Myanmar Cyclone, Nigeria and Philippines Buying Drive Rice Up for 6th Day
May 8, 2008
Myanmar, expected to export 600,000 tons of rice, may now become an importer after Cyclone Nargis. The cyclone hit hard in the 5 provinces that produce 2/3 of the country's rice. Nargis flooded 1,930 sq miles (5,000 sq km) of farmland across the Irrawaddy delta.
(Incidentally, Nargis is the name of a famous Indian female actress, who played in Mother India. At one point, her land is destroyed by a horrible storm).
The Philippines, the world's largest importer of rice, is moving aggressively to secure 600,000 tons of rice. Japan and the Philippines are in talks for 10% of that amount.
Nigeria, the 2nd largest rice importer, has purchased 500,000 tons of rice from Thailand and ended tariffs on rice imports.
Rice futures were up 4.7% to $23.40. The record is $25.07, set on April 24.
More rice futures news at Bloomberg
Argentine Farmers to Protest, Grain Shipments in Danger
May 8, 2008
Argentine farmers have ended talks with the government after 57 days of negotiations. However, the striking farmers have promised not to block highways. A 3 week strike in March - in which farmers did block highways - pushed the nation into domestic crises and led to the firing of the economic minister.
Talks seemed to break down last week, when the government failed to lift curbs on beef exports.
Argentina is one of the largest exporters of soybeans, corn, and wheat. Any disruption to exports of those grains is likely to further drive up their respective commodity prices.
Read more about soybean futures at the BBC
Oil futures defy rise in gas inventory, closes up $1.69
May 7, 2008
The Energy Department's weekly report showed a greater than expected rise in crude inventories. However, distillate fuels such as diesel fell unexpectedly while gas demand showed a slight rise.
Still, momentum seems to be the key factor these days. Overall, demand for gas is down 5% this year, and inventories are now growing at a record pace.
June light sweet crude oil futures closed up at $123.53 (+$1.69) on the NYMEX. Diesel closed at $4.242, just slightly below the all time record of $4.251. Other energy futures also rose today.
Read more at MSNBC
Rain, rain go away. Wet weather drives rise in Corn, Soybean Futures
May 7, 2008
Wet weather in the world's largest producer and exporter of corn and soybeans halted planting of the crops. News of the planting halt drove corn up 6.75 ¢ to $6.13 on the CBOT. Soybeans rose 2.5% to $13.09 (+32¢).
US Farmers reported that they will be planting 8.1% less corn this year, still it would make it the 2nd largest crop since 1949. Soybean crops were expected to grow 18%.
Corn is the US's most valuable crop, valued at $52.1 billion. Soybeans are 2nd at $26.8 billion
In other news, Argentinian farmers are expected to block trucks carrying newly harvested corn to protest rising taxes.
read more at Bloomberg
Middle Distillates, Not Gas Driving Oil Prices
May 6, 2008
Arjun Murti, who predicted the super spike in March 2005, released a new report today indicating that oil prices may reach $150 - $200. In his analysis, Mr. Murti believes middle distillates - such as diesel, heating oil, jet fuel - are now driving oil prices. Previously, oil had largely been driven by gasoline demand.
Last year, jet fuel was $9 cheaper than the RBOB spot prices ($83.30 vs $92.60). Today, that same jet fuel is now $30 above the RBOB. This price reality combined with falling gas demand has led some refiners to switch from gasoline to other middle distillates.
US oil futures finished the day at $121.84 (+$1.87)
Read more at CNBC
India Futures Round Up: Traders Fear Ban on SoyBeans, Sugar. Ban to Continue on 4 Grains.
May 6, 2008
The Abhijit Sen Committee today recommend that a ban on futures trading of wheat, rice, tur, and urad continue. Trading in those 4 commodities was banned last year. However, the committee report indicated that no conclusive evidence could be found to suggest trading futures contracts leads to increased prices.
Sugar and soybean traders continued to exit the futures market in droves. The volume of soybean trading has dropped 79% in the last year. Sugar trading volume is down 43 since February.
In other news, the MCX (Multi Commodity Exchange of India) has started trading in silver and gold minnis.
Read more at India Times
Continued Ban on Grains
Traders Flee Soybeans + sugar
MCX Offers Silver, Gold Minis
Oil Futures at $120. Gas, Heating Oil, and Nat Gas Futures Up Too
May 5, 2008
Problems in Nigeria, Iraq, and Iran continued to drive up oil prices today.
In Nigeria, rebels attacked a Royal Dutch Shell station over the weekend, shutting down some oil production. After years of conflict, major oil exporters have lost nearly 25% of Nigerian output.
