Thursday 31 May 2012

Odisha plans to link 6 ports to mineral shipment database


PRESS TRUST OF INDIA
BHUBANESWAR, MAY 30:
In a bid to further streamline mineral transportation, the Odisha government has decided to integrate export data of ports with the Integrated Mines and Mineral Management System (i3MS) from June 1. The effort aims bring transparency in the mineral business and therefore checking illegal mining.

“i3MS, the online data verification and permit generation software for mineral transports, will now be connected with six different ports through which minerals are being exported from Odisha,” the Steel and Mines Secretary, Mr D.K. Singh, told reporters here.

The six ports – Paradip, Dhamra, Haldia, Kakinada, Vishakhapatanam and Gangavaram – would have to share data with the State Government on export of minerals from Odisha through i3MS, Mr Singh said adding the system come into force on June 1.

“The ports which fail to be part of the system, will not be allowed to handle minerals being exported from Odisha.

Port authorities have to download data on export of mineral from the State in Web site every fortnight,” said Mr Singh.

Accordingly, the State Government would have sufficient information regarding the amount of minerals being transported to other countries and the persons or companies that undertake the trade, he said.

Port of Antwerp to take 4% stake in Essar Ports for Rs 175 crore


OUR BUREAU, THE HINDU BUSINESS LINE
MUMBAI, MAY 30:
Port of Antwerp International (PAI) has agreed to pick up a four per cent equity stake in Essar Ports Ltd for Rs 175 crore.

According to an agreement signed between the two companies on Wednesday, PAI, the international investing arm of the Port Authority of Antwerp, will subscribe to the Global Depository Receipts of Essar Ports. The issue price works out to Rs 100 a share underlying the GDR, the company said in a notice to the stock exchanges.

Each GDR represents 331 equity shares of Rs 10 each. Essar Ports' shares ended almost flat at 89.30 on the BSE on Wednesday.

PAI's investment in the Indian company is part of a long-term strategic alliance signed between Essar Ports and Port of Antwerp International on Wednesday, said Mr Rajiv Agarwal, Managing Director, Essar Ports.

Following today's agreement, Mr Jan Adam, CFO of Port of Antwerp, will join the board of Essar Port as a non-executive Director.

SECOND LARGEST IN EUROPE

Antwerp, the second largest port in Europe, handled 187 million tonnes of cargo last year.

Essar Ports is a listed private sector company having two operational ports and a couple of other on-going projects. The annual cargo handling capacity of 88 million tonnes is expected to go up to 158 million tonnes by 2014.

Promoters currently hold about 85 per cent stake in the company, which is required to be diluted by 10 cent by June next year.

Today's deal follows an MoU signed by the two companies two years ago. According to the agreement, Antwerp Port will assist Essar on training, port planning and offer other technical services. Both will also work on increasing the traffic flow between Antwerp port and the ports run by Essar.

Currently, captive cargo accounts for nearly 98 per cent of the traffic handled by Essar ports. The company hopes to increase the share of third-party cargo to 25 per cent in the next two years.

FINANCIAL PERFORMANCE

Essar Ports said that despite a 60 per cent increase in operating income, it suffered a net loss of Rs 61.5 crore for the fourth quarter as it paid back Rs 235 crore interest dues on the restructured debt.

For the full year, the company posted a net profit of Rs 63.9 crore. Revenue increased by 45 per cent to Rs 296.63 crore in the fourth quarter.

China continues to lap up more of Indian iron ore


Last Updated : 30 May 2012
NEW DELHI (Commodity Online): Export of iron ore and other minerals continue to be main stay of India’s exports to China even as ban on illegal mining had dented the quantum of ore exports in 2011-12.

According to Associated Chamber of Commerce and Industry of India (ASSOCHAM), one-third of India’s exports to China comprised the ores, minerals in 2011-12. In 2010-11, 55% of India’s exports to China was accounted for by ores and minerals, mainly iron ores. . Needless to say, the domestic industry engaged in sectors like steel has been raising the issue rather seriously.

Ores, minerals, agri-commodities accounted for about 45% of total exports in 2011-12, compared to 55% of total exports recorded in 2010-11. The higher content of primary commodities shows that the nation’s basic wealth is being shipped to China where it is turned into value added commodities possibly for export as well.

Even though there is a global slowdown, the Chinese importers of ores and minerals would not reduce the off take as they would like to build strategic reserves of such critical raw material.

US and Europe are major importers of India’s primary products but it is predominantly agricultural products than ores and minerals, ASSOCHAM said.

“After all, export of mineral resources sucks our natural resources leaving little for value-added manufactured products in the country, “ASSOCHAM Secretary General D.S. Rawat said.

In 2011-12, the engineering goods were the second biggest item of exports to China, followed by petroleum products. The Chemical and related products also accounted for sizeable portion of India’s shipments to China, the data analytical study found.

Engineering goods exports accounted for about 22 per cent of India’s total shipments to China in the previous financial year, while petroleum products claimed about 13-14 per cent of India’s outward shipments to the neighbouring country.
Chemicals and the related product’s share in India’s total exports to China was about 7-8 per cent. Interestingly, the share of petroleum exports to the Chinese market for India’s total exports has leapfrogged from negligible 1-3 per cent a year ago to 13-14 per cent in the last fiscal.

India suffers a big trade deficit with China and these three-four items, other than minerals and ores, can be used for bridging this gap. “A conscious effort must be made to decrease share of ores and minerals to China, “Mr Rawat said. Though it is a difficult task, given lack of markets for other Indian products in rest of the world, the country must take steps in this regard for the interest of long–term security of these natural resources, said the ASSOCHAM secretary general.

