martes, 29 de diciembre de 2009

Commodity Shipping Index Posts Biggest Annual Gain on Record

The Baltic Dry Index has been signaled as relevant indicator of an eventual recovery of global commodity trade. Trade has recovered, and 2010 promises to be another year of malthusian inflation.

By Alaric Nightingale
Dec. 24 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, posted its best-ever annual advance in London after record iron-ore demand from China.
The index tracking transport costs on international trade routes advanced 288 percent this year, exceeding the record 174 percent set in 2003, data from the Baltic Exchange show. The gauge was first published in 1985.
Shipping costs rebounded this year, after plunging a record 92 percent last year, as the global economy recovered from its deepest recession since World War II. China, the world’s biggest consumer of iron ore and coal, spent $586 billion to stimulate its economy. The two commodities are the biggest cargoes carried by ships included in the Baltic Dry Index.
“Next year is going to be a better year than a lot of people expect, but a lot depends on Chinese demand continuing,” said Michael Gaylard, strategic director at Freight Investor Services Ltd., a London-based derivatives broker.
Seaborne trade in coal, ore, grains and other dry bulk commodities will drop 1.2 percent to 2.997 billion metric tons this year, according to London-based Drewry Shipping Consultants Ltd. Ships carry about 90 percent of world trade, The Round Table of International Shipping Associations estimates.
The index swung between 772 points and 4,661 points this year, dropping as much as 29 percent in September and gaining as much as 96 percent in February and May.
“We’re going to see increased volatility which is going to exacerbate tightness and slackness,” Gaylard said.
The index fell 0.6 percent to 3,005 points today, the last day it will price this year. Capesizes, most commonly used to haul iron ore cargoes to China from Brazil and Australia, lost 1 percent $37,191 a day. Smaller panamaxes added 0.7 percent to $28,620 a day. Supramaxes declined lost 1 percent to $23,253 a day and handysizes lost 1.2 percent to $16,862 a day.
To contact the reporter on this story: Alaric Nightingale in London at Last Updated: December 24, 2009 08:48 EST

martes, 15 de diciembre de 2009

Food inflation returns

Traditional economists may say that it is because of a low dollar. But high food prices -for rice, soybeans, corn- are here to stay.

Fastest Food Inflation Since Riots Means Milk Up 39%
By Alan Bjerga, Madelene Pearson and Yi Tian
Dec. 14 (Bloomberg) -- Falling production in commodities from rice to milk is bad news for just about everyone except investors.

Rice may surge 63 percent to $1,038 a metric ton from $638 on Philippine imports and a shortage in India, a Bloomberg survey of importers, exporters and analysts showed. The U.S. government says nonfat dry milk may jump 39 percent next year, and JPMorgan Chase & Co. forecasts a 25 percent gain for sugar. Global food costs jumped 7 percent in November, the most since February 2008, four months before reaching a record, according to the United Nations Food and Agriculture Organization.

Farm prices this year lagged behind copper futures that doubled and oil’s 57 percent increase. A recovery from the worst recession since World War II would spur food demand and boost costs for buyers of commodities including milk processor Dean Foods Co. while increasing the number of hungry people that the UN says now exceeds 1 billion.

“Agricultural commodities will be a great investment in the next three to five years,” said Oliver Kratz, who manages $10 billion as head of Global Thematic Strategy investments at Deutsche Bank AG’s DB Advisors in New York, including $3 billion in agriculture. For those who can’t afford to pay more for food, there’s the “painful” risk of hunger, he said.

Expanding populations and higher incomes are boosting consumption in China and India. China’s milk demand is recovering after domestic supplies were tainted with melamine, a chemical used in making plastics that killed at least six babies and sickened almost 300,000 children. Droughts in India and Argentina and typhoons in the Philippines have reduced output.

Food-Price Risk

“Inventories are extremely low in a number of grains markets,” Barclays Capital said Dec. 10. “The prospect of a further bout of food-price inflation in 2010 cannot be ruled out since many of the factors that contributed to higher prices in 2007 and 2008 are still a feature.”

Stockpiles of corn and rice will drop before the 2010 harvest for the first time in three years, U.S. Department of Agriculture data show. The International Sugar Organization forecasts a second straight global supply deficit in the year through September 2010, and the USDA predicts stores of the sweetener will drop to the lowest level since 1995.

Pork, Poultry

Wholesale-pork prices in the U.S. are up 27 percent this year, heading for the first annual gain since 2004, as farmers hurt by two years of losses cut the domestic breeding herd to the smallest level since the USDA started collecting the data in 1964. Chicken output is sliding in the U.S., where the number of eggs placed into incubators each week is headed to the lowest quarterly average since 2002.

“The tendency for food prices is up, it’s not down,” Unilever Chief Executive Officer Paul Polman said Dec. 11 in a Bloomberg Television interview in Copenhagen. Rotterdam- and London-based Unilever, the largest consumer-product company after Procter & Gamble Co. in Cincinnati, makes Lipton tea, Hellmann’s mayonnaise and Bertolli sauces. “We need to be sure that we have the food supply, that we don’t waste, and that we continue to get increasingly efficient means to get that food to the consumers,” Polman said.

The risk of accelerating prices may be muted by “healthy” gains in inventories, including wheat, according to the FAO. Supplies in warehouses are enough to meet about 23 percent of global demand, compared with 19 percent two years ago, the FAO said last week. Inventories are “far more comfortable” than during last year’s crisis, the UN agency said.

More Wheat Supply

Global wheat stockpiles on May 31 are expected to jump 17 percent to an eight-year high of 190.9 million metric tons, after production last year reached a record 682 million tons, the USDA said Dec. 10.

Food costs jumped to a record in June 2008 as wheat, corn, rice, oats, soybeans, animal feed and cooking oil reached the highest prices ever. Indonesia, Argentina and India restricted trade to protect supplies, according to the UN. Shortages sparked about 60 riots from Haiti to the Philippines before the global credit crisis and recession sent prices plunging.

Global economic recovery means there is “increasing pressure on food prices to rise,” Nomura International Plc said in a report. “Volatility in price and supply are with us for the predictable future,” according to Josette Sheeran, the executive director of the UN’s World Food Program. “Risk is the new normal when it comes to food.”

Economic Growth Seen

The global economy will expand 3.1 percent in 2010 as more than $2 trillion in stimulus combined with demand in Asia pulls the world out the recession, the Washington-based International Monetary Fund said on Oct. 1.

The U.S. will expand 2.6 percent next year, compared with a contraction of 2.5 percent in 2009, according to the median of estimates from 83 economists in a Bloomberg survey. China’s growth will accelerate to 9.4 percent next year from 8.5 percent in 2009, a Bloomberg survey of 31 economists showed.

Some food supplies already are falling. Global production of rice, the staple for more than half the world, has lagged behind demand in four of the past eight years, USDA data show. Rising consumption is expected to erode stockpiles by 41 percent to 85.9 million tons in the 2009-2010 marketing year, down from a record 146.7 million in 2001-2002, the USDA forecasts.

Rice may exceed $1,000 a ton as dry El Nino weather, caused by a warming of sea waters in the equatorial Pacific Ocean, shrinks output and the Philippines and India boost imports, according to Sarunyu Jeamsinkul, the deputy managing director at Asia Golden Rice Ltd. in Thailand, the largest exporting nation.

Rice, Corn, Soybeans

The Thai rice price may soar to last year’s record of $1,038 a ton, according to the highest estimate in a Bloomberg survey last month of 10 importers, exporters and analysts in Vietnam, Thailand, India, Singapore and Pakistan.

Goldman Sachs Group Inc. said Dec. 3 that corn and soybeans will rally through 2011. Corn will reach $4.75 a bushel next year and $5 in 2011 on higher demand for fuels made from the grain, the bank said. Soybeans may reach $11 a bushel in the next 12 months and average $12 a bushel in 2011, Goldman said.

Decatur, Illinois-based Archer Daniels Midland Co., the second-largest U.S. producer of corn-based ethanol behind Poet LLC, reported a 53 percent drop in quarterly profit last month on tighter supplies of soybeans it processes into animal feed and cooking oil.

In the sweeteners and starches business, Archer Daniels Midland’s profit more than tripled to $194 million, partly because of higher selling prices and reduced costs for corn, which fell from last year’s record. Archer Daniels gained 14 percent since the end of June to $30.49 in New York trading.

Milk Supplies

U.S. manufacturers’ stockpiles of nonfat dry milk fell to 90.1 million pounds on Oct. 31, 47 percent lower than a year earlier and less than half of what they were in June, the USDA said Dec. 4. Domestic production this year is down 8.2 percent, including a 27 percent drop in October, as farmers culled dairy herds to end a surplus, government data show.

