Hedge funds, Russian grain, Libyan crisis, South Asian food stocks
Durable commentary and analysis in the FAO Monthly News Report on Grains, 2011 February, which is carried in full on this page. The highlights:
Sell-off in grains and oilseeds ‘an over-reaction, reported Agrimoney on 25 February 2011: The sell-off of in grain and oilseed markets in response to the Libyan crisis is an over-reaction, with tight supplies, particularly of corn, warranting continued high prices. The Canadian Wheat Board said that the Libyan unrest “in reality, does not materially change the grain fundamentals facing the market”, even through the global economic fears it has provoked through lifting oil prices.
Hedge Funds Cut Food-Price Bets as Grains Take a Fall, reported Bloomberg on 25 February 2011: Bullish bets on soybeans fell 18 percent and those for corn slid 3.4 percent. Holdings in eight agriculture commodities by money managers are higher than during the global food crisis three years ago. Investors put a record $2.6 billion into agriculture-index swaps, exchange-traded products and medium-term notes last month, after pouring $5.7 billion during the fourth quarter of 2010, according to Barclays Capital. In the week ended Feb. 8, hedge funds and other speculators increased bullish bets on wheat to a combined 51,787 futures and options contracts, the highest since August 2007.
Russia could prolong grain export ban: deputy PM, reported Business Recorder on 22 February 2011: Russia on Tuesday said it may extend a ban on grain exports that has been blamed for triggering global food price rises beyond its provisional expiry date of July 1. “We discussed the option of extending the grain export ban after July 1,” news agencies quoted First Deputy Prime Minister Viktor Zubkov as saying. Analysts link the spike in wheat prices to subsequent jumps in the cost of both Russian dairy products and beef.
Pakistan: Govt expects bumper wheat crop, lacks proper storage, reported Asian Pulse on 17 February 2011: Government has set wheat procurement target of 6.5 million metric tons expecting a bumper crop estimated to be 23.5 million metric tons for 2011 wheat season. The Government of Pakistan, while ensuring minimum wheat support price of Rs.950/- per 40 kgs to the farmers, procures around 28 to 30pc of the total crop to safeguard the interests of the farmers whose efforts have made the country not only self-reliant but also enabled to export the surplus wheat this year.
India Foodgrains Production in 2010-11 Estimated at 232.07 MT ; 2nd Advance Estimates of Crop Production Released, reported the Press Information Bureau on 9 February 2011: The second advance estimates of crop production for 2010-11 have been released. India is likely to produce 232.07 million tonnes of foodgrains during 2010-11 compared to 218.11 million tonnes last year. This is only marginally below the record production of 234.47 million tonnes of foodgrains in 2008-09. India is likely to achieve record production of wheat (81.47 million tonnes), pulses (16.51 million tonnes) and cotton (339.27 lakh bales of 170 kg. each) this year. Central Statistics Office (CSO) has estimated that the agriculture, forestry and fishery sector is likely to show a growth of 5.4% in its GDP during 2010-11, as against the previous year’s growth of 0.4%.