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The bloody cost of ‘democratic transition’ in Libya

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Libya's oil and gas industry. Graphic: Der Spiegel

The real nature of the US-NATO invasion of Libya has become even clearer in the last week. The orchestrated media coverage, similar to the trigger-happy reportage that marked the Gulf Wars and the USA’s Iraq and Afghanaistan wars, has focused on demonising Muammar Gaddafi and on the ‘rebels’ who are now in Tripoli. Absent from the popular coverage, especially on television, is the ordinary Libyan. Not absent any longer are the commercial roots of this invasion, for the German media are now openly talking about the business opportunities or Libyan “reconstruction”.

The Security Council’s stipulations that ground troops not be introduced into the country, that an arms embargo be kept in place and that mercenaries be prevented from entering Libya have all been flouted in this criminal operation to seize control of an oil-rich former colony and loot its resources, observed the World Socialist Website. There is barely any attempt to hide the fact that special forces, intelligence agents and mercenary military contractors have organized, armed and led the “rebels”, who have not made a single advance without the prior annihilation of government security forces by NATO warplanes.

After being terrorized for five months by NATO bombs and missiles, the people of Tripoli are now facing sudden death and a looming humanitarian catastrophe as a result of the NATO campaign to “protect civilians”. Kim Sengupta of the Independent reported Thursday from the Tripoli neighborhood of Abu Salim, which the “rebels” stormed under the cover of NATO air strikes. Known as a pro-Gaddafi area, its residents have been subjected to a reign of terror.

Libya military bases. Graphic: Der Spiegel

“There was no escape for the residents of Abu Salim, trapped as the fighting spread all around them,” Sengupta reported. “In the corner of a street, a man who was shot in the crossfire, the back of his blue shirt soaked in blood, was being carried away by three others. ‘I know that man, he is a shopkeeper,’ said Sama Abdessalam Bashti, who had just run across the road to reach his home. ‘The rebels are attacking our homes. This should not be happening. The rebels are saying they are fighting government troops here, but all those getting hurt are ordinary people, the only buildings being damaged are those of local people. There has also been looting by the rebels, they have gone into houses to search for people and taken away things. Why are they doing this?’ ”

Asked why local residents were resisting the NATO-led force’s takeover of the city, Mohammed Selim Mohammed, a 38-year-old engineer, told the Independent, “Maybe they just do not like the rebels. Why are people from outside Tripoli coming and arresting our men?” Meanwhile, other reports laid bare war crimes carried out by NATO and its local agents on the ground in Tripoli. Both the Associated Press and Reuters news agencies documented a massacre perpetrated against Gaddafi supporters in a square adjacent to the presidential compound that was stormed and looted on Tuesday.

“The bodies are scattered around a grassy square next to Moammar Gadhafi’s compound of Bab al-Aziziya. Prone on grassy lots as if napping, sprawled in tents. Some have had their wrists bound by plastic ties,” AP reported. “The identities of the dead are unclear but they are in all likelihood activists that set up an impromptu tent city in solidarity with Gadhafi outside his compound in defiance of the NATO bombings.” AP said that the grisly discovery raised “the disturbing specter of mass killings of noncombatants, detainees and the wounded.”

Libya oil pipelines and infrastructure. Graphic: Der Spiegel

Among the bodies of the executed the report added were several that “had been shot in the head, with their hands tied behind their backs. A body in a doctor’s green hospital gown was found in the canal. The bodies were bloated.” Reporting from the same killing field, Reuters counted 30 bodies “riddled with bullets”. It noted that “Five of the dead were at a field hospital nearby, with one in an ambulance strapped to a gurney with an intravenous drip still in his arm.” Two of the bodies, it said, “were charred beyond recognition.”

[See ‘A time before the pillage – what North Africa should mean to us’.]

The pretence that the US and its European NATO allies were intervening in Libya to “protect civilians and civilian populated areas from threat of attack,” as stated in the United Nations Security Council resolution, has effectively been abandoned. Behind the fig leaf of this resolution the naked imperialist and colonial character of the war has emerged. Der Spiegel has reported that three weeks ago, Hans Meier-Ewert, head of the German-African Business Association, travelled to Libya together with representatives from 20 German companies. Since all regularly scheduled flights to Tripoli have long ago been cancelled, the German government made a Transall military transport plane available for the journey, and the mission was headed up by Hans-Joachim Otto, a state secretary in the German Economics Ministry.

In Benghazi, where the rebel movement is headquartered, the group handed over aid goods and medical supplies to the city’s hospitals – public relations and photo ops. There, the Germans also met with representatives of the Libyan transitional council and of the country’s central bank in an effort to pursue economic interests in the country. Libya is rich relative to its African neighbors, but the Europeans consider its infrastructure woefully inadequate. Felix Neugar, an ‘expert’ on Africa with the German Chamber of Industry and Commerce (DIHK), has complained that Libya lags far behind the high standard of the large Gulf oil producers.

Economic associations estimate that between 30 and 50 German companies were active in Libya before the war. “But it was a difficult country to do business in,” reported Der Spiegel. “State-owned companies dominated most markets, and legal standards were at best fluid under Gadhafi’s leadership. During the meeting in Benghazi with the transitional council, the German economic leaders were assured that the private economy would be strengthened, says Meier-Ewert. Contracts signed with the Gadhafi regime are to be honored, and many Libyans with extensive business experience are planning to return from exile, the German delegation was told.”

