APEC’s supply chain connectivity and its benefit to agro-industry

[Source] : The Jakarta Post

This year, Indonesia will host the Asia-Pacific Economic Cooperation (APEC) Conference in October 2013, and will hold four Senior Officials Meetings (SOMs), 12 Sector Ministerial Meetings, an APEC CEO Summit and the Economic Leaders Meeting. From Jan. 24 to Feb. 8, APEC, SOM I and related meetings are taking place in Jakarta.

APEC is an intergovernmental forum dedicated to promoting free trade, investment and economic cooperation throughout the Asia-Pacific region.

As stated earlier this month by Foreign Minister Marty Natalegawa, Indonesia will include its own national interest issues on the agenda such as economic resilience, improvement of small- and medium-scale business competitiveness, sustainable growth and food security.

Click here to read the complete article

CSA Market watch: Soybeans in focus

Soybean prices are on the rise. As this article from Bloomberg highlights, some new interesting trends have emerged in recent years which commodity investors would do well to take note of.

Soybean plantation I drove past in Paraguay back in February of 2012. Soy exports remain a powerful driver of the Paraguayan Economy.

• China, which is currently the world’s largest consumer and importer of Soybeans tends to see demand spike around the Chinese Spring Festival / Chinese New Year Season (also referred to as the Lunar New Year Festival).  Farmers traditionally attempt to fatten their hogs before the season which is one of the few times during the calendar year which sees the great majority of the Chinese population take a holiday to reunite with family.  For thousands of years, Spring Festival in China been a special time of year where Chinese people from rich to poor justify “indulging in eating more meat.”  In the context of today’s interconnected global economy and China’s population of 1.3 billion people, this means when Chinese demand spikes, so will prices unless suppliers can adjust to this new phenomena and better prepare for yearly spikes around the time of Chinese Spring Festival. 
• China’s source of supply for soybeans is increasingly shifting towards South America. The agricultural sectors of Brazil, Argentina, Uruguay, Paraguay and Bolivia have been the major beneficiaries of rising demand from China (potential long-term problems which could arise from the environmental damage of intensive soybean production not withstanding).
• Prices have become increasingly sensitive due to two primary changes underway in the global supply chain of soybeans.
  • First, the USDA notes that supply is increasingly shifting from the US to South America.
  • Second, this shift has not been perfectly matched with an increase in supply from South America. Instead, South American producers are struggling to efficiently increase their production of Soybeans.

China Seen Boosting Purchases of Soybeans as Feed Demand Expands

[Source] : Bloomberg

Crushers in China, the world’s biggest buyer of soybeans, boosted purchases last week as rising demand for livestock feed increased profits from processing, according to a Bloomberg survey.

Companies ordered 30 cargoes from the U.S. or South America, the equivalent of about 1.8 million metric tons, according to the median of estimates from five crushers and one researcher compiled by Bloomberg. That compares with a usual weekly average of 10 cargoes to 20 cargoes, respondents said.
China canceled 1.16 million tons of shipments since Dec. 18, according to the U.S. Department of Agriculture, which increased concern consumption may be slowing. Fresh purchases by China, which buys more than 60 percent of globally traded beans, suggest demand is recovering as U.S. supplies decline.

“Traders are securing more shipments for the next two months” because of the looming shortage in supplies and limited loading capacity in South America, said Monica Tu, analyst at Shanghai JC Intelligence Co., who took part in the survey.

Consumption of soybean meal in China is increasing as farmers fatten hogs before the Lunar New Year festival in February when pork demand rises, Tu said from Shanghai yesterday. Stockpiles of soybeans in the U.S, the biggest producer last year, were 1.966 billion bushels on Dec. 1, 17 percent less than a year earlier, according to the USDA.

