SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 - InvestireOggi

SPOTLIGHT ON REUTERS
COMMODITY POLLS 2010
TABLE OF CONTENTS:
ENERGY:
Oil price to average $77.50 a barrel in 2010
US natgas 2010 price estimates hold, cold trims
stocks
Coal prices seen firmer in 2010, may rise strongly
METALS:
Metal prices to rise this year but policy risks loom
China's aluminium splurge to fuel market surplus
China demand to lift iron ore prices by 30 percent
GRAINS:
Big crops to pressure U.S. grain prices in 2010
Bumper soy crop set to limit palm oil gains this yr
SOFTS:
Sugar to scale peaks in 2010, supply eyed
Supply crunch to bolster cocoa prices in 2010
Robusta seen up 20 pct by year-end; demand firm
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Source: Reuters Pictures
Workers pump gasoline into cars at a petrol station in Sanaa February 1, 2010.
Yemen, trying to reduce subsidies, increased fuel prices up to 14.3 percent on
Sunday, pumping station owners said. REUTERS/Khaled Abdullah (YEMEN -
Tags: ENERGY SOCIETY)
03 FEBRUARY 2010
OIL PRICE TO AVERAGE $77.50 A BARREL IN
2010
* First stock draw seen in Q3
* U.S. crude oil to average $77.50 in 2010, $84.60 in 2011
* China loan curbs after record Q4 growth could hit demand
By Chris Baldwin
LONDON, Jan 25 (Reuters) - U.S. crude oil is expected to rise to
an average of $77.50 a barrel in 2010, a Reuters poll showed on
Monday, but analysts said heavy inventories will keep prices
range-bound until more demand emerges in the third quarter.
The poll of 29 analysts showed a rise in the consensus forecast for
the ninth consecutive month. In April of last year, the average
forecast for 2010 was $65.95 a barrel.
"In the short term, there remains a great deal of uncertainty as to
where the flat price may end up," said senior commodities analyst
Harry Tchilinguirian at BNP Paribas.
"Oil is likely to trade in a wide range over the next 3 to 6 months,
possibly $65 to $85 a barrel. Capped on the upside by weak
fundamentals but supported above a theoretical fundamental level
by still-ample liquidity conditions," he said.
U.S. crude is expected to average $75.20 in the first quarter of
2010, up from $73.70 in the last poll, which had also forecast an
average of $74.90 for the fourth quarter of 2009.
U.S. crude prices rose as high as $83.95 in January, spurred by a
prolonged period of below-average temperatures in the northern
hemisphere and robust economic growth in China, the world's
second-largest energy consumer.
On Monday prices dropped back to below $75 a barrel as
investors turned to safer assets following U.S. President Barack
Obama's moves to curb risk-taking among banks last week.
"In the short term a stronger dollar and the still very high level of
crude stocks could mean that the current correction will lead us to
$70 again," said analyst Frank Schallenberger at Landesbank.
"In the long term the still very strong appetite for oil (Chinese
markets went up 14 percent last year) from emerging markets will
take prices higher again."
The latest poll's forecast for U.S. crude to average $77.50 a barrel
for 2010 as a whole compared with a forecast of $76.40 in the
December survey.
SUPPLY OVERHANG
Analysts said likely credit tightening in China might pressure global
oil prices, as building and construction might shrink along with the
fuel needed for the transport and trucking industry, with support
not seen until the third quarter.
"China appears likely to move toward more restrictive monetary
policy, cutting support to energy intensive investment in housing or
primary industries," said Christophe Barret at Calyon.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
Chinese banking authorities ordered some big banks to curb lending
last week for the remainder of the month, intensifying their efforts to
prevent the world's second-largest economy from overheating.
"Our oil balances result in slight stock builds in Q1, 2010 and Q2,
2010, putting downward pressure on prices. The first stock draw
occurs in Q3, 2010, supporting prices over $70 a barrel in H2 2010,"
Barret said.
Oil prices in 2009 ran parallel with global stock market rallies and
some currency valuations, as risk appetite worked back into markets
following a credit crunch, the financial crisis and an eventual
widespread recession.
The U.S. dollar touched record lows against a basket of other major
currencies for more than a year, bottoming out in November only to
regain more than 5 percent in December.
A weaker dollar supports oil because dollar-priced commodities
become cheaper for buyers using other currencies.
CFTC IMPLEMENTATION
Analysts said it was a matter of time before legislation curtailed
excessive speculation in the futures market for U.S. crude, often
referred to as West Texas Intermediate (WTI).
The U.S. Senate Energy and Natural Resources Committee
postponed a hearing last week to review the Commodity Futures
Trading Commission's proposal to impose position limits on certain
energy contracts.
"For the second half of the year we will flag the implementation of the
CFTC rules on limits in Energy Futures which we believe could have
a negative impact on WTI but positive on Brent Futures ," said Olivier
Jakob at Petromatrix.
Analyst Jane Foley at Gain Capital-FOREX said last year's price rally,
in spite of high inventories, suggested speculative demand was rife
among market trades.
"Regulation and the likely commencement this year of central banks
mopping up excess liquidity suggests this will bring prices lower."
(Editing by Anthony Barker)
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US NATGAS 2010 PRICE ESTIMATES HOLD,
COLD TRIMS STOCKS
* Analysts leave 2010 price estimates unchanged
* Cold winter trims inventories from record-high levels
* Concerns persist about rising rig counts and LNG imports
By Joe Silha
NEW YORK, Jan 29 (Reuters) - Energy analysts kept their forecasts
for U.S. natural gas prices this year nearly steady from last quarter
after a six-week cold snap this winter lifted demand and sharply cut
inventories from the record highs seen at the start of the heating
season.
After steadily trimming their forward price outlooks last year when a
deep recession and strong domestic production kept the market
oversupplied, most analysts see a slightly tighter balance in 2010 as
the economy improves.
