Global Food Price Rally Will Drive Investment, Nestle Says (Source: Bloomberg)
Rising agricultural prices may spur increased investment in research and infrastructure, helping lift farm yields and output to feed a larger and richer global population, according to Nestle SA (NESN), the biggest food company. “Prices are getting to a level that may result in an effect that is positive for food production,” Chief Executive Officer Paul Bulcke said in an interview on Bloomberg Television. “People are motivated again to be in agriculture.” Global food prices rose for a second month in February on higher costs for cereals, cooking oils and sugar, according to a 55-item gauge tracked by the United Nations’ Food and Agriculture Organization. Costs may remain near current levels in the coming months as demand absorbs increased supply, Abdolreza Abbassian, a senior FAO economist, said on March 8.
Food-price volatility has increased as production isn’t growing at the same pace as demand, cutting stockpiles, Bulcke said in Kuala Lumpur. Raw-material costs for Vevey, Switzerland- based Nestle such as coffee and sugar were expected to continue to climb this year, although at a slower pace than 2011, he said.
Corn (Source: CME)
US corn futures end down, pressured by a fall in wheat prices and a stalled rally in Chinese corn prices. Expectations for Chinese demand remain, but corn prices in the country fell slightly overnight after hitting an all-time high Friday, easing optimism among US market participants. Lower USDA weekly export inspection data for corn also weighs. CBOT May corn ends down 9 1/2 cents at $6.63 1/2 a bushel.
Wheat (Source: CME)
US wheat futures end lower, pressured by favorable weather for the winter-wheat crop and Russia saying it won't place any restrictions on grain exports, ending expectations that it might adopt duties to boost domestic supplies. The likely extra competition for US exports weighed on US futures, as did weekly USDA export-inspection figures, which were lower. CBOT May wheat slides 2.9% to $6.52 1/4 a bushel while KCBT May falls 14c to $6.91 1/2 and MGEX May drops 15 3/4c to $8.07.
Rice (Source: CME)
US rice futures end up, with nearby futures climbing to their highest level in nearly two months amid questions about US acreage. Prices top the 100-day moving average for the first time in 4 1/2-months. Worries about low planted acreage in the wake of a months-long swoon in prices underpin the market. US Rice Producers Association also notes that weekly export sales were strong last week. CBOT May rice ends up 7c to $14.60 1/2 per hundredweight.
US old-crop corn at 4-month top on Chinese demand hopes
SINGAPORE, March 19 (Reuters) - U.S. old-crop corn rose for a third straight session to its highest since November on expectations of more Chinese purchases, while soybeans were little changed, taking a breather after climbing to a six-month top.
"U.S. export sales and lower supplies from South America have had supportive influence for the entire oilseeds complex, including the palm oil," said Ker Chung Yang, an analyst at Phillip Futures in Singapore.
Zimbabwe writes off a third of maize crop, deficit looms
HARARE, March 19 (Reuters) - Zimbabwe faces a huge grain deficit this year after a third of the current maize crop was written off due to a prolonged dry spell, state media reported on Monday.
The southern African country, once a regional bread basket, has struggled to feed itself since 2000 when President Robert Mugabe embarked on the seizure of white-owned commercial farms to resettle landless blacks.
China to import at least 1 mln T rice from Vietnam-paper
HANOI, March 19 (Reuters) - China could import at least 1 million tonnes of rice from Vietnam this year, which would be more than three times its 2011 imports, a senior Vietnam rice industry official was quoted on Monday as saying.
The forecast demand by China represents nearly 14 percent of the record 7.2 million tonnes Vietnam aims to export this year. If Vietnam does sell that much rice, it will overtake Thailand to become the world's largest rice exporter in 2012.
Argentina truck strike imminent, may disrupt corn, soy hauling
BUENOS AIRES, March 18 (Reuters) - Owners of Argentine grain trucks said on Sunday they would start an indefinite strike at midnight (0300 GMT) to seek higher transport rates, a protest that could disrupt hauling during early corn and soy harvesting.
