Coal consumption to hit 4.8b tons by 2020

2013-11-25
(Xinhua)
BEIJING -- China's coal consumption is expected to hit 4.8 billion metric tons by 2020, the China National Coal Association (CNCA) forecast on Sunday.

Liang Jiakun, CNCA vice president, said the nation's coal industry still has more growth potentials as coal remains its main energy source, which currently accounts for more than 60 percent of the country's primary energy resources.

CNCA data showed that China's coal output increased to 3.65 billion tons last year from 2.35 billion tons in 2005, representing an annual increase of 190 million tons. Consumption in 2012 stood at 3.52 billion tons.

However, Liang said that the sector faces ever more development challenges as the country puts greater emphasis on economic restructuring and transforming economic growth pattern. Meanwhile, ecological environment protection also puts a restraint on its development.

Liang said China has been accelerating efforts to restructure the coal industry by shutting down small coal mines, with the total number of mines reduced to 14,000 by 2012 from 24,800 in 2005.

Wheat firms on expectations of overseas demand

Mon Nov 25, 2013
* Wheat firms more than 0.5 pct

* Its two-day gains near 1 pct

* Soybeans fall on profit-taking, corn tracks higher
By Colin Packham
SYDNEY, Nov 25 (Reuters) - U.S. wheat futures rose on Monday, extending gains into a second straight session for the first time in a month, as production concerns in other key
exporters buoyed expectations for increased demand.

Soybeans fell for the first time in three sessions as traders banked profits, while corn tracked wheat higher.

Chicago Board of Trade March wheat rose 0.61 percent to $6.61 a bushel, having closed up 0.34 percent in the previous session.

Wheat futures last rose for two consecutive sessions on Oct. 22 and 23.

"The gains are being driven by the rising competitiveness of U.S. wheat," said Vanessa Tan, investment analyst at Phillip Futures Singapore.

"Previously you have seen tenders bypassing U.S. wheat, but now with Australia for one seeing unfavorable weather conditions, this could shift demand to the U.S."

Unseasonal rains in Western Australia and frost on the country's east coast have hit wheat crops in the world's No.2 exporter of the grain, dragging down quality and reducing harvests.

Elsewhere, the Rosario Grains Exchange last week forecast Argentina's wheat crop at 9.1 million tonnes in its first estimate of the season, well below the 11-million-tonne view of
the U.S. Department of Agriculture.

January soybeans fell 0.23 percent to $13.16-1/2 a bushel, having closed up 2.2 percent on Friday.

Soybeans had drawn support from strong export demand, analysts said.

The USDA confirmed on Friday that private sales of 115,000 tonnes of U.S. soybeans to China.

The USDA in its weekly report on Thursday said soybean sales last week were well above expectations at nearly 1.4 million tonnes.

December corn rose 0.18 percent to $4.23 a bushel, having closed down 0.2 percent the session before.

  Grains prices at  0324 GMT
  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI
  CBOT wheat     661.00     4.00  +0.61%    +1.89%     667.37   55
  CBOT corn      423.00     0.75  +0.18%    +0.00%     430.15   48
  CBOT soy      1316.50    -3.00  -0.23%    +1.94%    1281.82   64
  CBOT rice      $15.73    $0.02  +0.10%    -0.51%     $15.52   51
  WTI crude      $94.04   -$0.80  -0.84%    -0.84%     $95.91   45
  Currencies                                               
  Euro/dlr       $1.354  -$0.001  -0.10%    +0.47%
  USD/AUD         0.916    0.000  -0.04%    -0.77%
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential

(Editing by Joseph Radford)

Soybeans Retreat From Eight-Week High on South America Outlook

By Phoebe Sedgman - Nov 25, 2013
Bloomberg
Soybeans declined from the highest level in eight weeks on expectations favorable soil moisture in Brazil, the world’s biggest exporter, and rain this week in Argentina will boost crops. Wheat and corn advanced.

The contract for January delivery lost as much as 0.3 percent to $13.16 a bushel on the Chicago Board of Trade and was at $13.17 by 10:54 a.m. in Singapore. Prices climbed to $13.22 on Nov. 22, the highest since Sept. 27, on signs demand was increasing for U.S. supplies.