Panamax coal freight rates tumble on oversupply, weak demand


Thursday, 31 May 2012 |
Panamax coal freight rates continued their slide Wednesday, with freight rates on established routes from South Africa's Richards Bay to India falling sharply amid weak fixture activity.
Indian consumers are refraining from buying coal as the weakness in the rupee against the US dollar continues while Chinese buyers are also staying away from the market amid high stockpiles.
"Coal shipments are expected to remain minimal next month due to high stock piles in China, while the grain market, although more promising, is not expected to be able to support a market with excessive supply of vessels available," Greece's Intermodal Shipbrokers said in its weekly note on Tuesday.
Platts assessed the daily Panamax freight rates from Richards Bay to India west coast at $15.90/mt and to east coast at $17.45/mt, both down $1.90 on-day.
Platts also assessed the daily South Kalimantan to India west coast Panamax rates at $9.75/mt, down 35 cents on-day, and to east coast at $8.90/mt, down 20 cents on-day.
"It's a charterer's market," an India-based source said, adding that prices were falling much more "drastically" than expected.
A Hong Kong-based source said prices had fallen sharply as Indian buyers are not importing coal due to the current weakness in the Indian rupee.
The Indian rupee was trading at 56.09 to the US dollar Wednesday, compared with 52.64 a month ago.
Panamaxes took a pounding this week as the lack of demand left both the Atlantic and Pacific basins heavily over supplied, Intermodal said, adding that rates tumbled considerably across all major routes.
"There is a fairly bearish sentiment amongst owners now as there is little sign of improvement," the shipbroker said in the note.
Commodity prices are falling and there are not much cargoes being shipped to India or China but there are plenty of vessels available, a Singapore-based source said.
VESSELS SLOW DOWN SPEED AMID HIGH BUNKER PRICES
The Panamax market seems weak with just not enough cargoes to lift the weak sentiment and halt the month-long decline in freight rates, RS Platou Markets analysts said Wednesday.
Higher bunker prices, coupled with weak freight rates were also forcing ships to slow down speed compared with last year.
"Higher bunker costs and weak freight rate environment this year has seen the global shipping fleet slow steaming across the segments with a massive decline in ships speeds compared to year ago," RS Platou analysts said.
The trend of widespread slow steaming is likely to continue for most shipping segments as industry overcapacity persists and bunker prices remains at elevated levels, they added.
Grain tonnage activity in the Atlantic basin had propped up prices in the recent past, but that is now declining weighing on prices, sources said.
"Very few fresh trans-Atlantic cargoes are forthcoming and we are expecting restricted support for this region for the time being," broker firm Braemar Seascope said in its weekly report on Thursday.
Owners have become less reluctant to send their tonnage to the Far East and concurrently charterers' ideas for this route have started to drop, the broker said.
Source: Platts

BHP Billiton sells 3 iron ore fines cargoes on GlobalORE trading platform launch


Singapore (Platts)--30May2012

Australian miner BHP Billiton sold three iron ore fines cargoes on Singapore-based spot iron ore trading platform GlobalORE, which officially launched Wednesday at 3 pm Singapore time (0700 GMT), according to a source close to the matter.

Traders said the first shipment traded was a 90,000 mt 60.5%-Fe fines cargo, which the miner sold for $134.50/dmt CFR Qingdao, China, under the platform's Qingdao 62 bracket.

This shipment will load over June 6-15 from Australia's Port Hedland, and contain a maximum 2.6% alumina, 5.5% silica, 0.1% phosphorus, 0.05% sulfur, and 10% moisture, according to the source.

Traders with access to the platform said this was likely to have been a Mining Area C fines cargo, but this could not be confirmed by the miner.

GlobalORE could not be reached for comment on the matter.

BHP Billiton also sold a second 56.5%-Fe fines cargo for $124/dmt CFR Qingdao, China, on the GlobalORE platform under its Qingdao 58 LAPS bracket, trade sources said.

This shipment was a 110,000 mt cargo which will also load over June 6-15 from Port Hedland. This cargo will contain 1.8% alumina, 6% silica, 0.06% phosphorus, 0.05% sulfur and 10.5% moisture.

A third shipment of more than 45,000 mt of 56.5%-Fe fines was also sold at $126/dmt CFR Qingdao by the miner on GlobalORE. This cargo is to load over July 1-10 from Port Hedland, and will contain 1.8% alumina, 6% silica, 0.06% phosphorus, 0.05% sulfur and 10.5% moisture.

No other trades were heard done by the close of GlobalORE's trading session at 0800 GMT.

The seven shareholders of GlobalORE are miners Vale, Rio Tinto and BHP Billiton, Chinese state-owned steelmakers Baosteel and Hunan Valin Iron & Steel, and trading companies Minmetals and Glencore.

--Celestyn Wong,
--Edited by Deepa Vijiyasingam,

Dry bulk market unable to find new support to reach higher levels


Thursday, 31 May 2012 |
The dry bulk market has been unable to find new support and recover to higher levels during these past few days. As a result, the Baltic Dry Index (BDI) has failed to rise and instead has kept falling since the end of the previous week. Yesterday, the BDI was down by 3.65% or 36 points to 950 points. It was the seventh consecutive day of falls. The Panamax segment was the biggest loser, with the respective Baltic Panamax Index (BPI) retreating by 3.87% to 969 points, as a result of lower fixture activity in both the Atlantic and Pacific basins. Apart from the Panamax market, things are also grim in the Capesize front, with the Baltic Capesize Index retreating by 2.54%, with average daily earnings falling to just $5,292, which is the lowest in two months.
Commenting on the Capesize market, shipbroker Fearnleys mentioned in its latest weekly report that it has been heading “towards all-time lows again, as worldwide spot demand shrinks on a series of negative developments in fundamentals. With China now failing to deliver as far as raw materials imports are concerned, combined with a steady flow of new tonnage ex yard, sentiment is gloomy and the situation cannot be described as anything but dramatic. Average spot values are down 33% w-o-w, daily returns for fronthaul have dropped USD 4k to come in at USD 22k, and Pacific rounds are down 20% to USD 5600 - for those ships that are lucky enough to find cargo at all. Paper values have fallen dramatically, putting an effective stop to most period fixing - with the exception of 170k/2009 spot Singapore reportedly done for 12 months at USD 12,500 to major Europeans” said Fearnleys.

