India, the world's second-biggest wheat consumer, won't import the grain this year as purchases from domestic farmers reach a record, likely pressuring global prices of the commodity.
``There's no question of importing this year,'' Agriculture Minister Sharad Pawar told reporters today in New Delhi. Imports totaled 1.8 million tons in 2007.
Wheat has slumped 41 percent from its February record amid prospects of bigger harvests in producing nations. That's forced private suppliers such as Cargill Inc. to shun auctions in India, enabling the government to make record purchases since harvesting began April 1, Food Corp. of India. Chairman Alok Sinha said.
Food Corp. of India, the nation's biggest buyer of grains, may have 21 million tons in reserves on July 1, enough to meet demand for more than 20 months, Sinha said last week. The state- run company bought 18 million tons since April 1, double from a year earlier, the government said May 9. The company only bought 11.1 million tons of wheat last year.
Wheat futures for July delivery fell 2.1 percent to $8.045 a bushel in Chicago on May 9 after the U.S. government said world output of the grain will rise to a record, rebuilding stockpiles that are forecast to fall to a 30-year low.
The grain has rallied 71 percent in the past year, reaching a record $13.495 a bushel on Feb. 27, as world inventories were forecast to drop to 110 million tons on May 31, the lowest level since 1978. Production for the year that begins June 1 will rise 8.2 percent to a record 656 million metric tons, boosting global reserves before next year's harvest by 13 percent, the U.S. Department of Agriculture said May 9.
India's wheat production, second only to that of China, may climb to a record 76.8 million tons in the year ending June, up 1 million tons from last year, according to the government.
Separately, India does not plan to ban futures trading in more agricultural commodities, Pawar said. The government last week banned trading in soybean oil, potatoes, chick peas and natural rubber to cool the fastest inflation since 2005.
The government, which buys grains at guaranteed prices from farmers to sell to the poor at subsidized rates, needs at least 25 million tons of rice and 12 million tons of wheat annually.
Monday, May 12, 2008
India Factory Output Rises at Slowest Pace Since 2002
India's industrial production grew at the slowest pace since 2002 as borrowing costs at a six-year high discouraged consumers from buying cars, motorcycles and other goods.
Production at factories, utilities and mines rose 3 percent in March from a year earlier after gaining 8.6 percent in February, the statistics office said in New Delhi today. The increase was the smallest since February 2002. Economists surveyed expected a 5.8 percent increase.
Output is likely to be moderate this year as the fastest price gains in more than three years make it difficult for the central bank cut interest rates to stimulate demand. Sales at Maruti Suzuki India Ltd., the maker of half the cars sold in India, fell for the first time in more than two years in March.
``Industry is facing headwinds from tight monetary conditions, high raw material costs and weakening foreign demand,'' said Sonal Varma, a Mumbai-based economist at Lehman Brothers Inc. ``There is unlikely to be much scope to cut policy rates in 2008 to boost domestic demand.''
The Reserve Bank of India last month twice raised the proportion of deposits that lenders must set aside as reserves to prevent money supply in the system from adding to inflation. The ratio is now at a seven-year high of 8.25 percent. The bank wants to cool inflation, which is currently running at the fastest pace in more than three years.
Six-Year High
Borrowing costs near a six-year high are discouraging spending by consumers, who rely on loans to buy cars and motorbikes. Car sales rose 12 percent in the fiscal year, slower than the 22 percent gain in the previous period.
Sales at Bajaj Auto declined 10 percent in March and Maruti Suzuki said it sold fewer vehicles last month than last year.
``Higher interest rates have significantly impacted the businesses dependent on consumer loans,'' said Sunil Kant Munjal, Managing Director of Hero Group, which owns Hero Honda Motors Ltd., India's biggest motorcycle maker. ``There is a need for rates to come down.''
Manufacturing, which accounts for about 80 percent of India's industrial production, gained 2.9 percent in March from a year ago, according to today's report. Electricity output rose 3.7 percent and mining grew 3.8 percent. Production grew 8.1 percent in the year ended March 31.
