Grains, Soybeans Jump on USDA Data, Signaling Higher Food Costs – Bloomberg.com

Corn rose the most allowed by the Chicago Board of Trade as concerns mounted that food costs will climb after the latest U.S. government forecasts on supplies and acreage. Soybeans and wheat also jumped.

Soybean futures for May delivery jumped 38.25 cents, or 2.8 percent, to $14.1025 a bushel. The USDA said inventories fell to the lowest since 2003. The price has gained 50 percent in the past year on record demand for U.S. supplies from China.

Wheat futures for May delivery rose 36 cents, or 5 percent, to $7.6325 a bushel. The price has climbed 64 percent in the past year as drought spurred Russia to ban exports, while floods eroded crops in Canada and Australia.

Exports of agricultural products from the U.S. jumped 18 percent to a record

via Grains, Soybeans Jump on USDA Data, Signaling Higher Food Costs – Bloomberg.com.

Food Commodities Surge Seen Swamping Consumers With Inflation – Bloomberg.com

Coffee, sugar and cocoa prices will rise five- to 10-fold by 2014 because of shortages that will mean consumers getting “swamped” by food inflation, according to Superfund Financial.

A United Nations index of world food prices jumped to a record last month, contributing to riots across northern Africa and the Middle East that already toppled leaders in Egypt and Tunisia. Global food security is threatened by “excessive price volatility and speculation,” farm ministers from 48 countries said in a joint statement after meeting in Berlin in January.

“There’s a tremendous shortage of food, there’s a tremendous shortage of arable land,” Smith said in interview in London. “Any kind of food products are going to increase.”

Coffee jumped more than fivefold in the two years through July 1994 and more than tripled from February 2002 to March 2005. Sugar prices rose fourfold from June 2002 to February 2006 and more than tripled from June 2007 to February last year. Cocoa advanced 242 percent from December 2000 to January 2003.

via Food Commodities Surge Seen Swamping Consumers With Inflation – Bloomberg.com.

Rising Corn Acreage Failing to Meet U.S. Feed, Ethanol Use (1) – Bloomberg.com

U.S. corn planting will expand to cover the second-largest area since World War II this year and still fail to meet demand for feed and ethanol, driving prices to their highest in at least 34 years.

Corn will rise 5.7 percent to average $7.15 a bushel in the third quarter, the most since at least 1977, Abah Ofon and Koun-Ken Lee, analysts at Standard Chartered Bank in Singapore, wrote in a report.

Sowing will expand by 4 percent to about 91.75 million acres, the most since 2007 and the second-highest since 1944, according to a Bloomberg survey of 32 analysts. Corn will rise 5.7 percent to average $7.15 a bushel in the third quarter, the most since at least 1977, Abah Ofon and Koun-Ken Lee, analysts at Standard Chartered Bank in Singapore, wrote in a report.

A United Nations index that tracks the cost of 55 foods rose to a record in February, with higher prices contributing to riots in the Middle East and northern Africa that toppled leaders in Egypt and Tunisia. That’s driving up inflation and spurring central banks to consider higher interest rates that may slow global growth.

“We will have inadequate acreage, which without spectacularly favorable weather, will usher in a significant food shortage” in some parts of the world, said Doug Jackson, a West Des Moines, Iowa-based vice president at INTL FCStone Inc. “Demand is outrunning normal production expansion, led by biofuel policy,” said Jackson, who has been a grain analyst since 1974.

via Rising Corn Acreage Failing to Meet U.S. Feed, Ethanol Use (1) – Bloomberg.com.

Cotton Rally Peaking as Farms Build Stocks on Record Crop (3) – Bloomberg.com

The rally that drove cotton prices to the highest since America was recovering from the Civil War is ending as farmers from Texas to New South Wales plant record crops and replenish stockpiles for the first time since 2007.

Cotton will drop 51 percent to $1 a pound by Dec. 31, according to the median in a Bloomberg survey of 14 analysts and traders. Hedge funds are already cutting bets on higher prices by the most in three years. Output may rise 11 percent to 127.5 million bales in the year that starts Aug. 1, three times faster than a 3 percent gain in demand to 120 million bales, the U.S. Department of Agriculture estimates. One 480-pound bale is enough for 215 pairs of jeans.

“We have had quite a nice run, and I don’t see it sustaining,” said John Stephenson, who helps manage more than C$2 billion ($2 billion) at First Asset Investment Management Inc. in Toronto. “More acreage will be dedicated to cotton, and in a scenario where consumers are facing higher food and fuel prices, clothing will take a back seat.”

Cotton rose to $2.197 on March 7, the highest in 140 years of trading in New York, after flooding in Australia and Pakistan and freezes in China ruined crops. Adidas AG, the second-largest sporting-goods maker, said this month that cotton was a cost threatening margins, and Wal-Mart Stores Inc., the world’s biggest retailer, paid more for garments including jeans.

via Cotton Rally Peaking as Farms Build Stocks on Record Crop (3) – Bloomberg.com.