In a similar note, Shiptrade Services stated earlier that “the Atlantic market saw a significant decline on rates mainly due to lack of new requirements combined with the large volume of tonnage at the area. This was reflected on the transantlantic round which fell by USD 3,500 ending up at USD 5,000 as well as on the fronthaul trade which reported a reduction of USD 3,500 closing the week at USD 24,500. The Tubarao/Qingdao route was fixed below USD 20 pmt!, decreased even more than 50 cents. The same negative sentiment in the Pacific basin. The Australian iron ore trade showed minor movement leading the rates to downturn. Period activity remained silent with rates remained steady at around USD 12,250 levels” it mentioned.
Regarding the Panamax market, Fearnleys noted that “the week started with holidays in most European countries and in the US. With everyone back on Tuesday it was a very slow start and the market took yet another dive. It is a limited number of fresh requirements in both hemispheres and owners are starting to ballast into an already troubled Atlantic market. The ECSA grain market, which has kept the Atlantic alive the last couple of weeks, now face softening rates as the ballasters starts to appear ready for June loadings and volumes are low. TArvs now paying around USD 7-8k and the fronthauls are being fixed in the mid teens. In the Pacific as Chinese stockpiles are reported to be full and imports are slowing down rounds are being fixed at around 5k. The period market seems to evaporate as Owners ask under 8k for short period but takers are holding back and hardly anything has been done” it concluded.
On the Handy/Supra markets, Fearnleys noted that it was “another week of few signs for recovery in the Supra segment. Transatlantic voyages kept more or less stable with US Gulf positions fixing at tick below USD 25k/day. Vessels open in Skaw/Gibraltar range willing trip towards the US Gulf were paid around USD 5k. Fronthauls fixed around USD 18k/day. Pacific market has been weak and falling due to lot of prompt available ships and lack of cargoes. For Indo-India, large eco Supra now fixed at USD 6k + BB USD 60k basis APS Indo. Nickel ore cargoes are not seen in market anymore due to on-going Indo ban which has again taken away cargoes and putting pressure on market. Nopac also fixed basis APS at USD 10k + 300k BB. Indian iron ore market remains quiet with less activity on WCI & ECI. WCI-China rates around USD 9k and ECI-China around USD 7k. RBCT rv fixed at APS USD 11k + BB USD 300k. Red Sea fertilisers to India are fixed high teens. Not much activity seen on short period and rates around USD 10k for large Supra” stated Fearnleys.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

**

Wednesday 30 May 2012

China's coal demand set to rebound


China's record imports of coal in April, at 25.05 million tonnes, up 90.1% year on year, indicate rather robust trends for commodity demand, despite concerns over a slowing economy.

Author: Shivom Seth
Posted:  Monday , 28 May 2012
MUMBAI (MINEWEB) -
China's demand for coking coal imports appears to be robust. The Asian major is set to import as much as 50 million tonnes of coking coal in 2012. Imports have already jumped in April, as importers have taken advantage of cheap overseas supplies.

In April, China imported 25.05 million tonnes of coal of all types (lignite included), higher by 17.1% from a month earlier, and 90.1% higher than a year ago.

Data released by the General Administration of Customs showed that imports of anthracite amounted to 3.36 million tonnes, down 11.8% month on month and dropping 10.5% year on year, while that of coking coal (at 5.09 million tonnes), thermal coal (at 7.23 million tonnes) and lignite (at 5.18 million tonnes), rose 22.9%, 35.6% and 20.2% respectively, from a month earlier.

As compared to last year, coking coal was up 59.7%, thermal coal was up 312.5% and lignite was up 140.9%, allaying fears of a slowing economy.

China's General Administration of Customs has decided to include lignite into the categories of imported coal this year, to give a better reflection of China's coal imports. That means, excluding lignite, the imports of hard coal expanded 14.56% from a month ago to 19.87 million tonnes in April.

Data indicates that these figures are still 10.25% less than the record high seen last November.

The world's largest coking coal producer, China is said to have the world's third largest coal reserves at 114 billion tonnes. The country's coal output reached 838 million tonnes during the first quarter, up 5.8% year on year, official data showed.

Though the nation's coal demand has faltered since the fourth quarter of last year as economic growth decelerated, Wang Xianzheng, chairman of the China Coal Industry Association, said at a meeting that supply and demand would continue to be roughly balanced during the second quarter.

At a Coaltrans conference in Beijing recently, industry players said they expect a 10% jump in imports from a year ago. Most of the rebound is seen coming through early fourth-quarter, as the impact of more monetary policy easing and economic rebound starts to flow through, Sun Xuefeng, manager at Sinosteel Raw Materials was quoted by agencies as saying.

China imported 44.6 million tonnes of coking coal in 2011, a 5.5% decline from a year ago, as the government's year long clampdown on the property sector hammered steel producers.

April has also seen higher imports from the Guangdong province, the economic hub in southeastern China. The area recorded a surge in coal imports during the first four months of the year, despite a slowdown in demand as impacted by a faltering domestic economy.

Guangdong imported 19.91 million tonnes of coal in the January to April period, growing 87.5% year on year, according to data recently released by the National Development and Reform Commission. The volume represents 34.23% of the province's total coal purchases during the same period.

The country is on a drive to rationalise the coal industry and develop cleaner and more advanced technology to reduce carbon emissions for the sector by spending more than $79 billion a year during its 12th Five-Year Plan period (2011-2015).

Rio Tinto sells first cargo on China iron ore platform to China Minmetals


Singapore (Platts)--29May2012
Rio Tinto, the world's second-biggest iron ore exporter, sold its first cargo on the China Beijing International Mining Exchange Tuesday, sources with direct knowledge of the matter said.

The cargo was 165,000 mt of 61%-Fe Pilbara Blend fines loading in June. The specific laycan would only be confirmed by the miner at a later date, said one of the sources. It was bought by state-owned trader China Minmetals Corp. at $134.50/dry mt CFR China.

Minmetals bought the cargo because it needed to replenish stocks, said one of the sources.

"I think it is a fair number," said a Hong Kong-based trader. "Over the last few days, we also negotiated a few shipments of PB fines at around $131-132/dmt but couldn't get the cargo."

Platts assessed the 62%-Fe Iron Ore Index at $132.50/dmt CFR North China Monday, unchanged on the day. The IODEX is the most widely used spot price index to price physical long-term contracts.

So far, Vale and BHP Billiton are the other two miners to have sold cargoes via the platform, which is backed by the China Iron & Steel Association.

