Signalling the rising optimism in both stock and agriculture markets US fresh produce giant Dole Food, announced a US$565.7 million IPO last week, against the US$500 million mooted in August. It will offer 37.7 million shares and be quoted in New York. Chairman David Murdock, who took the group private six years ago, will retain a majority shareholding, at 59 per cent. Proceeds from the IPO will be used to pay off debts, personally guaranteed by Mr Murdock, amounting to some US$85 million, leaving borrowings of US$30 million outstanding.
Dole Food's reported net income during the quarter ended 20 June was US$20 million, down from US$181million during the same period of 2008. Dole achieved revenue of US$7.6 billion in last year as a whole, with net income of some US$123 million.
Meanwhile, shares in Phaunos Timber Fund jumped 8.8 per cent to US$0.71 in London last week, their highest since May, after the investment company said that it would answer shareholders' concerns about its low share price and undertake a strategic review. The fund, which has interests spread from South America to Eastern Europe, said it was seeking City advice on how to tackle the discount to its assets. As of June 30, Phaunos's investments were worth US$0.99 a share, yet the stock was trading at US$0.6425, a 35 per cent discount.
The statement from Phaunos comes three weeks after Ceres Agriculture Fund - which shares Phaunos's fund manager, FourWinds Capital Management - announced a strategic review on similar grounds. Ceres, whose directors in March tendered for 7.5 per cent of the funds' shares in an effort to close Ceres’s discount to net asset value, said fresh options included "a restructuring of the company".The share purchase helped close the discount on Ceres shares, which neared 40 per cent in January, to 11.4 per cent.
In what might portend better news to come, fertiliser stocks are declining, according to the data published last week by PotashCorp, the world’s largest producer. North American potash stocks fell by 54,000 tonnes to a little over three million tonnes last month. While this left inventories still 142 per cent above the five year average, it was at least some improvement. PotashCorp shares jumped C$2.62 higher at C$99.92 on the news. September's decline was the third consecutive monthly fall in stocks, the longest run since the summer of 2006. Prices held at roughly US$490 a tonne over the month, well below the US$880 or so they hit at last year's peak, but at least above the US$460 a tonne which India paid in July. Meanwhile, talks with China, the biggest potash consumer, over a fresh supply deal continue. Phosphorus prices were also stable, while ammonia jumped to about US$330 a tonne in Tampa, the highest price since late last year, the PotashCorp report added.
Grain markets remained firm over the past week, mainly supported by US markets influenced by harvest delays and potential crop losses due to early frosts. The US Department of Agriculture has confirmed there is more than enough wheat in the world. In the UK, according to merchants Gleadells, the recent rally has seen increased selling.
But leading EU grains research group, Strategie Grains sounded a note of caution over wheat prices, despite cutting its estimate for Europe's harvests by 1.2 million tonnes last week. This reflected lower forecasts for French, German and UK crops, and lower plantings than had been expected, with the forecast for Europe's average yield left at 5.7 tonnes per hectare.
That outlook, combined with weak Chicago prices impacted in European markets. Paris's November contract fell €1.00 to €127.00 a tonne. Strategie Grains' revisions follow large reductions this week to France's official wheat crop estimates.
Looking longer term, and much more bullish, was a Society Generale report that came out last week. This said hopes that China could become self-sufficient in grain looked unlikely to be fulfilled. Thus the case for a bull market, it said, was “compelling”.
Oilseed rape markets should remain relatively firm for the remainder of this year, but there is growing uncertainty about prospects for 2010. In Europe the Matif rapeseed market followed the US soy market higher, and was helped by the strong performance in crude oil.
Cocoa grindings are still slowing in North America and the EU. North American figures in the July-September period fell by 0.5 per cent to 118,400 tonnes, the National Confectioners Association announced. But this was still a significant improvement on the 6.8 per cent decline reported for the previous quarter, and the 13.0 per cent decline reported for the first three months of the year. The European Cocoa Association earlier this week reported a 1.5 per cent drop in EU cocoa grindings to 343,500 tonnes for the quarter. London cocoa for December lost early gains to stand 1.4 per cent lower at £2,097 a tonne, while the New York December contract was down 0.9 per cent at US$3,237 a tonne.
Delays in new sugar crop planting will leave supplies "tight" over the next year, according to research group FO Licht. This year’s price rally, which has pushed the price up by 80 per cent, has come too late to trigger plantings for the current crop year. "As sugarcane needs 12 to 18 months to mature, the cane that has been planted in response to this year's price surge will only be ready for harvesting for the 2010-11 crush”, Licht said, adding that lack of credit had also restricted plantings. Nor would Brazil and India, the world's two biggest sugar producers, whose harvest setbacks have been behind the surge in prices, be able to do much to increase demand.
London's December white sugar contract jumped more than five per cent on the news and on fund buying, rising a further US$3.10 to US$580.30 a tonne in late trade. New York raw sugar for March also rose five per cent.
Gourmet Corner:
Luxury basmati rice should be in plentiful supply this year despite the near crisis drought conditions in India. Increases in planted acreage lie behind the increase in supply, although it has to be said that the premium variety also needs less water. India produced three million tonnes of premium basmati rice last year, around two-thirds of which was exported. This year exports were banned.
Caraway seed prices are edging up despite disappointing crops in Finland, Holland, Poland and the Czech Republic. Prices are currently around US$2,770 per tonne for the 2009/10 season, but the market has been highly volatile, recent prices reaching levels of US$3,000 per tonne or more.
Sabtu, 17 Oktober 2009
Selasa, 13 Oktober 2009
Breakfast is ready rise
Breakfast is about to get more expensive! That staple of the day’s first meal around most of western Europe, orange juice, has been rising in price rapidly over the last few days. Quotes for Florida juice in the New York futures market last week were at the highest for a year. The market has been closing limit up, with the November contract’s last close at US 112.4 cents a pound. That is the highest since August 2008. The US Department of Agriculture has forecast that there will be 6 million boxes less collected, at 136 million and that the oranges will have a lower juice yield.
Just when farmers were celebrating the lack of hurricane damage a series of other problems have hit them. Severe frosts could cut orange output by as much as 16 per cent in the crop period beginning in December. This follows on from three years of drought, which had already cut estimated yields by 19 per cent. Florida’s crop has also been hurt by disease, including greening, a bacteria carried by insects.The USDA reports says that there are further problems in Florida which bode badly for the longer term, as in “poorly cared-for groves, trees were declining quickly due to citrus Tristeza virus, young tree decline and canker”.
Florida’s disaster follows on from a crisis in Brazil, the world’s largest supply of orange juice. Some of the problems there are similar, with the incidence of citrus greening rising by 49 per cent on last year’s levels in the growing areas in Sao Paolo and Minas Gerais. Earlier this year, however, a collapse in prices to their lowest level for eight years pushed many farmers into debt. They are now not in a position to cope with any rise in infections or sharp rises in temperatures.
Output has been forecast by the USDA to fall by six per cent. The report added that stocks of orange juice in Brazil were poised to fall to 58,000 tonnes in a year's time, 19.4 per cent lower year on year and 65 per cent below inventories at the end of June 2008. Growers are also facing difficult markets in that this summer only 40 per cent of the country's orange production had been contracted as processors. Increasing the independent farmers have found that their former major customers are now sourcing from their own groves. Then there has been a major fall-off in demand because of the world’s financial crisis. Exports were 29 per cent lower, by volume, in the latest crop year.
Prices on Brazil's open market remained below R$5 a kilogramme in Sao Paolo all summer, the lowest since 2001, and dropped to one quarter of the level they were achieving at the start of last year."Increased production costs and low prices... create more uncertainties about producers' profitability to remain in business," a report from the US Agricultural Trade Office in Brazil said. You cannot get much more pessimistic than that.
Just when farmers were celebrating the lack of hurricane damage a series of other problems have hit them. Severe frosts could cut orange output by as much as 16 per cent in the crop period beginning in December. This follows on from three years of drought, which had already cut estimated yields by 19 per cent. Florida’s crop has also been hurt by disease, including greening, a bacteria carried by insects.The USDA reports says that there are further problems in Florida which bode badly for the longer term, as in “poorly cared-for groves, trees were declining quickly due to citrus Tristeza virus, young tree decline and canker”.
Florida’s disaster follows on from a crisis in Brazil, the world’s largest supply of orange juice. Some of the problems there are similar, with the incidence of citrus greening rising by 49 per cent on last year’s levels in the growing areas in Sao Paolo and Minas Gerais. Earlier this year, however, a collapse in prices to their lowest level for eight years pushed many farmers into debt. They are now not in a position to cope with any rise in infections or sharp rises in temperatures.
Output has been forecast by the USDA to fall by six per cent. The report added that stocks of orange juice in Brazil were poised to fall to 58,000 tonnes in a year's time, 19.4 per cent lower year on year and 65 per cent below inventories at the end of June 2008. Growers are also facing difficult markets in that this summer only 40 per cent of the country's orange production had been contracted as processors. Increasing the independent farmers have found that their former major customers are now sourcing from their own groves. Then there has been a major fall-off in demand because of the world’s financial crisis. Exports were 29 per cent lower, by volume, in the latest crop year.
