Agri-Shop Ltd
Farminguk
27 August 2016 | Online since 2003
OvoConcept


26 February 2013 10:25:15 |

Investment funds reduce commodity holdings; Rain delays Brazil harvest


With inflation running at 20%, Argentinean farmers are reluctant to sell the only asset that is retaining its value – $-based soya beans! They are still clinging onto 3mt of old crop, have only sold 12% of new crop (total harvest estimated to be 50mt) when they normally would have sold half by now.
The government has imposed strict currency exchange rate controls (5 pesos/$1), which means that a black market has developed for cash (8 pesos/$1).
But soya can only be exported at official exchange rates which are 35% below black market rates, which when added to a 35% export tax, it is not surprising that export sales have dried up. The resultant lack of export tax means the Argentinean balance of payments is not improving; there are rumours that the government could force farmers to sell soya.
In Brazil there are rumours of a strike against the government decision to privatise the running of some 160 loading terminals, which threatens the workforce in terms of staffing and benefits. The Brazilian harvest is about 20% complete, as rain is said to have delayed harvest. Apparently the queue of 142 waiting ships is now 30-40 days long, with a combined total of 11mt of capacity waiting to be filled.
In the US, last years’ drought is not over, as the soil is still too dry in the run up to planting. Dedicated pessimists are already calculating the possible effects of a second-in-a-row US crop failure, and firing the first shots in the food or fuel debate. Optimists point to the widespread snow and rains expected over the next week.
China has allegedly bought as much as 1mt of wheat from the US, Canada and Australia in the past two weeks. Egypt bought 60,000t wheat from the US this week – nothing extraordinary except that no-one in the EU, Black Sea or Australia made any offers, which tends to confirm that exportable supplies are becoming exhausted, and that the US may be the last wheat exporter left standing with wheat that is €10/t cheaper than the EU (delivered EU!).
The USDA’s annual conference, Outlook Forum, is held this week; they forecast 30% lower average prices for maize and soya at $4.80/b and $10.50/b respectively for 2013-14, because of record harvests in both crops. UK May wheat futures are about £207, GM soya is about £400 ex port; currency is a major factor in supporting prices.
The FT recently reported that the average commodity hedge fund lost 3.7% in 2012. Last year three of the biggest commodity hedge funds closed, one of which (Fortress) lost 13% in the year to May 2012. The current two-largest funds, Clive Capital (London) and Blenheim (Australia), have lost money for two years running; Clive Capital managed a fund of £3bn in 2011, had lost almost £2bn by the end of 2012; Blenheim lost about $2 billion.
Calpers, the California pension fund, reduced its commodity holdings by half in October 2012, having lost about 8%/annum for five years. Barclays has also withdrawn from speculative bets in agricultural commodities. It seems that some of the larger players have permanently withdrawn from our markets (hooray!), and it is possible that prices may assume less stratospheric levels with less volatility (we can only hope). Of the more successful funds, the $600 million (£392m) Black River Commodity Trading fund run by Cargill, specialising in agriculture and energy, gained almost 9% last year.

Download

0 Comment

loginuserlogo
Name

Please enter your name


Email

Please enter your email

Please enter valid email


Comment

Please enter your comment


Post Comment

Your comment has been submitted successfully. Please wait for admin approval.


Comments

No comments posted yet. Be the first to post a comment


Canada | 26 August 2016
Canadian beef exports to EU in limbo over E. coli dispute

If differences of opinion over food safety practices are not resolved, the big promises of a new European market for Canadian beef may be a pipe dream. The Comprehensive Economic and Trade Agreemen...


India | 26 August 2016
GM mustard clears hurdle in India but more remain

A government panel has cleared commercial use of what would be India's first genetically modified (GM) food crop, but politicians still have to give final approvals amid wide-spread public opposition....


USA | 26 August 2016
USDA buys $20 million in cheese from dairy farms

Moving to bolster dairy farmers who are struggling to cope with price declines, the Agriculture Department announced Tuesday it is spending $20 million - on 11 million pounds of cheese. A taxpayer ...


France | 26 August 2016
Lactalis talks with French milk producers end with no deal

A meeting between Europe's largest dairy group Lactalis and French milk producers requesting a rise in prices ended in a deadlock after 10 hours of negotiations, sources close to the talks said. ...


USA | 26 August 2016
California farmers turn to sewers for water

California's prolonged drought is forcing Central Valley farmers to scramble for water to irrigate crops. They have to be creative. One agency is even turning to a sewage plant to meet demand. Just...



Trending Now

Viewed
Discussed


Top stories you may have missed
FarmingUK
FarmingUK Logo

FarmingUK

The British public are overwhelmingly in favour of keeping or strengthening...


FarmingUK
FarmingUK Logo

FarmingUK

The sustained recovery of pig prices since the spring has come at a time wh...


FarmingUK
FarmingUK Logo

FarmingUK

A World Trade Organisation (WTO) panel has declared the Russian import ban ...


FarmingUK
FarmingUK Logo

FarmingUK

A new study has linked oilseed rape crops grown from neonicotinoid-treated ...


FarmingUK
FarmingUK Logo

FarmingUK

Philip Hammond is to guarantee billions of pounds of UK government investme...


FarmingUK
FarmingUK Logo

FarmingUK

Access to the foreign labour market is 'critical', according the chief exec...


FarmingUK
FarmingUK Logo

FarmingUK

The Tenant Farmers Association has said the National Trust's vision for a p...


FarmingUK
FarmingUK Logo

FarmingUK

Ulster farmers will 'not lie down and wave the white flag' when Brexit nego...


FarmingUK
FarmingUK Logo

FarmingUK

The cost of rural crime to the UK economy costs £42.5 million a year, accor...


FarmingUK
FarmingUK Logo

FarmingUK

A young farmers club member from Oxfordshire has created a petition on the ...


closeicon
Username
Password