The price of nonfat dry milk, used in baking products and baby formula, will rise to an average of $1.275 a pound next year from 92 cents, and cheese will increase 28 percent, the USDA said on Dec. 10. Processed and fluid milk will jump 31 percent to $16.75 per 100 pounds, the USDA said.

“We’ve been through the boom and then the bust, and it looks like we’re going to have another boom,” said Michael Harvey, an international analyst at Melbourne-based Dairy Australia, a trade group.

Milk output will fall 4 percent in Australia in 2009-2010. New Zealand’s production slipped 2 percent in the first three months of its season, and Brazil’s supply dropped 4 percent to 5 percent through July, Dairy Australia said in a report.

Westpac Forecast

Milk-powder prices may gain more than 20 percent to exceed $4,000 a ton early next year, said Westpac Banking Corp., Australia’s second-largest bank. Whole milk powder for February delivery rose to a 16-month high of $3,523 a ton at auction, Fonterra, the world’s largest dairy exporter, said on Dec. 2.

Dean Foods, the largest U.S. milk processor, said Nov. 2 that fourth-quarter profit may fall more than analysts expected, to at least 36 cents a share, because of rising raw-milk costs. Chief Executive Officer Gregg Engles told investors that prices, which will climb through next year, probably won’t surpass the records set in 2007 and 2008. Since Oct. 30, shares of Dallas- based Dean are down 5.4 percent at $17.25 in New York.

Global sugar supplies will remain “tight” for the first half of 2010, JPMorgan Chase said. There’s a “material risk” that prices for March and May will jump 28 percent to 30 cents a pound, Tobin Gorey, the bank’s global commodity strategist, wrote in a report dated Dec. 10. Sugar for March delivery in New York increased 6.6 percent last week to close at 24 cents a pound on Dec. 11.

Palm Oil, Food Output

Palm oil, the world’s most-used cooking oil, may soar to 3,000 ringgit ($882) a ton by March as El Nino parches crops in Asia, said Dorab Mistry, director of Godrej International Ltd., one of India’s biggest edible-oil buyers, on Dec. 4. Palm-oil futures for February delivery closed at 2,530 ringgit on Dec. 11 in Kuala Lumpur. Production may drop next year, he said.

Food output will need to rise 70 percent in the next four decades as the global population expands to 9.1 billion in 2050 from 6.8 billion, the FAO estimates. Seven nations in sub- Saharan Africa, the world’s most famine-prone region, will see per-capita income fall next year, according to the UN, fueling an increase in hunger, which the organization now estimates affects 1.02 billion people.

“The politicians had best be able to at least feed their populations or they’re going to have uprisings,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which manages $220 billion. “One of the first things, other than clean water and a toilet, that people want when their per capita income rises is food.”

martes, 1 de diciembre de 2009

U.S. Postpones Decision on Ethanol Blend in Gasoline (Update1)

By Daniel Whitten and Mario Parker
Dec. 1 (Bloomberg) -- U.S. regulators postponed a decision on raising the percentage of ethanol allowed in gasoline until mid-2010 to allow more time to assess effects on engines.
The Environmental Protection Agency said it would keep the blend at 10 percent and could expand it based on a study on higher ethanol mixes in engines for cars and equipment such as lawn mowers. GrowthEnergy, an ethanol industry trade group, had asked that the agency permit 15 percent, also known as E15.
“While not all tests have been completed, the results of two tests indicate that engines in newer cars likely can handle an ethanol blend higher than the current 10 percent limit,” the EPA said today in a statement. The agency “expects to make a final determination in mid-2010 regarding whether to increase the allowable ethanol content in fuel.”
Raising the so-called blend ratio would increase demand for the fuel, benefiting producers battered by volatile corn and fuel prices. At least 10 ethanol companies have sought bankruptcy protection since last year, including VeraSun Energy Corp. and Aventine Renewable Holdings Inc. Automakers and refiners have opposed a change, saying added ethanol would damage engines.
Growth Energy said in a statement today that increasing the allowable ethanol blend would create U.S. jobs, a contention the Washington-based Environmental Working Group disputed in a study posted on its Web site yesterday.
‘Strong Signal’
“This announcement is a strong signal that we are preparing to move to E15, a measure that will create 136,000 new U.S. jobs, cut greenhouse gas emissions and lessen America’s dependence on imported oil,” retired Army General Wesley Clark, Growth Energy’s co-chairman, said in a statement today.
The U.S. Energy Independence and Security Act of 2007 calls for the nation to use 12 billion gallons of renewable fuels such as ethanol next year, up from 10.5 billion in 2009. The law requires the U.S. to use 15 billion gallons of the biofuel by 2015.
EPA said in a letter to Growth Energy dated Nov. 30 that in order to meet that standard “it is clear that ethanol will need to be blended into gasoline at levels greater than the current 10 percent.”
The letter said that the Energy Department is testing 19 vehicles and expects to have complete data on 12 vehicles by the end of May, which will provide “a significant amount” of data.
Poet LLC, Archer Daniels Midland Co., Valero Energy Corp. and Green Plains Renewable Energy Inc. are the largest ethanol producers.
ADM, Monsanto, Deere
ADM, the second-biggest U.S. ethanol producer, and agricultural companies such as Monsanto Co. and Deere & Co. stand to gain if the EPA eventually allows a 15 percent formula, Morgan Stanley analysts led by Vincent Andrews in New York said in a report yesterday.
“If we are going to show investors and the international community that we are serious about developing alternatives to petroleum, this is a good way to do it,” Matt Hartwig, a spokesman for the Renewable Fuels Association in Washington, said of raising the standard. “You have to change what people put in their gas tanks.”
To contact the reporters on this story: Daniel Whitten in Washington at; Mario Parker in Chicago at 5927 or Last Updated: December 1, 2009 10:50 EST

lunes, 30 de noviembre de 2009

EPA May Increase Ethanol Blend to 11%, Morgan Stanley Says

If the US economy becomes more alcoholic, corn demanda will continue to expand to levels more and more difficult to reach without leaving less land for other crops.... Another side of the Malthusian situation.

Nov. 30 (Bloomberg) -- The U.S. Environmental Protection Agency may allow the percentage of ethanol in gasoline to increase to 11 percent, analysts at Morgan Stanley & Co. said in a report today.

The EPA is expected to decide by tomorrow on an ethanol industry request to allow the ratio of ethanol in gasoline to rise to 15 percent from 10 percent. Growth Energy, an ethanol industry trade group, filed the request in March.

“While we are maintaining our long-held view that U.S. ethanol blend levels will ultimately migrate well north of the current 10 percent, we do not expect a material increase in the blend rate as a result of tomorrow’s EPA decision,” Morgan Stanley analysts Vincent Andrews, Robert Wertheimer and Megan Davis wrote.

Raising the blend ratio is a source of contention between the industry, oil refiners and automakers. Growth Energy filed the waiver request to lift demand for an industry that’s been battered by volatile corn and fuel prices. At least 10 companies have sought bankruptcy protection since last year, including VeraSun Energy Corp. and Aventine Renewable Holdings Inc.

The analysts said the EPA could allow refiners to sell gasoline that contains 11 percent ethanol until it determines the impact E-15 would have on engines.

“We would see this as a signal that the EPA is willing to let ethanol blend levels go higher over time assuming that a thorough data analysis concluded that there was no meaningful risks to such action,” Morgan Stanley said.

Court Resolution

The agency could also leave the current blend level unchanged, signaling that it won’t allow the ratio of ethanol in gasoline to surpass 10 percent, the analysts said. The decision is likely to be contested in court, according to the report.

Archer Daniels Midland Co., the second-biggest U.S. ethanol producer, and agricultural companies such as Monsanto Co. and Deere & Co. could surge if the EPA allows the higher formula, the analysts wrote.

Poet LLC, ADM, Valero Energy Corp. and Green Plains Renewable Energy Inc. are the largest ethanol producers.