--Keith Tan,
--Celestyn Wong,
--Edited by Haripriya Banerjee,

China may begin importing Argentina corn


Updated: 2012-05-30
By Zhou Siyu ( China Daily)
China, the world's second-largest corn consumer, may soon start importing Argentine corn, which has been barred because some genetically modified varieties are yet to be approved by Beijing.

"We believe issues with genetically modified seeds can be resolved in the next 60 days", Argentine Agriculture Minister Norberto Yauhar said at a recent news conference in Beijing.

Premier Wen Jiabao is set to visit Argentina next month, accompanied by Agriculture Minister Han Changfu and Ren Zhengxiao, director of the State Administration of Grain.

Given China's rising demand for corn, agricultural analysts said this could help the country diversify its corn supply and reduce its reliance on supplies from the United States.

China signed an agreement with Argentina on corn imports in February and the pact was expected to take effect on April 20. But some varieties of genetically modified crops, popular among South American farmers, are prohibited by China and therefore blocked from the Chinese market.

Chinese media reported in March that the country had signed agreements to purchase 40 million metric tons of Argentine corn this year.

China's corn consumption more than doubled over the past decade, thanks to the growing demand from the country's livestock industry, which has steadily driven up corn imports.

During the first four months of this year, corn imports stood at 1.76 million tons, more than the total amount last year, according to the General Administration of Customs. Most of China's corn imports now come from the US.

Chinese industry analysts estimate the country's corn imports this year will be between 3 million and 4 million tons, while the US Department of Agriculture set its forecast at 6 million tons in a report released earlier this month.

Argentine corn is currently exported to other Asian countries including Japan and South Korea, and "we are looking forward to China's market", said Fernando Martinez de Hoz, a senior trader at the grains division of the Buenos Aires-based exporter Nidera SA.

Argentine corn could compete with US corn in both quality and price and may prove popular among China's private mills, said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant Ltd, one of the largest consultancies in the industry.

But as agricultural trade becomes increasingly important in balancing Sino-US trade, large State-owned importers, which control about 60 percent of the country's corn import quota, may still stick to US corn for "political reasons", Ma added.

Argentina has in recent years made it a priority to increase agricultural exports to China.

During the past two years, Argentina has signed protocols to allow exports to China of corn, bovine semen and embryos, barley, beef and dairy products. The South American country is also a major soybean supplier for China.

Marubeni Follows Glencore To Boost Grain Trading: Commodities


By Shruti Singh, Maria Kolesnikova and Jack Kaskey - May 30, 2012
Bloomberg
Marubeni Corp. (8002)’s proposed $3.6 billion acquisition of U.S. grain merchandiser Gavilon Group LLC underscores the growing interest in agricultural traders as rising food demand puts pressure on global supplies.

The Marubeni deal, announced yesterday, will boost the Japanese company’s access to the U.S., the biggest corn grower and exporter. Marubeni prevailed after rival traders including Glencore International Plc (GLEN), Bunge Ltd. (BG), Mitsui & Co. and Mitsubishi Corp. also expressed an interest in Omaha, Nebraska- based Gavilon. Shareholders of Canadian grain-handler Viterra Inc. (VT) voted yesterday to accept a C$6.1 billion ($6 billion) takeover by Glencore, the world’s largest publicly traded commodities supplier.

“It’s a trend that’s been developing over the last five years that’s been accelerating,” Farha Aslam, a New York-based agricultural analyst for investment bank Stephens Inc., said in an interview. “The desire is to broaden the supply, broaden the reach and increase the depth across the globe.”

The agricultural-trading industry is being redrawn by the rising demand for food and animal-feed in developing countries including China, which went from being a net exporter of corn to a net importer two years ago. Corn futures have more than tripled in the decade through 2011 while inventories of the grain measured as percentage of consumption fell to a 38 year- low last year. Glencore said in March that global grain and oilseed demand will increase as much as 3.5 percent a year.

Supply Disruptions

At the same time, unforeseen disruptions to supplies have tripped up some trading companies. A drought has hurt South America’s soybean crop this year, helping soybean futures in Chicago to advance 13 percent. The last two U.S. grain harvests have disappointed initial government forecasts.

The long-term trend of population growth and rising prosperity in developing countries is continuing despite short- term economic concerns, said Kelly Wiesbrock, a San Francisco- based managing director at Harvest Capital Strategies, which has $1.2 billion under management. Geographic expansion helps suppliers meet demand in China when the harvest falls short in Brazil or Argentina, he said.

“If you have a base in North America, South America and the Ukraine from which to originate product, you have a lot of options,” Harold Reed, chief operating officer of Maumee, Ohio- based grain processor Andersons Inc. said in a telephone interview. “Everyone is broadening their base.”

Louis-Dreyfus Merger?

There may be further acquisitions in the trading industry. Margarita Louis-Dreyfus, the chairman of Louis Dreyfus Holding BV, was cited by Les Echos on May 15 as saying that the trader is being prepared for a possible initial public offering. She also isn’t ruling out a merger, the newspaper reported. The Amsterdam-based company said May 1 it agreed to acquire Sugar Land, Texas-based Imperial Sugar Co. for $77.6 million to expand into refining and distribution of the sweetener.

A takeover of Australia’s GrainCorp Ltd. (GNC), which operates seven of the eight ports that ship grain in bulk from the country’s east coast, is “inevitable,” Tim Mitchell, an analyst at Citigroup Inc., said in a March 12 note. GrainCorp climbed 1.7 percent to A$9.43, compared with the 0.5 percent decline in the local benchmark index.

Closely held Gavilon drew interest from Singapore-based Wilmar International Ltd. (WIL), the world’s largest palm-oil processor, as well as Bunge of the U.S., Switzerland’s Glencore, and Japan’s Mitsui and Mitsubishi, people familiar with the matter said in March and April.

Food Prices

Cargill Inc., the agricultural supplier that’s the largest closely held U.S. company according to Forbes, was interested in buying Viterra, the Wall Street Journal said March 11. Cargill Vice Chairman Paul Conway said in a March 22 interview that a “new player” in the U.S. agricultural industry was likely to purchase Gavilon as traders connect surpluses in the Western Hemisphere with demand in Asia.