Soybeans lost 6.6 percent this year as global production may increase to a record 283.5 million tons, the U.S. Department of Agriculture predicts. Abundant showers in northern Brazil through this week will improve moisture, while drier weather in southern areas will allow wetness to ease, MDA Information Systems LLC said Nov. 22. In Argentina, showers in central Buenos Aires early this week should help improve moisture and prevent stress on crops, it said.

“For the South American soybean crop, weather is being viewed as favorable near-term,” Australia & New Zealand Banking Group Ltd. analysts including Paul Deane wrote in a note. “Soil moisture in Brazil is generally good, while dry weather in Argentina is keeping the pace of soybean plantings on track before a low pressure system hits the region later this week and generates some much needed rain.”

Production in Brazil is set to reach a record 88 million tons in 2013-2014 and Argentina’s harvest may jump 8.5 percent to 53.5 million tons, according to the USDA.

Wheat for March delivery gained 0.5 percent to $6.60 a bushel. Corn rose 0.2 percent to $4.3025 a bushel.

Spot iron ore seen supported by light Chinese winter buying

Mon Nov 25, 2013
* Lean steel demand keeps iron ore buying interest in check

* Iron ore has only traded between $135 and $137 in November
By Manolo Serapio Jr
SINGAPORE, Nov 25 (Reuters) - Spot iron ore prices are likely to stay between $135 and $137 a tonne for a fourth week, supported by Chinese mills replenishing winter stockpiles
although ample supplies could cap gains.

Slow steel demand in top consumer China has trapped iron ore prices in narrow ranges this month, with producers not aggressively building stockpiles as the weather gets colder.

"There's still some demand although in previous years, buying was much stronger around this time. Some of the mills we've spoken to only have inventory for about two weeks and
that's quite short, so we expect them to replenish," said a Shanghai-based iron ore trader.

Benchmark 62-percent grade iron ore .IO62-CNI=SI gained 0.1 percent to $136.50 a tonne on Friday, according to data provider Steel Index.

"Restocking activity is driving the current strength but with high levels of inventory at port and light demand from the construction sector in China, we expect prices to edge lower
towards year-end," Australia and New Zealand Banking Group said in a note.

Since the start of November, iron ore has peaked at $137.10 from a low of $135.30.

"We are not in a hurry to take cargo because profit margin is too small to justify any risk in holding cargo at this point," the Shanghai trader said.

Global miner Rio Tinto  sold a cargo of 61.4-percent grade iron ore via tender on Friday at $135.50 per tonne, up from $134.90 earlier in the week, the trader said.

Chinese mills tend to rely more on imported iron ore during winter when domestic production slows down, but lean steel demand has curbed that appetite.

The most-traded rebar contract for May delivery on the Shanghai Futures Exchange was little changed at 3,629 yuan ($596) a tonne by midday on Monday. Rebar, a construction steel product, is down slightly for the month, after falling more than 5 percent in September and October.

At the Dalian Commodity Exchange, iron ore for May delivery was unchanged at 932 yuan a tonne.

  Shanghai rebar futures and iron ore indexes at 0408 GMT

  Contract                          Last    Change   Pct Change
  SHFE REBAR MAY4                   3629     +8.00        +0.22
  DALIAN IRON ORE MAY4               932     +0.00        +0.00
  THE STEEL INDEX 62 PCT INDEX     136.5     +0.20        +0.15
  METAL BULLETIN INDEX            136.48     +0.74        +0.55
  Dalian iron ore and Shanghai rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.0936 Chinese yuan)

(Editing by Himani Sarkar)

India may have to start importing iron ore soon: Steel Ministry

PTI
NEW DELHI, November 24, 2013
Iron ore production has come down from 213 MT in 2008-09 to 136 MT 2012-13.

The Steel Ministry is of the view that India will have to import iron ore in the immediate future to meet significantly increasing demand from domestic companies.

“With many projects in the pipeline, both brownfield and greenfield expansion of steel capacity, iron ore requirement will increase significantly leading to imports of iron ore in near

future,” the Steel Ministry has said in a recent presentation to the Planning Commission.

The Ministry in its mid-year plan review has identified iron ore availability as one of the challenges to achieve the steel production target of 300 million tonnes per annum (mtpa) by 2025.

With current production capacity of around 90 mtpa, India needs at least 140 million tonnes (MT) iron ore to meet its need. It requires 1.5-1.6 MT iron ore to produce one million tonne of

steel.