The Reuters quarterly poll put the consensus forecast for spot prices
this year at Henry Hub, the benchmark U.S. supply point in Louisiana,
at an average $5.87 per million British thermal units, little changed
from last quarter's estimate but up nearly 50 percent from 2009's
average of $3.99.
Of the 26 industry participants, nine revised upward their forecasts
from early October, while nine cut them. The rest were unchanged or
did not participate in the previous poll.
Prices are expected to climb 9 percent in 2011 to $6.40 as
demand, particularly from industrial users, picks up with the
economy, but estimates for next year were scaled down by more
than 6 percent from the previous quarterly poll.
But many also note that there are several factors that could limit
price gains this year and in 2011.
"The storage draws were bullish for gas prices, but the global
flexibility in LNG (liquefied gas) and the anxiousness to push the
gas rig count up really mitigate a good bit of that bullishness," said
Jen Snyder at consultants Wood Mackenzie.
As the economic recovery picks up speed, prices in 2012 were
seen averaging $6.76, up another 5 percent.
STORAGE, ONE LESS PROBLEM FOR BULLS
One big change for the natural gas price outlook this year has
been storage, which started the heating season at a record high
3.837 trillion cubic feet as recession-related cuts in industrial
demand, strong domestic production and a cool summer kept the
market oversupplied throughout 2009.
In November, many analysts had expected inventories to end the
heating season at record highs in the 1.9 tcf area, but the steady
cold since early December and subsequent strong storage draws
have prompted lower end-winter estimates of 1.6 tcf.
Some 665 bcf of gas was pulled from storage in December, versus
a more normal decline of 500 bcf, and analysts expect another 725
bcf or more to be tapped in January, also well above the average
draw for that month of about 625 bcf.
Recent U.S. Energy Information Administration data showed total
domestic gas inventories had slipped to 2.521 tcf, still 5 percent
above last year and 4 percent above the five-year average but well
below the surplus in early December that stood at nearly 16
percent above normal for that time of year.
Utilities typically build up inventories from April through October to
help meet 25 percent of peak winter heating needs.
Excess storage supplies give utilities more discretion when buying
and last year helped pressure late summer Henry Hub cash prices
to 7-1/2-year lows below $2 before a chilly October and then a
cold December more than doubled prices to above $5.
Of course a mild February and March could set the storage
surplus growing again, but several private forecasters are still
looking for a cold finish to the heating season.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
STILL PROBLEMS FOR THE BULLS
But despite the improved storage picture, most analysts agree there
are still potential problems for the bulls.
The steep decline in U.S. gas drilling last year prompted expectations
production would slow significantly this year, but as gas prices
doubled in the fourth quarter, the rig count started rising again and
output never dropped much, primarily due to increased production
from shale gas.
The number of U.S. rigs drilling for natural gas now stands at a 10month
high of 833, up 25 percent since bottoming at 665 in July,
according to recent data from Baker Hughes.
While EIA still expects domestic gas production to fall 3 percent this
year, as strong initial output from newly drilled wells tapers off, not all
analysts agree.
"Gas-directed drilling is recovering faster than we had expected,
posing downside risks to prices later in 2010," Barclays Capital said
in a research report this week, who estimate that Henry Hub prices
will average $5.25 this year.
Analysts note there are huge reserves of shale gas, some located
near existing drilling and pipeline operations, that can be readily
tapped should prices climb too far.
While environmental concerns, particularly about water quality, could
slow shale development, they are unlikely to stop output, which is
profitable at many basins when prices trade between $5 and $6 and
could cap future price gains.
Another problem for would-be bulls is the strength of the economic
recovery, which so far looks sluggish.
"We're looking for a recovery in natural gas demand from the
industrial sector in 2010, but it's not projected to be large enough to
absorb the supply overhang if producers don't scale back," said S&P
oil and gas equity analyst Tina Vital, who forecasts a $3.94 average
at Henry Hub in 2010.
A deep recession last year sharply cut gas demand, particularly from
the industrial sector which dropped more than 8 percent in 2009 and
accounts for nearly 30 percent of total consumption.
Strong fourth quarter GDP data on Friday could raise hopes for a
faster-than-expected recovery this year.
EIA expects U.S. gas demand in 2010 to hold steady, as gains in the
residential, commercial and industrial sectors offset declining electric
power use, and that should tighten the overall balance if output falls
as expected.
LNG, ANOTHER WILD CARD
But liquefied natural gas imports remain a big wild card this year, with
many expecting new global liquefaction projects to drive more supply
to U.S. shores and pressure prices.
While pipeline imports from Canada, which typically meet about 15
percent of total U.S. needs, are expected to fall this year, analysts
note it will not be enough to offset projected gains in LNG, which
could double this year to more than 2.5 bcf per day from the 2009
average of about 1.3 bcf daily.
(Reporting by Joe Silha; Editing by John Picinich)
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COAL PRICES SEEN FIRMER IN 2010, MAY
RISE STRONGLY
* China coal imports to rise in 2010, boost global prices
* India imports seen rising, S.Africa to supply more
* Europe demand seen shrinking slightly, more oversupply
By Jackie Cowhig
LONDON, Feb 2 (Reuters) - Physical coal prices on average are
seen strengthening by around $1-$5 a tonne in 2010 on strong
Asian demand and supply bottlenecks could lead to a much
steeper price rise, a Reuters poll of analysts showed.
Twenty analysts and industry players polled by Reuters in January
forecast modest price gains for the three main benchmarks --
thermal coal delivered into Europe and free on board (FOB) South
African and Australian ports.
The median forecast for coal delivered Amsterdam-Rotterdam-
Antwerp (DES ARA) in 2010 was $90.00 a tonne. For South
Africa's Richards Bay the forecast was $85.00 a tonne FOB while
for Australia's Newcastle the median view was $89.00 a tonne
FOB.
On Tuesday the spot price DES ARA was $78 a tonne, Richards
Bay coal was at $80-$86 and Newcastle was at $90.
The strength of a 2010 price rise depends almost entirely on how
much China buys, and this is unpredictable, they said.