Click here to read the full article

Vietnam-Uruguay: Prime example of why MERCOSUR has failed

Below you will find an excerpt and link to read the full article on how Vietnam and Uruguay are working together right now to increase cooperation  in investment, agriculture, and farm produce processing, adding that Uruguay can supply such products as beef, fruits and wine to Vietnam. While Vietnam, likewise has much to offer in exchange.

Why do I say that MERCOSUR has failed as a trading bloc? For starters Uruguay can not within the legal framework of the Economic Union negotiate FTA’s with countries unless all members of MERCOSUR are involved in the negotiations and on board.  It seems the intelligent leaders of Uruguay know which way the wind blows and how MERCOSUR is now becoming a major hindrance to their own destiny as a country. To put it simply:

• While Argentina and Brazil bicker over taxes and trade…
• While all members try to figure out what to do with Paraguay and the dirty game which was played to admit Venezuela into the union
• While Argentina continues to raise a stir over the FALKLANDS, which they believe is occupied by “Latino’s.” FAR from the reality, see this article written by a Panamanian journalist who recently visited the Islands… The place is more British than most parts of the ethnically diverse city of London.
• Last, while trade among the Economic Bloc is declining…

Uruguay has realized in this new, ever more inter-connected global economy they are a special country which can offer special incentives and advantages compared to their giant neighbors to the North and South (Brazil and Argentina).

It’s time MERCOSUR takes a deep, introspective look at itself because day by day, the MERCOSUR Union seems to be cracking apart piece by piece.  In the opinion of your author, Uruguay should realize its special niche in the world and that it no longer needs to depend too heavily on Brazil or Argentina for its economic well-being. No matter what happens with MERCOSUR, people from Argentina and Brazil will flock to Punta del Este for vacation, continue trading with the country, and maybe even continue the trend of using Uruguay as a conduit and medium in which to conduct business with the world and among each other because Uruguay is a dream come true when it comes to doing business… At least compared with Argentina and Brazil which notorious for bureaucracy, regulations and high taxes.

Vietnam looks to boost economic ties with Uruguay

[Source] : Vietnam Net Bridge English

VietNamNet Bridge – Uruguay should create favourable conditions for Vietnamese enterprises to invest and do business in the country as well as in the Latin American market, President Truong Tan Sang has said.

Sang made the suggestion at a reception in Hanoi on November 6 for visiting Vice President of the Eastern Republic of Uruguay, Danilo Astori, who is also President of the General Assembly and the Chamber of Senators.

The President went on to say that Vietnam is willing to serve as a bridge for Uruguay goods into the ASEAN market.

Apart from further promoting political ties, the two countries should soon implement the agreement signed, paving the way for trade and economic cooperation, especially in agriculture, oil, gas and telecommunications, said Sang.

Agreeing with the President’s proposal on the establishment of an inter-governmental committee at an early date, Astori shared his view that in the short-term, the two countries should implement the Framework Agreement signed in 2007 and forge new deals to boost bilateral economic and trade ties.

Click here to read the complete article

Noticias de Argentina y China en foco

China confirmó que comprará más soja argentina

[Source] : Primera Edicion

El Gobierno de China confirmó la compra de 2,4 millones de toneladas de productos de soja argentinos, lo que significó un incremento del 10 por ciento en lo que va del año en comparación con igual período de 2011.

Así lo indicó el ministro de la Administración Estatal de Granos (AEG) de China, REN Zhengxiao, durante un encuentro con el titular de Agricultura argentino, Norberto Yauhar, quien resaltó que se recuperaron las ventas de aceite de soja a China.
También señaló que existe interés de la Argentina por “consolidar su posición como proveedor de granos y sus derivados a China”, expresó un comunicado oficial. Durante la reunión ambos funcionarios enfatizaron en la firma del “Memorando de Entendimiento sobre Cooperación en Materia de Granos” que tuvo lugar entre ambos Ministerios en junio pasado. Fue durante la visita del primer ministro WEN Jiabao a la Argentina. “Asimismo, Yauhar remarcó que se encuentra plenamente operativo el Protocolo Fitosanitario para exportar maíz argentino a China, esperando que las grandes empresas estatales de China (SINOGRAIN, COFCO, Chinatex, entre otras) comiencen prontamente a realizar las primeras órdenes de compra”, se explicó. Se buscó agilizar los procesos de comercialización mediante reuniones de referentes de la delegación argentina con empresarios.