Global food prices more than doubled in the past 10 years, according to an index of 55 food items tracked by the United Nations’ Food & Agriculture Organization. The measure reached a record 237.9 points in February 2011 and was at 213.9 in April. The global food-import bill is expected to fall only slightly from the record set in 2011 amid “strong demand” even as world grain production rises to a record 2.37 billion metric tons in 2012, according to the FAO.

“When you look at the bigger-picture, secular story that says we have to double our food production in the next 40 years, that’s a big deal,” Wiesbrock said. “The biggest glaring issue is China.”

‘Safer Return’

The world’s most populous country became a net corn importer in 2010 for the first time in 14 years. It will continue that streak for the fourth straight year in the marketing year that begins on Oct. 1, the U.S. Department of Agriculture forecast on May 10.

World stockpiles of seven oilseeds are forecast to slump 25 percent to a three-year low by the end of the 2011-12 crop year on the combination of rising demand and falling production of soybeans, according to German research company Oil World.

“In the period of uncertainties, like the one we are in today, agriculture is one of the sectors that offers opportunities, which are a bit more predictable than other investments,” Abdolreza Abbassian, a senior economist at the FAO, said in a telephone interview. “For a long-term investment it’s going to be a safer return.”

Still, while grain demand is continuing to expand, prices have fallen back in the past year, and that may be a contributing factor to recent acquisitions because it lowered companies’ valuations, Wiesbrock said.

Price Volatility

“Some of the froth is out of the market,” Wiesbrock said. “If you’ve been waiting and waiting, now you are saying, this is a good time.”

Corn imports by China may advance 35 percent as a rapid increase in meat demand boosts consumption of grains to feed chickens and pigs, the UN said May 3. Corn consumption jumped 53 percent in the past decade while demand grew 41 percent for poultry and 27 percent for pork, according to the U.S. Department of Agriculture.

Corn prices averaged $6.785 a bushel in Chicago trading in 2011. It has declined 13 percent this year to $5.625 a bushel at the close yesterday and may average $6.05 a bushel in 2012, according to the median of four analysts’ estimates compiled by Bloomberg. Wheat prices in Chicago averaged $7.235 a bushel last year after more than doubling in the past decade. They may average $6.29 a bushel in 2012 and $6.90 a bushel in 2013, according to estimates.

Price Volatility

Given such price volatility, buying assets such as grain elevators and ports that connect farmers with consumers provides a more consistent return on investment, Jason Zandberg, a Vancouver-based analyst for PI Financial Corp., said in an interview.

“You are seeing consolidation of the supply chain of global commodities,” said Greg Pearlman, managing director and sector head of the food, consumer and retail group in Chicago for BMO Capital Markets. “Scale matters. Local market access matters. Part of it is physical assets and market access in both of these deals.”

Insufficient pre-monsoon rain to affect kharif crops like paddy, soyabean


30 MAY, 2012, 1SUTANUKA GHOSAL, ET BUREAU
KOLKATA: A prolonged dry spell in most parts of India is hurting the sowing schedule for paddy, a major kharif crop, raising the country's anxiety about monsoon rains, as parched fields urgently need moisture to plant crops.

The weather office has forecast normal rainfall in the June-September monsoon, but showers in the months before the rainy season are vital for soil moisture required to raise paddy nurseries and subsequently to sow the crop in fields. Since the beginning of March till May 23, rainfall has been 24% below normal, deteriorating from a cumulative deficit of 19% a week ago, weather office data showed.

The risk of late planting, which can affect yields and delay the next crop too, is higher in rain-fed regions, which account for about 55% of the 184 million hectares of arable land in India. "For paddy, the soil moisture content should be 20-25%. Below soil moisture content of 15%, paddy starts wilting. Paddy requires a lot of water and soil moisture content is critical for cultivation," said Mukund Wariar, officer-in-charge at the Central Rainfed Upland Rice Research Station in Jharkhand.

Moisture level is estimated to have dropped to 10% in some parts of the country, according to some estimates. The water level in reservoirs has also dipped below last year's level.

Data from the Central Water Commission shows India's 84 main reservoirs are filled to only 21% of their capacity, down from 26% a year ago, although it is higher than the average in the past 10 years.

"There has been a prolonged dry spell in India. West Bengal too has faced the same trend. In our state, we use wet beds for paddy nurseries and it requires a good amount of soil moisture content. There should be good rains to improve the water table content for raising paddy nurseries. There is hardly any water reservoir now," said Paristosh Bhattacharya, additional-director of agri research in West Bengal.

Delay to Affect Rabi Crop Too

Agriculture ministry officials and farm specialists discussed the situation at a meeting in Kolkata on "Bringing Green Revolution to Eastern India".

"As of now, we are hoping to have a good monsoon, but at the meeting, it was decided to prepare a contingency plan if things go wrong," said Bhattacharya.

Industry officials said delay in planting would lead to late harvesting, which in turn could affect the winter-sown crop. "The rain has to come on time and volume should be good so that soil becomes ready for sowing. Otherwise, crop will be delayed as soil is too dry. Irrigation is one way to improve soil moist content, but that is costly. If kharif crop is delayed, it will have an impact on rabi crop like potato. Harvesting gets delayed for kharif crop," said DN Mondol, president of the Bengal Rice Mills Association. Mondol is also a paddy farmer.

States like Punjab and Haryana are advising farmers to diversify to crops other than paddy because of water scarcity and declining moisture content. "Of 141 blocks, water resources in 113 blocks are at alarming levels of under 350 feet. Hence, the state government is advocating for crops other than paddy and advising farmers to opt for new cash crop like guar," Punjab Agriculture Director Mangal Singh.

Area under paddy in Punjab is expected to drop to 27.80 lakh hectares from 28.18 lakh hectares in the previous year while in West Bengal, acreage under kharif paddy is estimated to be 44 lakh hectares this year, same as last year. The state produces 150 lakh tonnes of rice annually.

In Haryana, area under paddy is targeted to be 12 lakh hectares compared with 12.35 lakh hectares a year ago. "Water level in the major reservoirs is less. We are educating farmers not to grow water-intensive paddy, including basmati varieties, in non-traditional areas of Fatehabad, Hisar and Sirsa districts," said Haryana state additional agriculture director BS Duggal. In Gujarat, the area under paddy is expected to be around 7 lakh hectares.

