Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1356
Deficit in sugar supplies ‘could match record’
By Agrimoney.com – Published 16/02/2010

The global sugar deficit in 2009-10 could be on its way to matching last year’s record, as weak crops in Asia and Central America compound Brazil’s disappointing output, Czarnikow has said.

The sugar merchant and consultancy raised by 1.3m tonnes to 14.8m tonnes its forecast for the shortfall in global production, compared with demand.

And Czarnikow, which last June had estimated the shortfall at just 6m tonnes, said there was a danger that the deficit could end up “as great as” the record 15.6m-tonne deficit in 2008-09.

‘Not delivering’

“Despite early hopes for a strong recovery in production during the 2009-10 season, it is now becoming clear that those hopes will not be realised,” London-based Czarnikow said.

Evolution in in Czarnikow forecasts for the global sugar deficit , 2009-10

Feb 16 2009: 14.8m tonnes

Nov 25 2009: 13.5m tonnes

Sept 8 2009: 9.0m tonnes

Jun 1 2009: 6m tonnes
“The key northern hemisphere cane crops in Asia and Central America… are not delivering the growth in production that had been initially expected.”

The disappointment at cane crops in countries such as China, Mexico and Thailand follows a significantly worse-than-expected harvest in Brazil’s Centre South region, the biggest cane-producing area of the biggest sugar-producing country, where rains hampered harvests and caused lower yields.

But thanks to the dearth of supplies from elsewhere, “the market is again looking to the new Centre South Brazil crop for much-needed supply”, Czarnikow said.

‘Hefty retracement’

Nonetheless, the merchant flagged the fall in prices this month, which it attributed to global economic scares, such as the Greek sovereign debt crisis, which had “weakened investors’ appetite for risk”.

“Combined with rumours of forced selling this has led to a hefty retracement” in New York’s nearer raw sugar contracts.

However, talk of a raised deficit, combined with a weaker dollar, helped sugar close up 1.7% at 26.73 cents a pound for May delivery, New York’s best-traded contract.

London white sugar for May ended 0.8% higher at \$739.00 a tonne.

* Key Brazil sugar region could raise output by 19%
* Forecast of bigger deficit revives sugar price
* Ethanol to save India sugar mills from 2011 slump
* Goldman lifts sugar price hopes, but market slumps

Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1406
Sugar retains ‘very bullish’ market dynamics
By Agrimoney.com – Published 26/02/2010

The case for investors to buy into sugar remains “fairly intact” despite this week’s sell-off, which paid little heed to the crop’s supply and demand fundamentals, Fortis Nederland has said.

This week’s sugar price drop, which topped 10% on Friday to pass the recognised mark for a “correction”, reflects largely one-off technical factors, such as a sell-off by speculators, the bank said.

On a supply-and-demand basis, the market retained its tightness prompted by a second successive year of production falling behind demand, taking the key stocks-to-use ratio to a 20-year low of 32%.

“The futures prices have become disconnected with the physical side of the market,” Fortis said in a monthly report.

“The bullish case… remains fairly intact”.

‘Very bullish factors’

Besides noting that sugar prices in China remained near contract highs, the bank forecast that the US would probably need to “step up” its imports “in the next few months” given the prospect of weak production in Mexico, a key supplier.

Global year-end sugar inventories and (stocks-to-use ratio)

2009-10: 53.06m tonnes (32%)

2008-09: 60.73m tonnes (37%)

2007-08: 71.99m tonnes (45%)

2006-07: 64.46m tonnes (41%)

Source: ISO, VM Group
Mexico may be able to supply only 400,000 tonnes of the 540,000 tonnes the US Department of Agriculture has anticipated.

“In the immediate term, there remain some very bullish supply-demand factors taking place,” the bank said.

Meanwhile comments last Friday from the Indian prime minister’s economic advisory panel that white sugar stocks could “rapidly approach the nil level”, and urging imports of 3m-5m tonnes should, Fortis said, “have put even more fire into the futures market”.

Turnaround imminent?