To contact the reporter on this story: Mario Parker in Chicago at 5927 or

martes, 24 de noviembre de 2009

Oil will not be enough in 2010

Prepare for a barel above US$ 100 by late 2010
World oil demand growth to outpace supply in 2010: poll
On 7:34 am EST, Tuesday November 24, 2009

By David Sheppard and Joshua Schneyer

Reuters -
LONDON/NEW YORK (Reuters) - Growing world oil use will likely outpace the rate of new supplies in 2010, eroding the huge stockpiles of crude which have mounted around the world since the start of the global economic crisis.
According to a Reuters poll of ten top oil-tracking analysts and organizations, oil demand is predicted to rise by 1.3 million barrels per day (bpd) next year to 85.9 million bpd.
At the same time, the rise in production from outside the Organization of the Petroleum Exporting Countries and output of natural gas liquids (NGLs) from OPEC members is seen growing by just 800,000 bpd in total.
Click here for Reuters table of results (ID:GEE5AN0S3)
Click here for a graphic illustrating the changes:
Click here for a spreadsheet on supply and demand "The key question for prices is supply," Barclays C "The key question for prices is supply," Barclays C apital analyst Costanzo Jacazio said.
"2010 is really a bridging year -- if the economies continue to perform as well as they have been doing during the early stages of the recovery, then I think by 2011 we'll be seeing the demand numbers at or above where they were in 2008."
Non-OPEC output is seen averaging 51 million bpd in 2010, up from 50.8 million bpd, while OPEC output of NGLs -- which are not subject to the producer group's production quotas -- are expected to rise to 5.6 million bpd, up by more than 20 percent since 2008.
If OPEC members can maintain current adherence levels to present output quotas, with group output including Iraq assessed around 28.9 million bpd, crude oil inventories could fall by almost 150 million barrels next year.
Demand for OPEC's crude is seen at 29.3 million bpd.
At the end of September, the International Energy Agency assessed oil stocks in the Organization for Economic Co-operation and Development (OECD) at 60 days of forward cover, 120 million barrels above the five-year average.
Doubts surrounding the eventual strength of the economic recovery and how oil demand will respond following the impact of record prices, a global recession and increased environmental initiatives has seen many analysts' views diverge.
Investment banks Goldman Sachs and BofA-Merrill Lynch have the most bullish outlook for demand, projecting 86.4 million bpd and 86.7 million bpd respectively.
Barclays Capital sees demand at 1 million barrels below Goldman's estimate because of increased conservation efforts, but conversely sees non-OPEC supplies 1.1 million barrels lower than its U.S. rival due to falling investment during the crisis.
Deutsche Bank sees demand as relatively weak in 2010, at just 86 million bpd, despite forecasting the world economy will grow at 3.7 percent in 2010 - well above the International Monetary Fund's forecast of 3.1 percent global growth.
"The question is where's the demand growth? Year-on-year figures in the U.S. show demand still struggling," said Adam Sieminski, Deutsche Bank's head of energy research.
"It appears the economic recovery is not coming in energy-intensive or oil-intensive sectors. We may still be seeing people being careful about consumption -- if they have two cars they'll be driving the smaller one."
The expected demand increase in 2010 will be the first year to show average growth since 2007, before record prices and the economic crisis slashed consumption.
Global oil demand has fallen by almost 2 percent since 2007, when average annual consumption hit an all-time high around 86.2 million barrels daily.
The steep drop in demand saw oil prices crash from record highs of almost $150 a barrel in July 2008 to below $33 a barrel in December last year.
Since then prices have more than doubled to just below $80 a barrel as OPEC -- whose member countries pump more than one in every three barrels of oil -- tried to cut output quotas by 4.2 million barrels, or 5 percent of world demand.
Demand growth is expected to be strongest in countries outside the OECD, with China leading the way.
"We see a healthy demand recovery of 1.5 million barrels next year, there's only so much you can contract," said Sarah Emerson, director of Energy Security Analysis Inc. in Boston.
"(Demand) growth in China next year should be significant and the U.S. will go from two years of contraction to growth."
The Chinese economy is expected to grow by around 8 percent in 2009 and may post even stronger growth next year. Implied Chinese oil demand in October was up more than 10 percent year-on-year, customs data showed on Monday.
Inside the OECD, the United States is seen posting a small recovery in demand. But many analysts remain doubtful about the strength of growth with some arguing oil use may never revisit highs of earlier this decade in North America and Europe.
"We're not going to be in an environment when prices will shoot back to anything like $120 a barrel in 2010," Jacazio at Barclays Capital said.
"(But) we still see oil demand growth next year outpacing non-OPEC supplies and NGLs combined."
(Editing by Sue Thomas)

jueves, 12 de noviembre de 2009

Artificial weather

Artificial rain -or in this case snow- is usually mentioned as a way to improve agriculture production, or mitigate the randomness of weather. China as usual moves ahead, but the results are questioned.

Chinese Debate Creation Of Artificial Snow Over Beijing
Wednesday, 11 November 2009
Scientists in China refueled the debate over the practice of tinkering with Mother Nature by artificially inducing the second major snowstorm to wreak havoc in Beijing this season, AFP reported.

The National Meteorological Center said the earliest snow to hit the capital in 22 years fell on the first of November and the capital was again shrouded in white Tuesday with more snow expected in the coming three days.

The Beijing Weather Modification Office had artificially induced both storms by seeding clouds with chemicals, a practice that can increase precipitation by up to 20 percent, according to The China Daily, which cited an unnamed official.

On Tuesday, an official had said the storm was "natural."

Such methods are aimed at alleviating a drought over much of north China -- including Beijing -- that has lingered for more than a decade, city weather officials reported.

Meanwhile, many residents of Beijing have complained about the flight delays, traffic snarls, cancelled classes and other inconveniences of a surprise snowstorm.

Most agree that officials could warn them if they are planning to toy with the clouds.

The paper reported that beyond the day-to-day hassles, experts said the weather manipulation had other undesirable side effects in the longer term.

Xiao Gang, a professor in the Institute of Atmospheric Physics at the Chinese Academy of Sciences, told the paper that no one could tell how much weather manipulation will change the sky.

"We should not depend too much on artificial measures to get rain or snow, because there are too many uncertainties up in the sky," he said.

The more than 5,500 tons of erosive snow-melting chloride used on city roads Tuesday -- nearly half the annual allotment -- could erode steel structures of buildings, according to Zhao Nan, a Beijing engineer, was quoted in The China Daily.

The paper cited official statistics that showed the snow-melting agent was responsible for killing 10,000 trees in Beijing and decimating 2.15 million square feet of grassland in 2005.

State press reports said that despite a massive effort to clear the capital of snow that involved over 15,000 workers, many roads remained blocked, while highways into Beijing and in neighboring Hebei and Shanxi provinces were shut down.

miércoles, 4 de noviembre de 2009

Conservation land goes into agriculture in the United States

3 million acres taken out of conservation program
By ROXANA HEGEMAN, Associated Press Writer Roxana Hegeman, Associated Press Writer –
TRIBUNE, Kan. – Surveying undulating grasslands that disappear into the western Kansas horizon, retired farmer Joe Govert pointed out parcel after parcel no longer enrolled in a federal program that pays property owners not to farm environmentally sensitive land.

The arid, wind-swept ground stripped of topsoil by Dust Bowl storms has laid undisturbed beneath a protective cover of native grasses that took two decades to re-establish under the Conservation Reserve Program. But millions of those acres are being plowed again after the 2008 Farm Bill capped the program at 32 million acres.

More than 3.4 million acres nationwide were taken out of the program in September when the owners' contracts expired. Most of them were in Texas, Colorado and Kansas, but hundreds of thousands of acres also came out in Montana and the Dakotas.

The environmental and economic repercussions could extend beyond the nation's Heartland with a greater risk of new dust storms, soil erosion and water pollution. Farmers also worry more grain will mean even lower commodity crop prices.

CRP pays landowners not to farm easily eroded land, while splitting with them the cost of establishing vegetative cover. The goal is to reduce soil erosion and sedimentation in streams and lakes, improve water quality and establish wildlife habitat.

The program has created millions of acres of habitat for quail, pheasant, prairie chickens and other wildlife and established filter strips and forested buffers to protect streams, lakes and rivers from sedimentation and agricultural runoff.

In return, farmers receive annual rental payments on 10-, 15- and 20-year contracts. With payments averaging $51 per acre per year, the program cost about $2 billion in fiscal year 2008.

Govert, 85, put all his land — about 750 acres — in the program in 1987 and got rid of his farm equipment. His contracts expired last month and for the most part cannot be extended.

With the government checks ending and property taxes and other bills to pay, Govert said he has little choice but to break up the ground to farm again — or sell it to someone who will.

"This stuff has roots," he said as he looked glumly across a field in Greeley County near the Colorado state line. "It is well established. This is what hurts. It took years to get it established."

But much of the land can be farmed again without harming the environment, said Adrian Polansky, director of the Farm Service Agency overseeing CRP in Kansas. Modern agricultural practices, such as no-till farming, curb soil erosion. CRP also gives a higher priority for re-enrolling the most environmentally sensitive acres.

Polansky also noted the program was more about the economy than the environment when Congress authorized it amid the farm crisis in 1985.

"We had producers, landowners, banks, suppliers that were in dire financial straits," said Polansky, himself a third-generation farmer. "So in those early years ... It was in a sense an economic rescue-type program to stabilize land prices."

