Agricultural commodities offer by far the worst prospects for returns in a raw materials sector which itself looks a poor rival – for now - to the potential offered by shares, Goldman Sachs said.
The investment bank, highlighting this year’s significant outperformance of shares over commodities after a decade close correlation, termed this divergence a “return to a more normal state of affairs”, in which assets were more prone to idiosyncratic price drivers…………………………………….Full Article: Source

Farmers responded to a big rise in prices in the past five years with a combination of increased planting, better husbandry and larger applications of fertiliser and pesticides. As a result, production rose, sending prices down.
The price weakness could last. Unlike agricultural commodities such as corn or wheat where seeds are set down every year, coffee bushes continue to produce beans and cocoa trees keep growing once planted. In short, it is a lot easier to increase production in response to rising prices than to cut it when prices fall………………………………………..Full Article: Source

While child labour remains a cause for concern in coffee and cocoa production in the developing world, global buyers of these commodities are also worried about the ageing workforce. Many smallholder farmers are growing older and their offspring are abandoning rural areas, and the question is how to make commodities farming appealing to younger people.
Most statistics point to a demographic shift in rural areas. In one study for Cadbury, on cocoa farmers in the Ashanti, western, south and eastern regions of Ghana, the average age of the farmers was 51………………………………………..Full Article: Source

Global cotton production is estimated to fall 5% to 26.3 mn tons while acreage is expected to to fall fall 5% to 34.1 mn ha in 2012-13 season on a year-on-year basis, according to International Cotton Advisory Committee (ICAC). World production is forecast to fall another 6% to 24.6 mn tons in 2013-14.
From 2012/13 to 2013/14, cotton production in China and the United States is each forecast to fall by 700,000 tons to 6.7 million tons and 3 million tons respectively, and production in India is forecast to decline by 170,000 tons to 5.7 million tons as farmers continue to switch out cotton for more profitable alternatives………………………………………..Full Article: Source

Cotton inventories at the end of July 2014 will be 11 percent higher than estimated last month as production gains outpace improved demand, according to an industry group.
Stockpiles will climb to 18.25 million metric tons, the equivalent of about nine months of global mill use, and up from 16.44 million forecast a month earlier, the International Cotton Advisory Committee said today in an e-mailed statement. In the 12 months that start Aug. 1, production will be 24.61 million, up 4.9 percent from April’s projection, the Washington-based group said. The consumption estimate was increased 2.3 percent to 24.25 million tons………………………………………..Full Article: Source

The growth of commodity futures markets in India has helped farmers in dismantling powerful trading cartels in commodities like potato and mentha oil apart from helping them in taking more broad-based decision on production, storage and marketing of farm produce, a study conducted by Tata Institute of Social Sciences in association with MCX showed.
The study which analyzed the contribution of commodity exchange ecosystem on economic development showed that commodity futures exchanges have facilitated a number of brokers, traders and producers, who are first generation economic beneficiaries of commodity markets and they have expanded their business with growing opportunities………………………………………..Full Article: Source

Morgan Stanley sounded a bullish note on commodities, even as, in agriculture, regulatory data showed hedge funds curbing negative positioning, with a large cut in bets on falling sugar prices.
Commodities “could see notable performance from here”, and “even outperform”, if sentiment towards the sector, and its fundamentals improve as expected, the bank said, following a sell-off in many raw materials to multi-month lows………………………………………..Full Article: Source

Hedge funds have taken their most bearish view on agricultural commodities on record, despite northern hemisphere weather setbacks testing expectations of sharp recoveries in output of key products this year.
Managed money, a proxy for speculators, cut its net long in futures and options in the major 13 US-traded agricultural commodities below 60,000 contracts as of last Tuesday, Agrimoney.com calculations of regulatory data show………………………………………..Full Article: Source

Czech agricultural and food exports should focus in particular on fourteen countries outside of the EU, and ten countries of the Commonwealth of Independent States (CIS), Balkans and southeast Asia have a priority, according to the Agriculture Ministry’s new pro-export initiative.
Among the countries interesting for Czech agricultural and food exports are also the USA, Canada, Japan and South Korea. Over 90 percent of these exports now target EU countries. Within the project okayed by the ministry this year in January, all existing pro-export measures in trade in agricultural products are to be unified, linked and finetuned, said ministry spokesman Jan Zacek……………………………………..Full Article: Source