Argentina, one of the world's top exporters of corn, soybeans and soy products, often sees strikes in March, when crop gathering begins and unions seek wage hikes.
US Corn Belt farmers resisting the urge to plant early
CHICAGO, March 16 (Reuters) - Shirt-sleeve weather this week across America's central grain belt tempted farmers to start planting corn early but expensive seeds and worries about insurance covering any sudden cold snap have kept crop planters out of fields.
"We've got a lot invested in this crop. We want to be careful," said central Illinois farmer Tim Seifert, who doesn't want to take the chance of seeing young corn seedlings hurt by an April frost.
Early-planted Argentine corn hit by Dec-Jan drought
BUENOS AIRES, March 16 (Reuters) - Early-planted corn in global No. 2 exporter Argentina was pummeled by a December-January drought, but later-seeded fields have since been enlivened by regular rains, the government said on Friday.
Dry, hot weather that blighted the Pampas during the dog days of the Southern Hemisphere summer chopped corn yields by 40 percent in the Bragado district of key agricultural province Buenos Aires, the Agriculture Ministry said in a report.
Italy 2011 maize imports jump, soft wheat up-Anacer
MILAN, March 16 (Reuters) - Imports of maize into Italy, a major grain buyer in Europe, surged 25.3 percent year on year in 2011 while imports of soft wheat rose 4.6 percent, Italian cereals body Anacer said on Friday.
Italy's maize imports jumped to 2,604,464 tonnes last year from 2,078,067 tonnes in 2010, while soft wheat imports rose to 5,039,884 tonnes last year from 4,816,234 tonnes in 2010, Anacer said in a statement without explaining the data.
India's Oct. 1-March 15 sugar output up 14 pct y/y-industry
NEW DELHI, March 19 (Reuters) - Indian sugar mills produced 21.2 million tonnes of the sweetener between Oct. 1 and March 15, up 14 percent from a year earlier, a statement from a leading industry body said on Monday.
Output in top producing Maharashtra state was pegged at 7.3 million tonnes, up 13 percent from 2011/12, while second-biggest producer Uttar Pradesh churned out 6.0 million tonnes, about 13 percent more than the previous year, the Indian Sugar Mills Association (ISMA) said.
Thai rubber intervention buying starts, slowly
BANGKOK, March 19 (Reuters) - A rubber intervention programme has started in Thailand aimed at supporting prices to help farmers but not much has been bought so far, so the impact on the market has been minimal, government officials and rubber cooperatives said on Monday.
The government approved a 15 billion baht ($488 million)budget in January to buy unsmoked sheet (USS3) from farmers at 120 baht per kg to prop up prices. The buying is to be done through cooperatives.
Sudan sugar maker Kenana plans Hong Kong IPO
KHARTOUM, March 18 (Reuters) - Kenana, Sudan's biggest sugar company, is planning to raise $200 million listing a quarter of its shares in Hong Kong in December, to finance new projects.
Kenana wants to more than double output to over 1 million tonnes annually and establish itself as a major exporter, managing director Mohamed El Mardi told Reuters in an interview.
China To Offer More Subsidies To Produce Grain To Offset Rising Oil Prices -Premier Wen (Source: CME)
Chinese Premier Wen Jiabao said the government will offer farmers more subsidies for grain production if oil prices rise further. Wen said over the weekend that the agricultural subsidies will be increased gradually. He made the comments during an inspection tour of central China's Henan province, China's largest wheat-producing area, according to the central government's website. Wen said earlier this month that China aims to spend CNY1.23 trillion ($195 billion) on its agricultural sector this year, up CNY186.8 billion compared with 2011.