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China ya superó a la Argentina como proveedor de autopartes a Brasil

[Source] : La Cronista

EDUARDO LAGUNA San Pablo

Con precios competitivos y escala de producción suficiente para abastecer su mercado local de vehículos -el más grande en términos globales-y enviar productos al resto del mundo, China está entre los cuatro mayores proveedores de autopiezas de Brasil.

Este año, los chinos superaron a Argentina, tradicional socio de la industria automovilística local, pero que perdió la cuarta posición por las barreras comerciales que impuso Brasil en respuesta a las trabas levantadas por el gobierno de Cristina Kirchner a la entrada de productos brasileños al país vecino.

Los proveedores nacionales se quejan por los bajos precios de los productos chinos, que aseguran se obtienen, muchas veces, sacrificando la calidad. Los importadores, a su vez, destacan el papel de los importados como regulador de precios y calidad de los productos brasileños, forzando a la industria nacional a aumentar la competitividad.

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Argentina está más cerca de exportar embriones bovinos a China

[Source] : Punto Biz

El Ministro de la Administración General de Supervisión de Calidad, Inspección y Cuarentena (AQSIQ) de China, ZHI Shuping, le confirmó hoy al Ministro de Agricultura, Ganadería y Pesca de la Nación, Norberto Yauhar, la realización a partir del mes de octubre de auditorías en nueve centros de inseminación artificial y transferencia de embriones bovinos. “Es el último paso para poder comenzar a exportar a China estos productos”, afirmó Yauhar luego de la reunión en la sede de la AQSIQ, en Beijing.

En este sentido, ZHI Shuping aseguró que “la relación con Argentina está viviendo una etapa muy exitosa. Hay una necesidad de ambos países de fortalecer esta relación estratégica”.

Las inspecciones servirán para hacer operativos los Protocolos Sanitarios firmados en la visita de mayo. “Argentina no sólo transfiere productos con alto valor agregado, sino también tecnología, conocimiento y desarrollo agropecuario”, remarcó Yauhar.

Como resultado del encuentro, el titular de la cartera agropecuaria nacional además confirmó: La inspección veterinaria a nuestro país para concluir el análisis de riesgo para la exportación de caballos vivos a China. “Existe una gran demanda de caballos para actividades deportivas y esparcimiento, y esta visita es un requisito esencial para poder completar la negociación y firmar el Protocolo Sanitario que abra el mercado chino a nuestros caballos”, resaltó Yauhar.

Haga clic aquí para leer el artículo completo

Soy Rally Sends South American Growers Into Pastures

[Source] : Bloomberg

By Matt Craze and Mario Sergio Lima - Sep 13, 2012 4:00 PM GMT+0800

SoyBean Field – Paraguay, Photo taken in March 2012 by Bennett Reiss (Webmaster and author of CSA)

Leonildo Bares, a soybean grower near the Amazon farming frontier town of Sinop, said he’s so confident prices for the commodity will stay near record highs that he’ll extend his crop to neighbors’ boggy cattle pastures.

Confined by Brazil’s crackdown on logging in the Amazon, the farmer talked his neighbors into growing soybeans on their cleared land and sharing the profit. Bares, whose 420-hectare (1,038-acre) farm in the center-western state of Mato Grosso extends on what was untouched rainforest in the 1970s, plans to boost planting to 650 hectares. About 1 million hectares of the state’s pastures, an area the size of Jamaica, probably will be converted to soybean crops in coming years, he predicts.