``Given the current situation of high inflationary pressures, we do not expect interest rates to come down and consumer spending, may therefore, remain subdued during the next six months,'' said Kaushal Sampat, an analyst at Dun & Bradstreet.
18 Percent Decline
Concern that growth will slow, hurting profits, have contributed to 18 percent decline in the Bombay Stock Exchange's Sensitive Index, or Sensex, this year.
Still, Finance Minister Palaniappan Chidambaram's Feb. 29 budget announcement to reduce the tax burden on individuals and the proposed higher salaries for 4 million government employees may help accelerate consumption and spur industrial growth, economists said.
Chidambaram raised the income tax exemption limit to 150,000 rupees ($3,626) from 110,000 rupees, leaving more money in the hands of citizens. Later, on March 24 a government-appointed panel recommended higher salaries for workers, that may cost the government 79.75 billion rupees in the current fiscal. The government is yet to decide on raising salaries.
``The budget proposals of cutting excise duties on several items and raising the threshold on taxable income could boost consumer spending,'' Shashank Bhide, an economist with the New Delhi-based National Council for Applied Economic Research said.
Production at factories, utilities and mines rose 3 percent in March from a year earlier after gaining 8.6 percent in February, the statistics office said in New Delhi today. The increase was the smallest since February 2002. Economists surveyed expected a 5.8 percent increase.
Output is likely to be moderate this year as the fastest price gains in more than three years make it difficult for the central bank cut interest rates to stimulate demand. Sales at Maruti Suzuki India Ltd., the maker of half the cars sold in India, fell for the first time in more than two years in March.
``Industry is facing headwinds from tight monetary conditions, high raw material costs and weakening foreign demand,'' said Sonal Varma, a Mumbai-based economist at Lehman Brothers Inc. ``There is unlikely to be much scope to cut policy rates in 2008 to boost domestic demand.''
The Reserve Bank of India last month twice raised the proportion of deposits that lenders must set aside as reserves to prevent money supply in the system from adding to inflation. The ratio is now at a seven-year high of 8.25 percent. The bank wants to cool inflation, which is currently running at the fastest pace in more than three years.
Six-Year High
Borrowing costs near a six-year high are discouraging spending by consumers, who rely on loans to buy cars and motorbikes. Car sales rose 12 percent in the fiscal year, slower than the 22 percent gain in the previous period.
Sales at Bajaj Auto declined 10 percent in March and Maruti Suzuki said it sold fewer vehicles last month than last year.
``Higher interest rates have significantly impacted the businesses dependent on consumer loans,'' said Sunil Kant Munjal, Managing Director of Hero Group, which owns Hero Honda Motors Ltd., India's biggest motorcycle maker. ``There is a need for rates to come down.''
Manufacturing, which accounts for about 80 percent of India's industrial production, gained 2.9 percent in March from a year ago, according to today's report. Electricity output rose 3.7 percent and mining grew 3.8 percent. Production grew 8.1 percent in the year ended March 31.
``Given the current situation of high inflationary pressures, we do not expect interest rates to come down and consumer spending, may therefore, remain subdued during the next six months,'' said Kaushal Sampat, an analyst at Dun & Bradstreet.
18 Percent Decline
Concern that growth will slow, hurting profits, have contributed to 18 percent decline in the Bombay Stock Exchange's Sensitive Index, or Sensex, this year.
Still, Finance Minister Palaniappan Chidambaram's Feb. 29 budget announcement to reduce the tax burden on individuals and the proposed higher salaries for 4 million government employees may help accelerate consumption and spur industrial growth, economists said.
Chidambaram raised the income tax exemption limit to 150,000 rupees ($3,626) from 110,000 rupees, leaving more money in the hands of citizens. Later, on March 24 a government-appointed panel recommended higher salaries for workers, that may cost the government 79.75 billion rupees in the current fiscal. The government is yet to decide on raising salaries.
``The budget proposals of cutting excise duties on several items and raising the threshold on taxable income could boost consumer spending,'' Shashank Bhide, an economist with the New Delhi-based National Council for Applied Economic Research said.
