT): Seasonally dry weather is expected to continue
during the next 7 days. Temperatures trend somewhat warmer during this period.
No significant concerns at this time.

 

INDIA (WINTER WHEAT): Showers have recently occurred in key winter wheat area
of north India. This will favor developing wheat at this time. The region looks
to be somewhat warmer and drier during this week.

 

EXPANDED SUMMARIES/FORECASTS:

 

Midwest corn, soybean and winter wheat

 

Summary...

 

WEST: Mostly dry during the past 24 hours. Temperatures averaged well below
normal.

 

EAST: Snow showers or squalls occurred through northeast areas during the past
24 hours. Mostly dry elsewhere in the region. Temperatures averaged well below
normal. Low temperatures this morning will likely be near or slightly under
zero F as far south as the lower Ohio river valley.

 

Forecast...

 

WEST: Dry or with only a few scattered snow showers today. Mostly dry tomorrow
and Saturday. Temperatures may moderate somewhat this afternoon before very
cold weather returns tonight, Friday and early Saturday. Temperatures may
moderate somewhat again later Saturday.
Mostly dry or with only a little light precipitation, favoring the Missouri
area, Sunday through Tuesday. Temperatures average below normal during this
period, but not as cold as it is currently in the region.

 

EAST: Snow showers or squalls develop through north and northeast areas later
today or during tonight. Drier again tomorrow and Saturday. Temperatures
average well below normal during this period but probably not any colder than
it is currently and maybe a degrees or two warmer.
Chance for a little light precipitation, favoring the southern and eastern
areas, later Sunday through later Monday. Drier again during Tuesday.
Temperatures average near to below normal south, below normal north.

 

6-10 Day Outlook: Temperatures are expected to turn warmer during this period,

Arabica Coffee Rises as Traders Worry About Brazil Rains

Alexandra Wexler

Investors are going back for a second cup of coffee.

     Arabica-coffee prices have risen 8.7% this week and 5.1% this year in the futures market, as

dwindling rains in Brazil, the world's largest grower, spur traders to once again bet on higher

prices. Only silver has performed better this year among the 22 commodities tracked in the Bloomberg

Commodity Index.

     Coffee was the top-performing commodity in 2014 and one of just a few to post a gain amid steep

drops in prices for crude oil, natural gas, copper and soybeans. Arabica prices jumped 50% last year

after Brazil experienced its worst drought in decades. Futures soared above $2 a pound, forcing big

roasters such as Starbucks Corp. to raise prices. Arabica is prized for its mild flavor and used in

gourmet blends.

     The market has pulled back from those highs. But investors are betting that if the rains in

Brazil's coffee-growing areas disappoint again, the market could surge back above $2 a pound in a

hurry.

     On Wednesday, arabica for delivery in March ended up 0.1% at $1.7505 a pound on ICE Futures

U.S.

     "We just receive reports about the scarcity of water across the country every day," said Harish

Sundaresh, commodities strategist at Loomis, Sayles & Co., a Boston investment adviser that manages

about $223 billion. Mr. Sundaresh bought coffee futures at the end of last year, when they fell back

below $2 a pound.

     "I think it seems like 2015 is building up to be a year where coffee prices go 40% to 50% to

the upside [again]," he said, adding that futures could easily crack $3 a pound, a level last seen

in May 2011.

     The 2014 coffee harvest in Brazil, which produces a third of the world's supply, was the

smallest in three years. This year is an off-year in Brazil's two-year coffee cycle, meaning

production would already have been lower without the unusual weather. Colombia, the world's No. 2

arabica grower, has been ramping up production, helping to alleviate some of the concerns about

global supplies. But Colombia only produces about a quarter as much coffee as Brazil.

     "For this month, we expect rain within the average--the problem will be the distribution," said

Marco Antonio dos Santos, agro-meteorologist at Somar Meteorologia, a closely watched São

Paulo-based weather forecaster. "If we only get it as localized downpours, then some areas, or even

some farms, could get less rain than they need. We'd need good rain above the average to be ideal."

     The lower production and higher coffee prices are hitting coffee companies as well as

consumers.

     J.M. Smucker Co. cut its outlook for the year in November after its Folgers coffee brand

suffered a decline in sales after it raised prices. Smucker and Maxwell House maker Kraft Foods

Group Inc. didn't return requests for comment. Starbucks declined to comment.