Europe's Warm Late Spring, Early Summer Adds To Crop Woes (Source: CME)
Temperatures will average higher than normal across Europe until June, with the exception of the U.K., Iberia and southern parts of the continent in April, Weather Services International said, just as the region's wheat crops are already suffering from prolonged dry conditions. WSI, a private forecaster for professionals in the agriculture, energy and aviation markets and federal and state government agencies, said a lack of North Atlantic "blocking," an atmospheric phenomenon that affects weather patterns, will likely result in warmer temperatures and reverse the prevailing trend experienced since 2008. "As we head into late spring and early summer, we expect a distinctly different pattern than what we've observed over the last four years, [which] should result in greater chances for summer heat in western and northern sections, rather than southern and eastern sections," said Chief Meteorologist Todd Crawford.
Europe's wheat crops face a worrisome weather outlook, with the prospect of drought coming after severe cold weather in January and February. Dry, warm conditions in the wheat areas of Spain, France, and the U.K. are causing concern, with many analysts beginning to lower their expectations for the region's 2012-13 harvests. Agritel said that dry weather on the Iberian Peninsula and some North African countries is being carefully watched and could help exports of French origins to intensify, potentially supporting Paris milling wheat futures. The risk manager added that producers are now busy reseeding in France as spring weather conditions have confirmed significant frost damage in the north and east of the country. Indeed, damage to winter wheat crops has increased across Europe and could cause losses of between 5 million and 6 million metric tons, Offre & Demande Agricole said Friday.
Since the beginning of March some of the eastern regions of France have reported losses of up to 30% of wheat acreage, the risk manager added, meaning the country's decline in production could be much greater than the 5% it previously estimated. However, Commodity Weather Group said France experienced beneficial rains over the weekend and will see some more showers this week, with the main boost coming to the eastern half of Spain. The forecaster added that rain potential is still limited in Morocco and stress to the crop is likely to persist there for the next 10 days, despite some models suggesting spreading rain next week. WSI said that rainfall patterns also should be different in upcoming months. It expects a drier summer in the U.K. and Nordic regions, with wetter weather suppressed farther to the south. Some regions of the U.K. are already in official drought status and the government has asked farmers and water companies to protect increasingly fragile water supplies.
"The real worry this season is that we've had enough rainfall to grow the crops, but historically lower rainfall over the past 18 months, so there isn't an abundant level of moisture in the soil," said, David Eudell, senior analyst for cereals and oilseeds at the U.K.'s Home Grown Cereals Authority. While domestic crops are in an adequate condition at the moment, Eudell added "there is still a very long way to go, and really we're looking through June and into July when the real crop will start to mature for harvest." Eudell said a similar growing season to last year was being experienced, with a very dry spring which caused variable yields throughout the U.K., while central and western areas were generally better equipped as their heavier soils could retain more moisture. "Finally, our forecast also supports less wind across Germany and Denmark and more wind in Spain than we have had the last four summers," WSI's Crawford said.
Russia Rules Out Restrictions On Grain Exports In 2011-12 (Source: CME)
The Russian government said it will not place any restrictions on grain exports as the domestic market situation is stable, finally putting to rest concerns that the country could introduce duties to combat supply shortages caused by record export levels. Deputy Prime Minister Viktor Zubkov said Russia will not impose any restrictions on the export of grain as the country's carryover stocks and intervention fund will be able to provide all domestic needs. Russia's grain exports surged during the first half of the 2011-12 marketing year, with analysts saying authorities were willing to curtail exports over a set figure around 24 million-25 million metric tons, to ensure domestic supply was met. However, Zubkov said grain exports have reached 22 million metric tons to date and could rise as high as 27 million tons by the end of the year. Zubkov said export companies can easily enter into contracts for April, May and June, with quite high world prices likely to benefit the country's farmers.