India Cheapest BRIC Market, May Get Cheaper on Materials Costs
Investors are punishing stocks in India more than in any of the other largest emerging markets as government measures to curb inflation cut profits at companies from Steel Authority of India Ltd. to Grasim Industries Ltd.
Steel Authority, India's second-largest producer of the metal, is valued at 9 times projected earnings, 41 percent less than at the start of 2008. The ratio for Grasim, the nation's third-biggest cement maker, dropped 32 percent to 8.5. Price-to- earnings for the entire Indian market slumped 33 percent as foreign investors turned net sellers for the first time since at least 2000, more than in Brazil, Russia and China, where they fell 10 percent to 31 percent, data compiled by Bloomberg show.
Investors are showing less faith in India -- even after the benchmark Sensitive Index jumped 13 percent from its March low -- because companies produce fewer commodities than Russia and Brazil, the nation's gross domestic product is growing slower than China's and a scarcity of coal, oil and iron ore drove inflation to a three-year high.
``I'm just not finding a compelling reason to be in India,'' said Uri Landesman, who oversees $5.5 billion as head of global growth and international equities at ING Groep NV's asset management unit in New York. ``With little natural resources given their population, inflation might be a problem and the government might end up quashing some of the GDP growth.''
India is the only so-called BRIC market where Landesman, 46, isn't invested after he sold the last of his Indian stocks at the start of the month. He declined to name them. BRIC is an acronym coined by Goldman Sachs Group Inc. in November 2001 to encompass four emerging markets it predicted would join the U.S. and Japan as the world's biggest economies by 2050.
Dumping Shares
India is also the only BRIC nation where economic growth is forecast to slow for a second consecutive year in 2008, according to the Washington-based International Monetary Fund.
Overseas fund managers pulled a net $3.03 billion out of Indian equities in the first three months of the year, Bloomberg data show. That's the first time foreigners have been net sellers on a quarterly basis since the data were first compiled in 2000.
``There are no triggers really for the markets to move up,'' said Mahesh Patil, who helps manage $8.8 billion at Birla Sun Life Asset Management in Mumbai.
The declines have made stocks too cheap for some investors to pass up. Prudential ICICI Asset Management Co., India's biggest money manager, and Merrill Lynch & Co.'s local management unit are among those betting on India's plan to spend $1 trillion this decade on roads, railways and airports.
Six-Year Streak
``We remain very positive,'' said Michael Konstantinov, Frankfurt-based chief investment officer for emerging market equities at RCM, a division of Allianz Global Investors, which oversees $435 billion. ``I'm looking for the right time to increase our holdings.''
UBS AG, the top-rated research firm for Asian equities in Asiamoney magazine's 2007 broker poll, is more skeptical. The Zurich-based investment bank predicted last month that rising prices will cause India's central bank to tighten monetary policy, which will curtail earnings growth and end six years of stock gains that lifted the 30-company Sensex 522 percent.
``India's probably going to remain out of favor,'' said Geoff Lewis, the Hong Kong-based head of investment services at JF Asset Management Ltd., which oversees $110 billion. ``It's not the time to be putting more money in.''
Lowest Among BRICs
Indian shares are valued at 10.9 times analysts' estimated 2008 earnings, based on the median of 573 companies analyzed by Bloomberg. That's the lowest among the four BRIC markets. Makers of steel, cement and other materials have the biggest discounts, with a median price-earnings ratio of 8.
Prime Minister Manmohan Singh's government last month asked companies to consider sacrificing some profits to help contain inflation, which doubled in the past four months. Wholesale prices increased 7.61 percent in the week ended April 26 from a year ago, the fastest since November 2004, India said last week.
Mumbai-based Tata Steel Ltd. and JSW Steel Ltd., and New Delhi-based Steel Authority -- India's three biggest steelmakers -- cut prices for a second time since April after meeting with Singh last week. Higher costs may cut margins ``substantially,'' JSW Steel said. The industry agreed last month to pay three times more for coking coal and 65 percent more for iron ore.
