Sept. 1 (Bloomberg) -- Sugar output from Brazil’s Center South, the world’s biggest producing region, may be less than estimated earlier this year because of heavy rainfall, adding to signs of a global shortfall.
Production may be less than the 31.2 million metric tons estimated in April, Eduardo Leao de Sousa, executive director of industry association Unica, said today in an interview, without giving a precise forecast. The rains had cut yields, Leao de Sousa said in New Delhi, where he’s attending a conference.
Raw sugar has surged to the highest in 28 years on production shortfalls in Brazil and India, and increased competition for imports. The jump in price, which has made sugar the best-performing commodity over the past year, has sparked hoarding in India, the biggest user and second-largest grower.
“There’s still room for a further increase in prices if Indian demand remains strong,” said Plinio Mario Nastari, president of Datagro Ltd., a Sao Paulo-based sugar-research company. “Brazil’s capacity to export sugar is limited.”
Raw sugar for October on ICE Futures U.S. rose as much as 4.1 percent yesterday to 24.48 cents, the highest since February 1981. The commodity is the best performer on the UBS Bloomberg Constant Maturity Commodity Index over the past 12 months.
‘Heavy Rains’
“Because of heavy rains, sucrose content has suffered,” Leao de Sousa said. The harvesting season in Center South, which comprises eight states and makes more than 80 percent of Brazil’s sugar, runs from April to November, when dry weather usually boosts yields and eases work in the fields.
In April, Unica said the region would reap a record 550 million tons of cane this year, increasing sugar production by 17 percent to 31.2 million tons. Production climbed to 15.3 million tons in the year through Aug. 16, up from 12.4 million tons in the year-earlier period, Unica said on Aug. 25.
Jonathan Kingsman, chairman of sugar broker Kingsman SA and backer of the Indian conference, said yesterday that Brazil has been “hit by bad weather” and “yields are quite low.” Separately, Newedge USA LLC Senior Vice President Michael McDougall forecast that raw sugar may reach 25 cents a pound.
World demand for sugar may exceed supply by 5 million tons in 2009-2010 after a record deficit of 7.8 million tons in the current year, Peter Baron, executive director of the International Sugar Organization, said on Aug. 16.
India’s weakest monsoon in at least seven years has caused drought in 278 of the nation’s 626 districts this year, damaging crops including sugar cane. Authorities are raiding hoarders to boost the availability of sugar, edible oils and lentils during the August-to-December festival season.
Tuesday, September 01, 2009
Shanghai Index May Drop 25% on Economy, Xie Says
Sept. 1 (Bloomberg) -- The Shanghai Composite Index, the world’s worst performer in August, may fall another 25 percent as China’s economic recovery isn’t “sustainable,” former Morgan Stanley Asian economist Andy Xie said.
The measure plunged 6.7 percent to 2,667.75 yesterday, the most since June 2008, and entered a bear market on concern a slower lending growth may derail a rebound in the world’s third- largest economy. Xie said the index “should be 2000 or less.” The gauge rose 0.6 percent to 2,683.72 today.
“The market is in deep bubble territory,” Xie, 49, who correctly predicted in April 2007 that China’s equities would tumble, said in an interview with Bloomberg Television.
China’s retreat sent the MSCI World Index of 23 developed nations down 0.8 percent, while MSCI’s emerging-market index lost 1.5 percent, the biggest drop in two weeks. The Bank of New York Mellon China ADR Index, tracking American depositary receipts of Chinese shares, lost 2.3 percent, led by commodity producers.
The Shanghai gauge slumped 22 percent in August, the biggest decline among 89 benchmark indexes tracked by Bloomberg, as banks reined in lending to avert asset bubbles and policy makers advised industries such as steel and cement to curb overcapacity. The decline stopped a rally that had sent the measure up 103 percent from a November low on prospects the government’s 4 trillion yuan ($586 billion) stimulus program and a record amount of new credit would ensure the economy grows at least 8 percent this year.
Strong Numbers
“The local market bears are convinced that tightening is already underway,” said Howard Wang, head of the Greater China team at JF Asset Management, which oversees $50 billion. Only “a very strong set of macro numbers in August” or “stronger statements from central authorities” would change this trend, Wang said.