Still, CRP was criticized early on for hastening the decline of rural towns. With fewer farmers tilling the ground, farm equipment dealerships closed and grain elevators consolidated. Many farmers moved away, and government payments often went to absent landowners.

By the time lawmakers scaled down the program in the latest farm bill, CRP protected 39.2 million acres with contracts expiring between now and 2012.

Bringing the land back into production is not expected to reverse the loss of small family farms: Today's growers can farm vast tracts with modern equipment, seamlessly absorbing new acres into existing operations.

But it could stimulate rural economies, with more sales of fertilizer, seed and other supplies; more business for grain elevators; and lower costs for corn, grain sorghum and other feedstocks used by ethanol plants and livestock feedlots. Lower commodity prices also might help reduce food prices for consumers.

Land auctions are already drawing farmers eager to expand their holdings. Govert said land he bought in 1950 for $55 an acre now sells for nearly $900 an acre, and a recent auction averaged as much as $1,100 an acre.

In some areas, change is in the air — literally. Thick plumes of smoke rise from thousands of acres where native grasses are being set afire in preparation for tilling. Most of those rough acres are expected to be seeded into wheat or grain sorghum, hardy crops that can survive in low quality soils and arid climates.

But even as some farmers expand, many worry about the effect on commodity markets when there's already a global grain glut.

"The timing of this is absolutely horrible," said Vance Ehmke, who farms near Healy in west-central Kansas. "You have all these acres coming out (of CRP) when the bottom has come out of the grain market. All we need is more ground going back into production."

miércoles, 28 de octubre de 2009

India May Import Rice in 2010, Trigger Price Surge, Trader Says

By Luzi Ann Javier
Oct. 28 (Bloomberg) -- India, the world’s second-largest rice grower, may import up to 3 million metric tons next year as the government secures supplies in case the nation faces another year of drought, triggering a price surge, a trader said today.

The weakest monsoon in India since 1972 may slash rice output by about 18 percent to 81 million tons in the marketing year that began Oct. 1, below forecast demand of 89 million tons, according to the United Nations Food and Agriculture Organization.

“The government can afford to have rice sitting in the warehouse and rotting, but they can’t afford to have a very low stockpile of rice next year in case another drought or flooding hurts crops,” Rakesh Singh, head rice trader at Emmsons International Ltd., which supplies about 500,000 tons a year in India, said in an interview in Cebu, central Philippines. “We may hear about a tender in the next few weeks.”

If India imports rice next year, it will be the first time the country has purchased the grain since 2006, according to data from the U.S. Department of Agriculture, and only the second time since 2001.

The country’s return to the import market would push Thai rice export prices, the regional benchmark, at least 25 percent higher from current levels to $800 a ton, Singh said.

The price of 100 percent grade-B Thai white rice was set at $525 a ton last week, the fourth consecutive weekly drop, according to Thai Rice Exporters Association figures.

‘Wild Card’

Reduced production caused by bad weather in the Philippines and Latin America and lower output in the U.S. may help push prices back to record levels next year, Dwight Roberts, president of the U.S. Rice Producers Association said in an interview in Cebu yesterday. Declining Indian production may turn the South Asian nation into an importer, triggering a surge in global prices, he added.

“I think India is a real wild card in the next few months, or the next few weeks,” Roberts said.

Rice futures traded in Chicago surged to a record $25.07 per 100 pounds in April 2008 as shipments slowed and buyers including the Philippines, the world’s biggest importer, increased purchases to secure supplies and cool inflation. Rice for January delivery traded 1.1 percent higher at $13.915 per 100 pounds as of 3:25 p.m. Singapore.

Still, India has no plans to import rice because its reserves are adequate, Nanda Kumar, the country’s farm secretary, said in New Delhi yesterday.

To contact the reporter on this story: Luzi Ann Javier in Cebu at

Last Updated: October 28, 2009 04:00 EDT

jueves, 22 de octubre de 2009

Jim Rogers senior consultant at Dalian

Oct. 22 (Bloomberg) -- Investor Jim Rogers took a “senior consultant” position with China’s Dalian Commodity Exchange because he is “excited” about the exchange’s efforts to grow.
“I expect China to become the commodity trading center of the world once they open their currency and open their economy,” Rogers said by phone from Dalian, in northeastern Liaoning province today. “I’m keen on all the three exchanges but I’m excited about what they’re doing in Dalian.”
Rogers, who is chairman of Singapore-based Rogers Holdings, said he also had discussions with the Shanghai Futures Exchange and the Zhengzhou Commodity Exchange, adding Dalian was the city he would want to live in if he was in China.
Rogers was hired as a “senior consultant,” the exchange said in an e-mailed statement yesterday. The exchange was China’s largest commodity derivatives market in terms of volume in the first half, and trades contracts including soybeans, soybean oil, palm oil and soybean meal.
Dalian may introduce energy, coking coal and live-hog futures contracts to spur trading volume, exchange president, Liu Xingqiang, said in an Oct. 12 interview.
The bourse also aims to “be more than just agricultural or energy-oriented,” Liu said. “We’re working on products that can be traded more easily as investments; that are more financial in nature. It will be a global exchange,” Liu said.
--Li Xiaowei. Editors: Richard Dobson, Jake Lloyd-Smith.
To contact the Bloomberg News staff on this story: Li Xiaowei in Shanghai at

miércoles, 14 de octubre de 2009

India Won’t Import Rice, Wheat on Adequate Reserves

Oct. 14 (Bloomberg) -- India, the second-biggest producer of rice and wheat, does not need to import grains because its reserves are adequate to fill production gaps after drought and floods damaged summer-sown crops, a minister said.
“We have enough stocks of rice and wheat,” Junior Food Minister K.V. Thomas told reporters in New Delhi today.
The nation’s rice output is forecast by the government to drop 10 million tons from a record following a drought in first half of the year and floods in paddy-growing areas in the south earlier this month. Rice reached the highest level since January today after the Philippines, the biggest importer, said it may arrange a second tender by yearend to purchase the cereal after storms cut domestic output.
Rice jumped to a record in April 2008 after the Philippines increased purchases and some exporters, including India, curbed shipments on concern that there may be a global shortage. Corn, wheat, soybeans and palm oil touched all-time highs last year, stoking inflation and sparking unrest from Haiti to Egypt.
“If we start having problems, weather problems, production problems, the price of rice is going to skyrocket over the next decade,” investor Jim Rogers, chairman of Rogers Holdings, said in an Oct. 12 interview. “When it happens, I don’t know,” he said. “Rice is a basic foodstuff for much of the world.”
Rough rice for November delivery gained as much as 2.8 percent to $14.29 per 100 pounds on the Chicago Board of Trade, the highest level since Jan. 13. The futures, which touched a record $25.07 per 100 pounds in April last year, were at $14.26 at 4:50 p.m. Mumbai time.
Net Buyer
India, which last bought wheat abroad in 2007 and became a net buyer of sugar in the crop year ended Sept. 30, has bought a record 55.1 million tons of rice and wheat from crops harvested in the year ended June 30. That’s enough to last more than a year, Farm Minister Sharad Pawar has said.
The government, the biggest buyer of food crops, purchases cereals such as rice and wheat at guaranteed prices from farmers for sale to the poor at subsidized rates.
In August, the price paid to rice growers was raised to 950 rupees ($21) for 100 kilograms (220 pounds), up from 900 rupees, as inadequate rains forced them to lower acreage by 6.3 million hectares. The price of grade-A grain was raised to 980 rupees.
Exports of wheat were halted in February 2007 and overseas sales of non-basmati rice on April 1, 2008.
To contact the reporter on this story: Pratik Parija in New Delhi at Last Updated: October 14, 2009 07:38 EDT

Monsanto Profit Tops Estimates; 2010 Outlook Repeated

Oct. 7 (Bloomberg) -- Monsanto Co., the world’s largest seed producer, reported fourth-quarter profit that exceeded analysts’ estimates because of higher corn and vegetable seed sales. The company maintained its forecast for 2010 earnings.

Profit in the three months ended Aug. 31 was 2 cents a share, excluding some items, St. Louis-based Monsanto said today in a statement. The average estimate of 13 analysts in a Bloomberg survey was for profit of 1 cent. The net loss widened to $233 million, or 43 cents a share, from $172 million, or 31 cents, a year earlier, largely because of restructuring costs.

Chief Executive Officer Hugh Grant is cutting 8 percent of the workforce as farmers spend less and Chinese competitors sell cheaper generic versions of the company’s Roundup herbicide. Monsanto repeated its 2010 earnings forecast after two earlier cuts in the outlook for the glyphosate-based weed killer.

“People thought they would lower the outlook,” Laurence Alexander, a New York-based analyst at Jefferies & Co., said by telephone. “The outlook for next year is basically in line.”