India last week said it's also seeking to persuade cement makers to cut prices. Grasim on April 29 forecast that profit margins at its cement and yarn units will narrow this fiscal year because of higher raw-material costs.
Valuation Disparity
The 8.5 times estimated earnings investors pay for Grasim is the lowest since at least March 2002, compared with reported profits, Bloomberg data show. The stock lost 36 percent in 2008.
In contrast, valuations for Anhui Conch Cement Co., China's biggest maker of the construction material, dropped 11 percent in Hong Kong. The company, based in Wuhu City in eastern China's Anhui province, said last month first-quarter profit doubled because it was able to increase prices.
China, which has $1.68 trillion in foreign reserves, more than five times India's balance, has beaten out its South Asian rival on the purchases of over $10 billion in oil and gas assets from Nigeria, Kazakhstan and Canada in the past two years.
``The Chinese government just has their act together more than the Indian government does,'' Landesman said. ``I have no idea what I'm going to get from India.''
Steel Authority, India's second-largest producer of the metal, is valued at 9 times projected earnings, 41 percent less than at the start of 2008. The ratio for Grasim, the nation's third-biggest cement maker, dropped 32 percent to 8.5. Price-to- earnings for the entire Indian market slumped 33 percent as foreign investors turned net sellers for the first time since at least 2000, more than in Brazil, Russia and China, where they fell 10 percent to 31 percent, data compiled by Bloomberg show.
Investors are showing less faith in India -- even after the benchmark Sensitive Index jumped 13 percent from its March low -- because companies produce fewer commodities than Russia and Brazil, the nation's gross domestic product is growing slower than China's and a scarcity of coal, oil and iron ore drove inflation to a three-year high.
``I'm just not finding a compelling reason to be in India,'' said Uri Landesman, who oversees $5.5 billion as head of global growth and international equities at ING Groep NV's asset management unit in New York. ``With little natural resources given their population, inflation might be a problem and the government might end up quashing some of the GDP growth.''
India is the only so-called BRIC market where Landesman, 46, isn't invested after he sold the last of his Indian stocks at the start of the month. He declined to name them. BRIC is an acronym coined by Goldman Sachs Group Inc. in November 2001 to encompass four emerging markets it predicted would join the U.S. and Japan as the world's biggest economies by 2050.
Dumping Shares
India is also the only BRIC nation where economic growth is forecast to slow for a second consecutive year in 2008, according to the Washington-based International Monetary Fund.
Overseas fund managers pulled a net $3.03 billion out of Indian equities in the first three months of the year, Bloomberg data show. That's the first time foreigners have been net sellers on a quarterly basis since the data were first compiled in 2000.
``There are no triggers really for the markets to move up,'' said Mahesh Patil, who helps manage $8.8 billion at Birla Sun Life Asset Management in Mumbai.
The declines have made stocks too cheap for some investors to pass up. Prudential ICICI Asset Management Co., India's biggest money manager, and Merrill Lynch & Co.'s local management unit are among those betting on India's plan to spend $1 trillion this decade on roads, railways and airports.
Six-Year Streak
``We remain very positive,'' said Michael Konstantinov, Frankfurt-based chief investment officer for emerging market equities at RCM, a division of Allianz Global Investors, which oversees $435 billion. ``I'm looking for the right time to increase our holdings.''
UBS AG, the top-rated research firm for Asian equities in Asiamoney magazine's 2007 broker poll, is more skeptical. The Zurich-based investment bank predicted last month that rising prices will cause India's central bank to tighten monetary policy, which will curtail earnings growth and end six years of stock gains that lifted the 30-company Sensex 522 percent.
``India's probably going to remain out of favor,'' said Geoff Lewis, the Hong Kong-based head of investment services at JF Asset Management Ltd., which oversees $110 billion. ``It's not the time to be putting more money in.''
Lowest Among BRICs
Indian shares are valued at 10.9 times analysts' estimated 2008 earnings, based on the median of 573 companies analyzed by Bloomberg. That's the lowest among the four BRIC markets. Makers of steel, cement and other materials have the biggest discounts, with a median price-earnings ratio of 8.
