Corn (Source: CME)
US corn futures finish lower on expectations that mild temperatures and wet weather will boost crop conditions. That's a turnaround from excessive rains that delayed plantings earlier this spring and caused some farmers to plant fewer acres than they intended. "Any corn that did manage to get planted in the Midwest should do well," says Joel Burgio, meteorologist for Telvent DTN. The losses follow a surge to record highs Friday. CBOT July corn slips 4 1/2c to $7.82 1/2 a bushel.
Wheat (Source: CME)
US wheat futures tumble as weather improves in Europe, a major exporter of the grain. Rains this week "should further improve moisture and crop conditions" in France and Germany after recent rains helped ease dryness, according to MDA EarthSat Weather. Prices had advanced recently on concerns about a drought in Western Europe. Yet, "weather has been and looks beneficial across most of the world's crop growing regions," says John Roach, president of Roach Ag Marketing. CBOT July wheat drops 16 1/4c to $7.43, KCBT July loses 17c to $8.51 and MGE July slides 14 3/4c to $9.85 1/4.
Rice (Source: CME)
Rice futures fall hard on profit-taking with the neighboring wheat and corn markets. Traders took money off the table in the grains after recent advances. Wheat's slide of more than 2% added spillover pressure to rice as both grains are global food staples. July rice finishes down 28 1/2c, or 1.9%, at $14.61 per hundredweight.
Price Increases To Affect Nestle Emerging Market Sales - Exec (Source: CME)
Natural and man-made disasters as well as spiralling raw material costs will hit emerging markets sales at Swiss food company Nestle SA, Executive Vice President Frits van Dijk said, as the company struggles to pass the higher costs on to consumers. Nestle's Asia Oceania Africa Zone was the fastest growing of Nestle's three global regions in the first three months of 2011, but rapid rises in commodity costs mean growth is likely to slow as many consumers in the region are on lower incomes and more sensitive to price increases, van Dijk told Dow Jones Newswires in an interview in Jakarta. The AOA region, which accounts for around two thirds of Nestle's emerging market exposure, saw sales growth of 11.8% to CHF3.8 billion ($4.54 billion) in the first three months of the year, ahead of the Americas, where sales were up 3.7% and Europe which saw sales growth of 2.3%. But Nestle is now faced with the challenge of maintaining its target of organic growth of 5% to 6% while continuously improving the bottom line.
Rapid rises in commodity costs "is obviously affecting us," said van Dijk, and Nestle brought in some price increases in the first three months of 2011,but he said the company is looking at ways other than price increases to meet its targets and protect margins. "We have to find ways and means of how to cope with this [raw materials rises]. Price increases is one solution, but clearly not the only solution," he said. "We have seen it in the past when you increase prices for a few months, you get a bit of headwind and the consumers have to adapt," said van Dijk. "But on the other hand, it is the whole industry that is suffering. Everyone ultimately will have to go through price increases. The whole price level goes up a bit, but the consumers get used to that after a while."
Nestle is also looking to improve efficiencies, reduce waste and packaging, and is reengineering its products to use cheaper ingredients, such as replacing much of the skimmed milk powder content of its Milo malt drink in Vietnam with less expensive soya protein. "This allowed us to maintain the very competitive price point of 1,500 Vietnamese Dong (7.3 U.S cents), which is a very strategic price for food and beverage in Vietnam," van Dijk said. "By keeping a price point we are able to grow the business at a lower cost." In 2011 the AOA region also faced a series of disturbances, from the Arab Spring uprisings in North Africa to the civil war in Ivory Coast and the Japanese tsunami and nuclear disaster. Nestle had to shut its factories in Ivory Coast when the fighting became heavy, while many countries refused to accept coffee and creaming products made in Japan due to fears over nuclear contamination.
Nestle had a series of business contingency plans which it put into effect to supply markets from other sources. Van Dijk declined to put a figure on the sales that were lost. "You lose a few days of sales, but nothing too much. But our competitors are in the same boat, so you don't lose market share. You have to fill up the pipeline after." In Japan, production was resumed at the damaged factory two and half weeks after the disaster. "We have stepped up our disaster planning," said Van Dijk, adding that the company's readiness to deal with disasters is "of a very high level."
