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COMMODITIES     The Agricultural Sector is going Up (Christina)

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Christina     posted : 30/07/10   11:15 pm


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Europe heat wave sparks surge in grain prices[g][/g]

Published: 26 July 2010 | Updated: 27 July 2010

Surging European grain prices following a scorching heat wave in recent weeks are likely to raise flour prices, and farmers are facing higher bills for animal feed, industry executives and analysts said on Friday (23 July).



But some analysts say they doubt whether recent price rises are sustainable in view of large global grain stocks and the fact that overall grain supplies are currently still satisfactory.

European grain prices have jumped around 25% in the past three weeks as hot weather and drought have hit crops just before harvesting in Western and Eastern Europe. Key Paris wheat prices were around 178 euros a tonne on Friday.

"Up to four weeks ago the harvest outlook was very positive and flour mills had expected new crop wheat prices of around 110 to 114 euros a tonne," said Manfred Weizbauer, chief executive of VDM, the association of German flour millers.

"This sort of rise in raw materials costs means a rise in flour prices looks unavoidable," with the level of any rise depending on individual companies, he added.

Analysts do not expect an immediate rise in bread prices, however, because in most European countries energy and wages account for about 90% of the costs of producing bread.

Farmers, meanwhile, are likely to face a rise in animal feed costs, because grass has not grown in the hot and dry weather.

"There has been a massive increase in the cost of feeding," said Hayley Campbell-Gibbons, chief dairy advisor to Britain's National Farmers Union.

Europe's fields 'looking like Africa'

The heat wave has stalled grass growth, Campbell-Gibbons said. Yields on a first grass cut to make grass silage to feed to dairy cows were down 20 to 30% in early June and were down as much as 50% on a second cut in late June.

"The heat wave has left a lot of fields looking more like Africa rather than European meadows," one grain trader said.

Hot weather has also meant cows had spent more time indoors, increasing the amount of straw needed for bedding.

Campbell-Gibbons said British straw prices had risen to up to 100 pounds a tonne from about 60 pounds last year.

She said farmers estimated the total increase in costs at about 1.0 to 1.5 pence per litre of milk.

France has authorised farmers to use set-aside land to feed animals to compensate for a drop in animal feed output after the heat wave in the country in past weeks.

Under the set-aside scheme, the EU pays farmers to leave land idle and not grow subsidised crops. France has given permission for the set-aside land to be used because of looming feed shortages.

But the picture is better in sun-drenched Spain, where farmers are not concerned about current hot weather, which they say is not unusual for the time and comes after cereals and other similar crops have finished ripening.

Will grain prices stay high?

Some observers are starting to question whether the surge in grain prices will hold.

"The fact that the high price level will have a visible impact on demand is largely being disregarded," Germany's Commerzbank said in a report on Friday. The latest figures indicate that EU wheat exports have dropped sharply, it said.

"We expect a sharp fall in prices as soon as the crop forecasts stabilise," Commerzbank said.

Claus Keller, a grains analyst with German commodity analysts F.O. Licht, attributed the rise to a change in expectations, not any supply-demand imbalance.

"The recent sharp rise in wheat and other grains prices involved the market adjusting from the previous outlook for ample supplies in the new season, with a good global crop coupled with large old crop stocks, to a lower crop," he said.

"It appears that less will be produced than last year, but the large stocks mean there should be no fundamental fear about supplies," he added.

This summer's wheat stocks in the US alone are at an enormous 27.5 million tonnes, larger than Germany's 2009 wheat crop of 25.1 million tonnes.

"At the moment there is enough wheat available in the northern hemisphere, especially because of record stocks in the US and elsewhere, which were built up over the last two years," Keller said.

(EurActiv with Reuters.)

I\'m happy to receive any constructive criticism about my trades. I\'m always ready to learn more.
mart.j     posted : 20/09/10   10:33 pm


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Luck i m your father     posted : 27/09/10   07:39 pm


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Sugar, up more than 50% in only three months. Cotton, up more than 40% since July 20.

Soybeans, up more than 20% since the beginning of June. Oats, up more than 60%. Corn, jumping more than 48% just since the beginning of July!

Palladium up 20% since early June. Copper up 26%.

The Fed’s money-printing and dollar devaluation is the chief reason we’re seeing these massive price gains in natural resources, tangible assets.

But it’s not the only reason. There’s also huge, non-investment related, consumer and industrial demand for natural resources — emanating primarily from Asia’s still hotly growing economies, especially China.

So where are all the supplies for these commodities coming from? I’ll tell you more about that in a minute.