Prime Minister Manmohan Singh's government last month asked companies to consider sacrificing some profits to help contain inflation, which doubled in the past four months. Wholesale prices increased 7.61 percent in the week ended April 26 from a year ago, the fastest since November 2004, India said last week.
Mumbai-based Tata Steel Ltd. and JSW Steel Ltd., and New Delhi-based Steel Authority -- India's three biggest steelmakers -- cut prices for a second time since April after meeting with Singh last week. Higher costs may cut margins ``substantially,'' JSW Steel said. The industry agreed last month to pay three times more for coking coal and 65 percent more for iron ore.
India last week said it's also seeking to persuade cement makers to cut prices. Grasim on April 29 forecast that profit margins at its cement and yarn units will narrow this fiscal year because of higher raw-material costs.
Valuation Disparity
The 8.5 times estimated earnings investors pay for Grasim is the lowest since at least March 2002, compared with reported profits, Bloomberg data show. The stock lost 36 percent in 2008.
In contrast, valuations for Anhui Conch Cement Co., China's biggest maker of the construction material, dropped 11 percent in Hong Kong. The company, based in Wuhu City in eastern China's Anhui province, said last month first-quarter profit doubled because it was able to increase prices.
China, which has $1.68 trillion in foreign reserves, more than five times India's balance, has beaten out its South Asian rival on the purchases of over $10 billion in oil and gas assets from Nigeria, Kazakhstan and Canada in the past two years.
``The Chinese government just has their act together more than the Indian government does,'' Landesman said. ``I have no idea what I'm going to get from India.''
MARKET PREDICTION
GLOBAL MARKETS ARE MIXED TODAY ...OILPRICE IS CREEPING UP ON THE CONCERN OF VENEZULA...AND CHINA ENTERING INTO DANGER INFLATION LEVEL.
GRADUALY,INFLATION IS HOVERING AROUND 7-8%.
INDIAN MARKET IS CORRECTED SIGNIFACANTLY AFTER TOUCHING NIFTY 5250 PSYCOLOGICAL LEVEL.
BELOW 5000 NIFTY COULD TOUCH 4920 LEVEL BUT FOR INTRADAY 5030 ONE CAN GO LONG WITH S L OF 5000.
IF MARKET DOES NOT SUSTAIN 5000 GO SHORT WITH S L OF 5050...
TOTAL OI IS IN MARKET 69 K CR AND PUT CAL RATIO IS 1.37.
CLOSER OF LONG PULLING DOWN MARKET. NITY LEVEL 4920-5000-5050-5100
BUY IN IT STOCK FROM 5030 LEVEL IF MARKET HOLD AND GO SHORT IN AUTO,BANKING,CONSTRUCTION IF MARKET DOES NOT SUSTAIN 5030 WITH S L OF 5050.
HAVE A NICE TRADING DAY.
-MR SAM
GRADUALY,INFLATION IS HOVERING AROUND 7-8%.
INDIAN MARKET IS CORRECTED SIGNIFACANTLY AFTER TOUCHING NIFTY 5250 PSYCOLOGICAL LEVEL.
BELOW 5000 NIFTY COULD TOUCH 4920 LEVEL BUT FOR INTRADAY 5030 ONE CAN GO LONG WITH S L OF 5000.
IF MARKET DOES NOT SUSTAIN 5000 GO SHORT WITH S L OF 5050...
TOTAL OI IS IN MARKET 69 K CR AND PUT CAL RATIO IS 1.37.
CLOSER OF LONG PULLING DOWN MARKET. NITY LEVEL 4920-5000-5050-5100
BUY IN IT STOCK FROM 5030 LEVEL IF MARKET HOLD AND GO SHORT IN AUTO,BANKING,CONSTRUCTION IF MARKET DOES NOT SUSTAIN 5030 WITH S L OF 5050.
HAVE A NICE TRADING DAY.