Earnings in the year that began Sept. 1, excluding some items, will be $3.10 to $3.30, Monsanto said, repeating a Sept. 10 forecast. Profit was projected to be $3.42 a share, the average estimate of 15 analysts surveyed.

First-Quarter Forecast

First-quarter profit will be break even or a “modest” loss because of lower Roundup sales, Chief Financial Officer Carl Casale said on a conference call with analysts. Monsanto was projected to post profit of 40 cents a share in the current quarter, the average estimate of four analysts.

About 60 percent of 2010 earnings will accrue in the second quarter and 40 percent in the third quarter, with a small loss in the final three months, Casale said.

Monsanto fell 99 cents, or 1.3 percent, to $74.38 at 11:52 a.m. in New York Stock Exchange composite trading. The shares gained 7.5 percent this year through yesterday.

Fourth-quarter revenue fell 8.4 percent to $1.88 billion because of lower herbicide sales, trailing the $1.99 billion average estimate of six analysts in the survey.

The fourth-quarter net loss includes 53 cents a share of restructuring expenses and a gain of 8 cents from the sale of the sunflower unit.

Results in Monsanto’s fourth quarter often are weaker than in other periods because farmers in North America and Europe have planted most of their crops.

Gross Profit

Fourth-quarter gross profit declined 11 percent to $857 million as profit from seeds and traits dropped 17 percent and crop chemicals fell 3.5 percent, led by a 23 percent drop in glyphosate herbicides. Corn and vegetable seed sales gained, while cotton, soybeans and other crop seeds declined.

In 2010, gross profit from seeds and traits will rise to $5.1 billion to $5.2 billion, Monsanto said, repeating the September outlook. That’s an increase of as much as 16 percent from $4.5 billion in 2009.

Gross profit in the weed-killer unit will drop to $650 million to $750 million, Monsanto said in a presentation on its Web site, repeating last month’s forecast. That’s as much as a 64 percent decline from $1.8 billion in 2009. Monsanto initially forecast gross profit of $1.9 billion before reducing its expectations in June and September.

The company is cutting Roundup prices in half to as little as $10 a gallon in the hopes of reclaiming lost market share, Grant said in a Sept. 23 interview.

Herbicide gross profit will be as much as $900 million in 2011 before stabilizing at about $1 billion in 2012, Monsanto said in the presentation. Grant in June said he may divest the Roundup business after restructuring and carving it out as a separate unit.

Market Share

Grant said he was “disappointed” with Monsanto’s 36 percent share of the U.S. corn seed sales, unchanged from 2008, after targeting a gain of as much as 2 percentage points. Few companies gained share while Monsanto increased average corn- seed prices 25 percent to capture some of the value provided by crops that resist bugs and herbicides, he said.

“We all ended up about flat,” Grant said. “In a world of flatness, I feel really good because we priced to the value we deliver.”

The Holden’s unit, Monsanto’s licensing arm, lost corn-seed share to ProAccess, a unit of DuPont Co., Scarlett Foster, a spokeswoman, said on the call.

The company’s share of U.S. soybean seed sales fell half a percentage point to 28.5 percent, and cotton-seed sales dropped 2 points to 39 percent of the U.S. market.

DuPont Share

DuPont’s Pioneer unit, the second-biggest seed producer, said Sept. 16 that it grabbed 2 more percentage points of corn- seed share, reversing years of losses to Monsanto, and gained 3 points of U.S. soybean share.

Smartstax corn seed, developed with Dow Chemical Co. to contain eight genetic modifications, will “reinvigorate” share gains when the product is introduced for planting next year, Casale said.

The seeds, which boost yields 5 percent to 10 percent compared with other products, will be planted on as many as 4 million acres in 2010, with a U.S. potential for 65 million acres, Monsanto has said.

To contact the reporter on this story: Jack Kaskey in New York at

Last Updated: October 7, 2009 11:53 EDT

viernes, 9 de octubre de 2009

Rice Prices May Rise Next Yr As Weather Hits 09 Output

5:05 AM, octubre 9, 2009
NUSA DUA, Indonesia (Dow Jones)--Ample rice stocks in major producing
countries such as Thailand could keep the lid on prices in the near term, but
an expected increase import demand from the Philippines following typhoons
Ketsana and Parma and lower production in India and Vietnam due to adverse
weather will likely lend support to the market going into next year, traders
and officials said at a major industry conference in Bali.
Global milled rice production in 2009 is expected to fall 3% on year to 446
million metric tons, a senior Food and Agriculture Organization economist said
"Adverse weather in several big producing countries, notably India and the
Philippines, is the main reason behind the expected fall in production," said
Concepcion Calpe, senior economist at FAO, an agency under the United Nations.
Speaking at World Rice Commerce 2009, Calpe said in 2010, global milled rice
demand is likely to increase by 5 million tons to 453 million tons.
Rising demand and lower production will result in a decline in global milled
rice stocks of around 4 million tons to 5 million tons next year, from around
121 million tons now, she said.
Prices in the world's top two exporting countries - Thailand and Vietnam -
could ease marginally on high inventories now, before rising slightly next
year, participants said.
"Thai prices are likely to fall from the current $525 a ton level as there is
going to be more rice coming onto the domestic market when the old intervention
program is finally scrapped, but I don't think prices will fall below $400 a
ton (for Thai 5% broken). We may see $420-$430/ton in the coming months but not
much lower," said Chookiat Ophaswongse, president of the Thai Rice Exporters
Vietnam's equivalent grade is currently selling around $400/ton, but that
could rise next year, with the country still assessing damage to paddy in the
central region, following Typhoon Ketsana.
"There are milled rice stocks in private and government hands of around 1
million tons, so prices are unlikely to rise immediately, although the damage
to paddy is still being assessed," said Nghiem Huy Doan, vice director of
Hanoi-based Vipfood Trading.
Storm Damage May Push Philippine Imports Higher
Officials said damage to paddy in the Philippines in the wake of typhoons
Ketsana and Parma, likely means the country will increase imports by at least
an additional 1.4 million metric tons of milled rice this year.
"We will have to import 1.4 million tons of rice to compensate for storm
damage to paddy, but that's a conservative, initial figure. We will probably
have to import more; we won't know until a full assessment is carried out in
the coming weeks," said Jose Cordero, administrator of the National Food
Authority's marketing operations department.
According to the latest assessment by the Agriculture Ministry, the
Philippine farm sector incurred storm damage of around PHP7.94 billion ($170
million). Rice fields were the worst hit, with initial production losses
estimated at more than 375,000 tons.
With this year's rice imports already at 1.775 million tons, another 1.4
million tons of imports could take the final figure to nearly 3.2 million tons,
up 39% from last year's record 2.3 million tons, making the country the world's
biggest rice importer.
High Global Stocks Hold Prices Down For Now
Officials said a spike in rice prices to more than $1,000/ton in 2008 amid
supply worries then encouraged producing countries to boost output and
consuming countries to bolster food security measures by increasing inventory.
Thailand, the world's largest rice exporter, is expected to ship 9 million
metric tons of milled rice in 2009, exceeding a previous government target of
8.5 million tons, Chookiat said.
"In the January-August period, Thailand exported 5.2 million tons of milled
rice. Exports to Africa have improved in recent months and will likely remain
strong as long as India keeps its export ban," he said
However, he noted Thailand has lost some market share this year as Vietnam
has been selling rice at lower prices on the back of an increase in production.
"The financial crisis has changed the landscape - people are looking for
cheaper rice."
Thai white rice exports in the January-August period fell 58% while parboiled
rice exports to Africa rose more than 50%, Chookiat said. Exports of white
broken rice and gluttonous rice have also risen.
Traders in Thailand have said government stockpiles are still at
unprecedented highs of 6 million-7 million tons of milled rice, with the next
harvest due in November expected to yield as much as 24 million tons of paddy,
around 1 million tons higher than last year.
-By Andrew Jones, Dow Jones Newswires;; +65 6415

martes, 29 de septiembre de 2009

French, German, U.K. Farmers May Plant More Wheat

Sept. 28 (Bloomberg) -- Farmers may plant more wheat in France, Germany and the U.K., the European Union’s largest producers, for the 2010 harvest as declining costs make the grain profitable to grow, consultants said.

Cheaper fertilizer has pulled estimated production costs for next year’s crop below futures prices, said analysts at U.K. consultant ADAS Holdings Ltd. and France’s Offre et Demande Agricole.

The November wheat contract fell 16 percent this year in Paris trading after a record 2008 harvest swelled global stocks. Prices no longer cover costs, said Adrien Bebin, head of research at Offre et Demande. Next year may be more profitable as growers pay less for products such as nitrogen, he said.

