Brazil orange harvest down 15%

The Brazilian orange harvest will be completed soon. Started last July, it should finish at the end of January, with a declining production. A Jan. 8 report from the Center for Advanced Studies on Applied Economics (CEPEA) in Sao Paulo, which monitors Brazilian agriculture, put the 2012-13 orange crop at 364 million boxes, a 15 percent decline from the previous season. Despite the smaller crop, Brazilian farm prices fell.

The 2012-2013 marketing year, which ends on June 30, was marked by storage issues. Due to a great harvest in 2011-2012 and decreased demand on the international markets, storage spaces have not been released. Last year, the United States had blocked imports of oranges from Brazil, after finding traces of fungicide.

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Unexpected surge in the global iron ore price

At $80 in September 2012, the iron ore price was at its lowest for the past 3 years. In 3 months, it surged to a current price around $150 a tonne, a 80% increase! But will it last? As it is often the case, China is the reason for the soaring price of the metal required to produce steel.

Chinese steelmakers absorb 60% of the global iron ore and are doing all they can to put their hands on any available cargo. It is true that at this time of year, China needs to import more since Chinese iron refining factories are typically idling in winter. China also imports more at the beginning of the year in order not suffer from supply disruptions in case the iron ore mines in Australia and Brazil get flooded as it is the beginning of the rainy season in these two countries. However, the current rush exceeds the usual seasonal increase.

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Made in the USA: A Case for Reshoring

Reshoring Gives Economic Hope to Manufacturers

Offshore outsourcing has become one of the hot button political issues of the day. Especially in light of the U.S. economic downturn, there is a desperate need for more jobs for American workers, while at the same time companies are looking for ways to save money to keep themselves afloat. But now it looks as though reshoring might be an idea that makes sense for both sides, making reshoring a trend that just might stick.

The OffShore Outsourcing Controversy

Off-shoring in the manufacturing, customer service, and tech industries has been happening for some time now and opponents feel there are far more negatives than positives to offshore outsourcing (delays, hidden costs, quality control), while others see nothing but an effective strategy for keeping costs down.

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North American PP prices up 15 cents in January

A major price hike has hit the North American polypropylene market, sending prices up an average of 15 cents per pound since Jan. 1.
The January move is the eighth double-digit price swing to hit the North American PP market since January 2011. Increased volatility has been a concern of both buyers and producers of the material.

The recent increase again was tied in to a major fluctuation in the price of propylene monomer feedstock. Propylene supplies have grown tight because of a number of planed and unplanned outages in production throughout the U.S. Gulf Coast, including a lengthy shutdown at a plant operated by Petrologistics LLC in the Houston area.

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China: steel industry in need of restructuring

Worldwide steel mills have reached a total estimated supply capacity of 1.8 billion tons, vs. a steel global demand of only 1.5 billion tons. Like Europe, China produces too much steel and it must restructure its industry.

Over the last 10 years, when steel production increased by 20% in Europe, it went up by 534% in China which now produces nearly half the world’s steel vs. 18% in 2001. The growth of the Chinese steel industry corresponds to the rapid development of the construction and infrastructure industry. Since 2008, the sector has also been heavily subsidized by the Chinese public banks.

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UK: shale gas fracking gets green light

Ed Davey, the Secretary of State for Energy and Climate Change, has lifted restrictions on the controversial practice of shale gas hydraulic fracturing, giving a green light to drilling, in a country that consumes the most gas in the EU but where conventional gas reserves are dwindling.

From a net exporter, the UK has become an importer. Promises of shale gas from Cuadrilla Resources, a small British company, could increase energy independence. Some hope that domestic shale gas production could reduce prices by 2% to 4% from 2021. But there is a world between promises and reality.

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Lumber Reaches 6-Year High as Housing Rebound Erodes U.S. Supply

Lumber futures rose to a six-year high, extending a 2012 rally that is one of the biggest among commodities, on mounting signs of tighter supplies as U.S. home construction rebounds.

Lumber futures for January delivery gained 0.9 percent to settle at $358.20 per 1,000 board feet at 1:05 p.m. on the Chicago Mercantile Exchange, after touching $360.80, the highest since April 2006.

Prices have surged 37 percent this year, more than any of the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. Lumber has more than doubled since January 2009, when the recession and a collapse in the U.S. housing market left a glut of wood. Since then, output plunged in Russia while China boosted imports, limiting supplies in North America just as demand rebounds, according to International Wood Markets Group.

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Oversupply Driving Down Raw Materials Costs

So far this year, U.S. oil futures are down 13%, while cotton prices have fallen 19%. Sugar is 20% lower. Copper is off 21% from its February 2011 record.
A glut of raw materials from crude oil to copper to Palm Oil and cotton is driving down prices and dimming the outlook for commodities over the next few months.

Stores of crude in the developed world are forecast to end 2012 at a two-year high, thanks largely to a slowdown in world demand growth and an unexpected surge in production in the U.S. In China, copper stockpiles are at record levels as the country’s slowing economy limits use of the metal. Cotton bales held in warehouses are predicted to reach an all-time high next year.

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Copper Settles at Seven-Week High

Copper prices shot to their highest settlement in seven weeks as a batch of better-than-expected economic data from China had traders betting the world’s top industrial-metal consumer was turning the corner.

The news was enough to push up copper and other base metals in thin trade. Copper for March delivery, the most actively traded contract, rose 4.30 cents, or 1.2%, to settle at $3.7060 a pound on the Comex division of the New York Mercantile Exchange on Monday. This was the highest settlement since $3.7500 a pound set Oct. 18.

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Declining cotton production will lead to higher prices in 2013-14

“Global cotton production will decrease by 11 percent to 23.2 million tons (106.56 million bales) in 2013-14 due to lower cotton prices and increased attractiveness of competing crops”, says the International Cotton Advisory Committee (ICAC) in its latest market outlook published this week.

Cotton values have fallen by two-thirds from their all-time highs reached in March 2011, depressed by the run-up in inventories encouraged by higher values. The prospect of a dip in cotton production follows assessments by US Department of Agriculture officials of the implications of low prices working their way through to southern hemisphere growers, in countries such as Australia and Brazil.

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