-MR SAM
Gas jumps above $3.67, oil passes $126 on Venezuela concerns
Oil rose above $126 a barrel for the first time Friday, bringing its advance this week to nearly $10, as investors questioned whether a possible confrontation between the U.S. and Venezuela could cut exports from the OPEC member. Gas prices, meanwhile, rose above an average $3.67 a gallon at the pump, following oil's recent path higher.
On Friday, The Wall Street Journal published a report that suggested closer ties between Venezuelan President Hugo Chavez and rebels attempting to overthrow Colombia's government. Chavez has been linked to Colombian rebels previously, but the paper reported it had reviewed computer files indicating concrete offers by Venezuela's leader to arm guerillas. That appears to heighten the chances that the U.S. could impose sanctions on one of its biggest oil suppliers.
"If we put on sanctions, I'm sure Chavez would threaten to cut off our oil supply," said Phil Flynn, an analyst at Alaron Trading Corp. "Obviously that would have a major impact on oil prices."
Light, sweet crude for June delivery vaulted to a new record of $126.25 on the New York Mercantile Exchange before retreating slightly to settle up $2.27 at a record $125.96. Oil futures set new records for the fifth straight day, and ended the week up $9.64, or 8.3 percent.
Even if Chavez cut oil shipments to the U.S., Venezuelan oil would still make its way to the U.S. via middle men, who would buy it from Venezuela and resell it to the U.S., Flynn said. But that new layer in the supply chain would bump up costs.
Oil prices also were boosted Friday by the dollar, which declined against the euro. The European Central Bank said it was unlikely to consider interest rate cuts to cool the strong euro against the slumping dollar. Investors often buy commodities such as oil as a hedge against inflation when the greenback falls. A weaker dollar also makes oil less expensive to overseas investors.
Many analysts believe the dollar's protracted decline has much to do with the doubling in oil prices since this time last year. Another school of thought thinks tight global supplies of oil, driven by growing demand in countries such as China, Brazil and India, is the primary factor driving oil higher.
Oil's surge is pushing retail gas prices higher. The national average price of a gallon of regular gas jumped 2.6 cents overnight to a record $3.671 a gallon according to a survey of stations by AAA and the Oil Price Information Service. The Energy Department expects prices to peak at a monthly average of $3.73 in June, though many analysts say national average prices could rise as high as $4. Consumers in many regions, including parts of California and Hawaii, are already paying that much.
Demand for diesel fuel is also growing worldwide, but supplies of distillates, which include diesel and heating oil, fell unexpectedly last week, the Energy Department said Wednesday. That's pushing U.S. diesel prices to record highs and inflating heating oil prices in the futures market; heating oil futures are often viewed as a proxy for diesel.
Heating oil for June delivery rose 12.62 cents to settle at $3.636 on the Nymex after earlier setting a trading record of $3.6524. At truck stops, retail diesel prices rose 1.8 cents overnight to a record national average of $4.269 a gallon,
Diesel is used to move most of the world's food, consumer and industrial goods via truck, ship and rail. Skyrocketing diesel prices are part of the reason food and consumer goods prices are so high.
In other Nymex trading Friday, June gasoline futures rose 6.34 cents to settle at a record $3.2012 a gallon after rising to its own record of $3.2038, and June natural gas futures rose 27.4 cents to settle at $11.537 per 1,000 cubic feet.
In London, June Brent crude futures rose $2.56 to settle at $125.40 a barrel on the ICE Futures Exchange.
Associated Press Writer Pablo Gorondi in Budapest and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.
On Friday, The Wall Street Journal published a report that suggested closer ties between Venezuelan President Hugo Chavez and rebels attempting to overthrow Colombia's government. Chavez has been linked to Colombian rebels previously, but the paper reported it had reviewed computer files indicating concrete offers by Venezuela's leader to arm guerillas. That appears to heighten the chances that the U.S. could impose sanctions on one of its biggest oil suppliers.
"If we put on sanctions, I'm sure Chavez would threaten to cut off our oil supply," said Phil Flynn, an analyst at Alaron Trading Corp. "Obviously that would have a major impact on oil prices."