Libya tribes and tribal areas. Graphic: Der Spiegel

The Germans aren’t the only ones who have begun exploring opportunities in post-Gadhafi Libya. The Italian oil concern Eni is doing all it can to defend its status as the largest foreign oil producer in the country. Even before the rebels stormed the Gadhafi residence in Tripoli this week, Eni technicians had begun preparing to restart the flow of oil. And Eni has the full support of the government in Rome. Prime Minister Silvio Berlusconi is meeting with rebel leader Mahmoud Jibril in a few days.

“Right now it is still too early to say when, how and under what conditions production can begin again in Libya,” said BASF subsidiary Wintershall, an oil producer active in the country since 1958, told Der Spiegel. The war also interrupted the construction of a highway that the German firm STRABAG had been working on. This autumn, the company plans to send a team to Libya to assess the situation. RWE Dea, another German firm that drills for oil in Libya, hopes the new government will uphold existing contracts. In the end, raw material exploitation contributes to reconstruction, the company says.

A lucrative reconstruction however requires destruction to be visited on Libya and its populace. This is taking place in appalling measure. Reporting from a local hospital, the Telegraph said: “As battle raged in the Tripoli streets hundreds of casualties were brought in, rebel fighters, Gaddafi’s soldiers, and unlucky civilians, laying next to each other in bed and even on a floor awash with blood, screaming or moaning in agony. Many died before they could be treated.” The paper interviewed Dr Mahjoub Rishi, the hospital’s Professor of Surgery: “There were hundreds coming in within the first few hours. It was like a vision from hell. Missile injuries were the worst. The damage they do to the human body is shocking to see, even for someone like me who is used to dealing with injuries.” Most of the casualties, he said, were civilians caught in the crossfire. The Telegraph reported that Tripoli’s two other major hospitals were similarly overflowing with casualties and desperately understaffed, as were all of the city’s private hospitals.

The aid group Medecins Sans Frontieres (MSF) warned that the city is facing a medical “catastrophe”. The group told Reuters that “Medical supplies ran low during six months of civil war [i.e., NATO bombardment] but have almost completely dried up in the siege and battle of the past week. Fuel supplies have run out and the few remaining medical workers are struggling to get to work.” The lack of fuel means that hospitals that have kept their power by running generators can now no longer do so. Health officials in Tripoli report that blood supplies have run out at the hospitals and that food and drinking water is unavailable over whole areas of Tripoli.

Distant from the battle, the hapless civilian victims and the constant terror of US-NATO airborne drones, fighter jets, bombers and surveillance aircraft, Western leaders have been parcelling out Libya’s future – this is mostly taking place in Paris, as the French government has played a leading role in the so-called “international deployment” against Gadhafi. The French government has proposed a quick meeting of the so-called Libya Contact Group, which is comprised of the countries that participated in the military operation. Germany, given its abstention in the United Nations vote to endorse a no-fly zone, is not a member of the group.

The meeting could happen as soon as next week, and high on the agenda will be drafting a plan together with the National Transition Council for the “international community’s” future role in Libya. The European Union’s deadly doublespeak is being broadcast regularly: “The way is now open for Libya for freedom and self-determination,” European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy said in a joint statement. They added that Europe would make “every endeavour” it could to help, providing “support for its democratic transition and economic reconstruction”. Of course it will, at a cost in North African lives and for a profit to be reckoned in many billions of euros.

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Big dry in Europe, big dry in USA

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This image, made with data collected by the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Terra satellite, reveals high temperatures that contributed to hazardous fire conditions. Image: NASA's Earth Observatory

An afterword about the drought conditions in the USA, centering on the state of Texas, and analysis from the USDA and the World Meteorological Organisation on the extremely dry conditions over northern Europe. This is May 2011 and keeping in mind what happened last year in Russia and Central Asia, we’re going to watch the big crop-growing areas very carefully over the next few weeks.

NASA’s Earth Observatory has said ‘Drought and Heat Create Hazardous Fire Conditions in Texas’ – So far in 2011, more than 1.4 million acres have burned in Texas, a result of some 800 fires. Why is fire activity so extreme in Texas this year? This image reveals high temperatures that contributed to hazardous fire conditions.

Fire needs dry fuel to burn, and weather conditions in March and April turned Texas into a tinderbox. The state began the winter dry season with abundant vegetation, following a moist spring in 2010. But then drought settled over the state in late 2010 and early 2011, culminating in the driest March on record. Many areas received less than 5 percent of their normal rainfall, according to the state climatologist.

In addition to being dry, March and April were warmer than normal. The image shows ground temperatures for April 7 to April 14 compared to long-term average for the week. The red tones indicate that most of Texas was much warmer than average, further drying out the abundant grasses, shrubs, and trees already suffering from a lack of rain.

In its latest World Agricultural Production report (2011 May) the United States Department of Agriculture (USDA), Foreign Agricultural Service has said that the European Union’s (EU) primary wheat and rapeseed region is struggling with dryness. “Dryness prevailed in northern Europe during March and April and continues into May, with far-below-normal precipitation levels and much-above-average temperatures. The high temperatures accelerated plant development so that crops are two to three weeks ahead of normal.”

Dry/drought conditions in Europe. Image: WMO

The report said that dryness is reportedly also interfering with fertilizer uptake by the crops. Both wheat and rapeseed crops need rainfall soon to prevent sharp yield reductions in northern France, northern Germany, England, and western Poland. These affected areas comprise a large portion of the EU’s primary wheat and rapeseed belt.