“Domestic requirement of iron ore is increasing with the capacity addition in steel production. Between the 2008-09 and 2012-13 period, the demand for iron ore has gone up from 87.4 million

tonnes (MT) to 124.8 MT,” it said.

India, the world’s fourth largest producer of steel after China, Japan and the US, had produced 78.31 MT steel during 2012-13. It is likely to slightly inch up in current fiscal.

During the January-October period of the current year, India produced 66.38 MT steel.

The Steel Ministry also said iron ore production has come down from 213 MT in 2008-09 to 136 MT 2012-13 due to ban on mining in Karnataka and sharp fall in production in Odisha.

“It would require sufficient time for 200 MT plus production (of iron ore),” the Ministry said.

The government has already taken steps discourage iron ore exports by raising the duty to 30 per cent.

As per the United National Framework Classification (UNFS) of mineral resources, total resource of iron ore in the country is around 28.51 billion tonnes, as on April 1, 2010.

Country’s iron ore production is expected to rise in the coming days with the Supreme Court partially lifting ban on iron ore mining in Karnataka, a producing state.

Sachin Tendulkar - A humble tribute

Soyameal exports jump nearly four-fold to 1.94 LT in October

By PTI | 11 Nov, 2013
NEW DELHI: Soyameal exports have jumped nearly four-fold at 1.94 lakh tonnes (LT) in October as crushing operations of soyabean started early in the current marketing year, according to industry data. 

"Exports of Soybean meal during October 2013 was 1.94 lakh tonnes as compared to 0.51 lakh tons in October 2012 showing an increase of 280.4 per cent," Soyabean Processors' Association of India (SOPA) said in a statement. 

When contacted, SOPA spokesperson and co-ordinator Rajesh Agrawal attributed the sharp jump in soyameal exports to early start of crushing operations in 2013-14 marketing year that started last month. 

Although marketing year starts from October, the crushing operations pick up from November and hence, the exports in October are generally low. 

Japan was the major importer last month with a quantity of 1.04 LT, followed by Iran at 33,035 tonnes. 

India exported 34.73 LT of soyameal in 2012-13 marketing year (October-September). 

On a financial year basis, soyameal exports rose by 21 per cent during April 2013 to October 2013 is 10.71 LT as compared to 8.88 LT in the same period of previous year.

Shanghai rebar hits one-week low on property curbs

Mon Nov 11, 2013
* Shanghai to raise downpayment for second-home purchases

* Dalian iron ore also hits one-week low
By Manolo Serapio Jr
SINGAPORE, Nov 11 (Reuters) - Shanghai steel futures dropped to one-week lows on Monday amid concern fresh efforts in China to curb property purchases may dent demand for the building material.

Shanghai will raise the minimum downpayment for second-home purchases to 70 percent from 60 percent, the city's housing bureau said on Friday, following similar moves by other big
cities in China.

Home prices in large Chinese cities have set records, despite a four-year government campaign to cool the property market, raising worries over a potential price bubble.

The most-traded rebar contract for May delivery on the Shanghai Futures Exchange was down half a percent at 3,651 yuan ($600) a tonne by the midday break, after touching a
low of 3,633 yuan, its weakest since Nov. 1.

"The restriction will be negative for steel demand and I heard that most of the buyers have already been done with restocking," an iron ore trader in Shanghai said.

China's iron ore futures were similarly lower, with Dalian prices also touching their weakest level since Nov. 1.

The most-active May iron ore contract on the Dalian Commodity Exchange was off 0.2 percent at 938 yuan a tonne, after falling to as low as 934 yuan.

Data over the weekend that showed China's industrial output rising 10.3 percent in October from a year earlier, faster than market expectations of 10 percent, failed to lift steel and iron
ore prices.

Market participants are more keen on any policy signals that would emerge from the Communist Party meeting in China which began on Saturday and ends on Tuesday, traders said.

President Xi Jinping and Premier Li Keqiang must unleash new growth drivers as the world's second-largest economy loses steam, burdened by industrial overcapacity, piles of debt and
soaring house prices.

Appetite for spot iron ore cargoes may be limited this week, traders said, after Chinese buyers snapped some shipments last week.