Swapan Kumar Dutta, deputy director-general (crop science) at the Indian Council of Agricultural Research, said: "There are some problems in Maharashtra and Karnataka on account of water. We may have to look at irrigation facilities and stronger variety of seeds for these regions. But we hope monsoon will be good, which that will increase the soil moisture content."

The other major kharif crop that is sown during June-August is soyabean, which does not require much water like paddy. "For soyabean crop, 3-4 inches of rainfall is required for pre-sowing that improves the soil condition, said Rajesh Agarwal, coordinator, Soybean Processors Association of India (SOPA). Since farmers have got better returns this year from the soya crop, its sowing area is expected to go up 5-7% this year. Last year, the area under soyabean cultivation was around 101 lakh hectares.

Baltic sea index slides on low shipping activity


Tue May 29, 2012
By Soma Das
May 29 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Tuesday for a sixth day due to weakness in dry bulk shipments.

The overall index, which reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 26 points or 2.57 percent to 986 points, lows not seen since mid-April.

"Activity was muted at the start of the week with holidays across continents," RS Platou Markets analyst Frode Morkedal said.

The Baltic's capesize index lost 1.92 percent to 1,377 points.

Rates for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, were down $375 at $5,736.

"With Chinese iron ore buyers in a wait and watch mode, the outlook near term remains weak," Morkedal said.

Some analysts, however, expect the current capesizes rates are likely see a bottom soon with steel output in top producer China is likely to remain near its record highs in June.

Shipments of iron ore, a raw material for steel, account for around a third of sea-borne volumes on the larger capesizes.

China's daily crude steel output hit a record 2.045 million tonnes in early May, the China Iron and Steel Association estimated, and an official at the industry group said on Tuesday the run rate was likely to stay around 2 million tonnes in June.

The Baltic's panamax index fell 3.91 percent, with average daily earnings down $325 at $8,033.

Average daily earnings for handysize and supramax ships were up at $9,588 and $11,396, respectively.

Growing ship supply, which is outpacing commodity demand, is set to cap dry bulk freight rate gains in the coming months, with economic uncertainty and a slowdown in China adding to headwinds.

The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, has fallen about 43 percent this year.

Analysts expect, however, the dry bulk segment to show some improvement with the Chinese government making efforts to fast track approvals for infrastructure investment to combat a slowdown in the economy.

"We believe the dry bulk shipping market could begin to improve if/when Chinese authorities follow through on the recent pledges of stimulating economic growth through accelerated infrastructure projects," Jefferies analyst Douglas Mavrinac said in a note.

Analysts said sliding iron ore prices in top consumer China were likely to spur some buying interest, which in turn may boost the demand for tonnage.

"Iron ore prices in China have come down to $130 per tonne, but seem to find support around this level - which could spur some more shipping activity," Arctic Securities analyst Erik Nikolai Stavseth said.

(Reporting by Soma Das in Bangalore, editing by William Hardy)

Rupee slips to 56.04 against dollar


OUR BUREAU, THE HINDU BUSINESS LINE
MUMBAI, MAY 30:
The rupee opened weak on Wednesday morning at 56 to the dollar. It had closed at 55.67 on Tuesday evening.

The rupee was trading at 56.04 against the dollar in the noon session.

The domestic unit tested new lows last week when it came to 56.38 before pulling back on suspected RBI intervention.

Government sources had indicated to Business Line that policy tools may be used to hold the rupee at close to Rs 53-54/$. The rupee has depreciated 25 per cent against the dollar since a year ago.

BUNKER PRICES : 30.05.2012

Daily Summary of Baltic Exchange Dry Indices 29-05-2012


======================================

Dry BDI 986   ( DOWN   26)
Capesize BCI 1377 ( DOWN   27)
Panamax BPI 1008 ( DOWN   41)
Supramax BSI 1090 ( DOWN   18)

Handysize BHSI 644   ( DOWN     2)

Thursday 24 May 2012

New iron ore platform faces tough times


Updated: 2012-05-23
(china daily)
Compared with the successful debut on May 8, China's iron ore platform has since experienced the doldrums. Up to May 22, it has only handled seven transactions, a volume of about 856,500 tons and $119 million, Beijing Times reported on Wednesday.

The platform is seen by industrial insiders as an important measure for China to acquire its discourse power in the global iron ore price system.

It is believed that, in order to have a certain influence and the right to speak, the trading volume of the platform should reach at least 100 million tons, equivalent to about 20 percent of China's total imported iron ore quantity. There is still a very large gap between the current level of trading volume and the planning.

China Beijing International Mining Exchange explained that the reason for the bleak situation is because there is a lack of enthusiasm among buyers and the demand for the entire iron ore market remains low.

Xu Yongbo, an iron ore industry analyst for 315.com.cn, a bulk commodity e-commerce platform, noted that transaction parties need a process to adapt to the platform, and the incomplete problems of the platform itself are another reason for the slump.

It is reported that, as a competitor of Chinese iron ore trading platform, a similar platform will be formally opening soon in Singapore. It will be a big challenge for the Chinese iron ore platform to build influence.

Centre moves to halt open sale of iron ore fines


24 MAY, 2012, MEERA MOHANTY, ET BUREAU
NEW DELHI: The Centre has moved to clear any ambiguity that could be misused by captive mine owners to sell iron ore fines in the open market

The move comes after the Jharkhand High Court in February stayed the State from banning exports, but relaxed it later to allow a one-time domestic sale of iron ore fines from the captive mines of Usha Martin and Steel Authority of India (SAIL).

Fines, or iron ore dusts, are smaller than 10mm, are produced when lumps are dug out from mines. Only few steelmakers are equipped to use them to make steel, such as the pellet-based facilities of JSW Steel, JSW ISPAT and Essar Steel. As a result, much of the fines were being exported to China.

The Centre's recent move is seen as an attempt to reinforce the implicit ban on sale of captive resources, simultaneously pushing owners of captive iron ore mines to invest in adding value to the ore, they own.

