Baseball91's Weblog

August 22, 2012

The Grain Exchange

The Financial Times said concerns over the US harvest had prompted senior G20 as well as United Nations officials to consider an emergency meeting on food supply, with a scheduled conference call set for August 27. The concern is about global shortages of certain food.

India allegedly has has plenty of wheat, with stocks of 47.5 million tons at the start of August, versus their target of 17.1 million tons.

With some background, the Iranian rial has lost nearly half its value in the past twelve months. In the currency wars. Which explains the saber rattling on the last Friday of Ramadan, called Qods (Jerusalem) Day, initiated with the Islamic Republic in 1979. Addressing worshippers at Tehran University, Mahmoud Ahmadinejad called the existence of Israel an insult to all humanity.” And Mahmoud Ahmadinejad then yesterday unveiled an upgraded version of a short-range surface-to-surface ballistic missile weeks after it was test-fire. After the Iranian rial has lost nearly half its value. And the status quo of his regime cannot exist much longer, with the world economic situation, and the grain situation.

As reported by Reuters, under pressure from the United States, India in December 2010 scrapped the decades-old mechanism for paying for oil imports from Iran. Refiners in India, Iran’s second-biggest oil client after China, have been struggling to find a lasting solution to problems caused by U.S. and European sanctions on oil exports from Iran. India and Iran discussed other options for payments, using banks in third countries. With a secured waiver from sanctions imposed on Iran by cutting oil imports, India aims to import at least 15 percent less oil from Tehran in the current fiscal year. Those Indians are being quite understanding with their oil supplier. Refiners in India — Iran’s second-biggest oil client after China, with a reported 500,00 per barrels of oil per day — have been under a new payment mechanism settling 45 percent of its oil purchases from Iran in rupees, continuing to pay the remainder in euros through Turkey’s Halkbank.

As reported by Reuters, specifically by Sarah McFarlane and Michael Hogan, Iran’s state grain buyer continued to build its strategic stocks, purchasing at least 240,000 tons of milling wheat the first week of August, as a drought-fuelled grain price rally kept food security on government radars. While economic sanctions do NOT target food shipments, these sanctions have made it difficult for importers to obtain letters of credit or conduct international transfers of funds through banks. Grain ttraders say that Iran’s purchase included German and Baltic Sea region wheat, taking advantage of the recent correction after a steep rise in June and July grain markets. Reuters reports that Iran’s Government Trading Corporation continued its discreet method of contacting traders directly for offers, making it difficult to glean details of total purchases. Though Iranian grain imports usually have been handled by private sector grain traders, the state was compelled to step in with purchases earlier this year because of disruptions to trade financing which have been caused by economic sanctions aimed at Iran’s nuclear program.

As reported by Reuters, private Iranian buyers also have been in the market two week back, traders note, signalling they may have found ways to finance purchases. “Iran’s has definitely been very active this week,” said a European trader, “what everyone has been working on this week. We have seen private buyers from Iran inquiring about European, Russian and Australian wheat for September shipment. It seems they want to buy for August-March shipment. Financing does not seem to be a major issue,” a European trader said.

As reported by Bloomberg News, purchases of wheat by Iran would help India cut its huge stockpiles of grain as well as save hard currency for Iran.

As reported by Bloomberg News, Ukraine is suffering from a contracting yield, and recently was approached by China as the Asian giant sought to substitute its loss of U.S. Grain. Ukraine’s grain exports rose 31 percent this month through yesterday to 389,000 metric tons, researcher UkrAgroConsult said. Wheat was shipped to Tunisia, Kenya and Egypt, corn to the European Union and barley to Saudi Arabia and Egypt, a Kiev-based researcher said. Shipments included 162,800 tons of wheat, 131,500 tons of barley and 88,300 tons of corn, up from 297,400 tons of grain exported in the same period a year earlier, UkrAgroConsult analyst Liza Malyshko told Bllomberg News. Shipments also rose from 80,800 tons exported in the same period in July, according to an e-mailed statement from UkrAgroConsult last week. Czech Agricultural Minister Peter Brendl told the Prague Post: “I saw with my own eyes how the drought of last April and May has impacted the harvest of south Moravian farmers.  Winter and perennial forage crops were mainly damaged. They had been previously destroyed by the February frost.”

As reported by Reuters, crops are wilting and dying in the Balkans. Hot, dry weather in eastern and southern Europe has put pressure on world grain markets which already reeling from huge drought damage in the United States.