The record collapse in U.S. corn exports and shrinking domestic demand are leaving more grain in silos, spurring a bear market just eight months after drought drove prices to an all-time high.
Stockpiles will be 836 million bushels (21.2 million metric tons) on Aug. 31, or 32 percent more than the U.S. Department of Agriculture forecast last month, according to the average of 35 analyst estimates compiled by Bloomberg. Export sales from the world’s largest grower and shipper fell 54 percent in the year that began Sept. 1, heading for the biggest annual drop in government data that starts in 1960………………………………………..Full Article: Source

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If you’ve ever been into horses, you know that you can spend as much money as you’ve got—and plenty more—on their care. Personally, I like draft horses; Clydesdales, in particular. But the thing about a draft horse is that it can eat a lot of food. And during the drought last year, hay costs soared.
Agriculture, as an investment theme, is consistently on my mind, but it is a stock market sector that is limited. The marketplace is dominated by only a handful of companies. There aren’t a lot of publicly traded agriculture stocks that would be considered mid-cap; the same goes for small-cap companies………………………………………..Full Article: Source

Set up in 2010, the Singapore Mercantile Exchange, a pan-Asian commodity and currency derivatives exchange, is now hunting for more agricultural commodities from black pepper in Vietnam to rubber in Thailand, to become the regional centre for agriculture futures transactions.
SMX last month signed a memorandum of understanding with the Agricultural Futures Exchange of Thailand to include rubber futures in its trading platform, following similar deals with Vietnam and Indonesia, which are famous for their black pepper and palm oil………………………………………..Full Article: Source

A thoughtful new paper from researchers at the University of Illinois marks a significant step forward in research on how commodity futures prices are formed. Until recently, the academic and policy debate about futures price formation has been locked in an acrimonious and polarized standoff between market fundamentalists, who insist all price moves reflect supply and demand fundamentals, and those writers who blame speculators for every rise in food and fuel prices.
Both views tend to be colored by the policy outcomes researchers favor. Anti-poverty campaigners focus on the role of speculation because they want governments to impose more controls on the cost of food and fuel. Free-market economists stress the role of fundamentals to deny governments any ammunition to meddle………………………………………..Full Article: Source

A series of experts urged broad, well-designed strategies to ensure that the higher prices, which have now lasted for a decade, are harnessed in order to achieve significant and durable reductions in poverty in the developing world. For that to happen, they said, greater attention must be paid to the needs of the globe’s 450 million smallholder farmers, and to the millions of impoverished non-farming families, often in the same countries, who suffer when food costs climb.
Opening the debate, UNCTAD Deputy Secretary-General Petko Draganov said: “In essence, high commodities prices have so far had only a limited impact on poverty reduction………………………………………..Full Article: Source

If there is one word to advocate for more integrated supply chains today it is horsemeat. I am glad to see more public discussion on how to address food security and other challenges for agriculture companies, but vertical integration alone cannot fully address today’s financial and operational risks.
Just before the horsemeat story broke, Rabobank released a report entitled, Winning through the Supply Chain.* The report states “The players in the F&A supply chains are now being asked to do more than ever before: produce more with fewer resources, access new markets, reduce costs, respond to new consumer demands, adapt to new outside influences and prepare for a long-term structural increase in demand.”……………………………………….Full Article: Source

Farm-commodity price swings are set to increase on tight supply, said Bruce Tozer, a consultant at De Novo Agricultura and former head of EMEA sales for soft and agricultural products at Credit Agricole SA. (ACA) He spoke at a commodity-industry meeting in Geneva organized by the United Nations Conference on Trade and Development.
On speculation in agricultural commodities, price swings and regulation: “If you took away all derivatives you would still have volatility, as you see in commodities that don’t have futures markets. Physical markets without futures markets are experiencing high levels of price volatility, so there is something happening over and above financialization………………………………………..Full Article: Source

