Monday, December 20, 2010

20101220 1157 Global Market News.

OIL: Oil rises on U.S. economic growth hopes
SINGAPORE, Dec 20 (Reuters) - Oil prices rose on Monday as  supportive U.S. economic data boosted optimism for growth  prospects for the world's largest oil user next year.
The Conference Board of leading economic indicators  jumped 1.1 percent in November, the biggest rise since March  and the fifth straight monthly gain.

COMMODITY MARKETS: Mostly thin gains for the week; sugar up 13 pct
NEW YORK, Dec 17 (Reuters) - Commodities mostly posted modest gains on Friday, but sugar jumped 13 percent on the week and coffee, corn and cotton also logged outsized gains on selective buying in thin, pre-holiday trade.
"Some people may want to take those profits ahead of the end of the year," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

GLOBAL MARETS: Euro dips on Ireland, U.S. Treasuries rally
NEW YORK, Dec 17 (Reuters) - The euro fell against the dollar for a second straight week and global stocks edged lower on Friday, weighed by renewed concerns over euro zone debt after a multi-notch downgrade of Ireland's credit rating.
"While the Moody's downgrade of Ireland isn't any surprise, the sheer magnitude of five notches warrants a mention. We haven't seen anything like this since the Asian crisis," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.

Real Estate May Be Hurting; But Farmland Has Become A Hot Commodity (Source: CME)
The price of farmland is climbing sharply again. Will a new round of pleas for aid from Willie Nelson be close behind? The rally in land values stirs memories of the 1980s farm debt crisis, when many farmers borrowed heavily as property values soared, then faced foreclosure after the bubble burst. The farmers' plight prompted musicians led by Mr. Nelson to stage high-profile Farm Aid concerts. Arable land has again become a hot commodity -- despite the struggles of the broader real-estate industry. It's attracting buyers ranging from wealthy individuals and institutional investors to farmers themselves. Many are investing in farmland funds, though some farmers are expanding operations. "It's just gotten sexy lately," says Shonda Warner, managing partner of Chess Ag Full Harvest Partners, which has a fund with about $50 million invested in farmland in four states.
Farmland values in key upper Midwest states shot up 10% in the third quarter compared with last year, according to the Federal Reserve Bank of Chicago. The Kansas City Fed says prices of irrigated farmland jumped 12% in Kansas and Nebraska in the same period. The recent increases follow a 55% rise in value in real terms over the past decade. Investors are plowing money not just into prime U.S. soil, but into major agricultural areas abroad as well. Some expect the land to appreciate in value. Others are betting that fast-growing nations will need to import more food to satisfy increasingly prosperous populations, boosting farm income. In October, Teachers Insurance & Annuity Association of America -- part of the mammoth TIAA-CREF retirement plan for academics -- bought Westchester Group Inc., which already managed some of TIAA's farmland investments. TIAA has about $2 billion invested in more than 400 farms in the U.S., South America, Australia and Eastern Europe.
George Washington University, in Washington, D.C., began buying in 2007 and now has $80 million of its endowment invested in farmland. One-quarter of that amount is in the U.S., and the rest is abroad -- including money in a fund that leases land in Poland. And Luminous Capital, an investment adviser in Los Angeles and Menlo Park, Calif., that serves wealthy individuals, has put $45 million of its clients' money into a fund that plans to buy 20 to 25 U.S. farms growing crops such as corn, cotton and wheat. "We believe that the emerging markets are going to continue to grow in wealth," says Kim Ip, who oversees the farmland portfolio at Luminous. That, she says, will mean increased meat consumption, which in turn will drive greater demand for feed grains.
U.S. farms are well-positioned to benefit from strong global demand for key crops, because they produce so much more than Americans consume. U.S. farms will provide more than half the world's corn exports and over 40% of its soybean and cotton exports this crop year, according to the U.S. Department of Agriculture. Exports can help farms earn significant revenue, particularly at times when prices are rising. Grain prices shot up this summer after a harsh summer drought in Russia that led to an export ban in that country on wheat. Corn and wheat prices were both up more than 65% recently from June lows, with soybeans up nearly 40%." U.S. farmland is also growing scarcer, which can bolster its value. The nation's farmland acreage has been declining steadily for more than half a century, from more than 1.2 billion acres in the mid-1950s to a little less than 920 million acres last year, according to the Department of Agriculture. Farming, however, is a notoriously perilous business.
Outside investors typically rely on tenant farmers or management companies to run the farms day-to-day, putting a premium on selecting skilled farmers. Farms are also heavily exposed to nature's whims. "The biggest risk is operational," says Don Lindsey, chief investment officer at George Washington University. He tries to mitigate the risk by investing in different regions, and with a variety of managers.