Prices on Brazil's open market remained below R$5 a kilogramme in Sao Paolo all summer, the lowest since 2001, and dropped to one quarter of the level they were achieving at the start of last year."Increased production costs and low prices... create more uncertainties about producers' profitability to remain in business," a report from the US Agricultural Trade Office in Brazil said. You cannot get much more pessimistic than that.
Minggu, 11 Oktober 2009
Fertilizer prices rise
Signs are that fertiliser prices are off the bottom, with phosphate leading the recovery. "Among the three major crop nutrients, we believe phosphate has the highest probability for further pricing improvement over the next 12 months," said brokers RBC Capital Markets. The analysts there said prices seem to have bottomed in June and have since climbed 18 per cent -a trend that bodes well for Mosaic, which is the largest integrated phosphate producer.
The outlook this year for potash is more difficult to forecast, although a rise in demand is expected in 2010. "Recent price declines, lack of demand and high producer inventory levels have reinforced buyers' perceptions that they could be further rewarded by continuing to hold off on their potash purchases," RBC said, adding that the strength of potash's recovery will also largely demand on whether China resumes its potash imports in 2010.
Longer-term, demand for both nutrients remain strong, with a growing world production requiring higher farming yields. "According to the International Plant Nutrition Institute, fertilizer accounts for approximately 40 per cent of crop yields," RBC said. "In the major agricultural regions of China, India and Brazil, potash and phosphate application rates are below scientifically recommended levels and improved fertilization practices could lead to higher yields." However, on Friday fertiliser shares in the US were falling, with Mosaic down 42 US cents, at US$49.24, Potash down US$2.77 at US$90.23 and Agrium 86 US cents lower at US$51.91.
In the UK, agriculture merchants Gleadells said phosphate prices were at rock bottom, and they forecast that prices would shortly begin to follow world prices higher. For potash, they see world supply and demand being very much in balance. All nitrogen products, they point out, are likely to be affected by oil and gas prices, which are predicted to increase through the winter, so now might just be the right time to make that purchase.
In UK corporate news sausages and pork products supplier Cranswick said sales were strongly ahead at the interim stage, helped by a contribution from the recently acquired Bowes of Norfolk. Sales in the six months to 30 September rose by 19 percent from a year earlier, with seven per cent attributable to the contribution from Bowes. The shares closed up 8p on Friday at 708p.
Chocolate maker and retailer Thorntons reported that it had had a solid three months trading to end September, with sales up by 2.3 per cent to £46.8million. This was despite the fact that two big customers, Birthdays and Woolworths, had closed down. The shares closed the week up 6p at 126p, helped by the news that chairman John von Spreckelsen had put his hand in his and bought 40,000 shares at 124.4p each, taking his stake to 1.6 per cent of the company. The shares are now trading at their best in over a year.
In commodity markets, there was news that Colombian coffee growers may harvest as little as 9.3 million bags this year, down 19 per cent from the previous season, after above-average rainfall damaged plants. Coffee has surged 23 per cent this year in New York after heavy rainfall hampered harvests in Colombia and Brazil, the biggest coffee producer and exporter. Next year’s output will also be boosted by warmer weather that is helping plants flower, the Federation said. Colombian inventories of coffee, now at about 700,000 bags, probably will increase to one million bags within two years, still below historic average.
The difficulties of the UK grain harvest were confirmed by the first official estimates from DEFRA last week. The data, which is based on June Survey plantings and yield data from over 1700 farmers, put total UK grain production for 2009 at 21.8 million tonnes, a drop of 10 per cent. Within this total, the wheat crop is estimated at 14.2million tonnes, a decrease of 18 per cent. This was based on an average yield of 7.9t/ha and a 14 per cent decrease in the sown area - slightly above the figure put out by the NFU in September. Oats production was also down by 7 per cent to 731,000tonnes, as plantings and yields fell. But the barley crop is put 10 per cent higher at 6.7 million tonnes, due primarily to a significant rise in the spring-sown area, as farmers made up for lost plantings the previous autumn.
Rice prices are rising again, on forecasts that the Philippines, the world’s largest importer, will be forced back to the market after floods there destroyed stocks in the major cities and wiped out seven per cent of the fourth quarter rise crop. In futures markets the contract for November delivery gained all week, adding as much as 0.6 per cent on Friday to US$13.305 per 100 pounds. Drought in India may slash rice output there by about 18 per cent to 81 million tons in the marketing year that began last week, cutting global supplies available for importers, Concepcion Calpe, senior economist at the UN Food and Agriculture Organization (FAO), said last week. Global stockpiles are expected to drop by 3 per cent to 117.4 million tons at the end of the 2009-2010 season, according to the FAO.
Tea prices are threatening to go higher than the ten-year records currently being achieved. World shortages after adverse harvest have left shrinking stocks and are resulting in forecasts that the days of cheap tea have gone. Kenyan prices have soared above US$4 a kilo and have been reaching US$4.16 and more – the low for this year has been down at US$1.91 for some grades. Colombo prices for even the lowest grades have gone from LKR 120 to LKR380, and higher grades have reach LKR550. Droughts in Kenya, Sri Lanka and India have cut output severely and resulted in highly volatile markets. Sri Lanka is expected to produce as much as 50 per cent less this year. With blenders holding little in the way of stocks, all tea prices are vulnerable to upward pressures. Concern about supplies is now being exacerbated by strikes in Sri Lanka.
Gourmet Corner:
Indonesia nutmeg farmers have got a whiff of higher prices and are refusing to be negotiated down, preferring to wait until their fruits are fully ripe and Christmas orders start to arrive. Prices have firmed to around US$10,700 a tonne, up from US$9,200 a week ago and US$8,400 earlier this year. Traders are warning their customers that there is generally a shortage of nutmeg, and the Indonesian market is controlled by a few very wealthy suppliers who can afford to manipulate the market.
Cardamom prices are also rising on the back of demand for festivities, but this time in the east. Indian cardamom is up by over 10 per cent over the last few weeks, trading at around Rs899 a kilo compared to Rs595 a year ago. Suppliers said that demand was always strong at this time of the year for Asian festivals and the marriage season. Plus, the crop has been reduced by adverse crop weather and is expected to be as much as 35 per cent smaller this year.
The outlook this year for potash is more difficult to forecast, although a rise in demand is expected in 2010. "Recent price declines, lack of demand and high producer inventory levels have reinforced buyers' perceptions that they could be further rewarded by continuing to hold off on their potash purchases," RBC said, adding that the strength of potash's recovery will also largely demand on whether China resumes its potash imports in 2010.
Longer-term, demand for both nutrients remain strong, with a growing world production requiring higher farming yields. "According to the International Plant Nutrition Institute, fertilizer accounts for approximately 40 per cent of crop yields," RBC said. "In the major agricultural regions of China, India and Brazil, potash and phosphate application rates are below scientifically recommended levels and improved fertilization practices could lead to higher yields." However, on Friday fertiliser shares in the US were falling, with Mosaic down 42 US cents, at US$49.24, Potash down US$2.77 at US$90.23 and Agrium 86 US cents lower at US$51.91.
In the UK, agriculture merchants Gleadells said phosphate prices were at rock bottom, and they forecast that prices would shortly begin to follow world prices higher. For potash, they see world supply and demand being very much in balance. All nitrogen products, they point out, are likely to be affected by oil and gas prices, which are predicted to increase through the winter, so now might just be the right time to make that purchase.
In UK corporate news sausages and pork products supplier Cranswick said sales were strongly ahead at the interim stage, helped by a contribution from the recently acquired Bowes of Norfolk. Sales in the six months to 30 September rose by 19 percent from a year earlier, with seven per cent attributable to the contribution from Bowes. The shares closed up 8p on Friday at 708p.
Chocolate maker and retailer Thorntons reported that it had had a solid three months trading to end September, with sales up by 2.3 per cent to £46.8million. This was despite the fact that two big customers, Birthdays and Woolworths, had closed down. The shares closed the week up 6p at 126p, helped by the news that chairman John von Spreckelsen had put his hand in his and bought 40,000 shares at 124.4p each, taking his stake to 1.6 per cent of the company. The shares are now trading at their best in over a year.
In commodity markets, there was news that Colombian coffee growers may harvest as little as 9.3 million bags this year, down 19 per cent from the previous season, after above-average rainfall damaged plants. Coffee has surged 23 per cent this year in New York after heavy rainfall hampered harvests in Colombia and Brazil, the biggest coffee producer and exporter. Next year’s output will also be boosted by warmer weather that is helping plants flower, the Federation said. Colombian inventories of coffee, now at about 700,000 bags, probably will increase to one million bags within two years, still below historic average.
The difficulties of the UK grain harvest were confirmed by the first official estimates from DEFRA last week. The data, which is based on June Survey plantings and yield data from over 1700 farmers, put total UK grain production for 2009 at 21.8 million tonnes, a drop of 10 per cent. Within this total, the wheat crop is estimated at 14.2million tonnes, a decrease of 18 per cent. This was based on an average yield of 7.9t/ha and a 14 per cent decrease in the sown area - slightly above the figure put out by the NFU in September. Oats production was also down by 7 per cent to 731,000tonnes, as plantings and yields fell. But the barley crop is put 10 per cent higher at 6.7 million tonnes, due primarily to a significant rise in the spring-sown area, as farmers made up for lost plantings the previous autumn.