In Iraq, PKK rebels threatened suicide attacks as punishment for sharing intelligence with Turkey. In Iran, the Ayatollah Khamenei reiterated that his country will not give up its' nuclear program.
Light sweet crude futures closed at $119.97 (+$3.65) on the NYMEX. Other energy trades: June gas futures closed at $3.0529 (+8.65¢), heating oil contracts finished at $3.3065 (+8.78¢), and nat gas settled at $11.178 (+40.1¢).
Read more at MSNBC
Chicken, Pork Futures Expected to Rise This Year
May 5, 2008
Food inflation is expected to hit pork and chicken prices hard this year. Over the past year, the 2 meats have not kept pace with the rise in beef prices. However, the growing cost of feeds is driving farmers to slaughter extra heads this year. That will have a near term effect of driving down prices, but the reduction in flock and fewer replacements is expected to drive prices up over the next year.
Beef futures have largely reflected the change in oil prices. In contrast, chicken and pork are more likely to reflect the rapid rise in corn futures (doubled in 2 years), soybeans (up 80% in a year), and wheat (doubled over the last year).
Read more at ABC
Soybean Futures rise on Fears of Argentina Strike
May 2, 2008
The Argentine government failed to lift a ban on beef exports today as promised, stirring fears of a resumption of a strike by Argentinian farmers.
Problems began March 12, when the government announced a new sliding tax of 40%. Previously the tax had been a flat 35%. To assuage farmers fears, Argentinian Cabinet Chief Alberto Fernandez promised to lift a ban on beef exports. However, the daily gazette used for government announcements made no mention of the beef export ban.
Argentina is the 3rd largest exporter of soybeans, behind only the US and Brazil. Argentina is also the largest exporter of animal feed and vegetable oil made from the soy seeds.
Soybean futures rose 2.6% to $13.045 on the CBOT. In the past year, soybean futures have risen 78%, reaching a record of $15.8625 in early March.
Read more at Bloomberg
Thailand Calls for Rice Cartel
May 2, 2008
With rice prices surging and export bans growing - the Thai government has called for a 5 nation rice cartel. The 5 nations would consist of Thailand, Laos, Myanmar, Cambodia, and Vietnam. Thailand and Vietnam are the 1 and 2 in terms of international rice exports.
The Laos foreign ministry responded positively, saying they would "seriously consider" the proposal. Thailand and Cambodia have long pushed for such a cartel.
However skepticism remains for many reasons. Most importatnly, the cartel would exclude the largest growers such as China, India, and Pakistan. It is important to note though, that those 3 nations usually keep most rice in nation, and have not been large exporters.
An additional problem would be the nature of rice vs oil. Rice is grown by millions of small farmers, while oil is largely produced by a handful of MNCs.
Read more at ABC
Number of Australian Farmers Drops by 33% in 20 Years
May 2, 2008
Over the past 20 years, the number of Australian farmers has dropped 33%. The number of farmers has dropped 10% in just the last 5 years alone. The country is in the 5th year of what Australians call the "Big Dry". This has been the worst drought to hit Australia in a century.
Read more at the BBC
CNBC Summarizes US Strategic Petroleum Reserve Issue
May 2, 2008
CNBC author Kennneth Stier has written a nice summary of the role the stockpiling of petroleum in the US Strategic Reserve (SPR) has on gas prices.
Experts insist that suspension of the stockpiling could knock 0.05¢ - 0.24¢ off retail gas prices. However, experts do not widely agree the 1 year 2006 suspension curtailed gas prices.
Currently the US is adding 68 k/bpd, which represent 0.01% of total daily global demand.
The US is aiming to pass the 1 billion barrel reserve mark in 3-5 years.
Read more at CNBC
Oil Futures Fall to $110.46 as Nigeria Strike Ends
May 1, 2008
Nigerian oil workers ended an 8 day strike Thursday. The news sent prices down. Light, sweet crude oil futures fell $2.53 to end at $110.46, while Brent crude fell $2.22 to close at $109.14.
The Nigerian strike had severely crimped ExxonMobil's daily 800 k/bpd. Exxon agreed to improve pensions, pipeline safety, and other improvements.
Read more at the BBC
US Corn Futures Futures Rise on Delayed Planting
May 1, 2008
US corn futures rose 0.7%, hitting $6.1625 on news of delayed planting. As of April 27th, the top 18 producing states about 10% of the estimated crop had been planted. By comparison, 20% was planted by the same period last year.
Corn prices are up 35% this year, hitting a record of $6.24 on April 29th.
A survey of Farmers taken March 31st indicated corn planting would be down 8.1% this year, as farmers switch over to wheat and soybeans.
Read more at Bloomberg