It has sought the Law Ministry's approval on the same.

The Jharkhand HC in February had held that the state wasn't empowered to issue such notifications under the existing Mines and Minerals (Development and Regulation) Act. It was the Centre that is empowered to amend or introduce rules and laws.

In August last year, when Arjun Munda led government in Jharkhand allowed the two steelmakers to sell fines from the mines that were allotted to them for captive use, the political parties that formed the opposition had cried foul.

This was despite the state government direction that the one time sale would only be allowed to local firms, with Jharkhand businesses given priority. The state government was accused of selling out. It even inspired an unusual silent protest by MLA in the Jharkhand assembly.

Senior Jharkhand Mines Department officials said the state had sought its legal department's view before it decided on the next course of action after the court order. The government had defended its action, pleading environmental hazard.

SAIL at its Gua mines in Jharkhand had for example piled up 196.50 lakh tones of fines. It has also put out tenders for their sale. "We have plans to put up a four million tonne pellet plant, but that will take a few years," a senior official said on conditions of anonymity. We only wanted to reduce this pile to minimise the environmental pollution."

Welcoming the move, the Secretary General of the Federation of Indian Mineral Industries said, "Allowing sale of fines would be a violation of the conditions under which the state was making a lease recommendation. It cannot be allowed."

According to an official in the Mines ministry, captive owners who have access to iron ore at a production cost of 600 -800 a tonne can afford to set up a beneficiation plant to increase its ferrous content and pelletize fines for easy transport. Tata Steel has set up its pellet plant close to its steel plant in Jameshedpur

Another miner who was affected by the move, said: "Where will we get space as the Environment (and Forest ) Ministry is reluctant to grant fresh forest land for mineral processing."

Wheat Fields Parched By Drought From U.S. To Russia: Commodities


By Tony C. Dreibus, Jeff Wilson and Maria Kolesnikova - May 24, 2012
Bloomberg
Droughts withering wheat crops from the U.S. to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year.

Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state’s climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg.

Wheat traded in Chicago rose as much as 18 percent in the 10 days through May 21 on concern that the market is returning to the droughts of 2010. Russia and Ukraine curbed exports that year and prices more than doubled to $9.1675 a bushel by February 2011, the month in which world food costs tracked by the United Nations reached a record. Analysts surveyed by Bloomberg expect futures to rise 12 percent to $7.51 by mid- July.

“In 2010, everyone was talking about dryness in Russia even in May, but no one was paying attention,” said Chris Gadd, an analyst at Macquarie Group Ltd. in London. “Because you’ve had the history of 2010, people are going to the other extreme and overreacting a little. If weather conditions deteriorate further, production estimates could go a lot lower.”

Gasoline and Cattle

Futures surged to an eight-month high of $7.22 on May 21 on the Chicago Board of Trade, and settled at $6.655 yesterday. The grain’s 2 percent advance this year makes it the fourth-best performer in the Standard & Poor’s GSCI Index of 24 commodities behind soybeans, cattle and gasoline.

The gauge’s 4.4 percent drop since the start of January compares with a 0.1 percent gain in the MSCI All-Country World Index of equities.

Treasuries returned 1 percent, a Bank of America Corp. index shows.

The USDA said May 10 that global wheat output will decline 2.5 percent to 677.56 million metric tons in the crop year beginning June 1, leaving stockpiles of 188.1 million tons at the lowest relative to demand since 2009. The department will probably cut the production forecast to 669.15 million tons in its June 12 report and reduce the inventory estimate to 183.3 million tons, according to the Bloomberg survey.

Dry Kansas

Kansas got 0.39 inch (0.99 centimeter) of rain in the first 20 days of May, according to Mary Knapp, the state’s climatologist. The record low of 0.98 inch for the entire month was set in 1966, the Manhattan, Kansas-based scientist said. Analysts were predicting record wheat yields for the state as recently as three weeks ago.

As much as 30 percent of the grain harvest in eastern and southern Ukraine may be lost because of damage from dry weather, said Tetiana Adamenko, the head of the agro-meteorology department at the National Meteorology Center in Kiev. Russian wheat output may drop 15 percent this year if below-average rainfall persists in southern regions during the flowering period for the next two weeks, Macquarie estimates.

While dry weather is depriving winter plants of the water needed to develop kernels, there’s still time for improvements before harvesting starts next month. Futures jumped 29 percent in July and August last year because of concern about drought, before tumbling 23 percent in the following month as rainfall revived crops and harvests exceeded analysts’ estimates.

Crop Projections

Winter wheat accounted for about 75 percent of U.S. output last year and is the main variety grown in the Black Sea region. The U.S. National Centers for Environmental Prediction, a unit of the National Weather Service, said May 22 that rainfall will be as much as four times above normal over the following week in eastern Ukraine and southwest Russia.

“Rain may be coming just in the nick of time” for Russia’s southern growing regions, which produce about 28 percent of the nation’s crop, said Gail Martell, the president of Martell Crop Projections in Whitefish Bay, Wisconsin.

This month’s surge in prices was also caused by speculators buying contracts to reverse wrong-way wagers on a decline, said Jim Hemminger, a risk-management specialist at Top Third Ag Marketing in Chicago. Hedge funds and other money managers held a net-short position of 50,057 futures and options in the week ended May 15, the most in a month, data from the Commodity Futures Trading Commission show. A CBOT futures contract represents 5,000 bushels and the CFTC updates the data tomorrow.

Russia and Ukraine

The funds were also betting on lower prices in May 2010, three months before Russia and Ukraine imposed export curbs after drought decimated their crops. Russian production plunged 33 percent and Ukraine’s harvest slumped 19 percent, USDA data show. A basket of 55 foods tracked by the United Nations jumped 32 percent in the next seven months, reaching a record in February 2011. The gauge fell 10 percent since then.

The rain that fell in the past several days in east and south Ukraine won’t be enough to revive wheat and barley crops, said Adamenko of the National Meteorology Center in Kiev. The stress on plants extends into neighboring Russia and Kazakhstan, and rain would slow the decline in yields rather than reverse it, said Don Keeney, a senior agricultural meteorologist for MDA EarthSat Weather/CropCast in Gaithersburg, Maryland.