Iron ore for immediate delivery in China's Tianjin port .IO62-CNI=SI slipped 0.7 percent to $135.90 a tonne on Friday, according to data provider Steel Index. The price reached a
two-month peak of $137.10 on Nov. 6.

"Fundamentals may not support the price to stand above $135. There's no shortage of cargo in the market and mills are not hungry for material at the moment," said another trader in
Shanghai.

  Shanghai rebar futures and iron ore indexes at 0430 GMT

  Contract                          Last    Change   Pct Change
  SHFE REBAR MAY4                   3651    -20.00        -0.54
  DALIAN IRON ORE MAY4               938     -2.00        -0.21
  THE STEEL INDEX 62 PCT INDEX     135.9     -1.00        -0.73
  METAL BULLETIN INDEX            136.07     -0.55        -0.40
  Dalian iron ore and Shanghai rebar in yuan/tonne
  Index in dollars/tonne, show close for the previous trading day
 ($1 = 6.0905 Chinese yuan)

(Editing by Himani Sarkar)

Could Russia ape Ukraine as a big force in corn?

8th Nov 2013, by Agrimoney
Could Russia follow Ukraine in emerging as a major force in world corn exports?

The "persistently wet weather" which has this year held back Russia's wheat harvest, which the US Department of Agriculture on Friday downgraded by 2.5m tonnes to 51.5m tonnes, has done little to hamper the country growth as a corn grower.

Indeed, the USDA raised its forecast for the Russian corn crop to 2.5m tonnes, to a record high.

While the corn harvest, at 11.5m tonnes, is still relatively small compared with that of big producing countries such as the US, Brazil and China, it represents a rise of 40%  year on year on last year's result .

With that enough to allow record exports of 2.5m tonnes, it echoes the situation late in the last decade in Ukraine, which has in the last four years near-tripled production to 29.0m tonnes.

Ukraine's exports have soared from 5.1m tonnes to 18.0m tonnes over the same period, making it the third-ranked exporter, after the US and Brazil, and equal with Argentina.

Better result

The rise in Russia's output this year, from less than 4m tonnes in 2009-10, is in part down to the one-off effect of benign weather – for an autumn-harvested crop, at least.

"Although some of Russia's top corn-producing territories were subject to below-normal subsurface moisture reserves in mid-summer, the crop was not subject to the unusually high July and August temperatures that have reduced yield in several recent years," the USDA said.

However, the rise also reflects the growing popularity of the crop among growers, with the estimate of corn area upgraded to a record 2.25m hectares, on a harvested basis.

One major factor in boosting former Soviet Union corn production has been the availability of better-quality seed, with some producers turning to Canada for non-genetically modified varieties suited to a mid-continental, northern latitude climate.

The USDA pegged Russia's average corn yield at 5.11 tonnes per hectare – up 21% year on year.

GRAINS-Corn up for second session after USDA crop forecast

Mon Nov 11, 2013
* Corn firms for second session on USDA estimate

* USDA pegs corn production at less than 14 billion bushels

* Soybeans dip after jumping 2 pct on Friday
By Colin Packham
SYDNEY, Nov 11 (Reuters) - U.S. corn futures rose for the second consecutive session on Monday and have now risen more than 2 percent to a near-two-week high after a U.S. Department of Agriculture (USDA) crop forecast for the United States that was lower than expected.

Soybeans slipped back, having jumped more than 2 percent on Friday, the biggest increase in eight weeks, and wheat also fell.

Chicago Board of Trade December corn rose 0.59 percent to $4.29-1/2 a bushel, trading just below the session high of $4.30-3/4 a bushel, which was the highest since Oct. 31. Corn closed up 1.5 percent on Friday.

"The USDA's final production figure, while being revised to a record, still fell under the magical 14 billion bushel mark," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia. "That smaller-than-expected upgrade supported short-covering on Friday and that positive tone seems to have extended into early Asian trading."

USDA said U.S. corn production would total 13.989 billion bushels, based on an average yield of 160.4 bushels per acre.

Analysts had forecast the USDA would put the crop at 14.003 billion bushels and an average yield of 158.933 bushels per acre.

January soybeans fell 0.15 percent to $12.94 a bushel, having firmed 2.3 percent on Friday.

Beans had firmed after the USDA put global ending stocks of soybeans at 170.23 million tonnes, more than 2 million tonnes below the average of trade forecasts.