For decades, the basic farm goods and industrial raw materials that underpin the economies of many poor countries sold at low and volatile prices on world markets. Development experts and government officials lamented that these low returns kept nations in Africa, Asia and Latin America from expanding their economies and reducing poverty.
Since the end of 2002, however, commodities prices have staged an unprecedented and long-lived boom - yet the windfall, while contributing to notable increases in gross domestic product (GDP) in a number of countries, especially in Asia, has been less significant in other countries, and has not led in those cases to other economic progress that was hoped for, such as economic diversification. In the countries that have done less well, there have been disappointingly small declines in poverty rates………………………………………..Full Article: Source

Hedge funds turned their most bearish on agricultural commodities since the depths of the global financial crisis - but appear to have been wrong-footed in lean hogs - ramping up short bets– just ahead of a rebound in prices.
Managed money, a proxy for speculators, extended a mammoth shift towards betting on falling agricultural commodities, according to data from the Commodity Futures Trading Commission, the US regulator………………………………………..Full Article: Source

Although US soybean farmers have grown in the past five years, the industry will continue to face revenue and profit pressures from international operators, with Brazil expected to overtake the United States as the top provider of soybeans in the next five years.
For these reasons, industry research firm IBISWorld has added a report on the soybean farming industry. “A surge in South American inventory is responsible for the United States experiencing a steadily declining share of global exports. The 2012 drought has also reduced the supply of soybeans, with US exports falling 7.1% for the year………………………………………..Full Article: Source

Hedge funds have slowed their shift into short position in agricultural commodities, but not by much, maintaining in particular a negative stance on livestock derivatives.
Managed money, a proxy for speculators, made their biggest positive shift in three months in positioning in Chicago wheat futures and options in the week to last Tuesday, according to data from the Commodity Trading Futures Commission, the US regulator………………………………………..Full Article: Source

An Oxfam report that accuses banks trading agricultural commodities of “speculating on hunger” is transmitting high-voltage shocks across the fund management industry. European banks are choosing either not to speculate on food prices on behalf of investors or to scrap funds tracking agricultural prices, following a scathing critique by the non-profit group’s Paris office.
The change in conduct has been dramatic. BNP Paribas, France’s largest provider of agricultural commodities funds, suspended a $214m agricultural fund. Crédit Agricole, meanwhile, shut three funds that permitted investors to speculate on agricultural commodities, although this was partly for economic reasons as the funds were small………………………………………..Full Article: Source

Despite continued rising demand pressures from emerging markets, many natural resources still operate on a cyclical bias. For example, natural gas demand and prices generally rise in the winter as more people begin to heat their homes. Conversely, when the weather is warmer, natural gas supplies build and prices drop.
Aside from natural gas, sugar has presented some of the most cyclical returns in recent years. For investors looking for a quick trade or perhaps those waiting for the right time to build a long-term position, now could be your chance………………………………………..Full Article: Source

Global cotton production will exceed demand by 1.15 million metric tons in the 12 months starting Aug. 1, Cotlook Inc. said in its first forecast for next season. The surplus will be 3.54 million tons this season, Birkenhead, U.K.-based Cotlook, the publisher of a benchmark cotton index, said today in a statement.
World output will drop 7.3 percent to 24.3 million tons, Cotlook said. Production in China, the world’s largest grower, will fall 8.9 percent to 6.65 million. The crop in the U.S., the top exporter, will tumble 24 percent to 2.87 million tons…………………………………….Full Article: Source

Rabobank amplified ideas on the revival in soft commodities in the second-half of the year, ditching ideas of a flat performance by sugar futures and steepening the rebound it expects in cocoa prices.
The bank - which had forecast that soft commodities would put in a firm end to 2013, contrasting with a weak finish by grains – maintained its forecast for New York cotton futures to average 85 cents a pound in the last quarter of 2013, up 9% from the first quarter…………………………………….Full Article: Source