     "I'm kind of a little nervous about what we're going to see come May and June," when Brazil's

coffee harvest ramps up, said Joseph Fernandes III, vice president at Socafe, a coffee roaster and

trader in Newark, N.J. "I'm buying contracts [for physical coffee deliveries] now because my gut

feeling is prices will go up."

     Futures had come under pressure during December, as rainfall in Brazil's coffee-growing areas

appeared to be helping the trees recover from 2014's severe drought. The dollar's rise to a near

10-year high against Brazil's currency added to the bearish sentiment in the market.

     The real's weakness encouraged producers and exporters to sell coffee abroad because they

receive more money back in their local currency.

     Not everyone thinks the situation in Brazil is dire. Last month, Volcafe Ltd., a unit of

commodities trade house ED&F Man Holdings Ltd., forecast that Brazil would reap 49.5 million bags of

coffee beans this season, 9.3% more than what the government crop agency says growers produced in

2014.

     But flagging rains in January mean production worries are now flooding back into the market, as

are investors.

     "It's showing relative strength in the commodity complex," said Matt Forester, chief investment

officer at CFG Asset Management, an investment adviser in Newtown Square, Pa. that manages about

$462 million. "Signals are saying buy coffee now."

     Mr. Forester bought shares in the iPath Pure Beta Coffee exchange-traded note, a security that

aims to track arabica prices, in October.

     In other markets, raw sugar for delivery in March ended down 0.6% at 14.78 cents a pound, while

cotton for March delivery settled at 60.43 cents a pound, up 0.4% on the day. March-delivery cocoa

ticked 0.3% higher to $2,912 a ton and orange juice for delivery in March ended 0.3% higher at

$1.4260 a pound.

PETRÓLEO: Futuros interrompem sequência de quedas e fecham em leva alta

   São Paulo, 7 de janeiro de 2015 - Os contratos futuros do petróleo

apresentaram uma leve recuperação, depois das quedas dos últimos dias, diante

da divulgação da diminuição dos estoques de petróleo dos Estados Unidos.

No entanto, o Brent continuou cotado na casa dos US$ 51 o barril e o WTI abaixo

de US$ 49.

   "Na minha opinião, o mercado está pendendo, de maneira exagerada, para o

lado negativo. No entanto, não há chances de transformar essa percepção

atual até que haja sinais concretos de mudanças dos fundamentos", disse o

analista do Energy Management Institute, Dominick Chirichella.

   O Departamento de Energia (DoE) informou que os estoques de petróleo dos

Estados Unidos caíram em 3,1 milhões barris, ou 0,8%, para 382,4 milhões de

barris na semana encerrada em 2 de janeiro.

   No entanto, os estoques de gasolina subiram em 8,1 milhões de barris, ou

3,5%, para 237,2 milhões de barris. Os estoques de derivados também

aumentaram, em 11,2 milhões barris, ou 8,9%, para 136,9 milhões de barris.

   "Certamente a baixa dos preços do petróleo terá um impacto positivo na

demanda, mas vai levar um tempo considerável para isso chegar ao mercado.

Assim, a mudança em curto e médio prazo deverá vir do lado da equação da

oferta, de membros da Organização dos Países Exportadores de Petróleo (Opep)

ou de fora do cartel", afirmou.

   Até o momento a Opep e a Arábia Saudita, principal membro da

organização, não manifestaram nenhuma intenção de reduzir a produção para

restaurar os preços no mercado internacional. Em novembro, o cartel decidiu

manter inalterada a sua produção diária em 30 milhões de barris e, desde

então, os preços do petróleo aceleram suas perdas.

   Em um movimento contrário ao visto nos últimos quatro dias, os contratos

futuros fecharam em alta hoje. O WTI, negociado na plataforma Nymex e com

vencimento em fevereiro de 2015, subiu 1,50%, para US$ 48,65 o barril, enquanto

o contrato do petróleo Brent, negociado na plataforma ICE e com vencimento no

mesmo mês, teve alta leve de 0,10%, a US$ 51,15 o barril.

Petrobras fecha no azul após 6 quedas e ajuda Bolsa a subir pelo 2º dia

O principal índice da Bolsa brasileira fechou esta

quarta-feira (7) em alta pelo segundo dia, amparado no bom desempenho de papéis

de bancos, Petrobras, Vale e siderúrgicas, além do clima de menor aversão ao

risco nos mercados internacionais.