Planting conditions were generally favorable for EU winter wheat and rapeseed crops last autumn, with adequate soil moisture across most countries, including France and the United Kingdom. In some areas of central Europe however, (including Germany, Hungary, and Romania), rain and wet soils impeded planting, and some fields were likely left unplanted to be sown later with spring crops. Overall, the EU’s winter was rather mild despite one period during late February when minimum temperatures dropped to between minus 15 and minus 20 degrees Celsius for several days in snow-free areas of eastern Germany and western Poland.

The World Meteorological Union, for all its heavyweight authority, has only a couple of paras about the drought conditions in Europe 2011. “A long-lasting dry period persists over large parts of Europe since January 2011. According to data of the Global Precipitation Climatology Centre (GPCC), especially the months February to April 2011 had a considerable rain deficit over large parts of Europe. The 3-month totals over this period ranged between 40 and 80% of the long-term mean 1951-2000 over large areas (see figure below), in many parts of central Europe even below 40%.”

The United Kingdom had extremely dry conditions in March and April, said the WMO, especially in its southeastern parts and experienced its driest March since 1953. The other parts of western and central Europe all had a dry February, March and April. 2011 was up to now one of the driest 10 years in nearly whole Switzerland since 1864. April 2011 was one of the 10 driest April months in Germany since 1881, in continuation of similarly dry April months in 2007, 2009 and 2010. Also the preceding winter 2010/11 was very dry at least in western Europe, causing a very low soil moisture during March and April.

Written by makanaka

May 12, 2011 at 20:42

Food reserves, strategic foodgrain stocks and port protests

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Sujit Kumar Mondal sailing to his floating garden - one of the initiatives cited for Bangladesh's success in fighting under-nutrition. Photo: IRIN/Peter Murimi

Sujit Kumar Mondal sailing to his floating garden - one of the initiatives cited for Bangladesh's success in fighting under-nutrition. Photo: IRIN/Peter Murimi

Food inflation and industrial action have come together in a new signal about the unsustainability of consumption. Port workers in Argentina had stopped, for three days, the loading of vessels with soya, of which Argentina is a major producer. Their reason is the continuing high cost of food in their country, which in this Reuters report on the matter is recorded as having been 25%. They struck work and blocked loading to demand higher wages so they could afford to buy their household food needs. They’re also directly responsible for loading an East Asian food staple. Block food to buy food.

The blockade by members of Juarez’s cooperative targeted a terminal north of the city of Rosario shared by Bunge and Argentina’s AGD, and at another nearby facility operated by Cargill. Argentina is the world’s No. 3 soybean exporter and a major supplier of corn and wheat. About 80 percent of its soyoil and meal is produced around Rosario, located 180 miles (300 km) north of the capital Buenos Aires.

The two terminals account for about 16 percent of the South American country’s soyoil-processing capacity. Argentina is the world’s biggest supplier of soyoil and soymeal. Earlier on Friday, port workers suspended a brief protest that halted shipping activity in the southern grains ports of Quequen and Bahia Blanca, SOMU shipping workers’ union Omar Suarez told Reuters. He said the union wanted exporters to use a logistics company that hires its members, but had called off the protest following a request from the government.

Major grain importing countries are set to build more storage silos and expand strategic stocks after seeing the role played by record food prices in political upheaval in the Middle East and North Africa, Reuters has reported. Egypt, South Korea and Saudi Arabia are among nations which have already unveiled strategic plans as grain markets adjust to the prospect of further supply crunches over the next few years.

Global demand for grain has risen steadily as consumers in emerging economies grow richer and suppliers have struggled to overcome erratic climatic conditions, which last year included Russia’s worst drought in decades and heavy rains in Australia. The upshot has been a near-60 percent surge in key US wheat prices in the year to March, while global food prices as measured by the United Nations hit their second straight record high in February.

Importers also no longer have the safety net of large stocks held by exporters such as the European Union, which has sold off the grain mountains it first accumulated in the 1980s and moved to more market-oriented policies. Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC) in top wheat exporter Egypt, said in February it was looking to improve and boost storage capacities.

“We have a long-term plan to improve storage capacity in Egypt and to build a network of silos that would allow GASC to purchase at the suitable time. We are also seeking improving performance of storage,” he said. South Korea, the world’s fourth-largest grain importer, is also among those building a strategic grain reserve, while another major importer Saudi Arabia hopes to double wheat reserves within three years. International Grains Council figures issued last week show a major shift in stocks from exporting to importing countries, said the Reuters report.

China is expected to hold 114.6 million tons of grain by the end of 2010-11, more than the combined total of 104.5 million tons held by all the major exporters, according to IGC estimates. Nie Zhenbang, state administration of grain head, said in an interview with the official Ziguangge magazine that China would continue to build up local government reserves of grains and edible oils and expand stockpiling capacities.

Mexico, the world’s second-largest maize importer, has not yet expanded its stocks but has plenty of space if necessary. Maize stocks currently total around 2 million tons, little changed from previous years, but the national association of warehouses (AAGEDE) estimates there is storage space for about 11 million tons. AAGEDE director Raul Millan said there is no deficit in storage space but that infrastructure is lacking in the southern part of the country where warehouses are not as well equipped. Mexico has no strategic reserves of grain, although there are some stocks held by the government to hand out to the poor.