French Agriculture Min: Drought Situation In France Is "Very Severe" (Source: CME)
France has been experiencing a "very severe" drought since the start of the year and possibly "the worst" of all Europe, French Agriculture Minister Bruno Le Maire said. Speaking in an interview with RTL radio and LCI television, Le Maire insisted that French farmers would get all the possible help, including the use of the country's armed forces and the state-owned railway company to carry fodder where needed as some farmers have been experiencing difficulties to feed animals due to the drought. "My objective is that not a single one farmer gives up during this drought crisis," Le Maire said, insisting that the future of "thousands" of farms was at stake. As for the German E. coli crisis, Le Maire noted that it was far from over as consumption of vegetables such as cucumbers and tomatoes was resuming too slowly.
Sustainable Farming Needed to Feed the World (Source: CME)
The Green Revolution of the 1960s saved an estimated 1 billion people from poverty and produced enough food to support a doubling of the world population to six billion by the year 2000. Thanks to high-yielding crops, irrigation and the widespread use of agrochemicals, farmers in the developing world boosted output from 800 million tons to more than 2.2 billion tons in that time. But now, as global yield growth is declining while the world's population looks set to top nine billion in the next 40 years, United Nations experts are calling for a new, even greener revolution. A new initiative from the Food and Agriculture Organization argues that decades of intensive farming has ravaged the world's natural resources, causing land degradation, sapping water supplies and contributing massively to climate change. "The present paradigm of intensive crop production cannot meet the challenges of the new millennium," said the FAO in its report, called Save and Grow.
Adding to the challenge is that fact that the amount of land available for cultivation is limited while demand, driven by a growing taste for meat and diversion of crops for biofuels, is growing exponentially. The FAO estimates that by 2020, industrialized countries may use 150 kilograms of corn per head per year in the form of ethanol, a similar increase to the rate of cereal food consumption in developing countries. Instead, the report calls for a new approach that will cut agriculture's contribution to climate change--it currently emits around a third of the world's greenhouse gasses--by empowering the world's 2.5 billion smallholder farmers through more sustainable methods of cultivation. An estimated $209 billion a year will need to be ploughed into agriculture, including improving access to high-yield and genetically modified seed varieties, improving the use of natural fertilizers and reducing dependence on pesticides and using water more efficiently, the FAO estimates.
"In order to grow, agriculture must learn to save," said FAO director-general Jacques Diouf. The report comes as agriculture ministers from the Group of 20 industrialized nations are due to meet next week to agree ways to combat food insecurity. Proposals include creating a coordinated forecasting system for crops, improving transparency in commodities markets and world stock levels. "Whatever the investment and however much is made it should be channeled towards new products and intensification of production on existing land," said Dr. Amit Roy, president and chief executive of the International Fertilizer Development Council. He argues that farmers in the developing world must have better access not just more but better technology if they are to boost yields without bringing more land under the plough. "They're using old technology in a world that's changed," he said. The Green Revolution of half a century ago helped farmers to exploit natural resources to create more from less.
This new revolution must teach us how to save what we have to preserve more for the future.
Europe's Drought Risks Inflation Deluge (Source: CME)
It will take more than a washed-out holiday weekend to put a smile back on the faces of European farmers - and policymakers. Dry weather in the continent's northern regions has seriously harmed potential crops, with the U.K. the latest country to declare drought conditions in some parts of the country -- England and Wales have experienced the second driest spring since 1910, with rainfall 45% below the long-term average. The feed-through to overall inflation levels is getting harder to ignore. Wheat, which accounts for nearly half of Europe's cereal production, is particularly at risk. Already, the price of milling wheat traded in Paris has risen 6.6% this year. France, Europe's largest wheat producer, is suffering its driest weather in 50 years, and could see its crop decline by 12% this year, the US Department of Agriculture estimates. Much of the price rise will be felt domestically, with Europe consuming around 85% of its annual wheat production.
Rapeseed, another important crop used in both biofuels and edible oils, has meanwhile seen its price rise by 46% since a year ago. Unless imports form Ukraine increase, its current near-term futures price of EUR466.5 per ton could rise to EUR500 per ton, Rabobank forecasts. Such price rises are feeding through to overall European inflation: euro zone food prices rose by 1.8% on-year in April, according to Eurostat, up from 0.1% in April 2010. Sure, the weighting of food in the euro zone consumer price index, at 14%, is low compared with emerging market CPI baskets. But its weight as a source of inflationary pressure is rising. In 2010, food contributed just 4% of overall euro zone inflation. In 2011, that could rise to 14%, according to Barclays Capital, heading higher to 17% in 2012. Since food demand doesn't fall much even as prices rise, higher food expenses will hit already stretched household budgets, especially for poorer families.