Light, sweet crude for June delivery vaulted to a new record of $126.25 on the New York Mercantile Exchange before retreating slightly to settle up $2.27 at a record $125.96. Oil futures set new records for the fifth straight day, and ended the week up $9.64, or 8.3 percent.
Even if Chavez cut oil shipments to the U.S., Venezuelan oil would still make its way to the U.S. via middle men, who would buy it from Venezuela and resell it to the U.S., Flynn said. But that new layer in the supply chain would bump up costs.
Oil prices also were boosted Friday by the dollar, which declined against the euro. The European Central Bank said it was unlikely to consider interest rate cuts to cool the strong euro against the slumping dollar. Investors often buy commodities such as oil as a hedge against inflation when the greenback falls. A weaker dollar also makes oil less expensive to overseas investors.
Many analysts believe the dollar's protracted decline has much to do with the doubling in oil prices since this time last year. Another school of thought thinks tight global supplies of oil, driven by growing demand in countries such as China, Brazil and India, is the primary factor driving oil higher.
Oil's surge is pushing retail gas prices higher. The national average price of a gallon of regular gas jumped 2.6 cents overnight to a record $3.671 a gallon according to a survey of stations by AAA and the Oil Price Information Service. The Energy Department expects prices to peak at a monthly average of $3.73 in June, though many analysts say national average prices could rise as high as $4. Consumers in many regions, including parts of California and Hawaii, are already paying that much.
Demand for diesel fuel is also growing worldwide, but supplies of distillates, which include diesel and heating oil, fell unexpectedly last week, the Energy Department said Wednesday. That's pushing U.S. diesel prices to record highs and inflating heating oil prices in the futures market; heating oil futures are often viewed as a proxy for diesel.
Heating oil for June delivery rose 12.62 cents to settle at $3.636 on the Nymex after earlier setting a trading record of $3.6524. At truck stops, retail diesel prices rose 1.8 cents overnight to a record national average of $4.269 a gallon,
Diesel is used to move most of the world's food, consumer and industrial goods via truck, ship and rail. Skyrocketing diesel prices are part of the reason food and consumer goods prices are so high.
In other Nymex trading Friday, June gasoline futures rose 6.34 cents to settle at a record $3.2012 a gallon after rising to its own record of $3.2038, and June natural gas futures rose 27.4 cents to settle at $11.537 per 1,000 cubic feet.
In London, June Brent crude futures rose $2.56 to settle at $125.40 a barrel on the ICE Futures Exchange.
Associated Press Writer Pablo Gorondi in Budapest and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.
China Inflation Quickens; Close to Fastest Since 1996
China's inflation accelerated to close to the fastest pace in 11 years, underscoring the government's challenge of taming prices without triggering an economic slump as export demand fades.
Consumer prices rose 8.5 percent in April from a year earlier, the National Bureau of Statistics said today, after gaining 8.3 percent in March. That compared with the 8.2 percent median estimate of 22 economists surveyed by Bloomberg News.
Food prices climbed 22.1 percent and rising commodity, energy and labor costs are adding pressure to inflation. Export growth cooled in April as economies around the world weakened, Ministry of Commerce data showed last week.
``Price pressures are still very big,'' said Isaac Meng, senior economist at BNP Paribas SA in Beijing. ``Higher inflation makes people's daily lives harder and weaker growth threatens jobs -- both are important social issues and the government can't ignore either.''
The yuan traded at 6.9832 versus the dollar as of 10.20 a.m. in Shanghai from 6.9833 before the data was released.
Consumer prices rose 8.7 percent in February, the biggest gain since 1996.
Central bank Governor Zhou Xiaochuan said May 5 that there's a possibility interest rates will rise. The benchmark one-year lending rate is at a nine-year high of 7.47 percent after six increases last year.
`Number One Issue'
China's economy, the world's fourth largest, expanded 10.6 percent in the first quarter from a year earlier, down from 11.9 percent for all of 2007, as exports cooled and blizzards closed factories.
``Inflation is China's number one economic issue,'' said Donald Straszheim, vice chairman of Newport Beach, California- based Roth Capital Partners.