"Despite coal being one of worst performing commodities in 2009,
prices are set to increase strongly," said Amrita Sen, analyst with
Barclays Capital in London.
"China remains the key to our global balances, and with the
expectation of a slow but steady recovery in Europe, the supply
bottlenecks that plagued the coal market in early 2008 could well
re-emerge this year," she said.
Prices rose by around 30 percent between November and late
January largely due to China's voracious appetite for coal.
Supply
bottlenecks
on key
railway lines
in Russia and
South Africa
and at ports
in Australia
will mean
more hot
spots will
develop,
particularly in Asia, where strong demand and limited supply due
to logistical limits will draw coal from far afield.
"Looking at the global markets we expect demand to keep
exporters straining to maximise supply," said Brendan Fitzpatrick,
Sydney-based research analyst at Deutsche Bank.
Logistical constraints could boost coal prices by 15-20 percent,
according to Barclays Capital's Sen.
BROAD-BASED DEMAND RECOVERY
Predicted strong growth in Asia and a slower recovery in Europe
and the U.S. look supportive for coal, analysts said.
"Against expectations for an improving macro backdrop, we expect
a broader-based recovery in demand from other parts of Asia and,
to a lesser extent, the West," Sen said.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
"Overall, price risks are skewed to the upside, particularly in
Newcastle and API4 (Richards Bay)," she added.
Global thermal coal seaborne trade is around 640 million tonnes a
year, split between 400 million within the Pacific region and 240 in
the Atlantic.
Coal demand in Asia will continue to outstrip slowly shrinking
European demand as South East Asia and East Asia ramp up coalfired
power generation. Strong Pacific prices will continue to support
European prices to a certain extent.
CHINA IMPORTING
China became a net importer in 2009 and is likely to continue to draw
coal from the Atlantic basin, analysts said.
"China is likely to remain a net importer for 3-5 years as further small
mines are closed and consolidated," said Deutsche Bank's
Fitzpatrick.
China, the world's biggest coal producer, will import whenever it is
cheaper to do so or domestic supply is disrupted.
The country imported over 50 million tonnes of thermal coal in 2009
and this alone prevented a global coal price slump.
"China thermal import demand we see at 55 million tonnes in 2010,
rising to 60 million tonnes in 2011," said Emmanuel Fages, analyst at
Societe Generale in Paris."
China's emergence as a huge importer has heightened the existing
imbalance between the Atlantic and Pacific.
"Pacific supply we see at 360 million tonnes for 2010 against
demand of 405 million. In 2011 we see supply of 372 million tonnes
against demand of 424 million," Fages said.
Atlantic coal supply is forecast at 273 million tonnes against demand
of 235 million, rising to supply of 285 million and demand of 237
million in 2011, he added.
INDIAN GROWTH
India is seen continuing to dictate prices for South African coal in
2010 and beyond as exporters switch increasing tonnages away from
Europe to Asia, analysts said.
Continued strong Indian demand will keep Richards Bay prices close
to parity or even at a premium to delivered Europe levels.
"(For) India we see thermal coal import demand at 45 million tonnes
for 2010, rising to 48 million in 2011," said Fages.
India took around 18 million tonnes of South Africa's 60 million
exports in 2009 and this is likely to rise to over 20 million in 2011.
(Additional reporting by Fayen Wong, editing by Anthony Barker)
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METAL PRICES TO RISE THIS YEAR BUT POLICY
RISKS LOOM
* Copper, aluminium, tin trading above 2010 forecasts
* Tighter monetary/fiscal policy to weigh on price in H2
* Chinese growth to remain strong but import demand may wane
By Maytaal Angel
LONDON, Jan 26 (Reuters) - Economic recovery and strong demand
from China will propel base metals higher this year, although tighter
monetary and fiscal policies will weigh on prices in the second half, a
Reuters survey showed.
The survey of 57 base metals analysts taken this month showed
average cash copper prices will rise by 37 percent year-on-year,
aluminium by 25 percent and nickel by 24 percent.
Sister metals lead
and zinc will rise
by 31 percent and
38 percent
respectively, while
tin, the laggard of
the complex, will
clock up gains of
20 percent.
"The start of the
new year has
seen money continue to flow into commodities while risks appetite
has also increased amid plentiful liquidity and optimism over the
ongoing recovery," said Leon Westgate at Standard Bank.
"There are still risks however, with arguably the largest being
concerns about China curbing spending, the over-reliance on
stimulus measures for growth, and fluctuations in the currency
markets," Westgate added.
Others were more cautious, saying tighter monetary policy, the
withdrawal of stimulus measures, market regulation, the end of
Western world restocking and possible Chinese destocking would
actually lower prices towards the end of the year.
As a consequence, the price forecasts -- while comfortably above
last year's averages -- are actually near or below current price
levels. Copper, for example, is forecast to average $7,077 a tonne
versus $5,178, but was trading around $7,345 at mid-morning on
Tuesday on the London Metal Exchange.
Next year it is forecast to average $7,500 a tonne, while
aluminium , used in transport and packaging, is seen averaging
$2,094 a tonne this year and $2,226 next year, versus $1,671 last
year. It was trading around $2,200 a tonne mid-morning on
Tuesday.
"The second half of 2010 could be pivotal. Monetary policy
normalisation, rising interest rates and taxes, the unemployment
and debt burden and producer capacity reactivation - all scream
prudence," RBS said.
THE PACE OF GAINS
Prices of copper, used in power and construction, surged around
140 percent last year, boosted by a restocking drive in top
consumer China, recovery of major economies from recession,
strong fund flows and a declining U.S. dollar.
Other metals followed suit, with top performer lead rising 144
percent and laggard tin gaining 58 percent, but analysts warn that
if any of the above factors diminish or reverse this year, the pace
of gains in metals will decline.
Of particular concern is monetary and fiscal policy and how it will
impact fund flows and shape the outlook for economic growth,
inflation and the dollar -- weakness in which drives dollar-priced
metals higher.