“All-in-all, [this is] hardly the sort of fundamental news that provokes a sell-off – but as with other commodities, sugar futures’ prices are currently under the sway of factors other than the physical markets,” the report added.

“That may not last too long, however.”

New York raw sugar for May closed 0.4% lower at 23.60 cents a pound, while London’s May white sugar contract ended 1.3% higher at \$670.50 a tonne.

* Brazil output jump helps sugar to two-month low
* Deficit in sugar supplies ‘could match record’
* Key Brazil sugar region could raise output by 19%
* Forecast of bigger deficit revives sugar price

Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1371
US wheat harvest to slump 12% this year, USDA says
By Agrimoney.com – Published 19/02/2010

American farmers will harvest a record corn crop this year, but in part at the expense of wheat production, which will slump by 12%, the US Department of Agriculture has said.

The USDA has pegged the corn harvest at 13.16m bushels, 200m bushels more than proposed earlier this month in its so-called baseline forecast.

The rise, which puts the crop marginally ahead of last year’s, was attributed in part to cheaper fertilizer costs, a particularly big input cost for corn.

“Net returns to corn production are expected to be much improved from 2009 as fertilizer prices have fallen from their highs during the fall and winter of 2008-09,” the USDA, adding that it was nonetheless factoring in a “return to trend yield” from last year’s bumper result.

The department also edged its forecast for soybean output 30m bushels higher to 3.26bn bushels, while noting the crop would lose acreage to corn and cotton.

Out of favour

However, the estimate for wheat production was lowered by 55m bushels (7.4m tonnes) to 1.945bn bushels (52.9m tonnes), reflecting a plunge in plantings.

US crop production forecasts, 2010-11 (implied year-on-year change)

Corn: 13.16bn bushels (+10m bushels)

Soybeans: 3.26bn bushels (-3.0%)

Wheat: 1.945bn bushels (-12.2%)

Cotton: 16.0m bales (+29%)

Rice: 226.0m hundredweight (+2.8%)
Output at that level would mean a slump of 12.2% in US wheat harvest this year, taking the equivalent of an Argentine crop out of its production.

It would almost certainly mean America falling further behind Russia in the global wheat output league.

Russia is expected in 2009-10 to have taken the third spot from the US among producing countries, behind China and India.

US farmers cut winter wheat sowings to their lowest since 1913 because of weak prices, and delays to autumn corn and soybean harvest which left fields tied up with standing crops.

“The sharp reduction in winter wheat area cannot be completely made up by spring plantings,” the USDA added.

Missing acres

The report also underlined the healthy prospects for US cotton output, which is expected to rise by 29% to 16.0m bales this year, encouraged by prices boosted by tight supplies at a time when global economic recovery is boosting demand.

US year-end stocks forecasts, 2010-11 (implied year-on-year change)

Corn: 1.65bn bushels (-3.8%)

Soybeans: 330m bushels (+57%)

Wheat: 940m bushels (-4.2%)

Cotton: 3.4m bales (+29%)

Rice: 49.8m hundredweight (+25%)

“Less land is expected to be cropped in 2010 as prices continue to ease from their record levels,” the USDA said,

However, many analysts questioned estimates that overall plantings of major crops would fall far this year, noting the considerable amount of land emerging for planting from conservation programmes.

“The surprise is that the USDA said this next year in all eight commodities… that acres would be down 6.5m acres,” broker US Commodities said, quoting a figure adjusted for conservation acres.

The USDA report said that wet autumn weather “provided little opportunity to put idled land back into production and historically only a limited portion of former [conservation programme] land actually returns to production, particularly in the first year”.

Soybean stocks

A forecast of a rise in US soybean inventories to a four-year high of 330m bushels by the end of 2010-11, below trade estimates of 600m bushels, also provoked questions.

“The USDA is using a very strong demand base,” US Commodities said.

The report added that “intense competition from Argentina and Brazil in 2010-11 is projected to scale back US exports of soybean meal and soybean oil from this year’s record levels”.