Still, Chinese stocks are trading at the steepest discount in the world compared with analysts’ price targets after the month-long slump. The gap of 13 percent below analysts’ combined price targets is the largest among the world’s 10 largest markets, data compiled by Bloomberg show.
Equities in China remain “a bright spot” among global stocks because of the nation’s strong growth potential, Goldman Sachs Group Inc. said yesterday.
‘Exit Strategy’
“We think the market concerns about a near-term ‘exit strategy’ appear premature as the government remains pro- growth,” Thomas Deng and Kinger Lau, analysts at Goldman Sachs, wrote in a research note.
Goldman Sachs has boosted its growth forecasts for China’s economy to 9.4 percent this year from an earlier estimate of 8.3 percent, it said in the note. Gross domestic product may increase 11.9 percent in 2010, higher than an earlier estimate of 10.9 percent, it added.
The People’s Bank of China will also have “very limited room” to raise interest rates by the end of this year, Deng and Lau wrote.
“The A share market is undergoing a correction rather than a bursting of the bubble,” said Richard Gao, who helps manage $2.8 billion at Matthews International Capital Management LCC in San Francisco. “Short term trading will be very volatile but we believe a strong economic recovery is underway in China and remain quite positive on the long-term growth potential.”
The government will maintain its fiscal and monetary policies because the economy faces many “uncertainties,” Premier Wen Jiabao said this month. Economic growth will slow in the fourth quarter as exports remain mired in a slump, Xie said.
“The recovery is not sustainable,” Xie, who resigned as Morgan Stanley’s chief economist in Asia in 2006 and now works as an independent economist, said in the interview yesterday from Shanghai.
Expectations
“This is a short-term negative,” said E. William Stone, who oversees $101 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “Expectations have been too high that China would be a driver of everything. Much has to come out of the expectations balloon.”
At least 150 stocks on the 898-member Shanghai index dropped by the daily 10 percent limit yesterday. Industrial Bank Co. and Aluminum Corp. of China Ltd. tumbled by the permitted cap after Caijing magazine reported new loan growth this month may be almost half that of July. Lower profits dragged Baoshan Iron & Steel Co., the nation’s biggest steelmaker, and China Southern Airlines Co. down at least 7 percent.
The Shanghai index trades at 29.56 times reported earnings, according to Bloomberg data. The MSCI Emerging Markets Index, a 22-country benchmark, trades for 19.22 times profit.
New Loans Drop
China may have 200 billion yuan of new loans in August, the Beijing-based Caijing reported today on its Web site. That compares with 7.4 trillion yuan for the first half of 2009 and 355.9 billion yuan in July alone. The government plans to tighten capital requirements for financial institutions, three people familiar with the matter said this month.
An estimated 1.16 trillion yuan of loans were invested in stocks in the first five months of this year, China Business News reported June 29, citing Wei Jianing, a deputy director at the Development and Research Center under the State Council.
“The government is now pulling the plug on liquidity,” said Xie, who is a guest columnist for Caijing. “Hopefully, it’s not too late.”
The measure plunged 6.7 percent to 2,667.75 yesterday, the most since June 2008, and entered a bear market on concern a slower lending growth may derail a rebound in the world’s third- largest economy. Xie said the index “should be 2000 or less.” The gauge rose 0.6 percent to 2,683.72 today.
“The market is in deep bubble territory,” Xie, 49, who correctly predicted in April 2007 that China’s equities would tumble, said in an interview with Bloomberg Television.
China’s retreat sent the MSCI World Index of 23 developed nations down 0.8 percent, while MSCI’s emerging-market index lost 1.5 percent, the biggest drop in two weeks. The Bank of New York Mellon China ADR Index, tracking American depositary receipts of Chinese shares, lost 2.3 percent, led by commodity producers.
The Shanghai gauge slumped 22 percent in August, the biggest decline among 89 benchmark indexes tracked by Bloomberg, as banks reined in lending to avert asset bubbles and policy makers advised industries such as steel and cement to curb overcapacity. The decline stopped a rally that had sent the measure up 103 percent from a November low on prospects the government’s 4 trillion yuan ($586 billion) stimulus program and a record amount of new credit would ensure the economy grows at least 8 percent this year.