Japan Changes US Wheat Import Rules As Cargoes Delayed (Source: CME)
Japan has changed the delivery rules for U.S. wheat in tenders this month due to delays in receiving cargoes but suppliers say the new structure is difficult to implement, can result in penalties, cause cost overheads and push up prices. Japan is one of the world's largest wheat importer, buying all its milling grade requirements from the U.S., Canada and Australia. At a time when Russia has eaten into U.S. share in wheat trade elsewhere, Japan continues to be a captive customer, and its import rules are among the world's most stringent. Japanese government officials told Dow Jones Newswires that they are now seeking few of the U.S. cargoes of wheat with contractual fixed dates of arrival because of earlier instances of delays in delivery. "If cargo arrivals are delayed, we can press for whatever penalties are stipulated in the contract," one of the food ministry officials said without elaborating.
The more common norm in global milling wheat trade is to buy the cargo with dates finalized only for shipment from the port of origin. Once the ship sails on the time stipulated in the contract, the onus of delayed arrival isn't on the exporter. Instead, in one of the recent tenders, Japan's Ministry of Agriculture, Forestry and Fisheries sought U.S. wheat for arrival within specific dates in June. However, the matter came to a head with only one of the exporters offering the popular, high protein, U.S. Dark Northern Spring, or DNS grade wheat, government officials and traders said. Japan didn't buy the grade in the tender due the lack of a price comparison, a government official said. In the next tender, Japan sought most U.S. wheat on stipulated shipment date basis but again insisted on two cargoes of DNS grade on arrival date basis. It managed to get the cargoes this time around.
Japan doesn't divulge the prices and sellers in its tenders but traders said the two cargoes with the mandatory date of arrival were sold by Sojitz Corp. and three others on shipment-basis by Itochu. Executives of Sojitz declined to comment and that of Itochu couldn't be immediately reached for comment. Exporters are wary of accepting arrival dates because the duration of a voyage can vary widely due to logistical hassles and unforeseen circumstances, said a Tokyo-based trading executive. Exporters also combine few orders into a single panamax vessel of 55,000 tons-65,000 tons to reduce costs and achieve economies of scale, he said. Earlier, Japan used to import wheat in small vessels at frequent intervals but with global prices rising over the years, government permitted shipments in panamax vessels around late-2010.
However, this has led to logistical problems and delay in larger vessels arriving and getting berths at ports, prompting millers to complain and press the government to insist on mandatory arrival dates. "We will continue to seek wheat based on both arrival and shipment dates, depending on the requirement of the mills regardless of price," the government official in Tokyo said. Exporters said this may jack up prices as they will factor in any potential penalty in their tender bids. Japanese wheat imports are highly regulated and nearly all of it is routed through government tenders.
Philippines Asking WTO To Extend Rice Import Designation For 5 Years (Source: CME)
The Philippines will officially ask the World Trade Organization to extend for five years a classification that allows it to impose restrictions on rice imports, National Food Authority chief Angelito Banayo said. Rice is currently classified under WTO's "QR," or quantitative restrictions, designation, but this is scheduled to expire June 30. The classification allows the Philippines to prevent the entry of rice imports into the country outside of what the government has predetermined. The Philippine mission in Geneva seeks waiver on the deadline, "while we are conducting negotiations with countries interested in QR," Banayo told reporters. According to Banayo, at least eight rice-exporting countries--the U.S., Australia, Canada, China, Thailand, Vietnam, Cambodia and El Salvador--have said they want to negotiate bilateral conditions with Manila on extending the restrictions.
The Philippines claims and has been granted the QR status based on an intention to give local rice farmers and millers a buffer against any possible influx of cheaper rice imports.
Solar 15% Returns Lure Investments From Google to Buffett (Source: Bloomberg)
U.S. solar developers are luring cash at record rates from investors ranging from Warren Buffett to Google Inc. (GOOG) and KKR & Co. by offering returns on projects four times those available for Treasury securities. Buffett’s Berkshire Hathaway Inc. (BRK/A) together with the biggest Internet search company, the private equity company and insurers MetLife Inc. (MET) and John Hancock Life Insurance Co. poured more than $500 million into renewable energy in the last year. That’s the most ever for companies outside the club of banks and specialist lenders that traditionally back solar energy, according to Bloomberg New Energy Finance data. Once so risky that only government backing could draw private capital, solar projects now are making returns of about 15 percent, according to Stanford University’s center for energy policy and finance. That has attracted a wider community of investors eager to cash in on earnings stronger than those for infrastructure projects from toll roads to pipelines.