"Junto a isso, os investidores domésticos aguardam por anúncios de ajustes

fiscais no Brasil, demonstrando otimismo com a equipe de Joaquim Levy [novo

ministro da Fazenda], o que também colaborou para o bom desempenho da Bovespa

nesta quarta", disse Ricardo Kim, analista da XP Investimentos.

A valorização do Ibovespa foi de 3,05%, para 49.462 pontos. O índice, no

entanto, soma queda de 1,09% em 2015. O volume financeiro movimentado nesta

sessão foi de R$ 7,559 bilhões. Para Kim, o noticiário positivo envolvendo

empresas e setores com peso relevante na Bolsa brasileira intensificou os

ganhos nesta quarta.

"Além disso, o Ibovespa já caiu bastante e, principalmente em dólar, está em um

nível bem baixo. Os estrangeiros olham muito para isso. Logo, qualquer melhora

no humor nas Bolsas externas pode ajudar a impulsionar o índice aqui no

Brasil", afirmou.

No exterior, as principais Bolsas subiram, após dados fracos de inflação na

Europa terem alimentado apostas de novos estímulos naquela região. Operadores

aguardaram ainda a divulgação da ata da última reunião do Fed (banco central

dos EUA), que saiu logo após o fechamento do mercado no Brasil. A autoridade,

segundo o documento, manteve sua estimativa de aumento dos juros americanos

ainda neste ano.

Após seis quedas seguidas, as ações preferenciais da Petrobras, sem direito a

voto, tiveram valorização de 4,08%, para R$ 8,67 cada uma. Já os papéis

ordinários da estatal, com direito a voto, avançaram 4,84%, para R$ 8,45 cada

um.

O ganho da petroleira ocorreu após a companhia informar que concluiu com

sucesso negociação com credores que demandavam demonstração contábil do

terceiro trimestre de 2014 revisada por auditor externo até fim deste mês. Na

véspera, os papéis caíram para seu menor nível desde 2003, na esteira da queda

do petróleo e do escândalo de corrupção dentro da estatal.

Em nota, a equipe de análise da Concórdia corretora avaliou a flexibilização

dos credores da Petrobras "como um alento para a companhia, apesar de

representar apenas um ganho de folego e não a solução de seus problemas".

Também subiram as ações preferenciais da Vale (+3,63%, para R$ 19,99), que

caíram mais de 40% em 2014, ajudando o Ibovespa a se manter no azul. O setor de

siderurgia contribuiu com o avanço do índice, após uma fonte do setor de

distribuição ter falado à Reuters que "as usinas anunciaram reajustes de 5% a

8% em planos em relação aos preços do quarto trimestre para aplicação a partir

da segunda quinzena de janeiro.

Os papéis da Gerdau estiveram entre as maiores altas, com valorização de 7,53%,

para R$ 10,42 cada um, influenciando o ganho de 6,89% da Metalúrgica Gerdau,

para R$ 12,10. A ação preferencial da Usiminas subiu 5,93%, para R$ 5, enquanto

a CSN valorizou-se em 10,81%, para R$ 5,74.

Os bancos, segmento com maior peso dentro do Ibovespa, subiram. O Itaú Unibanco

ganhou 3,62%, para R$ 35,80, enquanto o papel preferencial do Bradesco avançou

3,97%, para R$ 36,89. Já o Banco do Brasil viu sua ação subir 4,40%, para R$

23,48.

CÂMBIO

No câmbio, o dólar teve um novo dia de alívio com expectativa de novas medidas

de estímulo na Europa. O dólar à vista, referência no mercado financeiro, teve

desvalorização de 0,15% sobre o real, cotado em R$ 2,695 na venda.

Já o dólar comercial, usado no comércio exterior, cedeu durante boa parte do

dia, mas fechou em leve alta de 0,11%, para R$ 2,705. A virada, segundo

operadores, refletiu fluxos pontuais de saída de moeda estrangeira do país.

O Banco Central deu continuidade ao seu programa de intervenções diárias no

câmbio, através do leilão de 2 mil contratos de swap cambial (operação que

equivale a uma venda futura de dólares), por US$ 98 milhões.

A autoridade também promoveu um outro leilão para rolar 10 mil contratos de

swap que venceriam em 2 de fevereiro, por US$ 489,7 milhões. Até o momento, o

BC já rolou cerca de 19% do lote total com prazo para o segundo dia do mês que

vem, equivalente a US$ 10,405 bilhões.