Metals have declined for most of the past week on concerns over
looming monetary tightening in China and proposals for sweeping
restrictions on U.S. banks that could squeeze liquidity and crimp
demand from investors.
Lower liquidity poses a particular risk for aluminium, a metal
plagued by structural oversupply, but where cheap money has
resulted in financing deals that have tied up around 70 percent of
the record 4.6 million tonnes of London Metal Exchange stocks.
"Super low U.S. interest rates have encouraged many investors to
take physical delivery of certain commodities and sell forward to
extract carry. This has been a feature of the aluminium market. A
more aggressive turn in U.S. interest rates at the end of this year
would threaten to undermine such strategies," said Michael Lewis
at Deutsche Bank.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
A YEAR OF TWO HALVES
For less over-supplied metals like lead, and to a lesser extent zinc,
prospects are better but even these metals face the risk of mine and
smelter restarts, and a more moderate pace of import demand from
China.
Galvanising metal zinc is expected to average $2,293 a tonne this
year compared with $1,662 last year; while battery material lead is
seen averaging $2,252 this year versus $1,726 last year.
The two, along with their counterparts nickel and tin -- forecast to
average $18,185 versus $14,712 and $16,294 versus $13,618,
respectively -- will also be hard pressed to escape the effects of
monetary tightening.
"We see a year of two halves. The liquidity story that underpinned
metals in the second half of 2009 after the Chinese restocking faded
is expected to persist into the first half of 2010. Fresh highs are seen
in all metals save for nickel," said Michael Jansen at JP Morgan.
But he added that "a solid retracement is seen in the second half of
2010" as global liquidity lessens, supplies grow and tighter monetary
and fiscal policies boost the dollar and dent the appeal of
commodities as a hedge against inflation.
(Graphics by Scott Barber)
Additional reporting by Jan Harvey, Pratima Desai, Carole Vaporean,
Chris Kelly, Rujun Shen, Nick Trevethan, Polly Yam, Himangshu
Watts, Ruchira Singh, Humeyra Pamuk, Karen Norton, and Rebekah
Curtis, editing by Sue Thomas)
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CHINA'S ALUMINIUM SPLURGE TO FUEL
MARKET SURPLUS
* China flooding aluminium mkt, surplus to balloon in 2010
* Copper surplus forecasts halved
* Surpluses to grow in lead, zinc, tin and nickel
By Pratima Desai
LONDON, Jan 26 (Reuters) - A massive rise in aluminium supplies
from China and anaemic demand growth mean a larger market
surplus than many were previously expecting, a Reuters survey
showed.
The survey of 22 analysts taken in January showed the average
forecast for the aluminium surplus this year was 1.05 million tonnes
compared with 695,100 tonnes in the July survey.
"There has been a
massive increase in
supply of aluminium,
especially from China,
which is producing at
almost full capacity," said
Daniel Briesemann,
analyst at Commerzbank.
"China is flooding the
market with aluminium."
China's government, determined to make sure economic growth held
up, last year offered financial assistance to many firms, including
aluminium producers, to keep going, analysts say.
The country produced 13.105 million tonnes of aluminium in 2008,
according to the International Aluminium Institute.
Between January and November 2009 it produced 11.633 million
tonnes. Expectations are for the final year figure to match 2008. A
number around 15 million tonnes is expected for 2010.
Aluminium demand this year is estimated at about 37 million
tonnes from about 35-36 million tonnes in 2009. Analysts expect
demand for aluminium from the transport and packaging industries
to grow in 2010, but not at the pace of rising supplies.
That is why they expect a larger surplus, much of which will find its
way to official stocks.
Stocks of aluminium in London Metal Exchange warehouses are
hovering near record highs of 4.64 million tonnes set last week.
"The surplus will take time to eradicate, to get back to a normal
market," said Robin Bhar, analyst at Calyon.
E-BIKES AND AUTOMOBILES
The average forecast for the copper surplus this year is 115,000
tonnes from 227,300 tonnes in the July survey.
Strong economic growth and demand from China are behind the
cuts to forecasts, some are even expecting a deficit this year.
"Copper: We look for a "market deficit" partly due to tighter supply,
as a result of (for example) falling ore grades, and partly due to
rising demand (for example), the construction sector fights back,"
Danske Bank told Reuters.
Some analysts expect China, the world's largest consumer of
industrial metals, to start stockpiling copper again this year and
that too will take material out of the market. Much of the fall in
stocks last year was attributed to China stockpiling.
"Further stock building by strategic government agencies could
take up further excess inventory," said John Meyer, analyst at
investment bank Fairfax.
"Asian governments appear concerned that a return to coordinated
economic growth could lead to a rapid return to the shortages that
threatened ... prior to the Beijing Olympics."
In contrast, battery material lead is expected to show a bigger
surplus this year -- 62,500 tonnes from 34,500 tonnes in the July
survey.
"With developed economy auto sales unlikely to have a strong
year, we expect a surplus despite strong growth in demand out of
China from e-bikes and automobiles," said Justin Lennon, analyst
at Mitsui Bussan Commodities.
For stainless steel ingredient nickel the forecast shows a surplus
of 15,000 tonnes in 2010 compared with an average of 9,000
tonnes in the July survey.
In tin, the consensus is for a surplus of 2,000 tonnes from a deficit
of 1,500 tonnes and for zinc the numbers are 209,500 and 12,000
tonnes respectively.
"The zinc industry has a history of lacking discipline and this is
becoming evident as smelters, even in the Western world, rushed
to restart previously idled capacity in the second half of last year,"
Standard Bank said in a note.