Rice prices are rising again, on forecasts that the Philippines, the world’s largest importer, will be forced back to the market after floods there destroyed stocks in the major cities and wiped out seven per cent of the fourth quarter rise crop. In futures markets the contract for November delivery gained all week, adding as much as 0.6 per cent on Friday to US$13.305 per 100 pounds. Drought in India may slash rice output there by about 18 per cent to 81 million tons in the marketing year that began last week, cutting global supplies available for importers, Concepcion Calpe, senior economist at the UN Food and Agriculture Organization (FAO), said last week. Global stockpiles are expected to drop by 3 per cent to 117.4 million tons at the end of the 2009-2010 season, according to the FAO.
Tea prices are threatening to go higher than the ten-year records currently being achieved. World shortages after adverse harvest have left shrinking stocks and are resulting in forecasts that the days of cheap tea have gone. Kenyan prices have soared above US$4 a kilo and have been reaching US$4.16 and more – the low for this year has been down at US$1.91 for some grades. Colombo prices for even the lowest grades have gone from LKR 120 to LKR380, and higher grades have reach LKR550. Droughts in Kenya, Sri Lanka and India have cut output severely and resulted in highly volatile markets. Sri Lanka is expected to produce as much as 50 per cent less this year. With blenders holding little in the way of stocks, all tea prices are vulnerable to upward pressures. Concern about supplies is now being exacerbated by strikes in Sri Lanka.
Gourmet Corner:
Indonesia nutmeg farmers have got a whiff of higher prices and are refusing to be negotiated down, preferring to wait until their fruits are fully ripe and Christmas orders start to arrive. Prices have firmed to around US$10,700 a tonne, up from US$9,200 a week ago and US$8,400 earlier this year. Traders are warning their customers that there is generally a shortage of nutmeg, and the Indonesian market is controlled by a few very wealthy suppliers who can afford to manipulate the market.
Cardamom prices are also rising on the back of demand for festivities, but this time in the east. Indian cardamom is up by over 10 per cent over the last few weeks, trading at around Rs899 a kilo compared to Rs595 a year ago. Suppliers said that demand was always strong at this time of the year for Asian festivals and the marriage season. Plus, the crop has been reduced by adverse crop weather and is expected to be as much as 35 per cent smaller this year.
Selasa, 07 Juli 2009
Watchdog enters Timbercorp tussle
The Australian Securities and Investments Commission told the almond and olive growers yesterday that a lawyer would be appointed to act on their behalf next Wednesday at a Victorian Supreme Court hearing to decide the fate of 14 separate almond and olive projects at Robinvale and Boort.
ASIC is also asking the growers to complete an online poll where their views about the future of individual schemes will be submitted to Justice Ross Robson who is to preside over the hearing.
Writing to growers yesterday, ASIC noted complaints it had received on perceived conflicts of interest involving Mr Korda's insolvency practice.
ASIC also acknowledged the difficulties growers have encountered in making their views known and said that a plan by the Timbercorp Growers Committee to appoint a temporary manager - otherwise known as a responsible entity - is feasible.
It says that if a temporary appointment was made, growers' fees would continue to accrue and funding arrangements would need to be put in place.
But in documents before the court, Mr Korda claims that to keep the projects alive through 2010 the growers need to stump up $195.9 million on top of their existing rent and project maintenance costs.
He says this is because harvest proceeds from next season's crops are expected to fall short of meeting costs the projects are likely to incur.
As liquidator of 41 Timbercorp companies, Mr Korda and his assistant Leanne Chesser are acting for both the growers and a syndicate of banks that advanced $200 million to Timbercorp to fund land purchases outside Robinvale and Boort in the state's north.
Mr Korda argues that his first responsibility is to seek the best possible solution for growers.
Last week Mr Korda told a growers' meeting that the almond and olive schemes were a cashflow nightmare because of the upfront charges projects incur before the crops can be harvested and generate earnings.
He told the meeting that even if outstanding rents and crop maintenance bills were paid the projects would remain in deficit.
Timbercorp subsidised growers' rent bills, by charging just 60 per cent up front and leaving 40 per cent outstanding as a debt on the company's books until after the crops were sold after each harvest.
ASIC is also asking the growers to complete an online poll where their views about the future of individual schemes will be submitted to Justice Ross Robson who is to preside over the hearing.
Writing to growers yesterday, ASIC noted complaints it had received on perceived conflicts of interest involving Mr Korda's insolvency practice.
ASIC also acknowledged the difficulties growers have encountered in making their views known and said that a plan by the Timbercorp Growers Committee to appoint a temporary manager - otherwise known as a responsible entity - is feasible.
It says that if a temporary appointment was made, growers' fees would continue to accrue and funding arrangements would need to be put in place.
But in documents before the court, Mr Korda claims that to keep the projects alive through 2010 the growers need to stump up $195.9 million on top of their existing rent and project maintenance costs.
He says this is because harvest proceeds from next season's crops are expected to fall short of meeting costs the projects are likely to incur.
As liquidator of 41 Timbercorp companies, Mr Korda and his assistant Leanne Chesser are acting for both the growers and a syndicate of banks that advanced $200 million to Timbercorp to fund land purchases outside Robinvale and Boort in the state's north.
Mr Korda argues that his first responsibility is to seek the best possible solution for growers.
Last week Mr Korda told a growers' meeting that the almond and olive schemes were a cashflow nightmare because of the upfront charges projects incur before the crops can be harvested and generate earnings.
He told the meeting that even if outstanding rents and crop maintenance bills were paid the projects would remain in deficit.
Timbercorp subsidised growers' rent bills, by charging just 60 per cent up front and leaving 40 per cent outstanding as a debt on the company's books until after the crops were sold after each harvest.
Senin, 01 Juni 2009
Grain Trade Battle Continue
Russia has seized a shipment of Egyptian oranges at Novorossiysk port, after discovering Mediterranean fruit-fly infestation. The orange move has been reported in the Russian media as tit-for-tat for Egyptian moves to seize three shipments of Russian wheat since May 13.
Rosselkhoznadzor (RSN), the government's food and farm product inspectorate, confirms that the imported oranges have been impounded, but insists this is not a retaliation for last week's arrest by the Egyptian prosecutor-general of Russian wheat. Alexei Alexeyenko, the RSN spokesman, said the arriving citrus was inspected, and after the pest was found, the shipment has been quarantined and fumigated. In time, it will be allowed to be delivered to the consignees.
Alexeyenko also told Agriprods.com that two weeks after the Egyptians claim to have found infestation in 137,000 tonnes of arriving Russian wheat, there is still no official report from the government in Cairo of any contamination; and no official Egyptian government complaint. He said RSN has run special laboratory checks on grain from the same source as the wheat exported to Egypt, but no trace of weevil infestation has been found.
Alexeyenko said that traditionally, Egypt buys medium quality (4th and 5th class) wheat. "It always corresponds to the GOST [state inspection standard] and to the quality indicated in the sale agreement." Alexeyenko reflects government thinking in Moscow that the Egyptian seizures are a ruse to cut the trading price of the Russian grain in the Egyptian market, and to favour competing exporters from other countries. The timing, he said, is related to the World Grain Forum 2009, when
world grain producers and buyers will assemble in St. Petersburg on June 6.
President Dmity Medvedev will also depart shortly for his first state visit to Egypt. To avoid the growing embarrassment, Egyptian Foreign Minister Ahmed Aboul Gheit claimed this week in Moscow that "the relevant Egyptian bodies must determine whether there is a high level of bugs in the shipment and whether the shipment corresponds fully to international standards."
Since RSN says that no report has been received from the Egyptians, Russia's Foreign Minister Sergei Lavrov responded, during a press conference with Aboul Gheit, with a hint that nothing abnormal has happened at all, and that the problem will be solved soon: "In Russia and Egypt there is a bilateral mechanism to check the conformity of such products to the established norms. This mechanism is used, and what happened - this is a normal working situation."
Rosselkhoznadzor (RSN), the government's food and farm product inspectorate, confirms that the imported oranges have been impounded, but insists this is not a retaliation for last week's arrest by the Egyptian prosecutor-general of Russian wheat. Alexei Alexeyenko, the RSN spokesman, said the arriving citrus was inspected, and after the pest was found, the shipment has been quarantined and fumigated. In time, it will be allowed to be delivered to the consignees.
Alexeyenko also told Agriprods.com that two weeks after the Egyptians claim to have found infestation in 137,000 tonnes of arriving Russian wheat, there is still no official report from the government in Cairo of any contamination; and no official Egyptian government complaint. He said RSN has run special laboratory checks on grain from the same source as the wheat exported to Egypt, but no trace of weevil infestation has been found.
Alexeyenko said that traditionally, Egypt buys medium quality (4th and 5th class) wheat. "It always corresponds to the GOST [state inspection standard] and to the quality indicated in the sale agreement." Alexeyenko reflects government thinking in Moscow that the Egyptian seizures are a ruse to cut the trading price of the Russian grain in the Egyptian market, and to favour competing exporters from other countries. The timing, he said, is related to the World Grain Forum 2009, when
world grain producers and buyers will assemble in St. Petersburg on June 6.