The USDA said U.S. soybean crop production would total 3.258 billion bushels, the third-largest on record and 1 percent larger than the analysts had expected.

Brazil raised its official forecasts for its 2013/14 corn and soybean harvests, with soy output seen at a record high.

December wheat was little changed at $6.49-1/2 a bushel, having closed down 0.5 percent on Friday.

Wheat was under pressure from the USDA's estimate for ending stocks of 565 million bushels, well above expectations of 516 million bushels. Higher flour extraction rates reduced demand for food wheat, the USDA said.

  Grains prices at  0400 GMT
  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI
  CBOT wheat     649.50    -0.25  -0.04%    -0.54%     681.26   13
  CBOT corn      429.25     2.50  +0.59%    +2.08%     435.90   50
  CBOT soy      1294.00    -2.00  -0.15%    +2.17%    1271.49   61
  CBOT rice      $15.60   -$0.10  -0.61%    +0.61%     $15.29   72
  WTI crude      $94.65    $0.05  +0.05%    +0.05%     $98.87   36
  Currencies                                               
  Euro/dlr       $1.336  -$0.001  -0.07%    -0.42%
  USD/AUD         0.938    0.000  -0.05%    -0.78%
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential

(Editing by Alan Raybould)

Rice, Sugar Crops Damaged in Philippines by Super Typhoon Haiyan

By Chanyaporn Chanjaroen & Cecilia Yap - Nov 11, 2013
Bloomberg
Rice and sugar crops were destroyed by Super Typhoon Haiyan when it cut through the central Philippines flattening buildings and unleashing floods that may have killed as many as 10,000 people.

Rice imports may increase because of shortages, pushing purchases above an estimate of 1.1 million metric tons by the U.S. Department of Agriculture, said Samarendu Mohanty, senior economist at the International Rice Research Institute, which is using satellite-monitoring to get a better assessment.

Futures traded in Chicago fell 0.6 percent today to $15.60 per 100 pounds and are 6.1 percent below a 19-month high in June as global production expands 0.9 percent to a record 473.2 million tons, according to USDA data. Sugar futures traded in New York declined 6.6 percent in the past year.

“Depending on damage from the typhoon, the import number may change,” Mohanty said by phone. “I’d think there will be some increase. I can’t tell now how much exactly.” While the Eastern Visayas, the hardest hit area, represents only 5 percent of national output, shortages may strain inventories, he said.

The United Nations said it’s stepping up relief operations, with much of the destruction concentrated in and around Tacloban city, capital of Leyte province. The difficulty in reaching the worst-hit areas means the number of casualties has yet to be confirmed, said the Red Cross in Geneva, which cited Philippine authorities as saying the death toll may reach 10,000.

Mill Damage

Between 50,000 tons and 120,000 tons of sugar may have been lost as the typhoon damaged crops in Visayas, which accounts for more than half the nation’s plantations, Sugar Regulatory Administration head Regina Martin told reporters in Manila.

About 25,000 hectares of sugar in the area are affected and losses may rise, said Martin, citing preliminary data.

Cane crops as well as milling infrastructure may have sustained “significant” damage across northern Negros, Panay and Leyte islands, Green Pool Commodity Specialists Pty said in a report today. Negros represents 55 percent of country’s cane output, Panay about 6 percent and Leyte about 2%, said Green Pool, a research company based in Brisbane.

The true extent of the damage may not be known for weeks or months, director Tom McNeill, who has followed sugar for more than 25 years, said in a separate e-mail.

Hanjin Shipping CEO Resigns on Losses, Debt Repayments

By Kyunghee Park - Nov 11, 2013
Bloomberg
Hanjin Shipping Co. (117930)’s Chief Executive Officer Kim Young Min resigned, taking responsibility for two successive years of losses at South Korea’s largest shipper and a delay in getting financial support from creditors.

Kim, 58, will stay until a replacement is found, the Seoul-based company said in an e-mailed statement today. Kim was appointed as CEO in January 2009 after 20 years with Citigroup Inc., and his term was to end in March 2015.

Shares of the container-to-commodity mover, which last month received a loan from affiliate Korean Air Lines Co. to ease a “temporary” liquidity shortage, fell for a fifth straight day in Seoul. Laden with debt, Hanjin is among liners battling a global overcapacity and slump in cargo rates caused by China’s weak iron-ore demand, factors that pushed STX Pan Ocean (028670) Co. to file for a court receivership in June.