“There’s a general great relief that fertilizer costs have come down again,” said Susan Twining, an analyst at Wolverhampton, England-based ADAS. “At the moment we’ve got good drilling conditions. We would expect a slight increase in wheat area.”

French farmers may sow 4.93 million hectares (12.2 million acres) of wheat for harvesting in 2010, based on comments from clients of Bourges, France-based Offre et Demande, Bebin said in an interview. Soft-wheat plantings fell 3.8 percent to 4.87 million hectares this year, according to government statistics published this month.

German Sowing

U.K. plantings may rise to 2 million hectares from 1.8 million hectares, according to Twining. German wheat sowing may be “unchanged or slightly higher,” said Klaus Schumacher, head of the economics department at Hamburg-based grains trader Alfred C. Toepfer International GmbH.

Overall EU soft-wheat production is forecast to be 130.9 million metric tons this year, with France, Germany and the U.K. accounting for 59 percent of output, according to Coceral, a European association of grain trade groups. The 27-nation bloc is the world’s biggest producer, according to figures from the U.S. Department of Agriculture.

Milling wheat for delivery in November closed at 123 euros ($179.74) a ton on Euronext on Sept. 25 in Paris. Wheat for delivery in November 2010, after next year’s harvest, was at 137 euros a ton.

Forecast Raised

Prices have slumped this year as the International Grains Council raised its outlook for the global wheat crop at least three times on better-than-expected harvests in major producers including the EU and Russia. The group forecasts production of 666 million tons for the 2009-10 crop year, exceeding consumption by 23 million tons.

EU cereal stocks at the end of June had jumped 28 percent from a year earlier to 62.5 million tons as wheat, barley and corn production exceeded consumption, the bloc reported in July.

The price required to cover average costs for a producer in the Cher department, in France’s main wheat-growing region of Centre, climbed to about 140 euros a ton this year from 120 euros in 2008 because of costlier inputs, according to Bebin. Cheaper fertilizer this year means costs for the next harvest will fall to between 120 and 130 euros a ton, he said.

“At current prices, if they sell the wheat harvested this summer they’re losing money,” Bebin said. “For 2010, the farmers are buying fertilizer now, and we’ve returned to levels from before the surge.”

Fertilizer Costs

French farmers are paying less than 300 euros for a ton of nitrogen fertilizer, after prices doubled to 600 euros between May and September last year, according to Bebin.

Northwest European spot prices for bulk urea pellets, used in fertilizer as a source of nitrogen, have dropped to 198 euros a ton from 525 euros a year ago, based on data from ICIS-LOR, a provider of prices for chemicals and energy products.

In the U.K., average production costs this year were about 120 pounds ($192) to 125 pounds a ton, with higher fertilizer prices adding about 26 pounds, according to Twining at ADAS.

“Clearly where prices are, for most people they’re below the cost of production,” said Carl Atkin, head of agribusiness research at Cambridge, England-based Bidwells Property Consultants. “We saw a big spike in costs for 2009, but costs in 2010 for the better producers will be below 100 pounds.”

Farmers across Europe may also increase wheat plantings as they shift out of barley, which has been less profitable, said Atkin and Toepfer’s Schumacher.

Barley Prices

Barley export prices in Rouen, France’s main grains port, have dropped 31 percent in the past year, compared with a 29 percent drop for wheat, according to prices tracked by the International Grains Council.

The fact that some European farmers are now losing money on wheat won’t stop them from replanting the grain for next year, according to Twining, Bebin and Atkin. They spoke on Sept. 22, as did Schumacher.

Farmers in the U.K. are “highly capitalized” and require cash flow from selling grain, even below cost, to finance their business and service debt, according to Atkin.

“They need to produce, even if it’s just a contribution to overhead,” Atkin said. In “most of Western Europe, the planting decision is not as extreme as in Russia or Ukraine, where people can decide to leave large parts of land fallow.”

To contact the reporter on this story: Rudy Ruitenberg in Paris at

Last Updated: September 28, 2009 05:03 EDT

Dairy prices to recover in 2010

Fonterra Raises N.Z. Milk Price Forecast 12% on Demand Recovery
By Gavin Evans

Sept. 22 (Bloomberg) -- Fonterra Cooperative Group Ltd., the world’s
largest dairy exporter, raised its milk price forecast for the coming
year by 12 percent citing a recovery in global demand.

Fonterra, owned by about 10,500 New Zealand dairy farmers, will pay
NZ$5.10 ($3.64) for each kilogram of milk solids supplied in the year
to May 31, the Auckland-based company said in a statement. It is
estimating NZ$5.20 for last season and had been forecasting NZ$4.55
this year, the lowest in three years.

New Zealand’s dollar jumped to a 13-month high after Fonterra said it
is seeing “more positive sentiment and stronger demand” in global
markets. The strength of the currency, which has gained 24 percent
this year, “remains a concern,” Chairman Henry van der Heyden said

“They’ve built the high currency in and that makes you think there is
a little more upside to come,” said Darren Gibbs, chief economist at
Deutsche Bank AG in Auckland. “Obviously, if the currency races away
that comfort would tend to come out.”

Fonterra accounts for almost 40 percent of the global trade in butter,
milk powder and cheese and sells product in 140 countries. It
processes about 92 percent of New Zealand’s milk, making it the
biggest player in an industry that accounts for about 20 percent of
the nation’s export receipts.

Today’s increase is a boost for farmers who must decide in November
whether to put more capital into Fonterra to help reduce its debt and
fund expansion plans through 2014.

Early Signal

“Receiving this signal relatively early on should help our farmers to
plan their farm operations with confidence for the rest of the
season,” Blue Read, chairman of Fonterra’s shareholder council, said
in an e-mailed statement.

Today’s increase will add about NZ$650 million to farm incomes next
year, based on the company’s 2008 milk output of 13.8 billion liters.

Fonterra will announce its sales and production for the year ended
July 31 tomorrow and made no mention today of the NZ$5.20 a kilogram
payout it has forecast.

The New Zealand dollar jumped to 71.87 U.S. cents after the
announcement, its highest since August 22, 2008. It bought 71.74 cents
at 2:40 p.m. in Wellington.

The high currency has been “fully factored” into the latest forecast,
van der Heyden said.

World milk-powder prices slumped to a five-year low in July as
consumer spending slowed faster than producers could reduce output and
the U.S. and Europe offered subsidies to help their farmers export
surplus product.

Prices surged 55 percent at Fonterra’s past two monthly auctions and
reflect a strengthening of demand for all dairy products, Chief
Executive Officer Andrew Ferrier said today.

lunes, 7 de septiembre de 2009

Gold toward US$ 1.000 per ounce

Gold is usually a good indicator of the trend of commodities, so... may we be in another bullish wave?

Gold May Advance Toward $1,000 as Weakening Dollar Spurs Demand

By Nicholas Larkin

Sept. 7 (Bloomberg) -- Gold, little changed near a six- month high in London today, may rise toward $1,000 an ounce as a weakening dollar increases the metal’s appeal as an alternative investment. Silver climbed to a 13-month high.

The dollar slipped as much as 0.4 percent against the euro as a report showed European investor confidence increased for a second month in September. Gold tends to rise when the greenback weakens. Bullion last surpassed $1,000 on Feb. 20.

“The underlying factor is still the dollar,” Dan Smith, a Standard Chartered Plc analyst in London, said by phone today. “If we do see a break in the dollar, it could be one of the triggers to take gold higher.”

Immediate-delivery bullion lost $1, or 0.1 percent, to $993.40 an ounce by 1:46 p.m. in London, erasing a gain of as much as 0.3 percent. The metal jumped 4.1 percent last week, the most since April. December gold futures slipped 0.2 percent to $994.70 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division.

Comex floor trading in New York and Chicago is closed today for the U.S. Labor Day holiday.

“Markets are likely to be thin today, but volatility could step up across the rest of the week as markets exit the summer doldrums and traders and investors position for the remainder of the year,” James Moore, an analyst at in London, wrote in a report.

Higher ‘Fixing’

The metal increased to $992.75 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $989 at the afternoon fixing on Sept. 4.

“Sustained gains could be difficult without a pull back,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a report. “Gold could be hit by near-term profit- taking.”

Bullion is 3.8 percent below a record $1,032.70 an ounce set in London in March 2008 and has rallied every year since 2000. Spot prices have gained in seven of the past eight weeks.

“The price increase is of speculative nature, but gold will be able to temporarily break through the $1,000 mark,” Eugen Weinberg, a senior analyst with Commerzbank AG, wrote in a Sept. 4 note. “Currently there is insufficient fundamental support to allow for a sustained rise beyond this level.”