Reporting by Maytaal Angel, Jan Harvey, Pratima Desai, Carole
Vaporean, Chris Kelly, Rujun Shen, Nick Trevethan, Polly Yam,
Himangshu Watts, Ruchira Singh, Humeyra Pamuk, Karen Norton,
Rebekah Curtis; graphics by Scott Barber; editing by Sue Thomas)
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SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
CHINA DEMAND TO LIFT IRON ORE PRICES BY
30 PERCENT
* Forecasts for iron ore price rise vary from 15 to 40 pct
* Booming Chinese demand, tight supplies to drive prices
* Analysts see Japanese settling first, China could use spot
By Humeyra Pamuk
LONDON, Jan 27 (Reuters) - Benchmark iron ore prices are set to
rise by 30 percent for the 2010/2011 contract term, due to soaring
demand from top importer China, where steel output is running at
record highs, a Reuters survey showed on Wednesday.
The price increase will almost reverse last year's 33 percent cut,
settled during the global economic downturn, and will mark the
second-highest ever price for iron ore.
Five participants in
the poll of 13
analysts, conducted
in the last two weeks,
estimated Australian
ore prices to rise
above the median
forecast of 30
percent and up to 40
percent in the annual
contract talks, which
are expected to start
soon.
Several analysts predicted they would need to revise prices upwards
again soon as the outlook was increasingly bullish.
"China is the major driver," said Daniel Brebner, analyst at Deutsche
Bank. "The fact that we have had such a significant recovery in
demand from the most important consumer in the market justifies the
price hike in iron ore," he said.
The world's top steel producer's insatiable appetite boosted iron ore
prices in the spot market to around $135-137 a tonne in mid-January
for Indian ores containing 63.5 percent iron ore.
Despite a slight fall to below $130 a tonne since then, prices are still
up around 64 percent since last September.
Spot prices also reflect a massive premium over the Japanese
benchmark settled for 2009/2010, which was $60 per tonne for fines
with 62 percent iron ore, excluding freight.
Analysts say producers are stretched to meet the demand from
China, even though demand from Europe, Japan and South Korea
remains relatively subdued.
"We do not see a global iron ore supply response in the short term
sufficient to offset the increasing demand," RBC Capital Markets said
in a research note.
Iron ore output from BHP Billiton, the world's top miner, rose by 11
percent in the last quarter of 2009 to meet demand from importreliant
China. The country's December iron ore imports from
Australia surged by 40 percent.
Mining giants Vale of Brazil and Australia's Rio Tinto and BHP Billiton
control the $80 billion iron ore business.
China's steel production rose by 13.5 percent in 2009 to a record
high of nearly 570 million tonnes, while output in the ex-China world
dropped more than 20 percent, figures from the World Steel
Association showed last week.
JAPANESE FIRST?
Contract talks on the iron ore price are expected to be intense and
lengthy, as always. There will also be a tough debate about the
future of the pricing mechanism.
After last year's tense stand off betweeen Chinese steelmakers
and the world's top mining companies, analysts expect market
maker miners will aim to settle with Japanese buyers -- which
could make China follow suit or buy from the spot market again.
In 2009 Chinese steelmakers, seeking a deeper price cut than that
one by Japanese peers, never officially struck a term deal and had
to pay higher spot prices.
"The likelihood is we see a resolution between the traditional
buyers -- Japan and Europe -- and one of the producers, before
we see any kind of resolution with the Chinese," Brebner at
Deutsche said.
Delays in settling 2009 term contracts cost chief negotiator China
Iron and Steel Association dearly in terms of bargaining power, as
demand revived and China's growth remained strong.
The failure to resolve annual price talks in 2009 may also mean
spot prices play a pivotal role in 2010 as the starting point for talks
rather than the previous year's settlement.
"I see China moving increasingly towards the spot market," said
David Tucker, managing consultant at Hatch Beddows. "In the first
half of 2009, everything that was going into China was spot," he
said.
Other winners from the breakdown of the benchmark pricing
system are banks, brokers and exchanges that have been racing
to launch alternative instruments.
So far, the most popular appear to be iron ore swap contracts,
particularly with the introduction of clearing.
"They're filling a need but it's still in early days and I'm not sure
there's enough liqudity in these products for a buyer to go out and
hedge its needs. But definitely, it's got legs to grow," Tucker said.
(Reporting by Humeyra Pamuk, Editing by Anthony Barker)
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BIG CROPS TO PRESSURE U.S. GRAIN PRICES
IN 2010
* Big crops to weigh on corn, soy, wheat prices
* Huge South American soybean crop pressuring prices
* Bulls see recovering global economy lifting grains
By Sam Nelson
CHICAGO, Jan 27 (Reuters) - Big global production of grains and
a rebound in South American soybean output will keep pressure
on Chicago Board of Trade corn, soybean and wheat futures
prices through the end of 2010, a Reuters poll showed.
The poll of 14 analysts showed the year-end spot price for
soybeans at $9.09 per bushel, down 12.6 percent from last year;
corn at $3.84, down 7.5 percent; wheat at $5.27, down 2.8 percent
and soyoil at 37.87 cents per lb, down 6 percent.
The poll also showed
that wheat and
soybean prices on
June 30, 2010,
would be lower than
at mid-year 2009,
but the average corn
price may be up a
little as first-half
2010 corn supplies
tighten.
"There will be a lot of soybeans in the world this year. The crop will
be big in South America and we need to reflect that," said Jack
Scoville, an analyst for brokerage The Price Futures Group.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
Soybean prices held very strong through most of 2009 because of an
unprecedented drought in South America, the world's largest
soybean producing region.
Persistent buying of soybeans from the United States by China, the
largest global soy importer, also lifted prices.
RECORD SOY CROP FROM S. AMERICA
Now, South America is expected to produce a record soybean crop
and there are concerns about the fate of China's soy buying pattern
as the government begins to clamp down on bank lending to cool off
the perceived overheated Chinese economy.
"It is all about supplies. We think the (soybean) supplies overcome
the demand, unless we change the policy and we go to less acres,"
said Don Roose, analyst and president of U.S. Commodities in Des
Moines, Iowa.
Roose also thinks China will slow down its purchases.
Record large American corn and soy production last year and
forecasts for the largest stockpile of U.S. wheat in 20 years will
combine to keep pressure on each market and while there will be
peaks and valleys for prices this year, the analysts don't expect to
see the huge price swings of 2008 and 2009.
