Tuesday, August 18, 2009

Playing the Sugar Rush

From Seeking Alpha

Although sugar's still way off its record high of 66 cents/lb (set back in 1974), the commodity is still up 88% year-to-date.

The rise has been spectacular, but some analysts think sugar's future looks even sweeter. Take Jim Rogers, who told Bloomberg earlier this month that "sugar is certainly going to go much, much higher during the course of the bull market."

Investors seeking an exchange-traded play on sugar can check out the futures-based iPath Dow Jones AIG Sugar Total Return Sub-Index ETN (NYSE Arca: SGG). Year-to-date, SGG is up 62%, and lately has been one of the better performers in our Breakfast Index.

Other sugar-related (although more broadly based) exchange-traded vehicles include the PowerShares DB Agriculture Fund (NYSE Arca: DBA), which tracks futures in corn, soybeans, wheat and sugar; and the ELEMENTS Rogers International Commodity Agriculture ETN (NYSE Arca: RJA), which tracks 20 futures contracts worldwide.

Saturday, August 8, 2009

Agriculture Investor Weekend Reading

Soleil sees potash prices set to skid, from Vancouver Sun

Soleil Securities said on Friday that potash prices were set to skid about 25 percent, noting that Agrium Inc AGU.TO said late on Thursday that it cut U.S. potash pricing. Soleil analyst Mark Gulley said Agrium is dropping its U.S. list prices around 25 percent, in line with price cuts by Russia’s Silvinit SILV.RTRS and Germany’s K+S SDFG.DE.

The Omnivore’s Delusion: Against the Agri-intellectuals, from The American

I’m so tired of people who wouldn’t visit a doctor who used a stethoscope instead of an MRI demanding that farmers like me use 1930s technology to raise food. Farming has always been messy and painful, and bloody and dirty. It still is.

But now we have to listen to self-appointed experts on airplanes frightening their seatmates about the profession I have practiced for more than 30 years. I’d had enough. I turned around and politely told the lecturer that he ought not believe everything he reads. He quieted and asked me what kind of farming I do. I told him, and when he asked if I used organic farming, I said no, and left it at that. I didn’t answer with the first thought that came to mind, which is simply this: I deal in the real world, not superstitions, and unless the consumer absolutely forces my hand, I am about as likely to adopt organic methods as the Wall Street Journal is to publish their next edition by setting the type by hand.

Jim Rogers Says U.S. Commodity Curbs to Drive Markets Overseas, from Bloomberg

As the U.S. contemplates tighter regulation, China’s interest in commodities is accelerating, Rogers said. The world’s most populous country already accounts for about one- third of global copper usage. It also accounts for about one- sixth of wheat demand and one-fifth of soybeans, according to the U.S. Department of Agriculture.

“The three commodity exchanges in China are booming,” he said. “Dalian trades more soybean contracts than Chicago does already, and that’s with a blocked currency, a closed market. Can you imagine what’s going to happen if and when they open that market up to foreigners? It’s going to explode.”

Sugar Climbs to 28-Year High in N.Y. on India Weather Outlook, from Bloomberg

Sugar climbed to the highest price in more than 28 years in New York on concerns that low monsoon rainfall may stunt cane crops and reduce output in India, the world’s largest producer after Brazil.

“Subdued rainfall activity is likely to continue over western, central and peninsular parts of the country” in the next two to three days, the India Meteorological Department said today. Precipitation in India, the world’s largest sugar consumer, was 64 percent below the long-term average in the week ended Aug. 5, the weather bureau said yesterday.

“Concerns over poor supply and strong imports in India have been a major driver of recent price strength, and further fuel for the rally today came from forecasts by the Indian weather office for weak rains in most cane regions,” London- based Barclays Capital said in a report.

Thursday, August 6, 2009

Sugar High

more on sugar from the FT.

Inflation-wary investors have lately kept a close eye on the rising price of hydrocarbons: oil has risen by a third this year. But carbohydrates are what they should be worried about. Shortages have pushed up raw sugar futures 65 per cent since January. On Thursday, prices broke through 19.75 cents a pound, reaching levels last seen in 1981. Refined white sugar is at a record high. Next year could see bigger price spikes.

Weather is the main reason. Drought in India, the world’s biggest consumer, has hit local harvests. Heavy rain in Brazil, the world’s largest sugar exporter, has wrought the same effect. Ominously, such weather patterns are typical of El NiƱo, the seasonal warming of the Pacific that can cause volatility across a wide range of commodities.

Wednesday, August 5, 2009

Now that potash prices established, buy into fertilizer sector

Bullish article in the Vancouver Sun.

With the settlement of the Indian contract with Canpotex and Belarussian Potash Co. (BPC) settled, there is an established international benchmark for potash prices. There is also a North American benchmark now that Potash Corp. cut its domestic pricing, according to Dundee Securities analyst Richard Kelertas.

He expects Agrium Inc. to meet this new pricing level and revised his potash price forecast lower with these better indications on both domestic and overseas prices.

"We have been advising investors to take some short term profits since May," Mr. Kelertas said in a report this week. "However, we now believe that after the overbought period from March to May and the subsequent decline period from the peaks in May to current prices is over. As such, we would advise both short and long-term investors to buy into the fertilizer sector."

Monday, August 3, 2009

Refined Sugar Jumps to Highest Since at Least 1989 on Shortfall

From Bloomberg.
White sugar rose to its highest since at least 1989 in London on analysts’ forecasts for a global supply shortfall after lighter-than-expected monsoon rains in India, the second-biggest producer.

Monsoon rainfall was 18 percent lower than usual in the week to July 29, according to the country’s weather office. Deficient rain in July last year reduced cane yields, causing sugar output to halve and turning India into a net buyer for the first time since the 2005-06 season.

“Momentum is strong,” Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt, said by phone. “Fundamentally, the market is in short supply and prices will be supported.”

White, or refined, sugar for October delivery surged $11.10, or 2.3 percent, to close at $502.90 a metric ton on Liffe, the highest since at least January 1989

Look who's farming now - The seedling cultivator

Fortune article here profiling under 40 organic farmers.

Motley Fool on China Green Agriculture (CGA)

The Motley fool has been pumping CGA lately:

As an organic fertilizer supplier, China Green Agriculture is expected to benefit from China's push toward green technologies. With its $586 billion domestic stimulus package, the government wants to develop renewable energy projects that benefit more than just solar companies such as Suntech Power (NYSE: STP) and Yingli Green Energy (NYSE: YGE); more than a third of the funds are being spent on a broad category called "Green GDP." The economic stimulus and rising demand for healthier food will help China Green -- as well as green animal-feed companies such as AgFeed Industries (Nasdaq: FEED) -- rapidly expand. China Green's CEO expects the nation's percentage of organic fertilizer use to grow to 50% of total fertilizer use within five to 10 years, from 25% currently, as China’s farm land becomes degraded from chemical pollution.

And apparently also named it their “Number 1 Global Stock Idea for 2009″