The jump in food prices was more than the 21.4 percent increase in March. Non-food prices climbed 1.8 percent, an unchanged pace.
Accelerating inflation keeps pressure on the government to allow faster appreciation of the yuan to cool import costs and rein in the trade surplus that is pumping money into the economy.
Gains by the currency have slowed since the start of April. The government is concerned that interest rates higher than in the U.S. and the strengthening yuan are attracting overseas money to an economy flooded with cash.
First-Quarter Gains
The yuan has climbed about 0.4 percent versus the dollar since March 31 after a 4.2 increase in the first quarter that was the biggest jump since the end of a fixed exchange rate in 2005.
International Monetary Fund Managing Director Dominique Strauss-Kahn said last week that China's currency appreciation needs ``to go further, and faster.''
China's central bank has ordered lenders to set aside more deposits as reserves three times this year, pushing the ratio to a record 16 percent. It also sells bills to drain cash from the financial system.
The People's Bank of China will raise interest rates at least once this year, according to 11 of 15 economists surveyed by Bloomberg News last month.
The government is targeting inflation of 4.8 percent this year, the same as in 2007.
The average wage in Chinese urban areas climbed 18.3 percent in the first quarter from a year earlier to 6,524 yuan ($935). Producer prices jumped 8.1 percent in April from a year earlier, the fastest pace since November 2004.
Consumer prices rose 8.5 percent in April from a year earlier, the National Bureau of Statistics said today, after gaining 8.3 percent in March. That compared with the 8.2 percent median estimate of 22 economists surveyed by Bloomberg News.
Food prices climbed 22.1 percent and rising commodity, energy and labor costs are adding pressure to inflation. Export growth cooled in April as economies around the world weakened, Ministry of Commerce data showed last week.
``Price pressures are still very big,'' said Isaac Meng, senior economist at BNP Paribas SA in Beijing. ``Higher inflation makes people's daily lives harder and weaker growth threatens jobs -- both are important social issues and the government can't ignore either.''
The yuan traded at 6.9832 versus the dollar as of 10.20 a.m. in Shanghai from 6.9833 before the data was released.
Consumer prices rose 8.7 percent in February, the biggest gain since 1996.
Central bank Governor Zhou Xiaochuan said May 5 that there's a possibility interest rates will rise. The benchmark one-year lending rate is at a nine-year high of 7.47 percent after six increases last year.
`Number One Issue'
China's economy, the world's fourth largest, expanded 10.6 percent in the first quarter from a year earlier, down from 11.9 percent for all of 2007, as exports cooled and blizzards closed factories.
``Inflation is China's number one economic issue,'' said Donald Straszheim, vice chairman of Newport Beach, California- based Roth Capital Partners.
The jump in food prices was more than the 21.4 percent increase in March. Non-food prices climbed 1.8 percent, an unchanged pace.
Accelerating inflation keeps pressure on the government to allow faster appreciation of the yuan to cool import costs and rein in the trade surplus that is pumping money into the economy.
Gains by the currency have slowed since the start of April. The government is concerned that interest rates higher than in the U.S. and the strengthening yuan are attracting overseas money to an economy flooded with cash.
First-Quarter Gains
The yuan has climbed about 0.4 percent versus the dollar since March 31 after a 4.2 increase in the first quarter that was the biggest jump since the end of a fixed exchange rate in 2005.
International Monetary Fund Managing Director Dominique Strauss-Kahn said last week that China's currency appreciation needs ``to go further, and faster.''
China's central bank has ordered lenders to set aside more deposits as reserves three times this year, pushing the ratio to a record 16 percent. It also sells bills to drain cash from the financial system.
The People's Bank of China will raise interest rates at least once this year, according to 11 of 15 economists surveyed by Bloomberg News last month.
The government is targeting inflation of 4.8 percent this year, the same as in 2007.
The average wage in Chinese urban areas climbed 18.3 percent in the first quarter from a year earlier to 6,524 yuan ($935). Producer prices jumped 8.1 percent in April from a year earlier, the fastest pace since November 2004.
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