In India, the government maintains a ‘Food Security Reserve’ of 3 million tons of wheat and 2 million tons of rice. This reserve – maintained from 2008 – is part of what the Indian government calls ‘buffer’ norms’. The buffer stock norms are recalibrated four times a year and as on 2010 October, the ‘buffer stock norms’ stood at 14 million tons for wheat and 7.2 million tons for rice. Against these norms, the government’s actual stocks were 27.7 million tons of wheat and 18.4 million tons of rice. From 2009 July, the actual stocks of total foodgrains in India has been held at around 50 million tons, much above what the government calculates it needs for the Public Distribution System and other welfare programmes.

How the EU Commission backed business interests in the EU-India trade talks

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Legal action has been taken against the EU Commission, suing the EU’s executive in the EU General Court for withholding documents related to the EU’s free trade talks with India. The Commission is accused by Corporate Europe Observatory of discriminating in favour of corporate lobby groups and of violating the EU’s transparency rules.

Former EU Trade Commissioner Peter Mandelson (centre) with former Indian Commerce and Industry Minister, Kamal Nath (right), former CII President Sunil Bharti Mittal (left) and BusinessEurope’s Philippe de Buck

Former EU Trade Commissioner Peter Mandelson (centre) with former Indian Commerce and Industry Minister, Kamal Nath (right), former CII President Sunil Bharti Mittal (left) and BusinessEurope’s Philippe de Buck

The case concerns 17 documents including meeting reports, emails and a letter, which the Commission’s trade department (DG Trade) sent to industry associations including BusinessEurope and the Confederation of the European Food and Drink Industry (CIAA). While these corporate lobby groups received full versions of the documents, the Commission only released censored versions to Corporate Europe Observatory, arguing that full disclosure would undermine the EU’s international relations. The censored sections relate to allegedly sensitive information about priorities and strategies in the ongoing trade talks with India including issues such as tariff cuts, services, investment and government procurement liberalisation and health standards.

You can read background documents on the matter and on the legal action here.
You can read Corporate Europe Observatory’s assessment of the EU-India FTA and its implications here.

(Corporate Europe Observatory (CEO) is a research and campaign group working to expose and challenge the privileged access and influence enjoyed by corporations and their lobby groups in EU policy making. This corporate capture of EU decision-making leads to policies that exacerbate social injustice and accelerate environmental destruction across the world.)

What is at stake is whether the Commission can continue its practice of granting big business privileged access to its trade policy-making process by sharing information that is withheld from the public. This practice not only hampers well-informed and meaningful public participation in EU trade policy-making, it also leads to a trade policy that, while catering for big business needs, is harmful to people and the environment in the EU and the world.

The efforts to gain access to the information began on 5 June 2009. Corporate Europe Observatory filed an access to documents request for correspondence and reports from meetings between the Commission and corporate lobby groups, in which the ongoing free trade talks with India had been discussed. The purpose of the request was to monitor whether the Commission was shaping its negotiating position based on the public interest or only on the demands of large corporations. Previous research had shown that DG Trade had disregarded the concerns of small enterprises, trade unions and NGOs when it drew up the EU’s 2006 Global Europe trade strategy.

So, there was every reason to monitor the involvement of big business in the trade negotiations with India. After multiple deadline extensions and a complaint to the Commission’s General Secretary, DG Trade finally responded on 29 April 2010 – nine months after the statutory deadline. The response contained a list of more than 170 documents from 2008 and 2009 identified by DG Trade: meeting reports, emails and letters. Out of these, 50 documents were only partially released. More than 30 documents were withheld in their entirety, including email exchanges and reports about meetings with pharmaceutical companies Sanofi-Aventis, Eli Lili and GlaxoSmithKline, as well as pharma lobby group EFPIA. They were involved in lobbying the Commission for tightened intellectual property rights in the future EU-India deal, which public health groups have slammed as a threat to India’s position as the pharmacy of the global South.

Twelve of the censored documents at the core of the lawsuit are meeting reports from the EU’s Market Access Advisory Committee (MAAC) and its working groups. They operate in the context of the EU’s Market Access Strategy and bring together Commission officials, EU member state representatives and corporate lobbyists who discuss regulatory barriers in key markets, developing joint strategies to get rid of them. Market access in India ranks high on the agenda in the groups dealing with postal and distribution services, cars, tyres, textiles, food safety and animal health measures.

Several of the issues raised by these groups have made it onto the EU’s list of the top priority barriers which prevent access to the Indian market. This means that they have been jointly challenged by the EU Commission in Brussels, its delegation in Delhi and by EU member states: in the free trade talks with India, at the multilateral level in the WTO and in all kinds of ‘dialogues’ with the Indian authorities, sometimes with the support of other trading power-hubs like the US or Japan.

Food production and grain trade, Jan 2011

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The International Grains Council (IGC) has released its Grain Market Report for 2011 January. The IGC said that world grains supplies are forecast to tighten in 2010-11 but the outlook is little changed from two months ago. World production is expected to decline by 3.8%, to 1,726m. tons: the wheat estimate is lifted on better than expected southern hemisphere crops but the maize total is cut.

A serious drought has developed in eastern China over the past few months. Total precipitation has been scarce since October 2010, with some locations on the North China Plain receiving less than 10 percent of normal precipitation through December 2011. A lack of snow cover has deprived the dormant winter wheat crop of valuable moisture and protection from frigid temperatures and winds. Seasonably dry and cold weather is expected to continue for the next two weeks. USDA's WASDE said the impact of the drought has been mitigated by the widespread availability of water for irrigation, but crop stress could become serious if the drought continues after the winter wheat emerges from dormancy in February/March 2011.