The effect of higher basic food prices is already pushing up the cost of processed food. The year-on-year inflation rate for bread and cereals has risen sevenfold in the last six months, to 2.1%, for example. But the full effect still may not have been seen: Bread prices typically lag wheat futures by around six months, BarCap estimates. Europe's sun seekers may be enjoying the warm conditions. But for central bankers trying control the continent's inflation, it is another headache.
Wheat up 1 pct, corn rises on supply squeeze, weather
SINGAPORE, June 13 (Reuters) - U.S. wheat futures rose 1.2 percent , while corn firmed to trade near last week's all-time highs as concerns over tightening grain supplies and harsh crop weather continued to buoy
the grain markets.
"Corn prices are too high and livestock producers are switching from corn to feed wheat. It is a supportive factor for wheat prices," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore.
New downpours to hit flooded central and southern China
BEIJING, June 13 (Reuters) - More torrential rains are likely to hit central and southern China where nearly 100 people have been killed in floods and landslides over the last 10 days, the government said on Monday, as drought rapidly gives way to inundation.
Downpours are forecast for the middle and lower reaches of the Yangtze River, including Guizhou, Jiangxi, Hubei and Hunan provinces, the China Meteorological Administration said.
Farmers must boost sustainable crops to feed world-FAO
MILAN, June 13 (Reuters) - The ravages from half a century of intensive farming must give way to a more sustainable approach if farmers are to feed the world in 2050, the United Nations' Food and Agriculture Organisation (FAO) said on Monday.
Global farm output must increase 70 percent, including a nearly 100 percent jump in developing countries, to feed the world in 2050, the FAO said.
Vietnam to stockpile 1 mln T rice from July
HANOI, June 13 (Reuters) - Vietnamese exporters will stockpile 1 million tonnes of milled summer-autumn rice for three months beginning July 15, a typical move to support domestic prices as the harvest in the Mekong Delta food basket peaks.
This time the stockpiles, equivalent to a quarter of the current crop output, would be built without government support in the form of low-interest loans or a guanranteed place in government export deals.
Government declares drought in parts of east England
LONDON, June 10 (Reuters) - The British government declared a state of drought on Friday in parts of East Anglia, an important farming region in eastern England, after some areas of the country had their driest spring on record.
Declaring a region to be in a state of drought allows water companies to place curbs on the use of water.
Spain grain farmers eye good crop, tight supply
MADRID, June 10 (Reuters) - Spanish grain farmers expect to reap the benefits of producing their best harvest for three years this summer just as global supplies are tightening and driving prices higher.
Asaja recalled in a statement that the International Grains Council forecasts for global supply of 1.803 billion tonnes in the 2011/12 market year would fall slightly short of 1.812 billion in consumption.
Romania sees 6.7 mln T wheat, weather damage marginal
BUCHAREST, June 10 (Reuters) - Romania expects to reap a wheat crop of about 6.7 million tonnes this year, 18 percent higher than in the previous season, the agriculture ministry said on Friday.
The wheat crop in Romania, one of the largest cereal producers in the Black Sea region, was 5.7 million tonnes in 2010 while maize output grew to a five-year high of 9 million -- the European Union's second biggest.
Coffee dips, weighed by Brazil harvest; cocoa rises
LONDON, June 13 (Reuters) - ICE arabica coffee futures edged lower early weighed by Brazil's harvest, while cocoa firmed, with upside limited by a steady flow of supplies from top producer Ivory Coast.
Liffe white sugar futures firmed to around three-month highs and ICE raw sugar hovered around seven-week peaks, underpinned by tight supplies during a period of high demand before Ramadan in August, and port loading delays in Brazil and Thailand. Arabica coffee futures on ICE edged lower, weighed by Brazil's harvest, and remained underpinned by a shortage of high quality beans and the looming frost season in Brazil.
I.Coast cocoa arrivals hit 1,153,712 T by June 5 -BCC
ABIDJAN, June 10 (Reuters) - Cocoa arrivals to ports in top grower Ivory Coast hit 1,153,712 tonnes by June 5 since the start of the season in October, up from 1,009,646 tonnes in the same period a year ago,
according to official data.
Some 11,174 tonnes of beans reached the ports of Abidjan and San Pedro in the most recent week, according to the figures from industry regulator BCC obtained by Reuters on Friday, compared with 23,289 tonnes in the same week of the 2009-10 season.