Holdings of bullion in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, fell 0.38 metric ton to 1,077.63 tons on Sept. 4, data on the company’s Web site showed. The fund reached a record 1,134.03 tons on June 1. Holdings in ETF Securities Ltd.’s exchange-traded commodities rose 1,426 ounces to a record 7.993 million ounces on Sept. 4, its Web site showed.

Scrap Sales

“Overall market sentiment is still upbeat with constantly improving macro data, inflation expectations are idle, physical demand is absent, and scrap sales could only intensify at these prices,” Andrey Kryuchenkov, a VTB Capital analyst in London, wrote in a note. “As soon as risk appetite comes when the markets settle down ahead of the fourth quarter, gold will suffer a painful correction.”

Silver for immediate delivery in London climbed as much as 0.8 percent to $16.3638 an ounce, the highest since August 2008, and last traded at $16.28. The metal has rallied 43 percent in London this year, more than triple gold’s 13 percent gain.

Among other metals for immediate delivery in London, platinum added 0.4 percent to $1,260.50 an ounce. Palladium was 0.1 percent lower at $292.25 an ounce after earlier reaching $295, the highest price in a year.

ETF Securities’ palladium holdings advanced 11 percent to a record 452,488 ounces on Sept. 4. Platinum assets slipped 0.6 percent to 328,682 ounces.

To contact the reporter on this story: Nicholas Larkin in London at

Last Updated: September 7, 2009 09:04 EDT

Sugar reach highest price in 28 years

In commodities, some prices are already higher than the peak of 2008.... May this support our malthusian view of the markets....

Sugar Deficit to Support 28-Year High Price, ISO Says

By Mike Cohen

Sept. 7 (Bloomberg) -- Sugar prices, which reached their highest level in more than 28 years last week, are likely to be supported by a global supply deficit, according to Leonardo Rocha, an economist at the International Sugar Organization.

“Prices may rise slightly, but not by that much,” Rocha said in an interview at the World Sugar Summit in Cape Town today. “There will be some supply response” to the shortfall, he said.

On Sept. 2, the London-based industry body forecast demand for sugar would outstrip supply by 8.4 million metric tons in the year through September 2010. Rocha expects the shortfall to be eliminated the following year.

The ISO expects India, the largest sugar consumer, to import 4.1 million tons of the sweetener in 2009-10, 3 percent more than in the previous year. Consumption in the southeast Asian nation is forecast to rise 3 percent to 23 million tons.

“India is today the biggest driver of the sugar market,” Rocha said. “Production has collapsed significantly” due to poor rainfall, he said.

The ISO expects Brazil, the world’s largest sugar producer, to export 26.1 million tons of sugar in fiscal 2010, a 6.6 percent increase on the previous year. Exports from Thailand are expected to rise 0.9 percent to 5.8 million tons.

Raw sugar futures last week climbed to 24.85 cents a pound, the highest price since February 1981. Sugar has climbed 83 percent this year, heading for its biggest annual gain since 1980, as drought has affected parts of India and excessive rain slowed the harvest in Brazil.

Rocha expects the market for ethanol to remain static this year, because cane growers can earn better returns in the sugar market.

South Africa Constraints

Imports by the European Union may rise 1.5 percent to 4.5 million tons in fiscal 2010, while imports by the U.S. are expected to grow 0.1 percent to 2.5 million tons, the trade group said.

South Africa, Africa’s largest sugar producer, has limited scope to increase production because of shortages of suitable land and water, Johann van der Merwe, the South African Sugar Association’s external affairs director, told the conference.

South Africa produces about 2.5 million tons of sugar a year, about half of which is exported. Brazilian producers control about 10 percent of the South African market, Van der Merwe said.

To contact the reporter on this story: Mike Cohen in Cape Town at

Last Updated: September 7, 2009 06:34 EDT

viernes, 28 de agosto de 2009

Argentina May Import Beef First Time as Herds Die

By Matthew Craze
Aug. 18 (Bloomberg) -- Argentina, the biggest beef- consuming nation, may resort to imports for the first time within two years as a drought kills cattle and export controls prompt ranchers to quit the business.
Pastures have dried up and forage prices gained so much that farmers are allowing livestock to die in the fields, said Arturo Llavallol, a director of Buenos Aires-based farm group The Rural Society. Ranchers are killing higher than usual numbers of breeding stock, compromising future output, he said.
The nation’s herd has dwindled 7 percent since 2006, when the government restricted beef exports to boost supplies in the local market, Llavallol said in a telephone interview from his farm in Saavedra, southwest Buenos Aires province. The country may need imports within a couple of years, he said.
“If we want to keep exporting, we have to lower consumption,” said Llavallol, also the vice president of the Paris-based International Meat Secretariat, an association that represents ranchers worldwide. “If you don’t have enough raw materials, you shut down the factory or you import.”
Argentines will consume about 70 kilograms (154 pounds) of beef per person this year, according to Miguel Schiariti, an analyst who compiles a monthly report for the Argentine Beef Industry and Commerce Chamber. Consumption has risen from less than 60 kilograms a person in 2006 when the export restrictions began, according to Ciccra, as the chamber is known.
Cheapest Prices
Prices in the Latin American nation are the cheapest in the world at about $1.65 a kilogram, compared with $2.82 in neighboring Brazil and $2.86 in the U.S., Miguel Gorelik, a spokesman for Argentine meatpacker Quickfood SA, said in a telephone interview from Buenos Aires.
Farmers may renew roadside protests as Argentina’s Senate votes Aug. 20 on a bill that would give President Cristina Fernandez de Kirchner power to change farming policies without consulting congress, Eduardo Buzzi, head of the Argentine Agrarian Federation, told Infobae newspaper today.
Farmers and ranchers last year blocked grain and cattle shipments for four months to protest a new tax on soybeans and the export controls on farm goods. The government backed down on the new tax in July 2008 after it was rejected by Congress.
Argentina, which was the world’s largest beef exporter in the 1970s, slipped to seventh place last year, according to the U.S. Department of Agriculture. Brazil, now the world’s largest exporter, will ship four times as much beef as Argentina this year, according to the USDA.
Argentina will “celebrate” its bicentenary year in 2010 eating imported beef, milk and wheat, said Hugo Biolcati, president of the Rural Society, in an annual address during a livestock show in Buenos Aires. The show debuted more than a century ago.
Export Restrictions
Lifting the export restrictions set in place by former Argentine President Nestor Kirchner would allow ranchers to get better prices and stop them from selling breeding cattle for slaughter, according to Llavallol.
A drop in Argentine beef production and exports could hurt earnings at companies such as Brazil’s JBS SA, the world’s biggest meatpacker, and Marfrig Alimentos SA, which both own slaughterhouses in Argentina.
JBS, which became Argentina’s largest beef producer after its 2007 acquisition of U.S. meatpacker Swift & Co., has ceased investment in the Latin American nation because government controls are hurting economic growth, Marcus Vinicius Pratini de Moraes, a member of the company’s board and a former agriculture minister of Brazil, said from Sao Paulo.
‘Stopped Growing’
“We stopped growing in Argentina because of those problems,” Pratini de Moraes said in an Aug. 14 interview. “The world is currently divided into three types of countries: the developed ones, the emerging nations and Argentina.”
Ricardo Gauna, a spokesman at Argentina’s Agriculture Secretariat, declined to comment when contacted by telephone.
On Aug. 6, Fernandez announced an easing of some restrictions on beef exports. Five days later, she signed an accord to ship 80,000 metric tons of beef to Venezuela.
Parts of central and western Buenos Aires province are suffering a “severe drought,” the Buenos Aires Cereals Exchange said in an Aug. 12 crop report. The exchange said its report this week may show rains failed to alleviate the drought in the area, prompting ranchers to sell off their herds.
“Undoubtedly, it’s going to affect the herd,” said Quickfood’s Gorelik. “There have been deaths, but it’s difficult to quantify.”
The Argentine diet consisting of large amounts of beef dates back three centuries ago, when cowboys, known as gauchos, in the Spanish colony would feed from wild cattle on the grassy Pampas and sell the hides.
Hoping for Downpours
Ranchers are hoping downpours will arrive later this year as the El Nino weather pattern forms, which warms ocean temperatures and creates excess precipitation on the Pampas. So far, the effects of El Nino have only alleviated the drought nearer the eastern coastal areas of the Pampas agricultural zone, according to the Buenos Aires Cereals Exchange.
Opposition parties are seeking to eliminate government restrictions on beef and other farm exports in December, when they assume seats won during mid-term elections.
Still, ranchers who have given up on raising cattle to grow crops instead “aren’t going to come back,” said Luciano Miguens, a farm adviser to Union Pro, a coalition of opposition parties, in an interview from Buenos Aires. “We need to stimulate the ranching and dairy industries, which are going through critical moments.”
Last week, the yield on Argentina’s benchmark 8.28 percent dollar bonds due in 2033 rose 43 basis points to 15.89 percent, according to JPMorgan Chase & Co. The peso rose 0.47 percent to 3.845 per U.S. dollar from 3.833 on Aug. 10.
The Merval stock index declined 2.1 percent to 1,761.61. Banco Macro SA declined 8 percent, while Empresa Distribuidora y Comercializadora Norte SA fell 7.5 percent.
The following is a list of events in Argentina this week:
*T Event Date Budget Balance Aug. 18-21 Trade Balance Aug. 20
To contact the reporter on this story: Matthew Craze in Santiago at Last Updated: August 18, 2009 16:31 EDT

lunes, 17 de agosto de 2009

La reforma de la salud de Obama y la alimentación

Whole Foods es una cadena estadounidense de almacenes dedicados a alimentos naturales u orgánicos. Uno de los ejemplos de organización empresarial exitosa que tiene mucho para decir, dentro y fuera del rubro alimentación. Esta semana su gerente y fundados escribió una columna para criticar el costoso plan de salud de Obama.

