US soy product futures closed lower as forecasts for rain in dry Argentine growing areas sparked profit taking. Markets were due for a correction after soyoil on Monday reached its highest level since July 2008 and soymeal on Friday reached its highest level since Sep 2009, analysts say. Markets had climbed on worries about heat and dryness threatening output in Argentina, the world's leading exporter of soymeal and soyoil. CBOT March soymeal settled down $4.90 to $369 per short ton, and CBOT March soyoil dropped 0.67 cent to 57.70 cents per pound. (Source: CME)
Cooking Oil's Surge Shows How Inflation Hits Chinese (Source: CME)
These days, Liu Chuansheng nervously scouts five locations before he buys cooking oil, illustrating how a sudden spike in the price of the Chinese kitchen's most vital ingredient has become close to a national crisis. On a recent Friday, the 33-year-old, who runs a breakfast stand with his wife, wheeled a shopping cart into the aisle of a C.P. Lotus Corp. store in northern Shanghai, eying only prices. In seconds, his wife emptied the shelves of its 11 remaining bottles of Cofco Ltd. "Five Lakes" soybean oil, the discount choice at 47.90 yuan, or about $7.20, for five liters (1.32 gallons). At the checkout, Mr. Liu separated their $79 purchase into three batches to sidestep the store's four-bottle maximum and government bans on hoarding. To transport the provisions to their food stand, Mr. Liu placed two bottles into the basket of his blue electric scooter and balanced nine more on the running board. His wife plopped on back. Mr. Liu's livelihood is now just as precariously balanced.
He reckons his cooking-oil costs shot up 27% in 2010. Rising food prices helped push China's consumer price index to a two-year high of 5.1% in November, and nowhere are the pressures felt more deeply than with cooking oil, more vital in Chinese cooking than even rice. Rising oil prices mean daily hardship for Chinese on meager incomes. And though food represents only about one-third of the CPI, it accounts for about 75% of the index's recent rise. Such price challenges are a primary reason China's central bank abruptly raised interest rates twice in 10 weeks, most recently on Christmas Day. The next day, Premier Wen Jiabao went on national radio to take questions from anxious listeners worried about inflation. According to a report, China's official Purchasing Managers Index declined to 53.9 in December from 55.2 in November.
Bank of America-Merrill Lynch economist Lu Ting warned the input price reading is "still quite high," and that Chinese authorities "will have to tolerate a relatively high inflation in the coming years." Chinese housing has long been pricey, and an increasingly broad array of prices appears to be following. The National Development and Reform Commission in late December, for instance, announced a 3.77% rise in retail gasoline prices, to the equivalent of $3.50 a gallon, for an 11% increase in about a year. But the main oil shock the Chinese face is at the stove rather than the pump. In a nation where few kitchens include an oven, cooking oil is so valued that a jug of it is an appropriate gift. It is a potentially explosive trend. Three years ago, as oil prices were similarly surging, a stampede killed three people and injured more than 30 during a promotion offering $1.50, or about 20%, off five-liter bottles of oil in the western city of Chongqing.
Prices ultimately hit $2,009 a ton in early 2008, according to Pansun.
Palm oil scores new 33-mth high on supply concerns
KUALA LUMPUR, Jan 3 (Reuters) - Malaysian crude palm oil hit a new 33-month high as robust demand chases tightening supplies and investors continue to place bets on commodities after a strong performance last year.
"Short term, there is bullish potential for palm oil and 4,000 ringgit is not a far-fetched idea," said a trader with a foreign commodities brokerage.
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