"Corn prices are set to decline during the first six months on record
supplies and only modest increases in feed demand and exports,"
said Terry Reilly, an analyst for Citigroup. "Wheat will remain on the
defensive on comfortable global and U.S. stocks. U.S. exports are
not expected to recover until the 2010/11 crop year," he said.
There were a wide range of estimates and market bulls maintain that
as the global economy recovers, grain and soybean markets also
may move higher.
They also think that the big crop production has been factored into
the markets that are roughly half the price they were during the race
to record high prices in mid-2008.
"Considering where we were in 2008, these are pretty cheap prices,"
said Tim Hannagan, analyst for PFGBEST.
American farmers slashed their wheat plantings for the 2010 harvest
and are instead sowing corn and soybeans.
"Essentially, you planted a lot less wheat this year. Sure you have
large ending stocks ... but the top of the mountain is now in and
stocks will begin to decline," Hannagan said.
Corn and soyoil prices will be underpinned by their growing use in
the biofuels industry but prices still will struggle because of the
building supplies.
(Reporting by Sam Nelson, Julie Ingwersen, Mark Weinraub, Karl
Plume, Mike Hirtzer; Editing by K.T. Arasu and Lisa Shumaker)
-------------------------------------------------------------------------------------
BUMPER SOY CROP SET TO LIMIT PALM OIL
GAINS THIS YR
* Markets favouring buyers due to ample vegoil supplies
* Soy crop starting to weigh on palm oil prices since Oct.
By Niluksi Koswanage
KUALA LUMPUR, Jan 26 (Reuters) - Average palm oil prices in Asia
are set to rise at a slower pace this year and the next as gains from
strong global demand are curbed by record vegetable oil output, a
Reuters survey showed on Tuesday.
The poll of 19 analysts covering top palm oil producers Indonesia
and Malaysia indicated that price views for palm oil this year have
risen 7.7 percent to a median 2,450 ringgit ($719.5) per tonne from
2,275 ringgit per tonne in a similar survey in July.
Most of the gains are expected in the first quarter of 2010 due to
seasonally weaker palm oil output and strong demand from China
in the run-up to the Lunar New Year in mid-February.
But prices may get reined in after rival soyoil hits the market
around March as record soybean crops in the United States and
South America get harvested.
Based on a growing supply scenario -- the analysts who were
surveyed over two weeks -- put 2011 prices at 2,550 ringgit, up 2
percent from this year's forecast.
"It is a bearish scenario. We think prices should not be all that
much higher than last year," said Alvin Tai, an analyst with OSK
Investment Bank. "Demand is constantly growing but the market
needs to create a spike in orders for any strong price gain."
Reflecting divided opinions on how much of a market share soyoil
could grab from palm oil, which has much higher yields, estimates
ranged widely between 2,200 and 2,750 ringgit for this year and
between 2,100 and 2,900 for the next.
Traders say palm oil's discount to soyoil tumbled 60-70 percent to
$30-40 a tonne last Friday, from about $100 in December, after a
bumper U.S. soy crop started dominating the market from October
onwards.
Brazil and Argentina -- the world's second- and third-largest
producers of soybeans, respectively -- will take control from April
onwards and are expected to flood the global vegetable oil market,
judging by the rising plantings, larger acreage and more
favourable weather.
BUYERS' MARKET
Palm oil's fortunes this year hinge on the buying patterns from top
consumers India and China, which posted strong economic growth
last year, although recent moves by China to tighten credit may
slow the pace of demand.
"We expect demand to increase... but it depends on (whether) any
regulations are going to be changed and global economic factors.
It is hard to predict now," Teddy Oetomo, an analyst with Credit
Suisse, said.
For India, which surpassed China to become the world's top buyer
last year, ample soyoil may weaken palm oil's leading position in
the market as the growing middle class takes up more soyoil.
Industry data in India shows palm oil accounted for 80 percent of
the 8.7 million tonnes of vegetable oils imported in the marketing
year 2008/09 due to a zero percent import tax regime for crude
palm oil and traders say tax changes will alter the demand
momentum.
(Additional reporting by Angie Teo; Editing by Himani Sarkar)
-------------------------------------------------------------------------------------
SUGAR TO SCALE PEAKS IN 2010, SUPPLY
EYED
* Supply squeeze to drive sugar surge
* Funds set to stay long on sugar, soft commodities in vogue
* Weather in Brazil and India to keep market on edge
By Rene Pastor
NEW YORK, Jan 28 (Reuters) - Sugar prices will reach historic
milestones by the end of March 2010 as a global supply shortage
tightens its grip on the market and increases investor fervour for
the sweetener, a Reuters poll showed.
But prices are expected to retreat by the end of the year as the
supply crunch eases after the key Brazilian centre south harvest
comes on stream.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
Benchmark front-month raw sugar prices in New York are seen
hitting 30.50 cents per lb by the end of March 2010, a level last seen
29 years ago, according to the survey of 19 traders and analysts
conducted in January.
By the end of the year, however, raw sugar prices are expected to
retreat from peaks to 22 cents a lb, down from 26.95 cents at the end
of 2009.
ICE raw sugar hit a 29year
high at 30.10 cents a
lb this week, and was
trading at 28.74 cents at
around midday.
Analysts put the global
sugar deficit at 7.67
million tonnes in 2009/10.
While the figure is severe
enough to keep prices firm, it is narrower than the 2008/09 figure
estimated by the International Sugar Organization (ISO) at 11.3
million tonnes.
"Seemingly, the carnival of high prices is entering its final stage,
which may last, say, 5-6 months," said Sergey Gudoshnikov, a senior
economist at the London-based ISO.
"A big question here (is) what happens if the weather in Brazil and
India (two major origins where supply responses are currently
expected), is as bad as it was in 2009."
A similar poll carried
out by Reuters in July
2009 put the 2009/10
global sugar deficit at a
median of 4.2 million
tonnes.