Strong Numbers
“The local market bears are convinced that tightening is already underway,” said Howard Wang, head of the Greater China team at JF Asset Management, which oversees $50 billion. Only “a very strong set of macro numbers in August” or “stronger statements from central authorities” would change this trend, Wang said.
Still, Chinese stocks are trading at the steepest discount in the world compared with analysts’ price targets after the month-long slump. The gap of 13 percent below analysts’ combined price targets is the largest among the world’s 10 largest markets, data compiled by Bloomberg show.
Equities in China remain “a bright spot” among global stocks because of the nation’s strong growth potential, Goldman Sachs Group Inc. said yesterday.
‘Exit Strategy’
“We think the market concerns about a near-term ‘exit strategy’ appear premature as the government remains pro- growth,” Thomas Deng and Kinger Lau, analysts at Goldman Sachs, wrote in a research note.
Goldman Sachs has boosted its growth forecasts for China’s economy to 9.4 percent this year from an earlier estimate of 8.3 percent, it said in the note. Gross domestic product may increase 11.9 percent in 2010, higher than an earlier estimate of 10.9 percent, it added.
The People’s Bank of China will also have “very limited room” to raise interest rates by the end of this year, Deng and Lau wrote.
“The A share market is undergoing a correction rather than a bursting of the bubble,” said Richard Gao, who helps manage $2.8 billion at Matthews International Capital Management LCC in San Francisco. “Short term trading will be very volatile but we believe a strong economic recovery is underway in China and remain quite positive on the long-term growth potential.”
The government will maintain its fiscal and monetary policies because the economy faces many “uncertainties,” Premier Wen Jiabao said this month. Economic growth will slow in the fourth quarter as exports remain mired in a slump, Xie said.
“The recovery is not sustainable,” Xie, who resigned as Morgan Stanley’s chief economist in Asia in 2006 and now works as an independent economist, said in the interview yesterday from Shanghai.
Expectations
“This is a short-term negative,” said E. William Stone, who oversees $101 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “Expectations have been too high that China would be a driver of everything. Much has to come out of the expectations balloon.”
At least 150 stocks on the 898-member Shanghai index dropped by the daily 10 percent limit yesterday. Industrial Bank Co. and Aluminum Corp. of China Ltd. tumbled by the permitted cap after Caijing magazine reported new loan growth this month may be almost half that of July. Lower profits dragged Baoshan Iron & Steel Co., the nation’s biggest steelmaker, and China Southern Airlines Co. down at least 7 percent.
The Shanghai index trades at 29.56 times reported earnings, according to Bloomberg data. The MSCI Emerging Markets Index, a 22-country benchmark, trades for 19.22 times profit.
New Loans Drop
China may have 200 billion yuan of new loans in August, the Beijing-based Caijing reported today on its Web site. That compares with 7.4 trillion yuan for the first half of 2009 and 355.9 billion yuan in July alone. The government plans to tighten capital requirements for financial institutions, three people familiar with the matter said this month.
An estimated 1.16 trillion yuan of loans were invested in stocks in the first five months of this year, China Business News reported June 29, citing Wei Jianing, a deputy director at the Development and Research Center under the State Council.
“The government is now pulling the plug on liquidity,” said Xie, who is a guest columnist for Caijing. “Hopefully, it’s not too late.”
India Exports Fall 28.4%, Tenth Monthly Drop in a Row
Sept. 1 (Bloomberg) -- India’s exports declined for a tenth straight month in July as the global recession eroded demand in the nation’s biggest overseas markets in the U.S. and Europe.
Merchandise shipments dropped 28.4 percent from a year earlier to $13.6 billion after sliding 27.7 percent in June, the government said in New Delhi today. Exports plunged 33.26 percent in March, the biggest fall on record, according to Bloomberg data going back to April 1995.
India last week extended tax refunds to exporters and announced incentives to explore new markets in Africa and Latin America. Trade Minister Anand Sharma last month signed free- trade accords with South Korea and the 10-member Association of Southeast Asian Nations as India tries to reduce dependence on the U.S. and Europe, which account for 40 percent of exports.
