La Nina triggering heavier monsoon in Malaysia-Met Dept
KUALA LUMPUR, Nov 19 (Reuters) - The La Nina weather pattern will trigger heavier-than-usual monsoon rains this year for Malaysia's key oil palm growing region on Borneo island, the country's weather office said on Friday.
Director General of the Malaysian Meteorological Department Yap Kok Seng said the weather condition will induce five to six episodes of heavy rain in the world's second largest palm oil producer and No.3 rubber supplier.
Soy product futures rallied in unison with soybeans as broad-based commodity gains and the easing of Chinese monetary concerns buoyed prices. Soyoil led the upward charge, with spillover support from crude oil futures and higher-than expected weekly export sales underpinning prices, analysts said. CBOT December soyoil ended 1.98 cents, or 4%, higher at 50.92 cents per pound, and December soymeal traded $7.00, or 2.1%, higher at $335.00 a short ton. (Source: CME)
USDA Chief: Food Costs Won't Surge (Source: CME)
Skyrocketing prices in the agricultural futures markets won't translate into as big a bump in food costs for consumers, U.S. Department of Agriculture Secretary Tom Vilsack said on Wednesday. "I'm not sure that commodity prices necessarily translate directly and proportionately into food costs," Mr. Vilsack said in an interview, adding, "They go up and down all the time." Prices for grains such as corn and soybeans soared to two-year highs in the futures market last week, while sugar prices spiked to a 30-year high. The gains were widely attributed to fears that harvests would be too small to comfortably meet rapidly growing demand from China and other emerging markets. But farmers aren't reaping the full benefit of higher prices, and consumers don't pay the full cost, Mr. Vilsack said.
"There are a lot of people in the food chain that are taking a bite out of the apple," he said. Food prices rose only 0.1% in October, the Labor Department said on Wednesday, even as corn futures shot up nearly 20% and sugar futures rose 15%. But large food producers, including General Mills Inc., have said recently that they will soon scale back promotions that have kept consumer prices subdued. The USDA estimates food prices this year will rise by between 0.5% and 1.5%, the smallest increase since 1992, although the rate is expected to pick up to a more normal 2% to 3% in 2011. Businesses across the agricultural sector also have low debt levels, making it easier to weather volatile markets, Mr. Vilsack said. "If you're highly leveraged and you're basically banking on high commodity prices to get you out of a high leveraged circumstance, you're in big trouble," he said. "But if you've got $1 debt to $9 or $10 in asset value, you've got a little bit of time to deal with the vagaries of the market."
A "significant cushion" between debt and asset values also should keep rising farmland prices from turning into a bubble, Mr. Vilsack said. Prices for irrigated land in the western farm belt rose 9.6% in the third quarter, according to a survey put out last week by the Federal Reserve Bank of Kansas City. The rapid rise has some observers concerned about the risk of an equally sharp correction. "While the credit structure underlying U.S. farmland does not appear to involve excessive leverage or inappropriate loan products, this is a situation that will continue to require close monitoring," Sheila Bair, chairman of the Federal Deposit Insurance Corp., said last month.
Palm oil up as concerns over Ireland debt crisis eases
KUALA LUMPUR, Nov 18 (Reuters) - Malaysian crude palm oil futures rose 1.6 percent , lifted by broad commodity markets that rebounded as tension on financial markets eased over Ireland's debt crisis.
"Traders took profit in the morning session as they were worried about the China's pledge to control food prices, but it followed the rally in the overseas market before the market closed," said a trader with Kuala Lumpur-based foreign brokerage.
Paraguay soy output seen edging down to 7 mln T
ASUNCION, Nov 17 (Reuters) - Paraguayan farmers will finish sowing 2010/11 soybeans in the next few days and production is expected to dip slightly to about 7 million tonnes, an industry group said on Wednesday.
Paraguay is the fourth-largest soybean exporter, though it trails far behind neighboring agricultural giants Brazil and Argentina. The landlocked country produced a record-high crop of 7.4 million tonnes last season.
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