“There’s no good news for Hanjin right now,” said Yun Hee Do, an analyst at Korea Investment & Securities Co. in Seoul. “The company hasn’t been able to make money recently and its interest payment has been increasing. There’s quite a sizable amount of debt coming due next year for Hanjin.”

Korean Air said last month it will provide 150 billion won ($141 million) to Hanjin to help ease the company’s liquidity shortage. The shipping line has 736.4 billion won of debt and loans maturing next year, compared with 58 billion won in 2013, according to data compiled by Bloomberg. Its cash and cash equivalent was 506.6 billion won at the end of June.

Shares Drop

Hanjin Shipping’s $150 million of convertible notes sold in July 2011 were yielding 9.232 percent today compared with 9.184 percent at the start of the month, according to Bloomberg-compiled prices.

The stock fell as much as 1.4 percent to 7,000 won before trading at 7,050 won as of 12:26 p.m. in Seoul. The stock was up by much as 3 percent earlier today. Hanjin has slumped 41 percent this year, compared with a 0.6 percent decline in the benchmark Kospi index. Hyundai Merchant (011200) dropped as much as 6 percent and STX Pan Ocean advanced as much as 10 percent today.

Hanjin Shipping is considering selling new shares, loans and perpetual bonds to raise funds to repay its debt and improve finances, Korea Economic Daily said on Oct. 31, citing unidentified company officials. Sonya Cho, a Hanjin Shipping spokeswoman, said a share sale is among options being considered by the company.

Korea Development Bank and other lenders may provide short-term loans to the shipping company, Maeil Business Newspaper said today, citing financial industry officials it didn’t name. Hanjin posted a loss in each of the past 10 quarters.

Chaebol Hanjin

Korean Air, the nation’s biggest airline, is the largest shareholder of Hanjin’s parent Hanjin Shipping Holdings Co. They are both part of the Hanjin Group, which also has aerospace-related businesses.

Hyundai Merchant Marine Co., the country’s second-biggest shipping company, collected 156 billion won in a share sale last week. That was less than the 214.5 billion won the company expected to raise, according to a Nov. 4 regulatory filing.

Korea Development Bank bought 224 billion won of bonds sold by Hyundai Merchant last month to help the shipping company refinance its maturing debt. About 462.7 billion won of debt and loans are due next year, according to data compiled by Bloomberg.

STX Restructuring

STX Pan Ocean, South Korea’s biggest commodities-shipping company, went under court protection in June with a net debt of 5.37 trillion won at the end of 2012. The company has submitted its revival plan to the court in Seoul, which included a debt-for-equity swap and a rescheduling of loans.

Spot rates to haul container cargo from Asia to Europe, the world’s busiest trading lane, have dropped 5 percent from this year’s high, according to the Shanghai Shipping Exchange. Those from Asia to U.S. west coast dropped 32 percent to $1,718 per 40-foot box.

The Baltic Dry Index fell for three years since 2010, touching a record low in February last year of 647 because of slowing demand for moving iron ore, a key ingredient in making steel, to China. The gauge has since more than doubled to 1,581 as of Nov. 8.

Hanjin Shipping narrowed losses to 121.8 billion won in the first half, from 346.6 billion won loss a year earlier.

Sugar industry says exports crucial to reverse current bearish trend

VISHWANATH KULKARNI, THE HINDU BUSINESS LINE
FAO bullish on prices, points to weather woes in Brazil

NEW DELHI, NOV. 10:  
While the Food and Agriculture Organisation (FAO) has struck a bullish note on sugar in its recent outlook, the Indian industry is striking a different note.

The industry feels that unless 3-4 million tonnes are shipped out of the country, sugar prices are unlikely to stabilise, reversing the downtrend.

FAO last week said that global sugar prices would rise in the coming days on unfavourable weather conditions impacting harvest in Brazil, the largest sugar producer.

GLOBAL PRICES

“Sugar quotations increased by 9 per cent from July to October 2013. Although early in the season, the size of the production surplus remains uncertain, indications are that it will be much smaller than early estimates and not as large as the past two years. If these early assessments prove true as the season progresses, it will certainly lend some upward support to world sugar quotations,” it said.