Commodities Corner
Myra P. Saefong

Feb. 19, 2010, 7:03 a.m. EST · Recommend (1) · Post:
Natural-gas prices settle in for the long haul
Supply outlook good news for consumers, bad news for producers

View all Commodities Corner ›

‹ Previous Column

Lumber’s foundation not yet set

First Take ›

Volcker Rule dead? Not so fast …
Story Quotes Comments Screener (38)
Alert Email Print Share

By Myra P. Saefong, MarketWatch
Continued from page 1
Page 1Page 2

But oil and gas rig counts have been climbing recently. As of Feb. 12, there were 1,346 rigs actively exploring for or developing both oil and natural gas in the U.S., up 11 from a week earlier, according to data from Baker Hughes Inc. /quotes/comstock/13*!bhi/quotes/nls/bhi (BHI 49.76, +0.90, +1.84%) .

“We can anticipate some extra [natural-gas] supply to show up sometime soon, or at least supply shouldn’t be a problem this year,” said Ben Smith, president of First Enercast Financial, an information vendor serving energy markets.

He believes that natural-gas prices above $5 should spur new supply to enter the market, while sub-$5 levels could curtail supply.
‘Elephants in the room’

The endless shale potential is just one of the “elephants in the room,” according to Feshbach & Sons’ Feshbach, referring to issues that are often ignored or go unaddressed.

VisMedia

The U.S. also has the second-highest import capacity in the world and perhaps the most storage for LNG, according to Perry.

So one of the “wild cards” for the natural-gas market is all the LNG on the water that’s looking for a home, said Sewell.

Europe and China have been “soaking up all the excess LNG floating around recently,” said Smith. That “may change as soon as winter comes to an end” and if Europe experiences any sort of economic setback, LNG prices there may suffer, sending shipments to the U.S.

Even if prices fall, don’t expect LNG producers to cut back production in the near-term.

“They need the revenue no matter what the price and the U.S. has the most underground storage facilities in the world,” Sewell said.

There have already been reports of LNG tankers being diverted to the U.S. to “take advantage of the storage here and these loads of LNG are being dumped at whatever price they will bring,” said Perry.

“Of course, this does not bode well for natural-gas prices for producers,” he said. “Gas consumers are the ones who should be optimistic now.”
Weather prop

But how can consumers be optimistic when the weather outside is so miserable?

Parts of the U.S. are getting “hit hard with cold, windy weather that boosts gas use in home heating,” said analysts at Deutsche Bank, in a note to clients last week.

In the South census region of the nation where 60% of households use electricity as their primary space-heating fuel, heating-degree days, a measure of energy demand for heating, climbed 13% in January year-on-year, they said.

The Energy Information Administration, in a report issued last week, estimated that January electric-power-sector natural-gas consumption will be at a new record for the month.

“As cold weather and arctic temps continue, supplies will draw down even more,” said Kevin Kerr, president of Kerr Trading International. “Historically, this year will stand out, and EIA [weekly supply] numbers will be invalid or significantly inaccurate.”

But in order to bring natural-gas prices back to the $13 levels seen in 2008, the market would need to see a “prolonged winter and then a quick foray into summer with high temps,” said Kerr.

That quick foray might not even happen.

“The mid-Atlantic and Northeast will probably have a slow start to the summer season as far as warmth,” said Paul Pastelok, a senior meteorologist at AccuWeather.com.

“After a possible flip from a cold ending to winter to a warm up in April, temperatures will cool back off again in May and June to below normal across the Great Lakes, Northeast and possibly mid-Atlantic states,” he said, using a forecast that’s based off a series of analogs he and Bastardi researched recently. And “the usage of natural gas may not be as high this coming year for the central and southern Plains.”

Besides, betting on weather would be pretty risky.

“Gambling on weather is, over time, a sure-fire way to lose money,” said Feshbach. “Sooner or later, the weather always becomes uncooperative.”

Myra P. Saefong is MarketWatch’s assistant global markets editor, based in Tokyo.

Friday, February 12, 2010
Analysis
The Timeless Allure of Gold

Comments (2) Add Comment
0

You must login or register in order to recommend this.