“The pastures of Mato Grosso can be turned into soybean plantations and probably will,” Bares, who’s also the president of Sinop’s farmers association, said in a telephone interview from the city. “Anyone with the knowledge and money who’s willing to come here and do it, can do it.”

South American farmers like Bares have become the counterpoint to the worst drought in the U.S. Midwest in 76 years as they sow record crops during a global shortage of the oilseed used as animal feed in Asia. Brazil, Argentina, Paraguay, Bolivia and Uruguay will boost output by 34 million metric tons to 148.5 million in the 2012-2013 season, more than offsetting a decline of about 11.5 million tons to 71.7 million in the U.S., the Department of Agriculture said yesterday.

Click here to read the complete article

What are the ecological costs of China’s future food imports?

[Source] : China Dialogue

Tom Levitt
September 10, 2012

China’s growing agribusinesses and demand for soybeans and meat is bringing intensive farming and the risk of further deforestation in Brazil and beyond. Tom Levitt reports.

The dynamics of Chinese agriculture are changing. While it may still be largely self-sufficient in food, the country is expected to enter an era of rising food imports and in particular, animal feed. But how ready is China to take responsibility for the environmental impact of this growing overseas footprint?

Over the past two decades, China has seen a monumental surge in soybean imports. By 2030, China is expected to consume 72 million tonnes of soybeans from overseas – more than one-quarter of the world’s total soybean production today.

The impact, environmentalists fear, is greater pressure on uncultivated forested land in Brazil, the world’s second largest soybean producer after the United States and a major exporter to China. In 2011, more than 67% of Brazil’s soybean exports were sent to China. By no coincidence, the South American country is now emerging as a major focus of investment for China’s expanding agribusinesses.

Click here to read the complete article

Latin America’s China Addiction (Part 2): Are Commodity Prices Showing Signs Of Recovery?

[Source] : Seeking Alpha

Click here to read part 1 of this story 

China’s economic soft-landing has had a significant impact on economic growth across the globe and particularly in Latin America where mining and commodities production are key drivers of economic activity. In the first article of this series the linkage between Latin American economic growth, commodities exports and Chinese economic growth was illustrated. This showed that China’s slowing economy and decreased demand for commodities has been a key catalyst for the fall in economic growth across the region. It has also been a key catalyst for the plunging share prices being experienced by many resource companies, which include some of Latin America’s largest publicly tradable companies like Vale (VALE) and Petrobras (PBR).

Market outlook on commodities growing more optimistic

However, markets have been taking a more optimistic view of China and commodities over the last month. This growing optimism is based on signs that the contraction in Chinese economic activity is easing along with increasing speculation that the Chinese government will take action to boost growth. This has led to considerable speculation that there will be a recovery in commodities prices, which should see a renewal of economic growth in Latin America.

One of the key drivers of this growing optimism has been the slowing contraction of the Chinese manufacturing sector, with the Chinese purchasing managers’ index (PMI), rising in July to a five month high. There has also been renewed confidence in the iron ore mining sector with Australia’s third largest iron ore producer Fortescue Metal’s Group (FSUMF.PK) recently reporting an 8% increase in profit, along with positive statements from both Rio Tinto (RIO) and Vale concerning the future direction of iron ore prices. However, with the exception of crude oil it appears that this optimism is misplaced with commodity and basic materials prices continuing to fall.

Click here to read the complete article

Jim Rogers (commodity guru) talks, people (should) listen

China Easing Moves ‘A Mistake’: Jim Rogers 

[Source] : CNBC

Image courtesy of Wikicommons

“I think they’re a mistake and there’s still inflation in China,” said Rogers on CNBC Asia’s “Squawk Box” on Wednesday, referring to cuts in China’s reserve requirement ratios (RRR) and interest rates earlier this year.

“Yes, the property bubble has popped and prices have started coming down but not enough in my view. The most recent statistics show that Chinese property market is starting to recover,” he said.