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Prices in food commodities such as corn, wheat and soybeans rose sharply in 2012 due to extreme weather events, Baring Asset Management said. The investment firm believes that these high prices will remain for the next six months, which will also enhance the investment appeal of companies providing goods and services to farmers.
Companies providing for instance seeds, herbicides and fertilisers to farmers, enabling them to maximise their crop output, are expected to outperform this year………………………………………..Full Article: Source

Barclays is halting agricultural trading with hedge funds in a move to burnish its reputation amid a major overhaul, but will still market index-linked investment products in the sector.
The British bank is among several financial institutions to have come under fire for speculating on grain and other agriculture products, which critics say has pushed up food prices and fuelled unrest in some poor countries………………………………………..Full Article: Source

The global cotton market is showing a confusing trend as the usual volatility was absent during the first five months of 2012/13 season but suddenly spiked in mid-January, according to International Cotton Advisory Committee.
The Cotlook A Index rose to the highest levels in the current season on January 31, 2013 at 90.35 cents per pound, ICAC observed. In 2012/13, global cotton production is estimated down by 5%, while cotton mill use is expected to rise by 2%. However, production at 25.9 million ton remains much larger than consumption at 23.3 million tons……………………………………..Full Article: Source

Rarely is Deutsche Bank’s press conference as colorful. But Thursday morning it was barely possible to make it past the rabble of protestors chanting songs about world food supply and rising food prices. So Deutsche had some explaining to do as to why it’s once again selling financial products based on agricultural commodities.
Its return, after barely a year, announced by Co-Chief Executive Juergen Fitschen earlier this month at Germany’s biggest agricultural fair Gruene Woche, or “Green Week,” comes at a time when the bank is making tremendous efforts to repair its tarnished public image. And its two new co-chiefs, who took the helm in June, unrelentlessly advocate the bank’s need for “cultural change.”……………………………………….Full Article: Source

While child labour remains a cause for concern in coffee and cocoa production in the developing world, global buyers of these commodities are also worried about the ageing workforce. Many smallholder farmers are growing older and their offspring are abandoning rural areas, and the question is how to make commodities farming appealing to younger people.
Most statistics point to a demographic shift in rural areas. In one study for Cadbury, on cocoa farmers in the Ashanti, western, south and eastern regions of Ghana, the average age of the farmers was 51………………………………………..Full Article: Source

The public interest in an orderly approach to the nation’s business seems insufficient to prompt Congress to act in a timely fashion. The national legislature apparently needs some perverse incentive to spur it to action—either a cliff (fiscal or otherwise) to fall off, a ceiling (debt limit) to be crushed under, or a meat ax (automatic spending cuts known as sequester) hanging over pet programs.
This same dynamic has been in play for decades in farm policy. We just didn’t realize it. It took the narrow escape from a doubling of milk prices early this month to remind us that we live in the shadow of a “food bomb” too………………………………………..Full Article: Source

Food costs a lot. In fact, after the pernicious drought in 2012 (the worst in 50 years), consumers around the world are faced with the very real possibility of rising food prices. I’ve seen some food industry observers speculate that higher food prices and food shortages could become the norm in 2013. At the same time, global populations continue to rise, as do the number of people in emerging market nations that are now finally able to afford better, more protein rich, diets.
This confluence of events could very well drive up feed stock prices, and that means a nice trading opportunity in a basket of commodities such as corn, soybeans and wheat………………………………………..Full Article: Source

Deutsche Bank AG (DBK) will continue to provide agricultural-investment products after Germany’s largest bank concluded that they’re not the cause of rising prices for farm commodities.
“There was no evidence that speculation was responsible for price developments,” Juergen Fitschen, the company’s co- chief executive officer, said at a press conference in Berlin today. “It can contribute to volatility under certain conditions but there are also other reasons for volatility.”……………………………………….Full Article: Source

Grains represent agriculture investors’ better bet for most of 2013, but it is soft commodities, in particular cotton and sugar, which will end the year on the up, Macquarie said.
The bank, in a major crop report, rated corn as its “favourite in the short-term” in agricultural commodities, forecasting a return in prices to an average of $8.50 a bushel in the April-to-June quarter, well above the level that futures are pricing in………………………………………..Full Article: Source