ShareThis | Respond to Editor | Print

By Dunstan Prial
FOXBusiness

The argument for buying gold during tough economic times is nearly as old as the precious metal itself.

Indeed, when other currencies and commodities are losing their value, the siren call of gold is practically irresistible.

Entire countries have jumped on the gold band wagon of late, with India purchasing 200 tons in November, the single largest purchase of the commodity by a government central bank in three decades. Recent rumors that China is strongly mulling a big purchase similar to India’s have kept the price of gold above the $1,000 an ounce range, according to analysts.

After hitting a record high last month of just over $1,225 an ounce, the price has tapered off a bit, but not by much. It was trading at $1,090 an ounce on Friday.

Gold mining companies such as Gold Fields Limited (GFI: 11.9, 0, 0%) and Newmont Mining Corporation (NEM: 46.54, -0.26, -0.56%) have also benefited from the recent surge.

First, though, a little perspective is in order. The current price of gold is still well below its value three decades ago when inflation is taken into account. In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator.

Still, the shift in investors’ attention toward gold during the recent economic crisis has been dramatic.

Here’s commodities expert Kevin Kerr explaining gold’s allure: “Gold is attractive for investors for the simple reason that it is a comfort commodity. Much like a bowl of warm soup on a cold winter day it makes us feel warm and secure inside. Let’s face it, as the fiat currencies around the world get beat up each week, gold is one of the few places investors can put their money and not watch it whither.”

No argument here. But after a months-long runup since October 2008, when gold cost about $700 an ounce, the question is whether gold is a bubble that’s about to burst.

“No way,” says Kerr. “We’re just getting started.”

His entirely plausible reasoning is that investors will continue to turn to gold as the Federal Reserve – and other global central banks – struggle to pull back from the liquidity and stimulus programs that prevented the world’s economy from falling off a cliff.

“The bottom line is that gold will simply become more and more attractive as it becomes clearer and clearer just how bad a pickle the Fed is in. They simply cannot raise (interest) rates,” Kerr said.

The combination of easy credit fueled by low interest rates and rivers of stimulus money flowing from the coffers of various central banks is bound to lead to “hyper inflation,” and Kerr believes gold is the obvious hedge against that dynamic.

But there’s no reason to panic or go gold crazy.

Kerr recommends dedicating no more than 10% of an investor’s portfolio to precious metals. Given the precarious state of the world’s economy, he recommends leaning toward the higher end of that range at the moment.

Like any good investment argument, however, there other points of view.

Billionaire investment guru George Soros, in an interview last month from the World Economic Forum in Davos, Switzerland, described gold as “the ultimate asset bubble.”

Soros was ambiguous as to whether he felt gold was a bubble about to burst or one still rife for expansion Nevertheless, his point was pretty clear – investment trends come and go (Think dotcom companies and real estate in just the past decade.) but gold remains constant.

Seemingly unspoken in Soros’ statement at Davos was that what goes up must come down. Investors need only to look at the price of oil 18 months ago as it soared above record highs to nearly $150 a barrel.

The argument at the time was whether speculators had helped push the price up or whether supply and demand alone had created the surge. (A lot of both factors contributed, actually.) Eventually, as demand weakened and supplies of oil built up the price plunged to below $40 a barrel.

There is little doubt that gold will eventually hit a ceiling once the economy shows more sustained strength and interest rates start climbing higher.

As with many investment dilemmas it really comes down to timing: when and at what price will the gold rally end? No one knows, of course.

With central banks holding interest rates near zero, and Europe on the brink of bailing out Greece, gold remains a good investment as a hedge against inflation. And with additional risks lurking on the horizon in the form of Spain, Portugal and Ireland, risk-aversion will remain at the forefront of investor thinking.

So don’t expect an end any time soon to the current gold rush.

Watch Video HERE

http://www.foxbusiness.com/search-results/m/28330950/powerful-quake-hits-haiti.htm#q=kerr

www.marketwatch.com/story/us-refiners-suffer-oil-product-imports-may-grow-2010-01-08