President Dmity Medvedev will also depart shortly for his first state visit to Egypt. To avoid the growing embarrassment, Egyptian Foreign Minister Ahmed Aboul Gheit claimed this week in Moscow that "the relevant Egyptian bodies must determine whether there is a high level of bugs in the shipment and whether the shipment corresponds fully to international standards."
Since RSN says that no report has been received from the Egyptians, Russia's Foreign Minister Sergei Lavrov responded, during a press conference with Aboul Gheit, with a hint that nothing abnormal has happened at all, and that the problem will be solved soon: "In Russia and Egypt there is a bilateral mechanism to check the conformity of such products to the established norms. This mechanism is used, and what happened - this is a normal working situation."
Senin, 18 Mei 2009
Warning Of Farmland Riots
A warning that the quest for agriculture land by rich countries seeking to improve their food and fuel security could bring social unrest came last week from the US-based International Food Policy Research Institute (IFPRI). So it is drawing up a code of conduct for these acquisitions. Massive tracts of arable land in Africa, Russia and the Ukraine have been bought or leased. All told, the acreage secured through lease or purchase by Asian and European private and public investors is put by IFPRI at 15-20 million hectares, at a cost of €15-20 billion.
By comparison, annual net official development aid by OECD countries amounted to around €90 billion in 2008, €50 billion of which came from the EU. According to IRIN, the UN's humanitarian information news service, the lease of coastal wetlands in Kenya by Qatar threatens to displace thousands of locals who use the region for produce and livestock farming. Local councillors have said they will go to court to prevent the government from leasing the property.
In Madagascar meanwhile, the IFPRI researchers say, negotiations with South Korea's Daewoo Logistics Corporation to lease 1.3 million hectares for maize and oil palm played a role in the political conflicts that led to the overthrow of the government in 2009.
Stung by the criticism that using farmland for biofuel crops can actually boost carbon emissions and increase food prices, firms have been scouting about for cheap ‘wasteland'. "EU policies are certainly contributing to Western biofuels investment," Ruth Meinzen-Dick, one of the report's two authors, was quoted as saying in EUobserver, "When you hear the word ‘wasteland' or ‘unused', it usually does have some use, just not uses that are officially recognised," she added, "whether as a village common or as pastureland, gathering nuts, honey, or for rattan."
Food production is usually the focus of the land acquisition by emerging economies. The UAE has secured some 378,000 hectares to grow corn, alfalfa, wheat, potatoes and beans, while Saudi Arabia is in the process of gaining access to 500,000 hectares in Tanzania. Meanwhile in the east, Denmark's Trigon has secured 100,000 hectares from Russia. Sweden's Alpcot Agro has secured 128,000 hectares and Black Earth Farming 331,000 hectares in the country. Landkom, a UK firm, has leased 100,000 hectares in Ukraine. Ethiopia is home to 13,000 hectares secured under a contract farming agreement with Germany's Flora EcoPower for biofuel crop cultivation. Sweden's Skebab has secured 100,000 hectares in Mozambique for biofuels as well.
China has secured 2.8 million hectares in the Democratic Republic of Congo for oil palm and is hoping to access another 2 million hectares in Zambia for jatropha. Britain's CAMS Group has also purchased 45,000 hectares for jatropha biofuels in Tanzania. The researchers found that another 10,000 hectares have been secured in Nigeria by Trans4mation Agric-tech, also of the UK.
In markets, shipping rates continue to recover, as show by the key benchmark, the Baltic Dry Index. It surged at 2,432 points, up by 100, or 267 per cent higher than the low of 663 points of last December, led by the capesize sector. However, for the rally to be sustained, say brokers Fearnley and Braemar Seascope among others, the dry fleet will have to be reduced as fast as possible, otherwise the tonnage oversupply will prove disastrous.
In the major soft commodity markets, bullish sugar news, notably India’s production shortfall, has already been factoring into prices and the aggressive speculative buying has dried up allowing bearish traders to seize control. So world raw sugar futures closed down on profit-taking after racing to three-year highs earlier in the week on the back of heavy speculative buying. Alaron Trading said the next move higher may not occur until the third or fourth quarter. James Cassidy, senior vice president, Sugar Group at Newedge, looks for July sugar to decline to near US 14.50 cents a pound before finding support and levelling off. On Friday, ICE July sugar fell 52 points to settle at US 14.95 cents a pound.
Looking ahead, the International Sugar Organisation sees a possible 2009-10 world sugar deficit of 4.5-5.0 million tons. Tighter sugar stocks were also shown by the US Agriculture Department’s initial US figures for 2009-10. While production is higher, larger beginning stocks and decreased exports more than offset the increase. Ending stocks for the new crop year are pegged at a tight 289,000 tons, compared with 1.19 million in 2008-09. The 2009-10 projected stocks-to-use ratio for the U.S. came in at a bullish 2.7 per cent, down from a downwardly revised 11 per cent in 2008-09.
Coffee has strong underlying support as 2008-09 production is lower in Central and South America. The firmer US dollar and falling global equities pulled ICE Futures US Arabica coffee lower at the close of the week on Friday. The most actively traded contract, July settled down 20 points at US$1.2780 a pound and nearby May contract settled 40 points lower at US$1.2755. July Arabica is expected to continue to trade in the US$1.25-$1.30 range as speculators dominate the market, said Transworld Futures US. Futures have near-term resistance at the US$1.3075 level, Tuesday's high, and the strongest level since last October.
US cocoa futures rose on Friday in a minor technical bounce from recent lows during thin trade ahead of the weekend. Nearby July cocoa on ICE Futures US rose US$28 on Friday to settle at US$2,338 a ton. Liffe cocoa futures in London rose in tandem with the gains in New York. News this week from the International Cocoa Organization (ICCO) that 2008-09 grindings, a demand indicator, are expected to fall 6 per cent due to the economic recession which has been a bearish price influence. The ICCO said it expects global production for the current crop year to decline by nearly 7 per cent.
Gourmet corner:
Walnuts are the latest product for which tight stocks are being reported Last week there were sharp increases in spot UK prices of Chinese and Indian walnuts, according to the Public Ledger, as consumption rises around the world. Prices for Indian walnuts were being reported at US$6,700-6,800 a tonne cif European ports against US$5,200-5,300 two months ago. California walnuts are reported to be almost sold out, despite quotes of around US$2.75 a pound up from US$2 last year and after the largest US crop ever. Yet again strong Chinese buying is said to be the major cause of the shortages.
By comparison, annual net official development aid by OECD countries amounted to around €90 billion in 2008, €50 billion of which came from the EU. According to IRIN, the UN's humanitarian information news service, the lease of coastal wetlands in Kenya by Qatar threatens to displace thousands of locals who use the region for produce and livestock farming. Local councillors have said they will go to court to prevent the government from leasing the property.
In Madagascar meanwhile, the IFPRI researchers say, negotiations with South Korea's Daewoo Logistics Corporation to lease 1.3 million hectares for maize and oil palm played a role in the political conflicts that led to the overthrow of the government in 2009.
Stung by the criticism that using farmland for biofuel crops can actually boost carbon emissions and increase food prices, firms have been scouting about for cheap ‘wasteland'. "EU policies are certainly contributing to Western biofuels investment," Ruth Meinzen-Dick, one of the report's two authors, was quoted as saying in EUobserver, "When you hear the word ‘wasteland' or ‘unused', it usually does have some use, just not uses that are officially recognised," she added, "whether as a village common or as pastureland, gathering nuts, honey, or for rattan."
Food production is usually the focus of the land acquisition by emerging economies. The UAE has secured some 378,000 hectares to grow corn, alfalfa, wheat, potatoes and beans, while Saudi Arabia is in the process of gaining access to 500,000 hectares in Tanzania. Meanwhile in the east, Denmark's Trigon has secured 100,000 hectares from Russia. Sweden's Alpcot Agro has secured 128,000 hectares and Black Earth Farming 331,000 hectares in the country. Landkom, a UK firm, has leased 100,000 hectares in Ukraine. Ethiopia is home to 13,000 hectares secured under a contract farming agreement with Germany's Flora EcoPower for biofuel crop cultivation. Sweden's Skebab has secured 100,000 hectares in Mozambique for biofuels as well.
China has secured 2.8 million hectares in the Democratic Republic of Congo for oil palm and is hoping to access another 2 million hectares in Zambia for jatropha. Britain's CAMS Group has also purchased 45,000 hectares for jatropha biofuels in Tanzania. The researchers found that another 10,000 hectares have been secured in Nigeria by Trans4mation Agric-tech, also of the UK.
In markets, shipping rates continue to recover, as show by the key benchmark, the Baltic Dry Index. It surged at 2,432 points, up by 100, or 267 per cent higher than the low of 663 points of last December, led by the capesize sector. However, for the rally to be sustained, say brokers Fearnley and Braemar Seascope among others, the dry fleet will have to be reduced as fast as possible, otherwise the tonnage oversupply will prove disastrous.