Crude Oil Declines for a Third Day in New York on Signals Demand Weakening (Source: Bloomberg)
Oil declined for a third day in New York as signs that the global economy is slowing stoked speculation that fuel demand may falter. Futures slipped as much as 0.5 percent today before reports that may show sales by U.S. retailers fell in May for the first time in 11 months and China’s industrial production slowed. Prices dropped to a four-week low yesterday after government data showed China’s oil-product consumption slid 4 percent in May and Standard & Poor’s cut Greece’s credit rating to the lowest held by a country.
Copper in London Trades Little Changed Ahead of Chinese Output, Price Data (Source: Bloomberg)
Copper in London, trading little changed before China’s industrial production and inflation reports, may drop for a third day on speculation demand will weaken as global economic growth falters. The metal for three-month delivery on the London Metal Exchange traded at $8,910 a metric ton by 8:04 a.m. Singapore time. It fell as much as 0.8 percent to a three-week low of $8,864.75 a ton yesterday.
Goldman Sachs keeps 12-Month LME Copper price outlook
Jun 10 (Reuters) - Goldman Sachs reiterated its 12-month LME Copper price forecast of $11,000/mt saying an observed large deficit in China in the month of May will add to the substantial deficit in the global copper market this year.
The investment bank said it expects China's pull on copper imports to rise in the third quarter of 2011 as exchange and bonded warehouse inventories draw down to lower levels.
EU stainless steelmakers' profits to fall in Q2
LONDON, June 13 (Reuters) - European stainless steel producers' profits look set to shrink in the normally strong second quarter as prices for their products fall and customers opt to work off stocks rather than make fresh purchases.
On top of that, expectations of further weakness in prices for nickel -- a key ingredient in many stainless steel grades -- will keep stainless buyers hesitant in the next few months.
China lead pollution outbreak poisons 103 children
BEIJING, June 12 (Reuters) - Lead pollution from workshops in eastern China seriously poisoned 103 children and has affected hundreds of other residents in the country's latest case of unfettered industrial toxins, the official Xinhua news agency reported on Sunday.
The pollution from tinfoil-making workshops in Yangxunqiao town in Zhejiang province left the children, aged 14 or younger, with 250 microgrammes or more of lead for every litre of blood.
METALS-Copper slips on signs of China cooling, holidays
LONDON, June 13 (Reuters) - Copper dropped half a percent to a three-week low on Monday, dragged down by signs of cooling in top consumer China amid holiday-thinned trade, but prospects for a demand pick-up in the second half kept sellers at bay.
Three-month copper on the LME traded at $8,876 at 0958 GMT, compared with a close of $8,938 a tonne on Friday.
PRECIOUS-Gold falls on dollar, safe-haven status supports
LONDON, June 13 (Reuters) - Gold fell on Monday as the euro eased against the dollar, but concerns about the euro zone debt crisis sustained investor interest in the precious metal as a safe store of value.
Bullion fell almost 1 percent on Friday, its biggest one-day decline in a month, due to a rally in the dollar and broad commodities losses.
Gold Falls to Three-Week Low on Sales to Cover Losses in Slumping Equities (Source: Bloomberg)
Gold dropped to a three-week low on sales by some investors to cover losses in equity markets. The MSCI All-Country World Index of stocks touched the lowest in more than two months. The Standard & Poor’s 500 Index has fallen for six straight weeks. Gold reached a record $1,577.40 an ounce on May 2. “Gold may tumble if margin-call problems should arise in equities here and abroad,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. On the Comex in New York, gold futures for August delivery fell $13.60, or 0.9 percent, to settle at $1,515.60 at 1:53 p.m. Earlier, the price touched $1,511.40, the lowest for a most- active contract since May 23.
Japan May aluminium stocks rise 2.9 pct m/m
TOKYO, June 13 (Reuters) - Aluminium stocks held at three major Japanese ports at the end of May rose to a seven-month high, reflecting inflows from delayed deliveries and also a rise in imports, an official at trading house Marubeni Corp said on Monday.
Aluminium stocks at the ports came to 225,400 tonnes at the end of May, up 6,300 tonnes or 2.9 percent from a month earlier, said Marubeni, which collects data from the key ports of Yokohama, Nagoya and Osaka.
Boeing eyes aluminum hedging amid market volatility
NEW YORK, June 10 (Reuters) - Boeing Co may decide within the next year to begin hedging aluminum prices on the London Metals Exchange (LME) in order to reduce volatility in its costs, a senior executive said on Friday.
If initiated, the company intends to use the new hedging program on its long-term agreements, John Byrne, an executive with the company's commercial airplanes unit, told Reuters.