“A solar power project with a long-term sales agreement could be viewed as a machine that generates revenue,” said Marty Klepper, an attorney at Skadden Arps Slate Meagher & Flom LLP, which helped arrange a solar deal for Buffett. “It’s an attractive investment for any firm, not just those in energy.”
Brent crude below $126, holds most gains made on Iran worries
SINGAPORE, March 19 (Reuters) - Brent crude was steady below $126 a barrel, holding onto most of the previous session's gains made on continued concerns over potential supply disruptions from Iran, with the risk of major supply squeeze still being factored in.
"It's a question of whether other producers can handle a significant supply disruption," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
China Increases Fuel Prices Second Time in Two Months (Source: Bloomberg)
China, the world’s largest oil consumer after the U.S., increased gasoline and diesel prices for the second time in less than six weeks after crude had its biggest monthly gain in a year. Prices gain by 600 yuan ($95) a metric ton starting today, after the three crude grades tracked by the National Development and Reform Commission climbed more than 10 percent, according to a statement on the planning agency’s website yesterday evening. Retail gasoline prices will increase as much as 6.6 percent and diesel will be as much as 7.2 percent more expensive, according to data compiled by Bloomberg. It’s “crucial” for China to ensure domestic fuel supplies by increasing prices amid the planting season and instability in the Middle East, the NDRC said. Motor fuel will rise by 0.44 yuan a liter and diesel by 0.51 yuan, it said.
China’s biggest refiners, China Petroleum & Chemical Corp. (386), or Sinopec, and PetroChina Co., have urged the government to increase fuel prices to stem their processing losses amid rising global crude costs. After controlling tariffs last year to curb inflation, the government now has more room to maneuver after consumer prices grew at the slowest pace in 20 months. Fuel charges last increased on Feb. 8, by 300 yuan a ton, the first gain in 10 months.
Oil Drops From Three-Week High on Signs Supplies to Rise (Source: Bloomberg)
Oil dropped from the highest price in almost three weeks in New York on signs U.S. crude stockpiles are rising and speculation Saudi Arabia may boost output. Futures slipped as much as 0.4 percent after gaining for a second day. U.S. inventories climbed to the highest level in six months last week as refineries idled units and imports from Canada increased, according to a Bloomberg News survey before a government report tomorrow. Saudi Arabia’s cabinet will work with oil consumers and producers to restore “fair” prices, according to the state news agency. Oil for April delivery slid as much as 38 cents to $107.71 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.78 at 11:05 a.m. Sydney time. It gained 1 percent to $108.09 a barrel yesterday, the highest close since March 1. The April contract expires today. The more actively traded May future fell 33 cents to $108.23 a barrel. Prices are up 9.1 percent this year.
Brent oil for May settlement declined 41 cents to $125.30 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $17.07 to New York futures for the same month.
Brent crude below $126, holds most gains made on Iran worries
SINGAPORE, March 19 (Reuters) - Brent crude was steady below $126 a barrel on Monday, holding onto most of the previous session's gains made on continued concerns over potential supply disruptions from Iran, with the risk of major supply squeeze still being factored in.
Higher output from top exporter Saudi Arabia and plans by Iraq to expand its export routes have, however, tempered fears of a loss of Iranian barrels as the deadline for tougher Western sanctions approaches, analysts said.
Oil India aims to produce 3.95 mln T oil in 2012/13
NEW DELHI, March 19 (Reuters) - State-run Oil India aims to produce 3.95 million tonnes of crude oil in 2012/13, a senior company official said on Monday.