Worst Texas Drought in 44 Years Eroding U.S. Wheat, Beef Supply – Bloomberg.com

The worst Texas drought in 44 years is damaging the state’s wheat crop and forcing ranchers to reduce cattle herds, as rising demand for U.S. food sends grain and meat prices higher.

Texas, the biggest U.S. cattle producer and second-largest winter-wheat grower, got just 4.7 inches (12 centimeters) of rain on average in the five months through February, the least for the period since 1967, State Climatologist John Nielsen- Gammon said. More than half the wheat fields and pastures were rated in poor or very poor condition on March 20.

Dry conditions extending to Oklahoma, Kansas and Colorado may cut crop yields in the U.S., the world’s largest exporter, as too much moisture threatens fields in North Dakota and in Canada. Wheat futures in Chicago are up 50 percent in the past year, after drought in Russia and floods in Australia hurt output and sent global food prices surging. Wholesale beef reached a record this week, and the U.S. cattle herd in January was the smallest since 1958.

via Worst Texas Drought in 44 Years Eroding U.S. Wheat, Beef Supply – Bloomberg.com.

Oil, Grains Will Top Commodity Gains in 2011, Barclays says – Bloomberg.com

Crude oil and grains will be the top commodity performers this year as investors bet on supply disruptions, a Barclays Capital survey showed.

The Standard & Poor’s GSCI Spot Index of 24 raw materials jumped 20 percent last year, led by cotton, silver and arabica coffee. The gauge is up 14 percent this year, with cotton, oil and silver climbing the most. Food prices rose to a record last month, according to the United Nations.

Twenty-eight percent of more than 100 investors polled this month said oil will gain the most this year, followed by corn and wheat, Barclays Capital said. Gold, which rose 30 percent last year, may be “losing its shine” and was ranked the worst performer for 2011 after natural gas, the bank said.

“There is a strong case now for taking money out of gold,” Kevin Norrish, a managing director at Barclays, said in London yesterday. “The real risks are more bad weather and higher food prices. The real risks are further geopolitical issues and higher oil prices. That’s why crude oil and grains are on top of the list.”

via Oil, Grains Will Top Commodity Gains in 2011, Barclays Says (1) – Bloomberg.com.

Current Issue PET Heats Up – Recycling Today magazine

Prices for polyester fiber typically climb in response to increasing cotton prices, as manufacturers seek alternatives to the material,

according to Ian Hardin, a textiles professor at the University of Georgia College of Family and Consumer Sciences, who is quoted in the Athens (Ga.) Banner-Herald. The article notes, “The world’s supply shrunk this year as top cotton-producing countries like China and Pakistan suffered devastating droughts. And India, another top producer, capped its cotton exports.”

The political turmoil in Egypt, a leading producer of cotton, has exacerbated the shortage.

Virgin and recycled PET prices are rising as a result.

via Recycling Today Media Group – Recycling Today magazine. : Current Issue PET Heats Up.

Libyan Airstrikes Drive Up Oil Prices – WSJ.com

“People are beginning to accept that $100-plus barrel oil may be here to stay now,” said Matt Zeman, chief market strategist at Kingswood Financial. “Right now, oil is a relatively safe bet given the geopolitical backdrop.”

Light, sweet crude for April delivery settled $1.26, or 1.3%, higher at $102.33 a barrel on the New York Mercantile Exchange after briefly trading above $103 earlier in the session. Brent crude on the ICE futures exchange for May delivery ended $1.03, or 0.9%, higher at $114.96 a barrel.

via Libyan Airstrikes Drive Up Oil Prices – WSJ.com.

Natural gas the next ‘green hope’ – The Globe and Mail

In North America, four factors promise to make natural gas a viable alternative to oil-based fuels.

First, revolutionary technology is unlocking enormous new supplies of shale gas. Second, unrest in North Africa and the Middle East has underlined U.S. oil-supply vulnerability. Third, there are clear environmental advantages to clean-burning natural gas (which emits 25 per cent less carbon dioxide than diesel). Fourth, there have been major advances in natural gas fuel technology.

via Natural gas the next ‘green hope’ – The Globe and Mail.

Record Copper Prices Prompt Switch To Aluminum – WSJ.com

Copper’s price surge this year is sparking a switch among manufacturers to another electricity-conducting metal: aluminum.

Makers of automobiles, air conditioners and industrial components are increasingly turning to the much cheaper metal to help offset rising cost pressures as the global economic recovery gains steam.

The difference between the prices of copper and aluminum is now enough to cover the costs of retooling some manufacturing processes and pay for the extra aluminum it takes to conduct the same amount of electricity as copper.

“There is a lot more engineering and development activity as these companies think about how to replace copper with aluminum,” said Charles Belbin, spokesman for Atlanta-based aluminum producer Novelis Inc., a unit of India’s Hindalco Industries Ltd.

Markets ripe for the switch include wiring for automobiles and buildings and evaporator and condensing coils used in commercial refrigerators.

via Record Copper Prices Prompt Switch To Aluminum – WSJ.com.