Agricultural commodities may recapture some of their investor appeal lost during the late-2012 sell-off, Societe Generale said, rating Kansas wheat and lean hogs as its top bets in the complex.
Funds have quit positions in many commodity types, partly thanks to a rush back into equities, towards which investors have their most bullish positioning since February 2011, according to a Bank of America Merrill Lynch survey………………………………………..Full Article: Source

The past year was not only eventful for the commodities market, but also remarkable because various agricultural commodities touched new highs. Considering the fundamentals, supply fears lingered largely due to poor rains in India during the first half of the monsoon, which not only reduced the sowing of kharif crops but also raised worries over the crop yield.
Even the US was hit by its worst drought in 56 years, which parched the soybean and corn crops. However, the revival of monsoon in India during the second half of the season helped ease some pressure on sowing and yield. Further, the rabi sowing also progressed well and the weather conditions so far have been favourable for the crop yield………………………………………..Full Article: Source

For those who find ‘tea or coffee’ a question too far first thing in the morning, relief may soon be on hand - a combination of both. Researchers claim they have discovered the ultimate brew - a tea made from coffee leaves which is healthier than both of the drinks.
The coffee leaf tea, which is said to have an ‘earthy’ taste that is less bitter than tea and not as strong as coffee, boasts high levels of compounds which lower the risk of diabetes and heart disease, experts said. It also carries far less caffeine than traditional tea or coffee and contains antioxidant and anti-inflammatory properties………………………………………..Full Article: Source

As with other commodities like corn, soybeans and other classes of wheat, the spring wheat market has found prices sliding down at the end of the year heading into 2013.
“The uncertainties surrounding the fiscal cliff, investment fund rebalancing and basically non-fundamental, non-market influences have put the market into a tailspin,” said Jim Peterson, marketing director for the North Dakota Wheat Commission………………………………………..Full Article: Source

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Before you could even say Hallelujah about the US government meeting its Jan. 1 fiscal cliff deadline, the mainstream financial media put us on the edge again, this time, with the food price cliff.
Here’s how the usual experts explain this next looming economic escarpment: Increasing inflation has combined with rising global demand, emerging market growth, and supply shortages to create a perfect storm for runaway prices of natural resources and commodities………………………………………..Full Article: Source

In the global rice market, a big and surprising buyer has emerged: China. For decades, China’s booming rice production enabled it to sell far more rice than it bought. But the world’s biggest consumer of the grain has become a major importer.
In 2012, the country bought a record 2.6 million tons of milled rice, according to the U.S. Department of Agriculture. That was a sharp acceleration of a trend started in 2011, when China bought 575,000 tons. China had been a net importer of rice in just four of the previous 50 years………………………………………..Full Article: Source

Agri commodities outperformed industrial consumables with an impressive margin in 2012 due to strong fundamental support from the American continent. While the drought in Brazil and Argentina kept the global sentiments firm, the Indian government’s decision to raise the minimum support price ( MSP) of agri produce helped the price remain on a firm footing.
On the other hand, demand for industrial commodities remained low due to the prevailing uncertainty in the global economy. Commodities like cardamom offered returns of 70 per cent followed by turmeric and soybean with 38 per cent and 29 per cent, respectively………………………………………..Full Article: Source

The worst U.S. drought since the 1930s Dust Bowl is damaging wheat crops across the world’s biggest supplier, at a time when hedge funds are the most bearish on prices in seven months. About 62 percent of the country is mired in a dry spell that the government says will last at least until March in states growing the most winter wheat.
With dormant crops already in the worst condition since records began in 1985 and global inventories headed for a third annual drop, Chicago futures may rise as much as 26 percent to $9.50 a bushel this year, the median of 32 analyst estimates compiled by Bloomberg shows………………………………………..Full Article: Source

Wheat and soybean futures edged lower on Monday, but ended the year as the best performers in a basket of commodities, including crude oil, as demand lifted prices and the worst drought in half a century crimped supplies.
Wheat posted the biggest gain this year among the 19 commodities in the Thomson Reuters-Jefferies CRB index, soaring 19.2% despite falling for three straight months and tumbling 7.9% in December alone………………………………………..Full Article: Source

Coffee prices have fallen more than 50% since 2010 which can be seen through the coffee exchange traded fund symbol: JO. This investment seeks to replicate the returns that are potentially available through an unleveraged investment in coffee futures contracts as well as the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.
The top weekly chart shows my price targets for 2013 while the lower hourly chart shows strong on balance volume meaning big money is slowly building a long position in coffee………………………………………..Full Article: Source

Changing global climate has wrought havoc on the agricultural sector during the past year. Drought in the United States has stunted the yields of many crops, while unusual weather patterns elsewhere in the world led to sharp spikes — and drops — in farm yields across Asia, Latin America and Europe.
Yet it’s unwise to pay too close attention to these near-term events. Instead, focus on the clear long-term trend in place for global agriculture. Millions more people are joining the middle class in fast-growing places such as China, Brazil and India, and there is a global push to ensure crop yields are maximized to meet this rising demand………………………………………..Full Article: Source

Psychologically, Sugar prices have turned bullish for the near-term, as prices rallied off recent lows after a rather bearish surplus estimate failed to draw in short-sellers. Though current momentum is now favoring Sugar bulls, we may not see any major fresh buying by large speculators unless we can see a strong close through the 20-cent per pound level.
After trading at 28-month lows, Sugar futures prices are beginning to rebound, as some traders start to exit bearish trades going into the new year. Sugar futures were one of the worst performing commodities in 2012, as a large supply surplus and average demand sent prices to lows not seen in over 2 years………………………………………..Full Article: Source

Chinese demand makes it hard to gauge the outlook for bulk metals such as copper and iron ore. But grains look different. Global stocks of agricultural commodities are low and the drought that hit harvests in the fall of 2012 has continued, jeopardizing the new wheat crop. With low rainfall also hitting river-borne U.S. trade routes, grain prices may well stay elevated.
Prices of corn and soybeans have retreated somewhat from the record highs they reached when the severity of last summer’s dry spell became clear. But the lull may be deceptive. Several factors point to high prices next year………………………………………..Full Article: Source

A massive sell-off by speculators fuelled a decline in values of US wheat which has left the grain looking amongst the cheapest in the world, challenging Indian supplies on price. Managed money, a proxy for speculators, cut it net long position in Chicago wheat futures and options by more than 22,000 contracts, the biggest sell-down since January, regulatory data showed.
The data were for the week to December 11 – a day marked by the US Department of Agriculture’s 50m-bushel cut to its forecast for US wheat exports in 2012-13, a downgrade which sent prices of the grain tumbling to their lowest since July……………………………………Full Article: Source

According to the Financial Times, “a mysterious white substance is being smuggled over the border from Vietnam to China in growing quantities.” Of course this substance is a staple of modern Western society and something increasingly in demand in China and other emerging markets.
The FT states that: “China is the world’s top importer of raw sugar and third-largest consumer overall. Toby Cohen, a director at London sugar merchant Czarnikow, points out that China’s overall sugar consumption is still low in per capita terms, and expects it to keep growing. China could consume “double the volume of sugar it is consuming today, and still be consuming less on a per capita basis than the western economies,” he said.”……………………………………Full Article: Source

The year 2012 was very exciting for the agro-commodities market. High volatility and rising trading interests resulted in improved volumes in the futures market. There were many commodities, which gave significant returns — especially during the initial eight-nine months before profit booking set in at higher levels.
Volumes shot up on the exchanges and high liquidity was observed on counters that were not very liquid so far. Assisted by strong fundamental factors, we saw commodities like pepper, jeera, chana, kapas, cocud giving 50 per cent to 100 per cent returns in the first nine months itself before corrections occurred. Turmeric prices nearly doubled from their lows……………………………………..Full Article: Source

It was a pretty hectic year for agricultural commodities as the summer months wreaked havoc on prices. After the United States endured the hottest 12-month span on record and an abysmal drought, a number of these staple commodities experienced big movements in price and trading volume alike.
But now that 2012 is nearing its close, we look back at these funds throughout the course of the year to see which funds outperformed the rest……………………………………..Full Article: Source