Global raw sugar prices averaged 19.31 cents a pound during January-June, down 20 per cent over the corresponding period a year ago. However, in September, prices averaged at around 17.4 cents a pound and rose to around 18.7 cents a pound in October.

FAO estimates the global sugar output for 2013-14 at 180.2 million tonnes, marginally higher than last year. It expects bulk of the growth in global output to come from developing countries, such as India, Thailand and Pakistan.

However, FAO said: “India’s competitiveness on the international market is being constrained by rising production costs and falling world prices, which may limit further gains in world markets”. It has pegged India’s sugar output at 25.5 million tonnes for the 2013-14 season, while forecasting exports at 2.1 million tonnes.

UNVIABLE EXPORTS

The Indian industry has begun the 2013-14 season with a huge opening balance of 8.5 million tonnes, which is weighing on sugar prices that are in the bearish phase.

Mills are under pressure to liquidate stocks – that’s resulting in excess market supplies dragging the price. “Exports are currently not viable from India, but sugar can be pushed out, provided there is some support from the Government, say, in terms of transport subsidy for both inland and oceanic freight,” said Abinash Verma, Director-General of Indian Sugar Mills Association.

The Government had provided export subsidy in 2006-07 to ship out about 60 lakh tonnes of sugar. Mills in coastal areas then received a subsidy of Rs 1,350 a tonne, while those in the hinterland got Rs 1,450 .

“A subsidy of Rs 1,000-1,500 is good enough to help us export the surplus sugar,” said Verma. Also, the Government could help millers by providing interest-free loans to tide over the current crisis.

Earlier, the Government had extended such interest-free loans in 2007-08 to an extent of Rs 3,500 crore.

Sugar mills currently owe about close to Rs 4,000 crore to farmers for cane purchases made last year. Crushing for the current season is yet to start, as mills are seeking clarity on cane pricing, while farmers are demanding a higher price for their produce. An estimated half a million tonne raw sugar from the new crop has already been contracted for exports, mainly from Maharashtra.

Fertiliser Ministry moves to cabinet with proposal to drop assured buyback of urea

By PTI | 10 Nov, 2013,
NEW DELHI: The Fertiliser Ministry has moved a proposal to the Cabinet to remove guaranteed buyback clause in the urea investment policy and adopt a bidding process to shortlist companies after the lucrative incentive led to a flood of applications for expanding capacities.

In January, the ministry notified the New Investment Policy (NIP) 2012 -- approved by the Cabinet Committee on Economic Affairs in December last year -- to incentivise manufacturers for raising domestic urea output.

Policy guaranteed buy-back of urea for eight years from start of production. Encouraged by this clause, 13 fertiliser firms applied for setting up new plant or expanding capacity of existing plant by about 16 million tonne.

However, India needs an additional capacity of only 8 million tonne of urea to become self-sufficient. The domestic production stands at about 22 million tonne.

According to sources, the ministry has moved a proposal before CCEA to remove the buy-back clause and introduce bidding process for shortlising 4-5 applicants from among the 13 that have applied.

In the inter-ministerial consultation, Finance Ministry has suggested for bidding process, they added.

The policy has been hold as the fertiliser ministry wants to permit only 4-5 players for creating additional urea capacity.

Although the parameters of bidding process have not been finalised, sources said the cost of production could be a basis for shortlisting the applicants.

The government could reduce subsidy bill, projected at Rs 66,000 crore for this fiscal, by shortlisting manufacturers that quote lower cost of production.

Government controls urea sector by fixing MRP at Rs 5,360 per tonne. Difference between MRP and production cost is reimbursed as subsidy to fertiliser companies.

The Ministry wants to provide transparent and objective criteria for giving approval to the proposals received so that only as much capacity is added as is required to meet the demand and supply gap.

Among the major players who have approached the DoF for greenfield or brownfield expansion under the NIP are: IFFCO, Tata Chemicals, Indo Global Fertilisers, Chambfal Fertilisers and Chemicals, Rashtriya Chemicals and Fertilisers, National Fertilisers Ltd.

The NIP 2012 passed by the CCEA had also proposed a $2 per tonne increase in floor and ceiling prices of urea for every 0.1 $per million metric British thermal unit (mmbtu) increase in delivered gas prices up to $14 per mmbtu.