By far the biggest fall in grains output was in drought-affected Russia, with big reductions too in the EU, the US, Kazakhstan and Ukraine. A further rise in world grains consumption is forecast in 2010-11, to 1,787m. tons. However, at 1.4%, the rise is flatter than in recent years. The expansion in industrial use has slowed markedly, especially in the US ethanol sector, although recent use there has been higher than anticipated. Total feed use will only rise moderately this year.

The forecast fall of 62m. tons in global carryover stocks mirrors the reduction in the major grain exporters, with big declines in Canada, the EU, Russia and the US. World trade in grains is expected to rise by 2m. tons, to 242m., only marginally more than before, with bigger imports by the EU and Russia expected to outweigh reductions in Near East and Far East Asia. Because of the fall of 29m. tons in Black Sea shipments, exports by Argentina, Australia, the EU and the US are expected to climb steeply.

IGC said that international grain and oilseed prices advanced strongly in December and again in January, with some values at their highest for two years. However, export prices remained below the peaks recorded early in 2008. While there has been little fundamental change in the overall supply and demand balance in the past two months, markets were driven higher by concerns about supplies of quality milling wheat and the tightening outlook for maize and soyabeans.

The influence of other commodities, including crude oil, also featured regularly on the major exchanges. For wheat, reports that the extremely wet conditions in eastern Australia would render at least one-third of the country’s large wheat crop unfit for flour milling were especially bullish. More recently, better prospects for US exports and a winter wheat acreage report showing a smaller than expected rise in Hard Red Winter wheat plantings further triggered buying.

USDA Crop Explorer, south India rice coverage, 2011 forecast

IGC said that China was among several recent customers for Australian feed grade wheat. For maize, there were worries about a reduced official US carryover forecast as well as about whether plantings for the next crop would be sufficient to prevent stocks falling further in 2011-12. The impact of dryness, attributed to the La Niña event, on Argentina’s upcoming harvest added to the market’s nervousness. Similarly, despite quite ample current stocks, US soyabean prices moved higher, initially because of continued heavy demand from China but more recently due to a lower official US supply estimate and strength in crude oil. Rice export prices also increased, but while Thai values in late-December climbed to a ten-month peak, they subsequently fell back as the main crop harvest advanced. After mostly declining since June, ocean freight rates for grains firmed slightly in recent months, despite a further slide in the Capesize sector.

The US Department of Agriculture’s World Agricultural Supply and Demand Estimates (WASDE) for 2011 January has said that global 2010-11 wheat supplies are raised slightly this month as increased beginning stocks are mostly offset by lower foreign production. Beginning stocks for Argentina are up 0.9 million tons with upward revisions to 2008-09 and 2009-10 production estimates. Argentina production is also raised 0.5 million tons for 2010-11 as harvest results indicate higher-than-expected yields. Production in Brazil is raised 0.4 million tons as favorably dry harvest weather boosted yields for the 2010-11 crop. EU-27 production is raised 0.3 million tons based on the latest official estimates for Poland. More than offsetting these increases are reductions for Kazakhstan and Australia. Kazakhstan production is lowered 1.3 million tons based on the latest government reports. Australia production is lowered 0.5 million tons as heavy late-December rains and flooding further increased crop losses in Queensland.

According to WASDE 2011 January, world wheat imports and exports for 2010-11 are both raised slightly. South Korea imports are raised 0.4 million tons, mostly offsetting an expected reduction in corn imports. Imports are also raised 0.2 million tons each for Thailand and Vietnam based on the pace of shipments to date and the increased availability of feed quality wheat in Australia. Imports are lowered 0.5 million tons for EU-27 based on the slow pace of import licenses to date. Major shifts among exporters are projected as importers focus on U.S. supplies to meet their milling needs. Australia exports are reduced 1.5 million tons as quality problems limit export opportunities. Kazakhstan exports are reduced 1.0 million tons with lower supplies. While Argentina marketing-year (December-November) exports are raised 0.5 million tons, exports during the remainder of the July-June world trade year are expected to be lower based on the slow pace of government export licensing.

Global 2010-11 wheat consumption is projected 1.2 million tons lower, mostly reflecting reduced wheat feeding in EU-27, the United States, and Kazakhstan. Food use is also lowered for EU-27 and Pakistan. Partly offsetting are increases in feed use in South Korea, Thailand, and Vietnam, and higher expected residual loss in Australia with the rain-damaged crop. Global ending stocks are raised 1.3 million tons with increases for EU-27, Argentina, and Australia, more than offsetting the U.S. reduction.

WASDE 2011 January said that global 2010-11 rice production, consumption, trade and ending stocks are lowered slightly from a month ago. The decrease in global rice production is due primarily to a smaller crop in Egypt, which is down 0.5 million tons (-14%) to 3.1 million. Egypt’s area harvested in 2010-11 is reduced 19 percent from a month ago and is down 30 percent from the previous year. A reduction in the Egyptian government’s support of producer prices has discouraged farmers from planting rice. Additionally, the Egyptian government has imposed water restrictions thus reducing irrigation water availability. Furthermore, government restrictions have reduced exports. Global imports are increased slightly due primarily to increases for Indonesia and Turkey, but partially offset by a reduction for Egypt. Global exports are increased slightly due mostly to an increase for Thailand, partially offset by a decrease for Egypt. World ending stocks are projected at 94.4 million tons, down 0.4 million from last month and last year.