First, let’s look at some facts on how rapidly China is growing, even while the U.S. and European economies remain stuck in the mud …

arrow black Are You Missing The Boat? China’s factory output soared nearly 14% in August, year-over-year.

arrow black Are You Missing The Boat? China’s retail sales surged almost 19% in August.

arrow black Are You Missing The Boat? Through August, China’s capital spending soared 24.8%.

arrow black Are You Missing The Boat? Last month, China sold 1.322 million autos, fully 32% more autos than were sold in the U.S.

As China goes, so goes pretty much the rest of Asia!
mart.j     posted : 07/11/10   12:24 pm


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mart.j     posted : 23/11/10   10:46 am


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According Ned W Schmidt CFA, CEBS
www.agrifoodvalueview.com.

That brings us now to the red line in that second graph on the first page. It is a stochastic built on the Agri-Food Price Index. As both the second and third factors are leading to a short-term corrective process, an opportunity may be building for those that have thus far missed out on the gains in Agri-Equities. With the North American harvest complete, little news on the size of the next crop, Fall of 2011, is available. That may lead to further development of the corrective process. Additionally, the U.S. dollar is strengthening as it exits an inverted parabolic formation. That should cause traders to be far more cautious in grain markets.

All of this seems to be coming together to create an opportunity in Agri-Equities for investors in the months ahead. Short-term considerations have recently been lowering grain prices, and that pressure may continue in the weeks of Winter ahead. However, underpinning Agri-Food prices is the longer term, secular growth of China, India, et al. Now is the time for doing your research as Winter closes in on North America, and the fields become covered with ice and snow.




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Luck i m your father     posted : 26/11/10   07:21 pm


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Lara     posted : 02/02/11   10:32 pm


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Rogers is referring to the fact that while some commodities, such as copper and cotton, have risen to record nominal highs recently, many remain close to and not far above average prices seen back in the 1970s. Since that time there has been significant inflation and therefore adjusted for inflation, which is always crucial to do, many commodities remain well below their inflation adjusted highs of more than 30 years ago.

Since then, the global population has nearly doubled to more than 6.5 billion people, and there has been the emergence of huge middle classes and rising consumption in most of the world; especially in India, China and the rest of Asia.

One example of a commodity that is only marginally above its average nominal price from the 1970s is cotton. World cotton prices have risen to nominal highs in recent days due to robust demand, very low world stocks of cotton, limited supply and a depreciation of the US dollar.

The silver, sugar and cotton charts above show that despite their recent price gains, many commodities remain well below their inflation adjusted prices of more than 30 years ago. This is also the case with gold and silver as their record adjusted for inflation highs from 1980 are $2,300/oz and $130/oz.

This suggests that the recent price gains in commodities and rise in inflation may not be another short term speculative price rise and may be something more sustainable. It may even herald the continuation of the “commodity supercycle”.

Having said that, another bout of deflation and a double dip recession and depression in the US and global economy could see another sell off in commodities – at least in the short term.

Due to safe haven investment and store of value demand, gold and silver would perform well as they did in the deflation of the 1930s and during the recent bout of deflation in the current and ongoing global financial and economic crisis.





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Hi vador
mart.j     posted : 10/02/11   09:50 pm


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China Drought Global Food Crisis to Trigger Many More Egypts

wheat up and rice too




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mart.j     posted : 11/02/11   10:23 pm


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mart.j     posted : 28/02/11   10:42 pm


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In 2008 that stochastic was pegged at over bought for an extended period. That era is marked by the blue box on the left. That blue box on the right is the same size as the first one. While the length of time does not yet match that of 2008, it is working on it. While over bought does not make a market go down, it is often an importer precursor of such an event.
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mart.j     posted : 07/03/11   07:42 pm


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mart.j     posted : 02/04/11   12:03 pm


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Russia, U.S. and Indian Wheat Crops Impact on Agri-Food's

Has been, it seems, more than a year since any supply bullish/price bearish news on Agri-Foods has come out. Latest news on outlook for Russian and Ukranian wheat was not good (Financial Times, 30 March). World will not know if either nation will be able to export wheat till the second half of 2011. While at the same time, the appraisal of the North American wheat crop, now in the ground, is lackluster due to dry conditions.




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mart.j     posted : 05/04/11   09:37 pm


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mart.j     posted : 05/04/11   09:38 pm


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mart.j     posted : 05/04/11   09:39 pm


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according bespoke

For those interested, we also provide our trading range charts for the ten commodities listed above. The green shading represents between two standard deviations above and below the 50-day moving average. Moves above or below the green zone are considered overbought or oversold.

Corn is currently the most overbought of the ten commodities shown. Silver, oil, and gold are all at the top of their trading ranges but not quite above them. Gold has recently been struggling to break through resistance and move to new highs, but today it has finally broken through to the upside.




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