In the major soft commodity markets, bullish sugar news, notably India’s production shortfall, has already been factoring into prices and the aggressive speculative buying has dried up allowing bearish traders to seize control. So world raw sugar futures closed down on profit-taking after racing to three-year highs earlier in the week on the back of heavy speculative buying. Alaron Trading said the next move higher may not occur until the third or fourth quarter. James Cassidy, senior vice president, Sugar Group at Newedge, looks for July sugar to decline to near US 14.50 cents a pound before finding support and levelling off. On Friday, ICE July sugar fell 52 points to settle at US 14.95 cents a pound.
Looking ahead, the International Sugar Organisation sees a possible 2009-10 world sugar deficit of 4.5-5.0 million tons. Tighter sugar stocks were also shown by the US Agriculture Department’s initial US figures for 2009-10. While production is higher, larger beginning stocks and decreased exports more than offset the increase. Ending stocks for the new crop year are pegged at a tight 289,000 tons, compared with 1.19 million in 2008-09. The 2009-10 projected stocks-to-use ratio for the U.S. came in at a bullish 2.7 per cent, down from a downwardly revised 11 per cent in 2008-09.
Coffee has strong underlying support as 2008-09 production is lower in Central and South America. The firmer US dollar and falling global equities pulled ICE Futures US Arabica coffee lower at the close of the week on Friday. The most actively traded contract, July settled down 20 points at US$1.2780 a pound and nearby May contract settled 40 points lower at US$1.2755. July Arabica is expected to continue to trade in the US$1.25-$1.30 range as speculators dominate the market, said Transworld Futures US. Futures have near-term resistance at the US$1.3075 level, Tuesday's high, and the strongest level since last October.
US cocoa futures rose on Friday in a minor technical bounce from recent lows during thin trade ahead of the weekend. Nearby July cocoa on ICE Futures US rose US$28 on Friday to settle at US$2,338 a ton. Liffe cocoa futures in London rose in tandem with the gains in New York. News this week from the International Cocoa Organization (ICCO) that 2008-09 grindings, a demand indicator, are expected to fall 6 per cent due to the economic recession which has been a bearish price influence. The ICCO said it expects global production for the current crop year to decline by nearly 7 per cent.
Gourmet corner:
Walnuts are the latest product for which tight stocks are being reported Last week there were sharp increases in spot UK prices of Chinese and Indian walnuts, according to the Public Ledger, as consumption rises around the world. Prices for Indian walnuts were being reported at US$6,700-6,800 a tonne cif European ports against US$5,200-5,300 two months ago. California walnuts are reported to be almost sold out, despite quotes of around US$2.75 a pound up from US$2 last year and after the largest US crop ever. Yet again strong Chinese buying is said to be the major cause of the shortages.
Jumat, 01 Mei 2009
K+S Is Undercutting The Big Russian And American Players In The Key Chinese Potash Market
In the global marketplace for potash there are none sharper at spotting a bargain than the Chinese. That’s because Chinese farmers, and the state fertilizer distributors, comprise the world’s largest consumers and importers of potash. And more than that, when the Chinese fix their annual contract price for potash imports, they set the marker for counterparts in India, South East Asia, and Brazil. During the last few years, China’s demand has been supplied from several sources. These include Canpotex of North America, representing Canadian and US mining companies such as Potash Corporation, the Belarusian Potash Corporation (BPC), representing potash mined in Belarus and Russia, and Israel Chemicals Ltd. (ICL). And during the past four years of booming commodity prices, the China market grew steadily, and so did potash prices.
But that’s history now. In the last half of 2008, the crash of all commodity prices and the shortage of farm credit have led most producers of potash to curtail their production dramatically, and prevent the accumulation of unsold stocks. In the first quarter of 2009, the Russian producer Uralkali, for example, cut its production of potash from 1.3 million tonnes to 459,000 tonnes, a reduction of 63 per cent. Potash Corporation, the world’s largest potash producer in Saskatchewan, has reported that in the same period it cut sales volumes to North American customers by 86 per cent, and to the rest of the world by 78 per cent.
But it’s spring in China, and after an unusually rainless winter, farmers preparing to plant need more potash than usual to improve their yields out of the dry ground. This is also the time that China’s big-volume buyers usually meet with the major producers and suppliers to fix the volume of deliveries of imported potash for another six to twelve months. But the China National Agricultural Means of Production Corporation (CNAMPGC), the China National Chemical Construction Company (CNCCC), and Sinopec - the three major Chinese buyers – all seem to be keeping their pens in their pockets, and their contract orders off the table. So what exactly is happening?
The answer is that a relatively big German company, with a relatively small share of the Chinese market for imported potash, is making a quiet play, and has put an offer on the table the Chinese cannot resist. That company is K+S Aktiengesellschaft of Kassel, Germany. K stands for kali (potash, potassium) and S stands for salz (salt). Five years old in the present corporate structure, K+S is Europe’s largest producer of salt. Its’ well-known package trademark is Morton’s little girl shielded by an umbrella, losing her salt, with the slogan: “When it rains, it pours”. This was a US-owned trademark for almost a century, until Dow Chemical sold it, along with its food and industrial salt products, to K + S for US$1.7 billion. Morton’s little girl became K+S’s on April 2nd of this year.
But a much bigger wind blowing the umbrella for K+S has been potash demand. During the commodity boom, salt lost proportional value in the group’s total revenues of €4.9 billion. The growth in potash prices drove the K+S group’s potash and magnesium division too. K+S says it lifted eight million tonnes of potash and magnesium last year from six German mines. It now counts itself the fourth largest potash producer in the world, with an export market share of one tonne traded in seven. .
The latest Chinese import statistics for potash in the quarter to March 31st reveal that China imported more than 170,000 tonnes of German-origin potash. That is more than a threefold increase, compared to the same period of 2008, and almost as much as was imported from Germany during the entire year of 2008. Asked by Agriprods to confirm what the data implies – that this German potash came from K+S - the company declined to say. The company is also unwilling to acknowledge that the price at which these shipments from Germany have been delivered to China is less than US$570 per tonne CFR (cost and freight delivered to Chinese port).
According to analyses issued this month by Scotia Capital in Toronto, and drawn from a variety of Chinese and foreign industry sources, K+S has been selling into China within a price range of US$540 and US$565 per tonne CFR. This is more than US$100 per tonne below the price at which supplies of potash are reported in the trade to have been landed in China late last year. Although K+S has in the past made relatively small sales of potash to Chinese importers, and the new number remains small, the significance of the K+S move is its timing and its price.
For at the end of 2008, all the major international potash suppliers to China, including Canpotex, BPC, and ICL, wound up their contracts, and halted fresh deliveries to China. The suppliers then proposed reopening contract negotiations for this year with the Chinese, but there was no response. Not until this month have the Chinese announced the formation of a “buying consortium”, which includes Sinochem, CNAMPGC and CNCCC. Contract talks have now commenced officially, but sources close to the table say the Chinese side is in no hurry to make a deal.
And that’s what makes K+S tactics significant, and its intentions worth investigating. In March Canpotex sold two cargoes of North American potash into Malaysia and Indonesia at a price of US$735 per tonne (CFR). This was the first price reduction from that exporter since last year. In April Canpotex followed with the sale of two additional cargoes to Brazil priced at US$750 per tonne. BPC had already announced in March that it was offering a 25 per cent discount off the spot price of Russian and Belarussian potash on the Brazilian market, down from US$1,000 per tonne to between US$750 and US$765 per tonne. But the downward trend of prices hasn’t aroused the hoped-for buying interest from the Chinese, either for the Russian or the North American product. Only K+S has signed new orders, at an even deeper discount.
Chinese buyers acknowledge that the K+S sales to date of 170,000 tonnes, even if they are repeated in the current quarter, are a drop in the bucket by China’s import standards. But they are having a much bigger psychological impact, Chinese trade sources claim. This is because K+S sales agents around China are convincing the domestic market that they will keep up supply volumes, and keep down price growth. If another 100,000 tonnes of K+S potash lands before May 25, when the International Fertilizer Association holds its annual conference in Shanghai, Sinochem and CNAMPGC may decide to keep talking past the deadline, and wait for a further drop in price. India, the next largest global importer, appears to be delaying renewing its annual contract until it sees what the Chinese do.
Chinese buyers are also reported by Scotia Capital in Toronto as saying that right now the spring planting requirement for potash has been met, and that three million tonnes of potash remain in inventory. The Chinese are claiming they have enough potash in stock to last for another three months. But they will have to conclude the new contract negotiations in time for deliveries to be made in time for the autumn planting season.
BPC and Uralkali refuse to comment on the China negotiations. But industry sources report BPC sales director, Oleg Petrov, as saying publicly on April 28th that India's potash inventories have dropped very low, while China has enough inventory for several months, making it likely that the Indians will try striking a deal before the Chinese feel the need to do the same.
Market analysts in Europe and North America say they have only recently seen the evidence of the K+S move in China. Roydel Stewart, the fertilizer specialist at Alfa Bank in Moscow, told Agriprods that the market had been taken by surprise by the K+S initiative in the China market. He said that when asked, K+S “vehemently deny that they sell to China at below-market prices. K+S never reports its potash production or sales. They group it with other products, so we don't know exactly how much potash they produce and sell. So it is possible, I suppose, that they are sending some volume to China...”