European Bioethanol Firms Switching To Corn From Wheat
Several European bioethanol processors have switched from wheat to cheaper corn in a bid to improve refining margins, an analyst at an influential grains forecaster said. Currently maize [corn] is much cheaper than wheat and as maize has a much better ethanol yield than wheat it is more attractive," Christophe Cogny, market analyst with Strategie Grains, said. In it latest report, the French grains analysis company upped its prediction for European Union corn usage in bioethanol due to favorable prices. Cogny said refiners in the Netherlands, Spain, Germany and Austria that can use either grain have already switched to corn, a choice that may have boost acreage for the grain in the season ahead. "If [the refiners] switch from one grain to another it has price implications and planting implications," said Cogny. "And not only for biofuels, but exactly the same in the animal feed sector." Both grains are used for animal feed.

German business sentiment hits record high
BERLIN, Dec 17 (Reuters) - German business morale rose to its strongest level since 1991 in December, buoyed by an increasingly strong domestic sector that is helping the economy power ahead of weaker euro zone peers.
The Munich-based Ifo think tank said on Friday its business climate index, based on a monthly survey of some 7,000 firms, rose to 109.9 from 109.3 in November. The rise was the seventh in a row and surpassed expectations for a fall to 109.1

China can cap inflation next year-regulator
BEIJING, Dec 17 (Reuters) - China will be able to keep a  grip on inflation next year, but will have a harder time in  coping with hot money inflows fanned by loose polices in the  West, the country's chief banking regulator said on Friday.
Chinese consumer inflation raced to a 28-month high in  November of 5.1 percent and the country's top leaders have  declared that stabilising prices is a priority for 2011.

PRECIOUS-Gold rises above $1,375/oz as dollar retreats
LONDON, Dec 17 (Reuters) - Gold prices firmed in Europe on Friday, supported by a retreat in the dollar versus the euro, and by persistent concerns over sovereign debt levels in the euro zone after Moody's cut Ireland's credit rating.
Spot gold  was bid at $1,375.45 an ounce at 1028 GMT against $1,370.46 late in New York on Thursday, having slipped to a near three-week low of $1,361.35 an ounce in that session.

FOREX-Euro recovers on German data, but risks lurk
LONDON, Dec 17 (Reuters) - Upbeat German data helped the euro overcome a sharp credit ratings downgrade for Ireland on Friday, although investors were wary about pushing it higher while worries persist about peripheral euro zone debt.
Moody's slashed Ireland's sovereign rating by five notches, to Baa1 from Aa2, and warned further downgrades could follow if Dublin is unable to stabilise its debt situation.

U.S. wheat futures up on wet forecast for Australia
SYDNEY, Dec 17 (Reuters) - U.S. wheat futures gained about  1 percent in Asia on the back of forecasts that  Australia can expect a wetter-than-normal summer, raising  fresh concerns of crop damage.  The gains partially offset an overnight tumble in wheat  prices blamed on a bearish mix of technical selling and  earlier expectations that Australia's eastern crop fields were  drying out.  "Just when it looked like the east was drying out, the  forecast is for more rain over the summer," said a grains  trader in Sydney.

Argentine wheat crop estimated higher at 13.5 mln T
BUENOS AIRES, Dec 16 (Reuters) - Argentina's 2010/11 wheat harvest is seen reaching 13.5 million tonnes, up 4.0 percent from the previous outlook, due to high yields and harvesting advances, Buenos Aires Grains Exchange said on Thursday.
Current dry conditions are hurting corn and soy crops and delaying seedings in the South American country, a leading global grains exporter, but the grains exchange held its estimate for plantings.

Stocks firm; euro shrugs off Irish rating cut
LONDON, Dec 17 (Reuters) - World stocks advanced on Friday, partly lifted by firmer commodities as the dollar fell, while Irish and Portuguese bond yields rose after Moody's Investors Service cut Ireland's rating by five notches.
"The Irish downgrade was significant and severe," said Nick Stamenkovic, bond strategist at RIA Capital Markets in Edinburgh.

No comments: