http://www.zerohedge.com/news/deep-fried-black-swan-goes-global-drought-spreads-us-asia-and-now-southern-europe
Submitted by Tyler Durden on 07/25/2012 15:45 -0400
Deep Fried Black Swan Goes Global As Drought Spreads From US To Asia, And Now To Southern Europe
The US drought, which as previously noted, is the worst in decades, has already caused corn prices to hit a record, and soy to soar. And as we first reported last week, and subsequently Bloomberg also caught, Asia could well be next to suffer soaring food prices next as "the monsoon season, which is critical for that country’s agricultural production, is 22% below normal conditions for the year." In fact, if there is one thing preventing the PBOC from engaging in full blown easing, it is precisely the threat that just as it floods the market with excess CNY, that the supply of food will collapse causing widespread riots and chaos a la Arab Spring 2011. And now, just to make sure that the threat of full out global food crisis is complete, and the deep fried black swan has truly gone global, we find that a heat wave in Southern Europe is causing the corn crops to wither in a region that is responsible for 16% of global exports.
http://www.bloomberg.com/news/2012-07-25/indonesia-suspends-soybean-import-tax-as-tofu-makers-strike-1-.html
Indonesia Suspends Soybean-Import Tax As Tofu-Makers Strike
By Agus Suhana and Eko Listiyorini - Jul 25, 2012 8:38 AM ET
Indonesia will suspend a 5 percent duty on soybean imports until the year-end after makers of tofu and tempeh halted production to protest against surging costs spurred by the oilseed’s rally to a record.
The Finance Ministry will issue a ruling this month that will be effective without delay, Coordinating Minister for the Economy Hatta Rajasa said. The Trade Ministry has also held talks with importers to limit margins, he told reporters.
Indonesia’s decision, and the strike by local food-makers who’d demanded the levy be dropped, reflect the impact in Asia of the worst U.S. drought in more than 50 years, which has pushed soybeans and corn to all-time highs. South Korea’s government said today it’s considering stockpiling soybeans, corn and wheat to cope with rising prices. Goldman Sachs Group Inc. has said soybeans and corn will extend gains in Chicago.
The government will “provide facility and flexibility for tofu and tempeh cooperatives to directly import soybeans” to ensure supplies, Rajasa told reporters in Jakarta. The 5 percent levy on soybean shipments had been in place since January.
Soybeans rallied 32 percent on the Chicago Board of Trade this year as the worst drought since 1956 in the U.S., the world’s biggest grower, hurt supplies. Futures, which reached a record $16.915 a bushel on July 23, traded at $15.92 at 8:37 p.m. inSingapore. Goldman Sachs has a three-month target of $20.
Soybean Rally
Some Indonesian producers of tofu and tempeh, soybean-based staples, stopped production today after local bean prices surged 33 percent in the past three weeks to about 8,000 rupiah per kilogram ($841 a metric ton), according to The Confederation of Indonesian Tofu and Tempeh Makers Cooperatives. The stoppage came during Ramadan, the Muslim holy month, when followers break daylong fasts with communal meals.
“About 23,000 members in Banten, Jakarta and West Java provinces that halted output this morning will soon resume production,” said Sutaryo, the group’s head of business, who uses a single name. “Supplies of tofu and tempeh will return to normal on Saturday,” he said, adding that the confederation expects the government to maintain soybean prices at about 6,000 rupiah to 7,000 rupiah per kilogram.
The drought in the U.S. may spark a rebound in global food costs through October, the United Nations Food & Agriculture Organization said on July 5. South Korea’s Agriculture Ministry will also seek to temporarily lift import tariffs on soybeans and wheat, according to an e-mailed statement today.
Import Needs
Indonesia, Southeast Asia’s biggest economy, imports about 70 percent of its soybean needs, according to Deputy Agriculture Minister Rusman Heriawan. Tofu and tempeh, derived from soybeans and eaten mainly with rice, the main staple, are key sources of affordable protein. The foods represent about 88 percent of total soybean use in the country, according to the U.S. Department of Agriculture.
Indonesian inflation unexpectedly accelerated in June as food costs climbed, the Central Statistics Office said on July 2. Consumer prices rose 4.53 percent last month from a year earlier after climbing 4.45 percent in May.
The country is expected to import 1.97 million tons of soybeans in the marketing year from October 2012, up from 1.9 million tons a year earlier as consumption will exceed output, the USDA’s Foreign Agricultural Service said in a report in May.
and......
http://www.bloomberg.com/news/2012-07-25/corn-soybeans-decline-as-rains-may-ease-stressed-u-s-crops.html
Corn Rises In Chicago As Rains May Fail To Reverse Crop Losses
By Whitney McFerron and Luzi Ann Javier - Jul 25, 2012 7:59 AM ET
Corn rose in Chicago on speculation rains forecast for parts of the U.S. may fail to reverse crop losses caused by the worst Midwest drought in at least a generation. Soybeans also gained.
Areas of Indiana and Ohio had as much as 0.75 inch of rain yesterday, and parts of the eastern Corn Belt may receive an inch tomorrow, Telvent DTN said. While rain may ease crop stress, “this will not be a drought-breaking situation,” the forecaster said. As of July 22, 86 percent of the corn crop already entered the silking stage, critical for determiningyields, Department of Agriculture data show.
“Even with these rains, in a lot of areas it could be too little, too late” for corn, Christopher Narayanan, head of agricultural commodity research at Societe Generale SA, said by telephone from New York. “Beans still have another week or two to recover if we get some good rains, because pod filling is just now starting. You have a little bit of time, but not a whole lot.”
Corn for December delivery gained 1.1 percent to $7.87 a bushel on the Chicago Board of Trade by 12:33 p.m. London time. Futures jumped to a record $8 on July 23 as the USDA said crop conditions were the worst since 1988.
Soybeans Retreat
Soybeans for November delivery rose 0.5 percent to $15.7725 a bushel. About 36 percent of the U.S. soybean crop was in the pod-setting stage as of July 22, according to the USDA.
Midwest temperatures may be as much as 8 degrees Fahrenheit above normal for at least the next two weeks, with below normal rains, Joel Widenor, co-founder of Commodity Weather Group LLC, said in a note yesterday. About 55 percent of the contiguous U.S. was in moderate to extreme drought at the end of June, the highest percentage since 1956, National Climatic Data Center figures show.
“Severe drought conditions persist across most production regions,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia (CBA), said in a report today. “The USDA is expected to substantially cut its U.S. production next month given the ongoing decline in crop conditions.”
The next USDA estimate is due on Aug. 10.
Corn yields from the eastern third and north-central parts of Iowa, the biggest U.S. producing state, were 33 percent smaller than measured a year earlier, according to results from field inspections on the second day of the annual Doane Advisory Services Co. crop tour.
Wheat for September delivery rose 1.2 percent to $8.895 a bushel. In Paris, November-delivery milling wheat increased 2.6 percent to 257.50 euros ($312.73) a ton on NYSE Liffe.
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