K+S spokesman Katja Seeger was asked what sales strategy K+S is keeping under the famous umbrella, and whether it is K+S's aim to undercut the supply and price controls of its international rivals, and improve its potash sales to China. She replied: “China is the biggest potash market in the world. K+S KALI GmbH traditionally supplies this market and will go on doing so. The quantities we ship are considerably smaller than those of some competitors. We ask for your understanding, that at this point we won´t discuss the strategic orientation of our business.”
But that’s history now. In the last half of 2008, the crash of all commodity prices and the shortage of farm credit have led most producers of potash to curtail their production dramatically, and prevent the accumulation of unsold stocks. In the first quarter of 2009, the Russian producer Uralkali, for example, cut its production of potash from 1.3 million tonnes to 459,000 tonnes, a reduction of 63 per cent. Potash Corporation, the world’s largest potash producer in Saskatchewan, has reported that in the same period it cut sales volumes to North American customers by 86 per cent, and to the rest of the world by 78 per cent.
But it’s spring in China, and after an unusually rainless winter, farmers preparing to plant need more potash than usual to improve their yields out of the dry ground. This is also the time that China’s big-volume buyers usually meet with the major producers and suppliers to fix the volume of deliveries of imported potash for another six to twelve months. But the China National Agricultural Means of Production Corporation (CNAMPGC), the China National Chemical Construction Company (CNCCC), and Sinopec - the three major Chinese buyers – all seem to be keeping their pens in their pockets, and their contract orders off the table. So what exactly is happening?
The answer is that a relatively big German company, with a relatively small share of the Chinese market for imported potash, is making a quiet play, and has put an offer on the table the Chinese cannot resist. That company is K+S Aktiengesellschaft of Kassel, Germany. K stands for kali (potash, potassium) and S stands for salz (salt). Five years old in the present corporate structure, K+S is Europe’s largest producer of salt. Its’ well-known package trademark is Morton’s little girl shielded by an umbrella, losing her salt, with the slogan: “When it rains, it pours”. This was a US-owned trademark for almost a century, until Dow Chemical sold it, along with its food and industrial salt products, to K + S for US$1.7 billion. Morton’s little girl became K+S’s on April 2nd of this year.
But a much bigger wind blowing the umbrella for K+S has been potash demand. During the commodity boom, salt lost proportional value in the group’s total revenues of €4.9 billion. The growth in potash prices drove the K+S group’s potash and magnesium division too. K+S says it lifted eight million tonnes of potash and magnesium last year from six German mines. It now counts itself the fourth largest potash producer in the world, with an export market share of one tonne traded in seven. .
The latest Chinese import statistics for potash in the quarter to March 31st reveal that China imported more than 170,000 tonnes of German-origin potash. That is more than a threefold increase, compared to the same period of 2008, and almost as much as was imported from Germany during the entire year of 2008. Asked by Agriprods to confirm what the data implies – that this German potash came from K+S - the company declined to say. The company is also unwilling to acknowledge that the price at which these shipments from Germany have been delivered to China is less than US$570 per tonne CFR (cost and freight delivered to Chinese port).
According to analyses issued this month by Scotia Capital in Toronto, and drawn from a variety of Chinese and foreign industry sources, K+S has been selling into China within a price range of US$540 and US$565 per tonne CFR. This is more than US$100 per tonne below the price at which supplies of potash are reported in the trade to have been landed in China late last year. Although K+S has in the past made relatively small sales of potash to Chinese importers, and the new number remains small, the significance of the K+S move is its timing and its price.
For at the end of 2008, all the major international potash suppliers to China, including Canpotex, BPC, and ICL, wound up their contracts, and halted fresh deliveries to China. The suppliers then proposed reopening contract negotiations for this year with the Chinese, but there was no response. Not until this month have the Chinese announced the formation of a “buying consortium”, which includes Sinochem, CNAMPGC and CNCCC. Contract talks have now commenced officially, but sources close to the table say the Chinese side is in no hurry to make a deal.
And that’s what makes K+S tactics significant, and its intentions worth investigating. In March Canpotex sold two cargoes of North American potash into Malaysia and Indonesia at a price of US$735 per tonne (CFR). This was the first price reduction from that exporter since last year. In April Canpotex followed with the sale of two additional cargoes to Brazil priced at US$750 per tonne. BPC had already announced in March that it was offering a 25 per cent discount off the spot price of Russian and Belarussian potash on the Brazilian market, down from US$1,000 per tonne to between US$750 and US$765 per tonne. But the downward trend of prices hasn’t aroused the hoped-for buying interest from the Chinese, either for the Russian or the North American product. Only K+S has signed new orders, at an even deeper discount.
Chinese buyers acknowledge that the K+S sales to date of 170,000 tonnes, even if they are repeated in the current quarter, are a drop in the bucket by China’s import standards. But they are having a much bigger psychological impact, Chinese trade sources claim. This is because K+S sales agents around China are convincing the domestic market that they will keep up supply volumes, and keep down price growth. If another 100,000 tonnes of K+S potash lands before May 25, when the International Fertilizer Association holds its annual conference in Shanghai, Sinochem and CNAMPGC may decide to keep talking past the deadline, and wait for a further drop in price. India, the next largest global importer, appears to be delaying renewing its annual contract until it sees what the Chinese do.
Chinese buyers are also reported by Scotia Capital in Toronto as saying that right now the spring planting requirement for potash has been met, and that three million tonnes of potash remain in inventory. The Chinese are claiming they have enough potash in stock to last for another three months. But they will have to conclude the new contract negotiations in time for deliveries to be made in time for the autumn planting season.
BPC and Uralkali refuse to comment on the China negotiations. But industry sources report BPC sales director, Oleg Petrov, as saying publicly on April 28th that India's potash inventories have dropped very low, while China has enough inventory for several months, making it likely that the Indians will try striking a deal before the Chinese feel the need to do the same.
Market analysts in Europe and North America say they have only recently seen the evidence of the K+S move in China. Roydel Stewart, the fertilizer specialist at Alfa Bank in Moscow, told Agriprods that the market had been taken by surprise by the K+S initiative in the China market. He said that when asked, K+S “vehemently deny that they sell to China at below-market prices. K+S never reports its potash production or sales. They group it with other products, so we don't know exactly how much potash they produce and sell. So it is possible, I suppose, that they are sending some volume to China...”
K+S spokesman Katja Seeger was asked what sales strategy K+S is keeping under the famous umbrella, and whether it is K+S's aim to undercut the supply and price controls of its international rivals, and improve its potash sales to China. She replied: “China is the biggest potash market in the world. K+S KALI GmbH traditionally supplies this market and will go on doing so. The quantities we ship are considerably smaller than those of some competitors. We ask for your understanding, that at this point we won´t discuss the strategic orientation of our business.”
Kamis, 30 April 2009
The Price Is No Deterrent As Demand Continues To Rise - English Wines
Interesting to learn from Guy Tresnan, sales and marketing director of PLUS listed English Wines Group, at the Master Investor Show in London last week, that the constraint on growth is volume rather then sales. In other words the company can sell all the wine it produces through a combination of retail sales, wholesale to supermarket groups and sales to restaurants. Needless to say it is retail sales that get the biggest mark-up as far as the company is concerned and the lowest mark-up comes from the supermarkets. Somewhere in the middle come well known restaurants such as Gary Rhodes, Ramsay, Konstam, Roast and other well known chains, but it is with them that maximum credit control has to be exerted in these difficult financial times.
Guy gives an example of Tom Aikens’s restaurants which went into administration in October 2008. All they owed English Wines was £600, but a lot of small farmers and suppliers were owed a lot more than that. In a matter of weeks Aikens was back in business through another company and all the outstanding bills were worthless. Guy is angry about this and, as an aside, suggests that he may put together a band of these creditors to have a good dinner at the new restaurant before telling whoever is front of house that the bill can be put against their old invoices.
The selling of wine is a funny old game as Rowan Gormley pointed out recently Rowan was the man who started Virgin Money and Virgin Wine for Richard Branson. After Virgin Wine was sold to Laithwaites he started another company called Naked Wine and this will cut through what he sees as the crap of marketing which costs small producers more than the wine costs to make. English Wines stands out from this comment as it is the only English wine maker of sufficient size to interest supermarkets and restaurant groups in its range of wines. Nevertheless it still has to spend significantly on marketing support for the supermarkets. .
The last two years have seen low harvests as a result of the weather and the words ‘climate change’ have disappeared from the lips of chief executive Frazer Thompson. When we wrote about the company this time last year he mentioned those two dread words on more than one occasion when explaining why he was buying land for grape growing on the chalk belt running up from Dover to the north Downs. It was because the average annual temperature was very similar to the area around Reims and Chablis where the French produce champagne and high class white wines from what are called the ‘noble grapes’.
Now the story is much simpler. The ground is suitable for growing pinot noir and chardonnay grapes, and the more the merrier. In the interim results announced last September Frazer reported that 116 acres of freehold land had been acquired at Kit’s Coty on Bluebell Hill near Aylesford and that the first 75 acres had been planted with vines which should start to bear fruit in 2010. Frazer Thompson is not very forthcoming with information but it looks a fair bet that the Kit’s Coty venture will cost around £10,000 per acre after taking into account all the expense of planting the vines and installing the wire, spiles and posts to support them.