Sugar futures prices
are up about 6 percent
so far this year after
surging more than 120
percent in 2009 on
disappointing harvests in leading producers Brazil and India.
The price of Liffe (refined) white sugar in London, basis the front
month, is seen hitting $775.00 per tonne by the end of the first
quarter of 2010 -- which would mark a record high.
Liffe sugar hit a historic $767.00 per tonne on Jan. 21.
But by the end of the year whites are expected to fall back to $640
per tonne, down from $710.20 at the end of 2009.
The wider investment community was quick to jump on the sugar
train, with supply and production difficulties adding up to a strong
fundamental story.
By mid-January, data from the U.S. Commodity Futures Trading
Commission showed index investors with $50 billion worth of long
positions, with their largest longs in sugar at $9.3 billion.
"I expect investment funds in 2010 will maintain their strong position
in sugar due to the strong fundamental supply/demand situation,"
said Gary Mead, an analyst at VM Group in London.
"A global economic recovery -- which we expect to make itself felt by
H2 2010 -- will stimulate demand recovery and exacerbate the
chances of a further global sugar supply/demand deficit in 2011."
BRAZIL, INDIA WEATHER KEY
The question mark hanging over the market is weather conditions in
Brazil and India, which some forecasters say can still be affected by
El Nino, a weather anomaly.
El Nino would usually cause drought or dry spells in Asia and floods
in South America.
"If weather problems persist in key growing areas of Brazil, prices
will remain firm," said Sterling Smith, an analyst for Country
Hedging Inc. in Minnesota.
Last season, excessive and persistent rainfall in Brazil and a poor
monsoon in top consumer India eroded production, underpinning
prices as sugar importers scrambled for supplies.
El Nino is expected by U.S. government forecasters to last into the
early summer of 2010.
That raises the prospect that India's annual monsoon may again
falter and could spawn more rain in Brazil's critical centre-south
cane areas.
Investors are expected to continue betting heavily.
"The de-linkage of sugar price dynamics from other commodities
as well as the increased interest in the commodities as an inflation
hedge should see fund interest rise," said Czarnikow's senior
sugar analyst Peter De Klerk.
(Additional reporting by David Brough and Nigel Hunt in London,
Mica Rosenberg in Mexico, Inae Riveras in Brazil, Mayank
Bhardwaj and Himangshu Watts in India; editing by Veronica
Brown and Sue Thomas)
-------------------------------------------------------------------------------------
SUPPLY CRUNCH TO BOLSTER COCOA
PRICES IN 2010
* Global cocoa deficit of 50,000 tonnes seen in 2009/10
* El Nino seen threatening production, supporting prices
* Economic recovery seen boosting global cocoa grindings
By Nigel Hunt
LONDON, Jan 28 (Reuters) - Cocoa prices are on course for multiyear
highs in 2009/10, supported by rock-solid supply
fundamentals with a bigger global market shortage of beans, a
Reuters poll of market participants showed on Thursday.
The spot ICE cocoa contract was forecast at $3,705 a tonne at the
end of 2010, which would be a 31-year high and up about 13
percent from the end of 2009.
Forecasts are based on median estimates of a poll of 20 traders
and analysts in Europe, North America, West Africa and Asia.
Analysts say prices, which have risen in league with sugar over
the past year with added impetus from fund activity in soft
commodities, would also benefit from a broad rise in industry
demand -- tethered to tentative global economic recovery.
Global grindings -- a key measure of manufacturing demand -- are
already beginning to rebound after falling in the first half of last
year.
"As 2010 sees a tentative recovery in global grindings, there will
be even greater pressure on the global producers to raise
production, compared to last year," said Macquarie Bank
commodity strategist Kona Haque.
"However, as strong as prices may be, we fear production may still
not rise sufficiently enough to avoid a global deficit," she added.
ICE cocoa was seen at $3,500 by the end of the first quarter of
2010.
The benchmark cocoa contract on Liffe was forecast at 2,350
pounds a tonne at the end of 2010, up about three percent from
year earlier levels and just below a 32-year peak of 2,356 pounds
set a week ago.
Liffe cocoa was seen at 2,375 pounds at the end of the first
quarter of 2010.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
At mid-morning on Thursday, Liffe May cocoa was down 31 pounds
or 1.4 percent at 2,219 pounds per tonne, while ICE March cocoa
was down $32 or 1 percent at $3,236 per tonne.
"Prices will be driven by two main factors - global economic recovery
(which we expect to be strong in 2010 albeit with a shaky start) and
weather," said VM Group analyst Gary Mead.
GLOBAL DEFICIT
Prices were seen underpinned by a forecast global cocoa deficit of
about 50,000 tonnes in 2009/10 which would be the fourth
consecutive annual shortfall. That compares with a 2008/09 deficit of
28,000 tonnes, according to International Cocoa Organization (ICCO)
figures.
The potential for weather phenomenon El Nino to disrupt production
was seen as a key bullish factor.
"I expect questions with weather, including a possible El Nino year to
support cocoa prices. I also expect commodities overall to perform
extremely well," said Michael Maniatis, market strategist with LaSalle
Futures Group.
Top producer Ivory Coast's 2009/10 crop was forecast at 1.2 million
tonnes. The total slightly exceeded a Reuters poll of exporters and
traders in September 2009 which forecast a crop of between 1 million
and 1.15 million.
Cocoa arrivals in Ivory Coast ports during the 2008/09 season were
around 1.2 million tonnes.
Analysts said producers in Ivory Coast may struggle to increase
production in response to high prices following a prolonged period
when investment has been difficult.
The Ivory Coast is gearing up for elections - currently scheduled for
around the end of next month - which are meant to end years of postwar
instability and stalemate that have held back its once prosperous
economy.
"Factors I expect to drive the price of cocoa this year are the poor
husbandry of the Ivory Coast tree crop and the aging tree stock along
with the expected economic recovery that may help to drive
consumer demand and thus grindings," said Drew Geraghty, founder
of www.thesoftsedge.com.