The how and why of sugar’s 30-year high

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Raw sugar prices have been rising in the world’s commodity exchanges following speculation that India, the world’s second-largest producer of sugar, is considering restricting exports to rebuild its inventory. The international financial press is reporting that the price of raw sugar in the commodity markets surged to a high as dry weather constrained output in Brazil, the world’s biggest producer, and on news that India may cap exports to boost domestic supplies. The last time sugar was as high was in January 1981. It has in recent days gained $16.10 to $751.10 per ton on the NYSE Liffe in Britain, a 2.2% increase.

“India is really the big question overhanging the market,” London-based trader Jake Wetherall of Rabobank International told Bloomberg. “It looks like India’s going to have a fairly good crop this year – it should be over 25 million tons for the first time in a few years – but the question is how much the government decides is going to be made available for export.”

Bloomberg reports, quoting industry association Unica on 28 October 2010, that output in Brazil’s Center South, the country’s biggest producing-region, dropped 30% in the first half of October from a year earlier. Stockpiles in India, the second-largest grower, are about 4 million metric tons, compared with the nation’s preferred level of 10 million tons, according to Rabobank International.

Raw sugar for March delivery rose to 30.12 cents/pound on ICE Futures U.S. in New York. Earlier, the price reached 30.64 cents, the highest level for a most-active contract since 15 January 1981. Sugar has more than doubled since touching a 13-month low on 7 May 2010 on concern that adverse weather will reduce output in Brazil, Russia, China and Pakistan.

Societe Generale SA raised price forecasts for raw and refined sugar, citing lower crop forecasts. Raw sugar in the fourth quarter will be 29.2 cents, up from a 17 September 2010 estimate of 17 cents, Emmanuel Jayet, an analyst in Paris, said in a report. The estimate for white sugar was raised to $744 a ton from $515.

Many sugar buyers have been relying on India, the world’s second-biggest producer of sugar, to keep export supplies running early next year, with the cane crushing season in top-ranked Brazil winding down this month. India has yet to make an announcement on its export policy, and government sources on Thursday said that the country, recovering from two seasons of sugar deficit, would not permit wholesale shipments for now. The comments added to fears of a supply squeeze as traders believe that Brazil’s sugar production may fall in 2011-12, affected both by dry weather as well as the credit crunch, which slowed investment in new mills and cane plantings.

On 4 November 2010 however Reuters reported that India will allow an additional 930,000 tonnes of sugar exports after 15 November 2010. The news agency quoted an unnamed government source. “So far we have allowed less than 600,000 tonnes. After 15 November 2010 we will allow more but after that we will go slow. Exports will only be allowed in a calibrated manner,” the senior government official told Reuters.

On 26 October 2010 Agrimoney had reported that world sugar prices are set to remain at elevated levels for years, to ensure producing countries – and notably Brazil – ramp up output to meet demand growth of more than 50% over the next two decades. Agrimoney quoted leading sugar industry trader Czarnikow. The briefing did not name a figure for sugar prices. However, Czarnikow’s head of analysis Toby Cohen told Agrimoney a figure of 22 cents/pound may be necessary to ensure sufficient supplies.

The group forecast that world sugar consumption will rise to 257m tonnes in 2030, boosted by growth in China and India, where rising wealth and population growth will foster doubling in demand. “Asia will become the largest sugar-consuming region, reflecting the rising economic status of India and China,” Czarnikow said in a report published to coincide with the annual sugar industry gathering in London. China, where urbanisation would give sugar demand an extra spurt, taking the country’s consumption above the European Union’s by 2014, was “clearly set to demonstrate significant demand growth”.

However, prospects for production growth were more uncertain, with land in many large producing countries, such as India and Thailand in short supply. In China, cane area “will come under increasing pressure” from rice which, as a staple food, is “likely to take priority. The US, there are plans to reincorporate some cane land in Florida into the Everglades national park. This leaves Brazil, which has a “comparatively unconstrained” ability to expand cane area, as likely to increase further its dominance over world production, of which it currently provides 23%, and exports, of which it is responsible for about 60%.

Importers and consumers are set “to become ever more dependent upon Brazilian supply”, the briefing said. “However, as with any investment, it will have to be paid for by higher returns and, as the market evolves, we believe sugar consumers will need to adjust to higher prices.” Brazilian investment will be needed in infrastructure as well as directly in sugar production, Czarnikow added, stressing the country’s logistical bottlenecks, which were evident in a struggle this year to keep up with demand. The report also highlighted the potential for the European Union and Russia to return to sugar exports.

What does Czarnikow say in detail about sugar? (1) We have revised our growth forecast for 2010-11 down from 17.4m mtrv to 14.8 m mtrv. (2) During 2010/11, we project cane sugar production to rise to 137.9m mtrv from 123.1m mtrv last year, while beet sugar production is unchanged on last year’s at 34.3m mtrv. (3) We are estimating global consumption in 2010 at 167.9m mtrv rising to 171.3m mtrv in 2011.

“Although it is still very early in the cycle, the idea that next year’s sugar balance will be resolved through an increase in global production now seems less certain. Extreme weather conditions in Russia and Pakistan have crushed hopes of an increase in production in the 10/11 season, while growth in many other areas of the world is not likely to be as strong as first expected.”