The government’s efforts are “aimed at arresting the exports decline and protect employment,” said Rohini Malkani, an economist at Citigroup Inc. Shipments are likely to decline by 10 percent to $158 billion in the current fiscal year to March 2010, Malkani estimates.
The global recession hit Asia hard as the region is almost twice as reliant on exports as the rest of the world. South Korea’s exports fell 20.6 percent in July, the tenth consecutive monthly decline, a report showed today. Japan’s exports tumbled 36.5 percent.
Global Trade
The continued risk of sluggish demand prompted the World Trade Organisation to lower its forecast for trade in goods for 2009 in July. The trade arbiter now expects a drop of 10 percent after forecasting a 9 percent contraction in March.
India has been hit by the global slump as it becomes integrated into the world economy. The volume of trade rose to about 35 percent of gross domestic product in the year ended March 31 from 21 percent in 1997-98, the year of the Asian financial crisis, according to the central bank.
Flagging exports are forcing jewelers, textiles and leather makers to scale back production and cut jobs. Exporters cut about 500,000 jobs in 10 industries, Trade Minister Sharma said on July 8.
Sharma, while unveiling the foreign trade policy for five years to 2014, last week said he expects the nation to export goods worth $168 billion in the fiscal year to March 2010 and $200 billion the following year. The South Asian nation may return to an annual average export growth of 25 percent in the three years to 2014 as global demand picks up, he predicts
Imports fell 37.1 percent in July from a year earlier to $19.6 billion, according to today’s report. Oil imports declined 55.5 percent to $5.6 billion and non-oil imports fell 24.5 percent to $13.9 billion, the government said in a statement.
India’s exports in the first four months of the fiscal year to July 31 slumped 34.1 percent to $49.6 billion, while imports slid 32.5 percent to $78.5 billion, today’s report showed.
Merchandise shipments dropped 28.4 percent from a year earlier to $13.6 billion after sliding 27.7 percent in June, the government said in New Delhi today. Exports plunged 33.26 percent in March, the biggest fall on record, according to Bloomberg data going back to April 1995.
India last week extended tax refunds to exporters and announced incentives to explore new markets in Africa and Latin America. Trade Minister Anand Sharma last month signed free- trade accords with South Korea and the 10-member Association of Southeast Asian Nations as India tries to reduce dependence on the U.S. and Europe, which account for 40 percent of exports.
The government’s efforts are “aimed at arresting the exports decline and protect employment,” said Rohini Malkani, an economist at Citigroup Inc. Shipments are likely to decline by 10 percent to $158 billion in the current fiscal year to March 2010, Malkani estimates.
The global recession hit Asia hard as the region is almost twice as reliant on exports as the rest of the world. South Korea’s exports fell 20.6 percent in July, the tenth consecutive monthly decline, a report showed today. Japan’s exports tumbled 36.5 percent.
Global Trade
The continued risk of sluggish demand prompted the World Trade Organisation to lower its forecast for trade in goods for 2009 in July. The trade arbiter now expects a drop of 10 percent after forecasting a 9 percent contraction in March.
India has been hit by the global slump as it becomes integrated into the world economy. The volume of trade rose to about 35 percent of gross domestic product in the year ended March 31 from 21 percent in 1997-98, the year of the Asian financial crisis, according to the central bank.
Flagging exports are forcing jewelers, textiles and leather makers to scale back production and cut jobs. Exporters cut about 500,000 jobs in 10 industries, Trade Minister Sharma said on July 8.
Sharma, while unveiling the foreign trade policy for five years to 2014, last week said he expects the nation to export goods worth $168 billion in the fiscal year to March 2010 and $200 billion the following year. The South Asian nation may return to an annual average export growth of 25 percent in the three years to 2014 as global demand picks up, he predicts
Imports fell 37.1 percent in July from a year earlier to $19.6 billion, according to today’s report. Oil imports declined 55.5 percent to $5.6 billion and non-oil imports fell 24.5 percent to $13.9 billion, the government said in a statement.
India’s exports in the first four months of the fiscal year to July 31 slumped 34.1 percent to $49.6 billion, while imports slid 32.5 percent to $78.5 billion, today’s report showed.
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