Although a small harvest is expected in 2010, the wine from this will not be sold until 2011. The first full harvest should be in 2011 for wine to be sold in 2012 and most of this will be champagne type wine as the fizz inflates the profit margin. In a reasonable year one acre should produce 3 tonnes of grapes/acre which should amount to 3,000 bottles after the wine maker has done his work. By 2012, therefore, Kit’s Coty should be producing an additional 18,750 cases of fairly expensive wine and there will still be the grapes from the other 41 acres to come. It is a major investment, but as long as English Wines retains its premier position in its particular sector of the market, it should pay off
One thing can be said against PLUS listed English Wines Group, it is very parsimonious with news for a listed company. In fact the only announcements of note appear to be the interim results in September and the final results in April. Nothing about harvests or new sales contracts in the meantime which seems a pity as it fails to exploit its position as a listed company. A quarterly news bulletin would be one idea, as would special wine or meal offers for shareholders. After all the main vineyard at Chapel Down near Tenterden now has a restaurant run by celebrity chef Richard Phillips. There is a bit of romance in having shares in England’s biggest winemaker, but it would be a whole lot more romantic if some offers were thrown in. After all if expansion is what the company is about it may want to raise more money in the future and this will mean courting shareholders.
During 2008 pre-tax profits fell from £157,543 to £105,995. The low harvests in 2007 and 2008 were the culprits as the volume of wine sold last year fell by 17 per cent and the 8 per cent increase in selling prices (excluding duty) were not sufficient to offset this. The quality of the grapes mitigated this problem to an extent and costs have apparently been contained, but administration and market costs increased by 10 per cent. Looking ahead there is more acreage coming into production as the company attracts new growers to supply premium grapes from suitable land. Let us hope that the weather will be better this year so that it coincides with good quality to produce wines for which demand appears to be growing.
Guy gives an example of Tom Aikens’s restaurants which went into administration in October 2008. All they owed English Wines was £600, but a lot of small farmers and suppliers were owed a lot more than that. In a matter of weeks Aikens was back in business through another company and all the outstanding bills were worthless. Guy is angry about this and, as an aside, suggests that he may put together a band of these creditors to have a good dinner at the new restaurant before telling whoever is front of house that the bill can be put against their old invoices.
The selling of wine is a funny old game as Rowan Gormley pointed out recently Rowan was the man who started Virgin Money and Virgin Wine for Richard Branson. After Virgin Wine was sold to Laithwaites he started another company called Naked Wine and this will cut through what he sees as the crap of marketing which costs small producers more than the wine costs to make. English Wines stands out from this comment as it is the only English wine maker of sufficient size to interest supermarkets and restaurant groups in its range of wines. Nevertheless it still has to spend significantly on marketing support for the supermarkets. .
The last two years have seen low harvests as a result of the weather and the words ‘climate change’ have disappeared from the lips of chief executive Frazer Thompson. When we wrote about the company this time last year he mentioned those two dread words on more than one occasion when explaining why he was buying land for grape growing on the chalk belt running up from Dover to the north Downs. It was because the average annual temperature was very similar to the area around Reims and Chablis where the French produce champagne and high class white wines from what are called the ‘noble grapes’.
Now the story is much simpler. The ground is suitable for growing pinot noir and chardonnay grapes, and the more the merrier. In the interim results announced last September Frazer reported that 116 acres of freehold land had been acquired at Kit’s Coty on Bluebell Hill near Aylesford and that the first 75 acres had been planted with vines which should start to bear fruit in 2010. Frazer Thompson is not very forthcoming with information but it looks a fair bet that the Kit’s Coty venture will cost around £10,000 per acre after taking into account all the expense of planting the vines and installing the wire, spiles and posts to support them.
Although a small harvest is expected in 2010, the wine from this will not be sold until 2011. The first full harvest should be in 2011 for wine to be sold in 2012 and most of this will be champagne type wine as the fizz inflates the profit margin. In a reasonable year one acre should produce 3 tonnes of grapes/acre which should amount to 3,000 bottles after the wine maker has done his work. By 2012, therefore, Kit’s Coty should be producing an additional 18,750 cases of fairly expensive wine and there will still be the grapes from the other 41 acres to come. It is a major investment, but as long as English Wines retains its premier position in its particular sector of the market, it should pay off
One thing can be said against PLUS listed English Wines Group, it is very parsimonious with news for a listed company. In fact the only announcements of note appear to be the interim results in September and the final results in April. Nothing about harvests or new sales contracts in the meantime which seems a pity as it fails to exploit its position as a listed company. A quarterly news bulletin would be one idea, as would special wine or meal offers for shareholders. After all the main vineyard at Chapel Down near Tenterden now has a restaurant run by celebrity chef Richard Phillips. There is a bit of romance in having shares in England’s biggest winemaker, but it would be a whole lot more romantic if some offers were thrown in. After all if expansion is what the company is about it may want to raise more money in the future and this will mean courting shareholders.
During 2008 pre-tax profits fell from £157,543 to £105,995. The low harvests in 2007 and 2008 were the culprits as the volume of wine sold last year fell by 17 per cent and the 8 per cent increase in selling prices (excluding duty) were not sufficient to offset this. The quality of the grapes mitigated this problem to an extent and costs have apparently been contained, but administration and market costs increased by 10 per cent. Looking ahead there is more acreage coming into production as the company attracts new growers to supply premium grapes from suitable land. Let us hope that the weather will be better this year so that it coincides with good quality to produce wines for which demand appears to be growing.
A rise in Asian palm oil demand
A rise in Asian palm oil demand - the world’s cheapest and most consumed cooking oil - has cut stockpiles in Malaysia by 13 per cent in March to the lowest level since July 2007. Just last November they were at record highs, but the latest data suggests “the prospect for a sharp drop in palm oil prices has evaporated,” a HwangDBS Vickers Research report said. However, “current stocks of soybeans in China and of palm oil in India are at record levels, hence there is a possibility of declining purchases in the coming months,” warned Citigroup analyst Penny Yaw. Her latest report forecasts that the palm oil price will average RM2,200 a ton this year.
Malaysian crude palm oil futures edged up to a 34-week high on expectations that data due this week (starting 27 April) would show good palm oil exports so far this month. There is market speculation that exports could be as much as seven per cent higher. The benchmark July contract on the Bursa Malaysia Derivatives Exchange ended up RM5, or 0.2 per cent, at RM2,585, ( US$721.50). The benchmark contract hit an intraday low of RM2,535 and a high of RM2,648, a level not seen since August 25. Overall volume was more than double the usual level at 23,396 lots of 25 tonnes each.
China, the world’s largest vegetable oils consumer, has turned to stock piling other oilseeds, which analysts say may slow demand. It will extend by two months a plan to stockpile 6 million metric tons of soybeans and buy more rapeseed from growers to aid farmers sell crops and boost their incomes, the State Council said. Palm oil exports to China from Malaysia, the second-largest producer, have dropped 10 per cent to 1.03 million tons this year from 1.15 million tons in the same period last year, according to data from Societe Generale de Surveillance up to April 20.
Supporting palm oil prices are the threats to soya exports. Argentina, the largest soybean oil exporter, is having its worst drought in more than four decades and in addition there is on-going disruption to exports from the clash between government and farmers over taxes. The Buenos Aires Cereals Exchange lowered its 2009 soybean forecast by 6.1 percent to 37 million tons as the harvest may be the lowest in four years.
Another factor is that the US, the largest soybean grower, has indicated that farmers may plant less than had been expected. Soybean oil and palm oil are substitutes, accounting for about two-thirds of the world’s cooking oils. Plus, Russia is expected to step up imports before imposing higher tariffs on palm oil to help boost demand for domestic cooking oils, such as sunflower. Shares of the UK-quoted palm oil producers all rose on Friday, New Britain continuing its run, gaining12p to 395p, MP Evans up 4p at 270p, Anglo Eastern Plantations up 17p at 325p, REA up 28p at 345p.
Shares of Wilmar International Ltd, IOI Corp, KL Kepong Bhd and other plantation companies may rise more than forecast, according to brokers Hwang DBS Vickers Research. “Singapore listings offer best value,” the report said, advising investors to buy Wilmar, First Resources Ltd and Indofood Agri Resources. The report advised investors “take profit” on PT Astra Agro Lestari of Indonesia and Sime Darby Bhd of Malaysia.
In other markets, cocoa prices were mixed amid ongoing fears about leading producer Ivory Coast. “Ultimately the considerable shortfall in the main Ivory Coast harvest seen earlier this year - and resulting pressure on stock levels - will really hold any downside to prices in check”, said Barclays Capital analysts. By Friday on LIFFE, London's futures exchange, the price of cocoa for delivery in May had risen to £1,837 a tonne from £1,712 the previous week. On the New York Board of Trade (NYBOT), the July cocoa contract rallied to US$2,453 a tonne from US$2,354.
In coffee markets by Friday on LIFFE, Robusta for delivery in May dipped to US$1,491 a tonne from US$1,494 the previous week. On the NYBOT, Arabica for July rose to US 118.55 cents a pound from 114.25 cents.
On LIFFE, the price of a tonne of white sugar for delivery in August firmed to £413.10 from £396.2 the previous week. On NYBOT, the price of unrefined sugar for July increased to US 13.83 cents a pound from 13.48 cents.