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Jim Rogers Says Silver Is A Better Investment Than Gold

[Source] : Seeking Alpha

By Jared Cummans

Jim Rogers is easily one of the most famous investors of all time. His astounding track record has led him to become one of the most successful traders ever, earning deep respect throughout the financial world. Better yet, Rogers is not the least bit shy about speaking his mind, whether he is right or wrong. Some of his previous statements included the fact that anyone who doesn’t invest in commodities is a fool, that gold will surely drop 20% from its current levels, and now, Rogers has stated that silver is a better investment than gold.

Gold investing has long dominated the precious metals space, as investors have used this ultra-popular metal as both a trading/speculative instrument as well as an integral part of a longer term strategy. While silver still has a large presence in the financial world, it is not often that a big name steps into the limelight and touts this white metal over its gold counterpart.

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Agriculture in focus: Chinese buy up soy beans & Glencore offers some positive outlook

Chinese buying could push soybeans over $20

[Source]: Reuters via Alberta Farmer Express – Canada

Buyers are starting to grow concerned about the diminishing reserves

Soybean plantation I drove past in Paraguay back in February of this year (2012). Soy exports remain a powerful driver of the Paraguayan Economy (and to a lesser degree because of more diversity of their exports — in Argentina and Uruguay as well).

Aug 23, 2012 11:04 AM – 0 comments TEXT SIZE
By: Gavin Maguire, Reuters
Crops, General, Markets

The July-September quarter is traditionally a soft period for U.S. soybean exports as the world’s top buyers of the oilseed typically divert their buying interest to South American suppliers while the U.S. crop rounds out the growing season.

But the shortage of supplies in Brazil and Argentina following this year’s drought in that region has forced the world’s top buyer China to start the current quarter with a six-year-high purchase of U.S. soybeans for the month of July and show continued solid demand so far in August.

Record high domestic soy prices suggest China may have further import buying to do in the weeks ahead, and should that buying occur amid fresh fears of potential U.S. crop shortages, could prove enough to push U.S. soy prices beyond the $20 per bushel mark.

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Glencore flags farming’s ‘positive’ fundamentals

[Source] : AgriMoney

Glencore flagged “positive” fundamentals for agriculture, and a 37% rebound in its profits in the sector, even as it warned over a “very challenging” European biodiesel market, and setbacks in Brazilian sugar.

“[Agriculture] industry fundamentals are the most positive they have been for some time,” Ivan Glasenberg, the Glencore chief executive, said, restating the rationale which had driven the group to buy Viterra, the Canadian grains handler.

In the short-term, the group noted flagged the setbacks to US crops which had made it “apparent that [grain and oilseed] production shortfalls will be severe, and supply/demand will consequently be extremely tight”.

This meant the second half of the year “is therefore likely to be a considerably higher-priced and more volatile environment than the first half of 2012″.

Click here to read the complete article

Argentine Unionist Claims China Only Interested In Commodities

[Source]: Bernama Malaysian News Agency 

BUENOS AIRES, Aug 14 (BERNAMA-NNN-MERCOPRESS) — Trade with China for Argentina has great opportunities but also great threats because the Asian giant is only interested in produce with no added value, the head of Argentina’s Industrial Union, Ignacio De Mendiguren said.

“Trade with China has opportunities and threats. We must not fall into the temptation of limiting exports to commodities. Let us understand that in this growth cycle so favourable for Argentina, it should help us boost development”, said De Mendiguren with foreign correspondents in Buenos Aires.

It is clear that for China, “the added value must be incorporated in China” said the Argentine lobbyist and called for the diversification of trade with countries prepared to buy goods with more added value.

“China wants the soy bean, not even soy oil or soy flour and it is legitimate. That is why we must re-direction our trade to all those countries with middle classes that can purchase out goods but at the supermarket. China does not want Argentine products in their supermarkets”, said De Mendiguren.

Click here to read the complete article from Bernama Malaysian News Agency