B.N. Talukdar, director of exploration, also said the company would produce around 3.9 million tonnes in the current financial year that ends on March 31, compared with a target of 3.7 million tonnes.
Gasoline pushes up US inflation, dents confidence
WASHINGTON, March 16 (Reuters) - U.S. consumer prices rose the most in 10 months in February as the cost of gasoline spiked, but there was little sign that underlying inflation pressures were building up.
Surging gasoline prices put a small dent in consumer confidence early this month, other data showed on Friday. Still, Americans do not believe the sharp run-up in prices will last.
Saudi oil sales to US jump; Iran response or just business?
NEW YORK/LONDON, March 16 (Reuters) - Saudi Arabia is preparing to extend this year's unexpected jump in oil sales to the United States, adding to speculation about the response of the world's top oil exporter to sanctions against Iran and a rally in prices.
The kingdom's shipments to the United States have quietly risen 25 percent to the highest level since mid-2008, according to preliminary U.S. government data, a sizeable leap that appears at least partly related to the imminent completion of a major expansion at its joint-venture Motiva refinery in Texas.
Australia Passes 30% Tax on Iron-Ore, Coal Mining Profits (Source: Bloomberg)
Australia passed legislation that will reap about $11 billion in taxes within three years from BHP Billiton Ltd. (BHP), Rio Tinto Group and other iron-ore and coal miners as the government seeks to turn its budget to surplus. Prime Minister Julia Gillard’s Minerals Resource Rent Tax was passed in the upper house yesterday and will become law on July 1 after receiving backing from the ruling Labor party and the Greens, who hold the balance of power in the Senate. Passing the legislation is a success for Gillard, whose predecessor Kevin Rudd was ousted amid a campaign by mining companies against a broader 40-percent levy that he initially proposed. Gillard, the country’s first female prime minister, is trying to hold together a minority government that relies on the support of independent and Green party lawmakers.
“It’s a victory for Labor and will help the nation’s bottom line,” said Norman Abjorensen, a political analyst at Australian National University in Canberra. “Most Australians probably believe the big miners can afford to pay more tax.”
Copper Climbs on Bets Gains in U.S. Economy to Bolster Demand (Source: Bloomberg)
Copper rose to the highest closing price in two weeks as signs of economic gains bolstered prospects for metal demand in the U.S., the world’s second- biggest consumer. Government and industry reports this week may show U.S. home purchases climbed in February to the highest in almost two years, according to economists surveyed by Bloomberg News. Separate data from the Commerce Department may signal homebuilding increased. The Copper Development Association says that construction accounts for 40 percent of demand. “There’s some euphoria starting to appear about the U.S. economy, and that’s working to support copper,” Sterling Smith, an analyst at Country Hedging in St. Paul, Minnesota, said in a telephone interview. Copper futures for May delivery advanced 0.8 percent to settle at $3.909 a pound at 1:15 p.m. on the Comex in New York, the highest settlement since March 1. The metal has gained 14 percent this year.
Ship Owners Losing After $11.4 Billion Battle for Boxes: Freight (Source: Bloomberg)
After a quarter in which companies selling space on container lines doubled rates, the amount the owners of the ships are being paid is the least in two years. Operators, who charter vessels and then charge shippers per container, are demanding $1,379 for a 20-foot box on the China- to-Europe trade route, up 97 percent this year, according to Clarkson Plc (CKN), the largest shipbroker. A measure of how much they’re paying ship owners fell 4.2 percent since the start of January, data from the Hamburg Shipbrokers’ Association show. The gap is growing because operators are leaving vessels idle or hiring fewer ships, driving down how much they pay owners, while restricting supply and boosting box rates. RS Platou Markets AS and Fearnley Fonds ASA, units of Norway’s biggest shipbrokers, recommend selling shares of Seaspan Corp. (SSW), a Hong Kong-based owner, and buying those of Orient Overseas (International) Ltd. (316), which manages vessels from the city.