Here is a country breakdown provided by Czarnikow: Brazil – The mid-August total of 338 million tonnes of cane crushed represents round 60% of the CS Brazil cane total and we are expecting total production to reach 41.7m mtrv. India – Indian crop prospects for 2010/11 continue to look promising; we expect sugar production to increase by around 30% to reach 27.1m mtrv. Pakistan – Although serious floods have displaced up to 20% of Pakistan’s population, we are holding our figure unchanged at 3.75m mtrv. EU – Our projection has been revised down by 0.4m mtrv to 16.2m mtrv. Russia & FSU – Russian beet crop prospects in Central and Volga regions have been damaged by a heatwave, so we have reduced our production estimates from 4.1m mtrv to 3.3m mtrv. China – We expect 13.2m mtrv during 2010/2011, but with consumption at 16.1m mtrv, the country will be in deficit. Thailand – The forthcoming crop is now expected to reach a similar level to last year at around 7.6m mtrv, down from our initial estimate of 8.4m mtrv.

Who is Czarnikow? “Czarnikow operates from a head office in London and a network of 10 regional offices to service clients and customers globally. Commercial involvement in physical sugar transactions in excess of 8 million tons of sugar each year assures that we have a first hand presence in all major sugar markets of the world. Czarnikow has been in the sugar business since 1861 and is the premier provider of world sugar market services.”

World agri supply and demand estimates, Sep 2010

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Climate change. Image courtesy UNEPThe US Department of Agriculture’s World Agricultural Supply and Demand Estimates (Wasde) report is out, dated 10 September 2010. Here are the highlights of its analysis on global wheat and rice.

Wheat

Global wheat supplies for 2010-11 are projected down 0.7 million tons as higher carry-in mostly offsets a 2.7-million-ton reduction in world output. Much of the offset is explained by Canada, where beginning stocks are increased 1.5 million tons, as reported by Statistics Canada, and production is increased by 2.0 million tons. These changes mostly offset lower production in Russia and the European Union (EU) 27. Production for Russia is lowered 2.5 million tons based on the latest harvest results for the drought-affected central growing areas in the Volga and Urals Federal Districts. EU-27 production is lowered 2.4 million tons with the largest reductions for Hungary and Romania where heavy summer rains reduced yields. Smaller reductions in a number of other member countries also reduce EU-27 production. Although the reduction for Germany is small, persistent and heavy August rains have reduced supplies of high quality milling wheat. Other production changes include a 0.3-million-ton reduction for Belarus and a 0.4-million-ton increase for Morocco.

World wheat trade for 2010-11 is raised with global exports projected 1.4 million tons higher. Export shifts among countries largely reflect availability of supplies and increased competition from North America. Exports are raised 2.0 million tons for Canada and 1.4 million tons for the United States. Exports are also raised 0.5 million tons each for Iran and Kazakhstan. A 0.5-million-ton increase in Russia exports reflects larger-than-expected shipments during early August, before implementation of the export ban on August 15. These increases more than offset a 3.0-million-ton reduction for EU-27 and a 0.5-million-ton reduction for Australia. EU-27 exports are lowered with reduced supplies and increased competition from Canada. Logistical constraints are expected to limit exports from Australia.

Climate change. Image courtesy UNEPWorld wheat imports for 2010-11 are raised with increases for Russia and Nigeria. Imports for Russia are raised 1.4 million tons as imports from regional suppliers support domestic usage, particularly for feeding. World wheat consumption is lowered 3.8 million tons with lower consumption in EU-27, Russia, and Kazakhstan outweighing increases for Pakistan, Canada, and Nigeria. Wheat feeding is lowered 2.0 million tons for EU-27 with imported coarse grains expected to partly replace wheat in livestock and poultry rations. Global ending stocks are projected 3.0 million tons higher with increases for EU-27, Canada, and Australia. Ending stocks are lowered for Pakistan and Russia.

Rice

Projected global 2010-11 rice supplies and use are both lowered from last month. Global rice production is projected at a record 454.6 million tons, down 4.6 million tons from last month’s estimate, mainly due to large declines for several countries including China, Indonesia, and Pakistan.

China’s 2010-11 rice crop is reduced 1.5 million tons to 136.0 million, due mainly to a decrease in the early rice crop. Both area and yield are reduced by early season drought in some areas combined with late-season flooding in other areas. Indonesia’s 2010-11 rice crop is reduced 2.0 million tons to 38.0 million, based in part on a report from the U.S. Agricultural Counselor in Jakarta. Indonesia’s 2009-10 rice crop is also reduced – a reduction of 1.7 million tons to 37.1 million. Indonesia’s yield growth has stagnated due to weather, pests, and disease problems. Pakistan’s 2010-11 rice crop is reduced by 1.2 million tons or 18 percent to 5.3 million as severe flooding lowered both area and average yield.

Global 2010-11 exports are reduced by 0.6 million tons to 31.0 million, mainly due to a reduction for Pakistan. Global consumption is lowered by nearly 2.3 million tons, mainly due to decreases for China (-0.5 million) and Indonesia (-1.35 million). Global ending stocks for 2010-11 are projected at 94.6 million tons, down 3.0 million from last month, but up slightly from 2009-10. Stocks are lowered for China, Indonesia, Vietnam, and Iran, and raised for the United States.