Gourmet Corner:
Clove smuggling is on the increase. Farmers have become increasingly unhappy with the prices they are getting, while international prices are soaring after bad harvests last year and rising demand in Asia for cigarettes and food flavouring. High prices are also pushing importers to aid the smugglers.
In one major producer, Zanzibar, there is officially no free trade, selling being done by state organisation. Farmers say this has been giving them only half the selling price. So farmers have been taking their cloves over the border to Kenya. In another producer, Madagascar, it is the local Chinese merchants that have been causing discontent in their major market, China, and importers have been cutting them out.
One of the many problems with clove production is that it takes five years for a tree to become productive, so farmers are reluctant to cut down old ones or to invest money in new ones. So, in Zanzibar, for example, the number of trees have halved over the last thirty years, according to the Zanzibar Clove Producers Organisation, cutting the annual crop from 24,000 tonnes to 10,000 tonnes.
Zanzibar cloves are being quoted at around US$4,375 a tonne, up from US$4,150 fob EU earlier this year. Madagascar is quoting EUR2,996 a tonne, up from EUR2,470 cif European ports.
Malaysian crude palm oil futures edged up to a 34-week high on expectations that data due this week (starting 27 April) would show good palm oil exports so far this month. There is market speculation that exports could be as much as seven per cent higher. The benchmark July contract on the Bursa Malaysia Derivatives Exchange ended up RM5, or 0.2 per cent, at RM2,585, ( US$721.50). The benchmark contract hit an intraday low of RM2,535 and a high of RM2,648, a level not seen since August 25. Overall volume was more than double the usual level at 23,396 lots of 25 tonnes each.
China, the world’s largest vegetable oils consumer, has turned to stock piling other oilseeds, which analysts say may slow demand. It will extend by two months a plan to stockpile 6 million metric tons of soybeans and buy more rapeseed from growers to aid farmers sell crops and boost their incomes, the State Council said. Palm oil exports to China from Malaysia, the second-largest producer, have dropped 10 per cent to 1.03 million tons this year from 1.15 million tons in the same period last year, according to data from Societe Generale de Surveillance up to April 20.
Supporting palm oil prices are the threats to soya exports. Argentina, the largest soybean oil exporter, is having its worst drought in more than four decades and in addition there is on-going disruption to exports from the clash between government and farmers over taxes. The Buenos Aires Cereals Exchange lowered its 2009 soybean forecast by 6.1 percent to 37 million tons as the harvest may be the lowest in four years.
Another factor is that the US, the largest soybean grower, has indicated that farmers may plant less than had been expected. Soybean oil and palm oil are substitutes, accounting for about two-thirds of the world’s cooking oils. Plus, Russia is expected to step up imports before imposing higher tariffs on palm oil to help boost demand for domestic cooking oils, such as sunflower. Shares of the UK-quoted palm oil producers all rose on Friday, New Britain continuing its run, gaining12p to 395p, MP Evans up 4p at 270p, Anglo Eastern Plantations up 17p at 325p, REA up 28p at 345p.
Shares of Wilmar International Ltd, IOI Corp, KL Kepong Bhd and other plantation companies may rise more than forecast, according to brokers Hwang DBS Vickers Research. “Singapore listings offer best value,” the report said, advising investors to buy Wilmar, First Resources Ltd and Indofood Agri Resources. The report advised investors “take profit” on PT Astra Agro Lestari of Indonesia and Sime Darby Bhd of Malaysia.
In other markets, cocoa prices were mixed amid ongoing fears about leading producer Ivory Coast. “Ultimately the considerable shortfall in the main Ivory Coast harvest seen earlier this year - and resulting pressure on stock levels - will really hold any downside to prices in check”, said Barclays Capital analysts. By Friday on LIFFE, London's futures exchange, the price of cocoa for delivery in May had risen to £1,837 a tonne from £1,712 the previous week. On the New York Board of Trade (NYBOT), the July cocoa contract rallied to US$2,453 a tonne from US$2,354.
In coffee markets by Friday on LIFFE, Robusta for delivery in May dipped to US$1,491 a tonne from US$1,494 the previous week. On the NYBOT, Arabica for July rose to US 118.55 cents a pound from 114.25 cents.
On LIFFE, the price of a tonne of white sugar for delivery in August firmed to £413.10 from £396.2 the previous week. On NYBOT, the price of unrefined sugar for July increased to US 13.83 cents a pound from 13.48 cents.
Gourmet Corner:
Clove smuggling is on the increase. Farmers have become increasingly unhappy with the prices they are getting, while international prices are soaring after bad harvests last year and rising demand in Asia for cigarettes and food flavouring. High prices are also pushing importers to aid the smugglers.
In one major producer, Zanzibar, there is officially no free trade, selling being done by state organisation. Farmers say this has been giving them only half the selling price. So farmers have been taking their cloves over the border to Kenya. In another producer, Madagascar, it is the local Chinese merchants that have been causing discontent in their major market, China, and importers have been cutting them out.
One of the many problems with clove production is that it takes five years for a tree to become productive, so farmers are reluctant to cut down old ones or to invest money in new ones. So, in Zanzibar, for example, the number of trees have halved over the last thirty years, according to the Zanzibar Clove Producers Organisation, cutting the annual crop from 24,000 tonnes to 10,000 tonnes.
Zanzibar cloves are being quoted at around US$4,375 a tonne, up from US$4,150 fob EU earlier this year. Madagascar is quoting EUR2,996 a tonne, up from EUR2,470 cif European ports.
Rabu, 04 Februari 2009
Food prices start to creep back up, retail figures show
Since Autumn of last year the price of most food had started to fall from their record highs, as the cost of global commodities came down, especially wheat and milk.
However, the British Retail Consortium on Wednesday warned that the price of some food, especially frozen food and ready meals, was increasing once again.
According to the BRC, annual food inflation climbed from 6.2 per cent in December to 7.5 per cent in January.
This is because the majority of goods on shop shelves – from food, to electrical goods, toys and clothing – are imported.
Stephen Robertson, director general of the BRC, said: "The effects of the weak pound are starting to filter through to the costs of imports, slowing the rate of price falls for some non-food goods and contributing to pushing up the prices of some food products."
Overall, inflation rose from 0.5 per cent in December to 1.1 per cent last month.
And retail experts warned that shoppers will need to get used to a return to prices climbing up once again, especially in clothing and electrical goods, most of which are sourced from Far East countries, whose currencies are pegged to the value of the dollar.
Investors, fearing for the state of the British economy, have sold sterling on the international currency markets, forcing down the value of the pound from above $2 a year ago to $1.44 this week.
Jason Gordon, retail director at consultancy Ernst & Young, said: "We import tonnes of food from abroad – fruit and vegetables, much of our meat and most branded goods. It is all going to be costing retailers more."
Though some staples such as bread and milk have started to come down in price compared with their peaks of last year, other goods are more expensive than a month ago.
According to MySupermarket.co.uk, a kilo of bananas in Tesco increased from 85p to 95p between December and January; Asda increased the price of a cucumber portion from 34p to 49p and the price of Maris Piper potatoes at Sainsbury's has climbed from £1.50 for a 2.5kg bag to £1.99.
The full effect of the weak pound will only hit clothing, toy and electrical goods prices later in the year, after retailers' hedging agreements – contracts to shield themselves from currency volatility –run out.
"After more than a decade of falling prices for jeans, T-shirts, and other basic clothing, shoppers are potentially in for a rude awakening," said Mr Gordon.
However, the British Retail Consortium on Wednesday warned that the price of some food, especially frozen food and ready meals, was increasing once again.
According to the BRC, annual food inflation climbed from 6.2 per cent in December to 7.5 per cent in January.
This is because the majority of goods on shop shelves – from food, to electrical goods, toys and clothing – are imported.
Stephen Robertson, director general of the BRC, said: "The effects of the weak pound are starting to filter through to the costs of imports, slowing the rate of price falls for some non-food goods and contributing to pushing up the prices of some food products."
Overall, inflation rose from 0.5 per cent in December to 1.1 per cent last month.
And retail experts warned that shoppers will need to get used to a return to prices climbing up once again, especially in clothing and electrical goods, most of which are sourced from Far East countries, whose currencies are pegged to the value of the dollar.
Investors, fearing for the state of the British economy, have sold sterling on the international currency markets, forcing down the value of the pound from above $2 a year ago to $1.44 this week.
Jason Gordon, retail director at consultancy Ernst & Young, said: "We import tonnes of food from abroad – fruit and vegetables, much of our meat and most branded goods. It is all going to be costing retailers more."
Though some staples such as bread and milk have started to come down in price compared with their peaks of last year, other goods are more expensive than a month ago.
According to MySupermarket.co.uk, a kilo of bananas in Tesco increased from 85p to 95p between December and January; Asda increased the price of a cucumber portion from 34p to 49p and the price of Maris Piper potatoes at Sainsbury's has climbed from £1.50 for a 2.5kg bag to £1.99.
The full effect of the weak pound will only hit clothing, toy and electrical goods prices later in the year, after retailers' hedging agreements – contracts to shield themselves from currency volatility –run out.
"After more than a decade of falling prices for jeans, T-shirts, and other basic clothing, shoppers are potentially in for a rude awakening," said Mr Gordon.
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