As reported by Reuters, two leading Russian agricultural analysts cut their forecasts for Russia’s grain harvest on Monday after harvest data from two drought-stricken eastern growing regions reduced the outlook for the overall crop. Russia is the world’s number four exporter, the Russian government has put this season’s exportable surplus at ten to twelve million tons, but which could be curbed due to drought damage in its crop. The strong ruble may dampen demand for Russian export grain, when it comes to potential buyers.

China has reined in inflation as its economy slows however, while its grain output stood at 1.3 trillion tonnes in the first half of the year, up 2.8 percent from the same period a year earlier. Monsoon rains were 15.2 percent below average in mid-August, according to latest data from India weather bureau. Indian Food Minister Kuruppasserry Varkey Thomas told parliament this month that prevailing conditions “could affect the crop prospects and may have an impact on prices of essential commodities.” Asian rice prices are forecast to rise by as much as 10 percent in the coming months as supplies tighten. India and Thailand are two of Asia’s leading rice exporters. And the Indian people might soon be asking why their surpluses were shipped to Iran.

As reported by Reuters, an emerging El Nino weather pattern is likely to have only a modest impact on crops in Australia and could benefit sugar cane growers in Queensland, a senior forecaster said. Drier conditions have already settled in over much of the country, with August rainfall to date only about 20 percent of normal, said Andrew Watkins, manager of climate predictions.

Food is in chronic shortage in the Sahel region of Africa where World Vision Australia said 18 million people need food assistance in Niger, Mali, Chad, Mauritania and Senegal.

Farmers in Wales are facing a difficult year ahead after the unusually rainy summer hit crops and pushed up food production costs, a union warns.

The La Nina phenomenon is blamed in the Pampas farm belt, the agricultural heart of Argentina, for the parched soil which came on in the December 2011 – January 2012 dog days of summer in the Southern hemisphere. For one of the largest exporters of food products, the soy crop from last season’s harvest was 40.1 million tons, down from early-season Argentine projections of 52.5 million tons. About 85 percent of the world’s soybeans from the world’s top producers of soy in the United States, Brazil, Argentina, China as well as India are processed or “crushed” annually into soybean meal and oil. South America as a continent produces more soybeans than North America combined production. The Chamber of Oil Industry of Argentina and Cereals Exporters Center (CIARA) predicts Argentine crushers will process 35.5 million tons of soybeans this year, about 1.8 million less than in 2011. In the drought-affected Santa Fe province of Argentina 283 miles north of Buenos Aires, farmers still deal daily with the deterioration of their crops due to drought. Drought both in northern Argentina along with southern Brazil have cut soybean supply there.

The story seems universal in 2102. Mexico is suffering from one of its worst droughts in more than 70 years. Severe weather has also hurt agricultural production in other exporting countries, including Brazil and Australia. The problem in he expansive farmlands of Brazil has been mainly excessive rain.

And Iran is watching as its closest ally loses its hold in Syria. Iran, the real financier of Hezbollah. After Hezbollah seized control of the Lebanese government last year. As U.S. authorities seized $150 million from a New York account of the Lebanon’s Banque Libano Francaise SAL which authorities allege is connected with a larger scheme to launder hundreds of millions of dollars through U.S. banks for the Lebanese terroist group, Hezboolah. U.S. officials believe that Iran and Syria use Lebanese banks to evade international sanctions, the Wall Street Journal reported. The defunct Lebanese Canadian Bank denied Tuesday U.S. claims that it had any connection to Hezbollah.

The status quo of the Iranian regime and its friends cannot exist much longer, with the world economic situation, and the grain situation. If you were in search of the weakest link, as reflected with the weakest currency.

Ayn Rand wrote in Something to Reflect On (1959), “Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion—when you see that in order to produce, you need to obtain permission from men who produce nothing —when you see that money is flowing to those who deal, not in goods, but in favors —when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed.”

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2 Comments »

  1. http://www.bloomberg.com/news/2014-11-25/iran-got-less-and-more-than-expected-from-sanctions-relief.html

    The above link updates about Iran as 2014 draws to a close. The news focuses upon a shared suffering in Iran as a consequences of sanctions and/or poor leaders. How can leaders on both sides of the issue be so cruel to innocent humans — to widows and orphans? To real God-fearing people and those who were out strictly for their own human power.

    http://www.independent.co.uk/news/science/climate-change-emergency-jet-stream-shift-warning-global-warning-extreme-weather-a7111661.html

    Comment by baseball91 — August 22, 2012 @ 4:56 AM | Reply


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