Food production and grain trade, July 2010

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Economic Research Service of the United States Department of Agriculture (USDA), former Soviet Union wheatThe July 2010 news and analysis on the global grain trade market have much to do with the weather conditions in Russia and Central Asia. The Economic Research Service of the United States Department of Agriculture (USDA), the Food and Agriculture Organization (FAO) and the International Grains Council all concentrate on this region and the effect of an extraordinary heatwave on the wheat crops of Russia, Ukraine and Kazakhstan.

1) The Economic Research Service of the United States Department of Agriculture (USDA) said that the next decade is likely to see a major shift in global wheat production and trade. The largest gains in wheat production and exports will likely come from the region of the former Soviet Union (the one-time USSR), specifically Russia, Ukraine, and Kazakhstan, where changes in production efficiency and market forces combine to favor wheat. The USDA has projected that wheat exports by Russia, Ukraine, and Kazakhstan will increase by about 50% to over 50 million metric tons (mmt) by 2019. In the coming decade, the region may account for over half the growth in world wheat exports, perhaps even supplanting the U.S. as the “wheat breadbasket of the world”.

Economic Research Service of the United States Department of Agriculture (USDA), former Soviet Union wheatThe United States, the world’s largest wheat exporter since World War II, could slip to second place. US wheat production is projected to rise only slightly over the next decade, and exports are forecast to remain below the average for 2001-09. By 2019, according to USDA projections, Russia’s wheat exports will exceed those of the United States. And, total wheat exports from Russia, Ukraine, and Kazakhstan likely will be more than double those of the United States.

The USA has been the largest wheat exporter during the post-World War II period. However, the US share of world wheat exports could drop from an average of 24% in 2001-09 to an estimated 16% by 2019, with the annual volume of US wheat exports declining from 27.5 mmt during the 2000s to 24.5 mmt in 2019. The European Union, Canada, and Argentina also will lose shares of world wheat exports, while Australia will likely maintain its share. USDA projects that over the next 10 years, Russia, Ukraine, and Kazakhstan’s share of wheat exports could increase from less than 20% in the 2000s to over 33% in 2019. Russia and Ukraine are returning to their historical role, as during the Russian tsarist empire which ended in the late 1910s, of being major wheat exporters.

Economic Research Service of the United States Department of Agriculture (USDA), former Soviet Union wheat2) The Food and Agriculture Organization (FAO) has said that the impact of unfavourable weather events on crops in recent weeks has led FAO to cut its global wheat production forecast for 2010 to 651 million tonnes, from 676 million tonnes reported in June. But despite production problems in some leading exporting countries, the world wheat market remains far more balanced than at the time of the world food crisis in 2007-08 and fears of a new global food crisis are not justified at this point, said FAO.

A continuing, devastating drought afflicting crops in the Russian Federation, coupled with anticipated lower outputs in Kazakhstan and Ukraine have raised strong fears about the availability of world wheat supply in the 2010-11 marketing season. The turmoil in global wheat markets, which has intensified in recent weeks, is evidence of the growing dependence on the Black Sea region, an area renowned for erratic yields, as a major supplier of wheat to world markets. In addition, an expected production decline in Canada, another major producer and exporter of wheat, has reinforced market worries.

International wheat prices have jumped by over 50% since June. This rapid increase in prices is prompting concerns about a repeat of the crisis of 2007-08. But after two consecutive years of record crops, world inventories have been replenished sufficiently to cover the current anticipated production shortfall. Even more importantly, stocks held by the traditional wheat exporters, the main buffer against unexpected events, remain ample. The latest downgrading of world wheat production forecast for 2010 points to a tighter supply situation and increases the likelihood of higher wheat prices compared to the previous season. However, fears of a global food crisis are unwarranted at this stage. On the other hand, should the drought in the Russian Federation continue, it could pose problems for winter plantings in that country with potentially serious implications for world wheat supplies in 2011-12.

Food and Agriculture Organization (FAO) wheat outlook3) Heightened market concerns about the outcome of this year’s harvests in some key northern hemisphere exporters, especially wheat and barley in the Black Sea region, propelled prices of grains and oilseeds upwards in July, said the International Grains Council in its Grain Market Report of 29 July 2010. However, rice markets weakened further over the period. Milling wheat export quotations in the EU and the Black Sea region climbed by around US$70 per ton in response to reports of significant drought-induced yield losses in some areas, with markets also speculating about possible export restrictions in Russia and Ukraine. However, substantial new wheat sales were still being recorded from those countries.

Wheat futures in the US reached their highest levels in over a year, with considerable speculative activity, but export values nevertheless became increasingly competitive against other origins, with this year’s ample availabilities likely to spur a sharp recovery in foreign sales. US maize futures, having initially slumped to nine-month lows at the end of June, climbed steeply in early July in response to somewhat reduced US supply forecasts and the rally in wheat, but the gains over the period as a whole were quite modest, reflecting the generally favourable crop outlook. For oilseeds, much of the focus was on diminishing US old crop supplies of soyabeans as the season neared its end and the continued fast pace of exports, especially to China.

In contrast to the generally bullish tone of world wheat and coarse grains markets, international rice prices again moved lower in the absence of significant new buying in Far East Asia and the broadly favourable outlook for India’s next crop, although much depends on the final outcome of the summer monsoon. Ocean freight rates for grains and other dry bulk cargoes fell further in July although there were recent signs of increased chartering activity.