The Whole Foods Alternative to ObamaCare
“The problem with socialism is that eventually you run out
of other people’s money.”
—Margaret Thatcher

With a projected $1.8 trillion deficit for 2009, several trillions more in deficits projected over the next decade, and with both Medicare and Social Security entitlement spending about to ratchet up several notches over the next 15 years as Baby Boomers become eligible for both, we are rapidly running out of other people’s money. These deficits are simply not sustainable. They are either going to result in unprecedented new taxes and inflation, or they will bankrupt us.

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:

• Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees’ Personal Wellness Accounts to spend as they choose on their own health and wellness.

Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan’s costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.

• Equalize the tax laws so that that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

• Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

• Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

• Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to us through much higher prices for health care.

• Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor’s visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?

• Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

• Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren’t covered by Medicare, Medicaid or the State Children’s Health Insurance Program.

Many promoters of health-care reform believe that people have an intrinsic ethical right to health care—to equal access to doctors, medicines and hospitals. While all of us empathize with those who are sick, how can we say that all people have more of an intrinsic right to health care than they have to food or shelter?

Health care is a service that we all need, but just like food and shelter it is best provided through voluntary and mutually beneficial market exchanges. A careful reading of both the Declaration of Independence and the Constitution will not reveal any intrinsic right to health care, food or shelter. That’s because there isn’t any. This “right” has never existed in America

Even in countries like Canada and the U.K., there is no intrinsic right to health care. Rather, citizens in these countries are told by government bureaucrats what health-care treatments they are eligible to receive and when they can receive them. All countries with socialized medicine ration health care by forcing their citizens to wait in lines to receive scarce treatments.

Although Canada has a population smaller than California, 830,000 Canadians are currently waiting to be admitted to a hospital or to get treatment, according to a report last month in Investor’s Business Daily. In England, the waiting list is 1.8 million.

At Whole Foods we allow our team members to vote on what benefits they most want the company to fund. Our Canadian and British employees express their benefit preferences very clearly—they want supplemental health-care dollars that they can control and spend themselves without permission from their governments. Why would they want such additional health-care benefit dollars if they already have an “intrinsic right to health care”? The answer is clear—no such right truly exists in either Canada or the U.K.—or in any other country.

Rather than increase government spending and control, we need to address the root causes of poor health. This begins with the realization that every American adult is responsible for his or her own health.

Unfortunately many of our health-care problems are self-inflicted: two-thirds of Americans are now overweight and one-third are obese. Most of the diseases that kill us and account for about 70% of all health-care spending—heart disease, cancer, stroke, diabetes and obesity—are mostly preventable through proper diet, exercise, not smoking, minimal alcohol consumption and other healthy lifestyle choices.

Recent scientific and medical evidence shows that a diet consisting of foods that are plant-based, nutrient dense and low-fat will help prevent and often reverse most degenerative diseases that kill us and are expensive to treat. We should be able to live largely disease-free lives until we are well into our 90s and even past 100 years of age.

Health-care reform is very important. Whatever reforms are enacted it is essential that they be financially responsible, and that we have the freedom to choose doctors and the health-care services that best suit our own unique set of lifestyle choices. We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health. Doing so will enrich our lives and will help create a vibrant and sustainable American society.

—Mr. Mackey is co-founder and CEO of Whole Foods Market Inc.

miércoles, 12 de agosto de 2009

India se queda sin agua

India atraviesa una dura sequía por el Monzón más débil de los últimos cinco años. Pero su problema con el agua es en realidad estructural. Su subsuelo se seca. Una vez más un embudo malthusiano que pende sobre la alimentación de casi 1.000 millones de personas.
El riego no es una solución para la producción de alimentos, sino solo una postergación del problema. Y si es mal usado, es agravar los problemas.

Space Images Forewarn of Indian Groundwater Crisis, Study Says

By Jason Gale
Aug. 13 (Bloomberg) -- Orbiting satellites measuring the gravitational pull of water below the earth’s surface confirm what authorities in India suspected for more than 20 years: groundwater is shrinking in some of the nation’s driest areas.
Water equal to the maximum held by Lake Mead, the biggest reservoir in the U.S., was depleted from underground supplies of three northwest Indian states between August 2002 and October 2008, scientists said in the journal Nature yesterday.
The findings suggest that pumping water from wells for irrigation is damaging India’s resources more than the government has estimated. Without measures to curb demand, dwindling groundwater supplies may cause drinking-water shortages and erode crop production in a region inhabited by 114 million people, the authors said.
“That part of northern India is really experiencing rapid groundwater decline that’s mostly human-driven,” said co-author Jay Famiglietti, associate professor of earth system science at the University of California, Irvine, in a telephone interview yesterday. “What they are doing is not sustainable.”
About a fifth of water used globally comes from under the ground, the Stockholm International Water Institute has said. Withdrawals are predicted to increase 50 percent by 2025 in developing countries, and 18 percent in developed countries, according to the policy group based in the Swedish capital.
India’s area of irrigation almost tripled to 33.1 million hectares (82 million acres) from 1970 to 1999, the authors said, spurred by the so-called Green Revolution that began in the 1960s to bolster production of wheat, rice and other staples.
River Contamination
Surface water supplies are also strained. Three-quarters of the country’s rivers, lakes and dams are contaminated by human and agricultural waste and industrial effluent, according to a report by the Ministry of Urban Development in September.
Groundwater stocks in Rajasthan, Punjab and Haryana states are being lowered at an average rate of about 4 centimeters (1.6 inches) a year, Famiglietti and colleagues said. The depletion is equal to about 17.7 cubic kilometers (4.7 trillion gallons) of water a year, exceeding the estimate of 13.2 cubic kilometers by the Ministry of Water Resources, the researchers said.
More than a quarter of the land area in the three states is irrigated accounting for about 95 percent of the groundwater consumed, they said. Levels of subsurface water also appeared to be declining in western Uttar Pradesh. That state, along with Punjab and Haryana are India’s largest wheat-producing states.
Monsoon Forecast
This year’s monsoon may be the weakest in five years, the India Meteorological Department said this week. That’s exacerbating demand for watering crops and prompted some governments to divert electricity to farms to pump water, said Sunita Narain, director of the New Delhi-based Centre for Science and Environment, who was not part of the study.
India’s government established a Central Ground Water Authority in 1986 to regulate pumping from aquifers. Groundwater hasn’t been developed evenly across India, and exploitation has led to a drop in water levels and seawater intrusion in some areas, the Ministry of Water Resources said on its Web site. Of 5,723 sites assessed, 839 are “over-exploited,” 226 are “critical” and 550 are “semi-critical.”
“I don’t think that the water issues are going to get the attention they deserve until we reach crisis mode,” Famiglietti said. “In that part of India, they are certainly reaching crisis mode.”
Pumping costs are being ratcheted up by the falling water table and the need to drill deeper wells, said Steven Gorelick, professor of earth sciences at California’s Stanford University.
Cost of Pumping
“The problem of declining groundwater levels will become self-limiting at some point,” Gorelick said in an e-mail yesterday. “Use will curtail when it is simply too costly to pump the water to the surface from great depths, or when the quality of deeper and deeper groundwater is no longer suitable.”
Famiglietti and colleagues used hydrological modeling and data from the Gravity Recovery and Climate Experiment (Grace), twin satellites launched in March 2002, to quantify groundwater losses over more than six years.
“What is remarkable about this study is that such small declines in groundwater levels can be detected using remote sensing based on Grace satellite data,” said Gorelick. “The approach is like trying to track new construction of urban skyscrapers by sequentially measuring the average elevation of an entire city.”
To contact the reporter on this story: Jason Gale in Tokyo at Last Updated: August 12, 2009 13:00 EDT