Ghana, the world's second-largest producer, was forecast to have a
crop of 700,000 tonnes, little changed from the prior season. Ghana's
2008/09 crop has been estimated by industry sources to be 703,000
tonnes.
(Additional reporting by Marcy Nicholson in New York, Tim Cocks in
Abidjan and Aloysius Bhui in Jakarta; Editing by Veronica Brown and
Sue Thomas)
-------------------------------------------------------------------------------------
ROBUSTA SEEN UP 20 PCT BY YEAR-END;
DEMAND FIRM
* Robusta seen up 20 pct by year-end, arabica up 2 pct
* Global consumption up more than 1 pct from pvs forecast
* Brazil output pegged at 50 mln bags in 2010/11
By Lewa Pardomuan
SINGAPORE, Jan 29 (Reuters) - Robusta coffee prices are set to
rise 20 percent by the end of 2010 while arabica futures may gain
more than 2 percent as a rebound in the global economy lifts
consumption, a Reuters poll showed on Friday.
Global coffee consumption was pegged at 129.30 million 60-kg
bags in the crop year to September 2010, up from 127.5 million
bags estimated in a similar poll last July, and higher than 128
million estimated in 2008/09, a median forecast of 21 dealers and
analysts showed.
Production was pegged at 130 million bags in the 2009/10 crop
year, barely changed from a previous forecast of 129.5 million
bags.
"The demand side of the market is expected to offer a moderate
improvement in line with a rebound in global economic growth,
particularly in the U.S. and Europe," said Nicholas Snowdon,
analyst at Barclays Capital.
"The key factors will largely be how the two major supply-side
dynamics evolve, namely Brazil and Colombia. The key
development on the horizon for the coffee market, in our view, is
the prospect of a record sized Brazilian crop in 2010-11."
Shortages of
good-quality
beans in Brazil
and Colombia due
to heavy rains,
and worries about
falling output in
Vietnam and
Indonesia are
bullish factors that
could take robusta
back to levels last seen in early 2009, according to the poll.
The median forecast saw London second-position robusta coffee
at $1,600 a tonne by the end of this year, up from $1,332 at the
end of 2009.
The front-month arabica contract in New York was forecast at
$1.390 a pound by the end of 2010, versus $1.3595 at the end of
last year -- within sight of a 17-month of high $1.4920 in mid-
December 2009, but well below a 10-year peak of $1.6960 in
February 2008.
New York's March
arabica futures
was steady at
$1.331 per pound
in early trade on
Friday, while
London's March
robusta futures
were unchanged
at $1,330 a tonne.
"Economic
recovery is seen by us as likely to be quite strong in 2010 and this
will help demand growth recovery," VM Group analyst Gary Mead
said.

SPOTLIGHT ON REUTERS COMMODITY POLLS 2010 03 FEBRUARY 2010
"Uncertainties are all weather-related, especially the lingering El Nino
which may damage Indonesia later this year," said Mead, referring to
the drought-inducing weather phenomenon that could damage the
coffee crop.
Weather plays an important role in coffee production, with Brazil
bracing for a dearth of export-grade beans despite high output and
Colombia facing the prospect of its smallest crop in 35 years.
Vietnam's robusta output is also suffering due to weather problems.
Brazil, Vietnam, Colombia and Indonesia account for more than 60
percent of global coffee output, which includes robustas and arabicas.
Arabica coffee is typically used in premium coffees while robusta is
either blended with arabica beans for a lower-cost brewed coffee or
processed into instant coffee.
Editorial contacts:
Richard Mably (Global Editor, Commodities & Energy)
richard.mably@thomsonreuters.com, 44 (0) 207 542 6280
Camila Reed, (Editor Commodities & Energy
EMEA), Camila.Reed@thomsonreuters.com, +44 20 7542 8065
Jonathan Leff (Editor, Commodities & Energy Americas)
jonathan.leff@thomsonreuters.com, 646 223 6068
Chris Baldwin (Energy Correspondent)
christopher.baldwin@thomsonreuters.com, +44 (0) 207 542 7526
Joe Silha (Correspondent)
joe.silha@thomsonreuters.com, 646-223-6071
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jacqueline.cowhig@thomsonreuters.com, +44 207 542 3470
Maytaal Angel (Correspondent)
maytaal.angel@thomsonreuters.com, 00442075429105
Pratima Desai (Commodities Correspondent),
pratima.desai@thomsonreuters.com, +44 207 542 5113
Humeyra Pamuk (Commodities Correspondent)
humeyra.pamuk@thomsonreuters.com, +44 (0) 207 542 9736
Sam Nelson (Correspondent)
sam.nelson@thomsonreuters.com, 312-408-8721
Niluksi Koswanage (Correspondent )
niki.koswanage@thomsonreuters.com, 603 2333 8035
Rene Pastor (Correspondent)
rene.pastor@thomsonreuters.com, 732-388-0424
Nigel Hunt (Agricultural Markets Correspondent)
nigel.hunt@thomsonreuters.com, +44 20 7542 8421
Lewa Pardomuan , (Asia Correspondent, Softs and Precious
Metals), Lewa.Pardomuan@thomsonreuters.com, 65 68703834
Financial Graphics, Financial.graphics@thomsonreuters.com
The poll pegged Brazil's output at 50 million 60-kg bags in the
2010/11 crop year, down slightly from a July forecast of record 52
million bags but much higher than 39.47 million bags in 2009/10
estimated by Brazil's supply agency Conab.
"The first semester of this year will greatly be influenced by the
squeeze of finer arabicas," said one respondent who wished to
remained anonymous.
"This together with a weak U.S. dollar will keep the ICE on a
constructive tone, spilling over with higher demand expectation for
the finer Brazil arabicas," he added.
(With reporting by Marcy Nicholson in NEW YORK, Peter Murphy
in SAO PAULO, Ho Binh Minh in HANOI and Nigel Hunt in
LONDON; Editing by Himani Sarkar)
-------------------------------------------------------------------------------------
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