Warmer Weather

Kansas will be mostly dry with only scattered light showers for the next week, and temperatures will be warmer than normal, Mike Palmerino, an agricultural meteorologist at Telvent DTN in Minneapolis, said in a May 23 report. As recently as May 3, yields were forecast at a record 49.1 bushels an acre by the Wheat Quality Council, after the industry group tallied 608 samples from its annual three-day tour of fields.

The outlook is no better in Western Australia, which produces 40 percent of the country’s wheat. The state had below- average rainfall in April, according to the Bureau of Meteorology. Production in Australia, the second-biggest exporter after the U.S., will drop 12 percent to 26 million tons in the year through May 2013, USDA data show.

Wheat fields in France, Germany and Poland, which account for about 10 percent of global output, were damaged by unusually cold weather in February. The 27-nation European Union cut its outlook for soft-wheat production to 126.7 million tons last month, about 4.7 percent less than forecast in March.

“Across the board, we have production concerns,” said Shawn McCambridge, the senior grain analyst for Jefferies Bache LLC in Chicago. “If we do see that hot, dry pattern come in, it’s not an opportune time for the crop.”

Govt may allow sugar exports of up to 2.5 mn tonne


From May 11, sugar export has been freed by putting it under Open General Licence

Reuters / New Delhi May 24, 2012,
The government may allow up to 2.5 million tonne sugar export under the Open General Licence (OGL) scheme in the 2011-12 marketing year ending in October.

Before sugar export was brought under OGL earlier this month, the government had allowed export of 2 million tonnes of sugar in view of higher production.

With effect from May 11, sugar export has been freed by putting it under OGL with no quantitative restriction on the shipments. However, the Commerce Ministry has asked millers to register the export contracts with itself to keep a track on quantity of shipments.
"The Commerce Ministry is looking after sugar exports. It was decided to review exports once its touches two million tonnes. The industry has estimated output at 26 million tonnes and since there has been less lifting of levy sugar, there is scope for allowing additional 5,00,000 tonnes," Food Minister K V Thomas told PTI.

Levy sugar is the sweetener that government buys from mills at subsidised rate for supply through ration shops. It is mandatory for mills to sell 10 per cent of their production to the government at lower rate. Levy sugar quota is allocated to states and union territories for supply via ration shops.

The government has pegged sugar production at 25.2 million tonnes in the 2011-12 marketing year as against the annual demand of 22 million tonnes.

Industry body Indian Sugar Mills Association (ISMA) has estimated sugar production at 26 million tonnes for this year as against 24.3 million tonnes in the last year.

Shipping problems dog castorseed exporters


OUR CORRESPONDENT, THE HINDU BUSINESS LINE
RAJKOT, MAY 23:
Prices of castorseed declined over 3 per cent or Rs 101 a quintal in the futures market as market participants' sold heavily. However, the downfall was restricted in the spot market as arrivals dropped.

Traders said that the demand was weak as exporters have been facing problem to get ships for export during the last 15 days. If the situation continues, castor prices may fall more in coming days.

According to market sources, new export enquiries are expected in the coming days leading to increased demand. However, since traders have ample stocks, any rise in castorseed may be nominal only.

A Rajkot-based castor broker said that the current weak demand in the physical market has resulted in prices dropping on Wednesday. However, arrival declined marginally from 1,10,000 bags to 90,000-100,000 bags, capping the drop in price.

On the National Commodity and Derivatives Exchange, castorseed June contracts declined by Rs 101 to Rs 3,082 a quintal, with an open interest of 24,100 lots. July contracts decreased by Rs 93 to Rs 3,141 with an open interest of 18,960 lots.

Ore, coal demand falls


China's economic slowdown has led to weak demand for iron ore and coal in the domestic and overseas markets as the nation's steel producers and power plants reduce production and generation, analysts said.

Updated: 2012-05-24
(China Daily)
Some Chinese steel mills may have deferred shipments agreed to under long-term contracts with foreign traders, but not those under short-time contracts, said Zhang Lin, senior researcher at the Lange Steel Information Research Center.

Last week, iron ore prices dropped to $144 a metric ton, the lowest this year, which will obviously affect of foreign iron ore traders' business, she said. "For long-term iron ore purchasing contracts, Chinese steel producers may reduce import volumes because of lower demand in the country, which will lead to lower prices," Zhang said.

She said she had not heard of any defaults so far.

Shougang Group, one of the largest steelmakers in China, said the company didn't defer any iron ore or coking coal cargos, but it added that steel prices are "really weak".

The majority of steel mills in Shanxi, Hebei and Shandong provinces have halted production, said Dai Bing, senior analyst at coal.com.cn, a coal-trading website.

He said falling demand for steel led to the reduction of iron ore and coking-coal purchases.

"The central government carried out a series of policies to control the real estate market which resulted in a huge drop in steel for construction," he said. "Thus, the demand for iron ore and coking-coal fell and prices have been going down."

Concerns over slowing growth have intensified in China after weak economic data for April was released last week. Growth in industrial production, imports, exports, fixed-asset investment and bank lending all eased in April.

Zhang said two giant miners, BHP Billiton Ltd and Rio Tinto Plc, are being stricter about approving new mining projects and Vale Ltd, the biggest iron ore producer in the world, postponed its new project plans.

In addition to the steel industry, coal-fired power plants are generating less electricity, meaning less demand now exists for thermal coal.

A senior official at one of the five largest power generation groups in China, who declined to be identified, said the company's thermal coal inventory had increased to more than 15 days of use because less electricity is being generated.

"Coal prices have dropped a little, but that cannot help coal-fired power plants eliminate losses," he said.

According to Dai, coal prices have been falling for three weeks so far.

The price of thermal coal at Qinhuangdao port of Hebei province was 780 yuan ($124) a ton on Tuesday, down 5 yuan from the beginning of the month.

Average coal inventories at power plants now stand at 25 days. In Shaanxi, coal inventories could cover up to 26 days, Dai said.

The growth rate of power consumption in the first four months dropped to 6 percent and the figure in April was 3.7 percent year-on-year, the slowest in the past 16 months, showing further evidence of an economic slowdown.