Price volatility in world market: thin participation witnessed in first urea tender

A thin participation was witnessed in the first urea tender conducted by the Trading Corporation of Pakistan (TCP) for the import of 0.1 million tons, mainly due to price volatility in the world market. Overall some four international suppliers participated in the tender, out of which three submitted their offers for the supply of urea, while one bidder submitted a regret letter.

Presently, Pakistan, India and Bangladesh are facing acute shortage of urea and have planned to import millions of tons of the commodity from the world market to meet their domestic requirements. Pakistan has already floated a tender for the import of 0.5 million tons, while India also intends to import about 2 million tons of urea.

Sources said that ahead of this demand, urea prices in the world market were on the surge, and had gone up by $60-70 per ton during last three months. Urea prices have reached $350-360 per ton (Cost and Freight) in the first week of November, previously they stood at $290-300 in August.

The price volatility in the world market has caused thin participation of bidders in TCP''s urea import tender. Although, after the announcement, some 18 pre-qualified parties purchased tender documents from the state-run grain trader for participation in urea tender, however, most of international suppliers avoided submitting bids in the first tender.

Sources said, "Presently urea prices in the world market are continually fluctuating and trend is on higher side, therefore the foreign suppliers were reluctant to participate in the tender."

"The international suppliers are closely monitoring the world market and accordingly will take their positions as the TCP has to open four more tenders for the import of 0.4 million tons of urea during this month," they added.

Last month, the Economic Co-ordination Committee (ECC) of the cabinet allowed import of 0.5 million tons of urea to prevent shortage during Rabi season. The TCP was directed to import the same quantity till December.

In the line with these directives, the TCP floated five international tenders, out of which the first tender was opened on November 8, 2013 at TCP head office.

In order to avoid speculation, the TCP invited bids from pre-qualified foreign suppliers/exporters, already registered with the corporation, for the supply of urea in bulk through world-wide sources on Cost and Freight (C&F) basis. In response of the TCP''s tender, some four parties participated in the tender, however one supplier namely M/s Swiss Singapore submitted regret letter, while the remaining three quoted prices ranging $344.73 per ton to $348.95 per ton (C&F).

Lowest bid was submitted by the M/s CHS Europe Switzerland, which offered to supply 100,000 tons of urea at $344.73 per tons (C&F). In addition, M/s Dreymoor Fertilizer submitted a price of $348 per ton for supply of 100,000 and M/s Key Trade AG quoted a price of $348.95 for same quantity.

Sources said that the quoted prices, in the first tender, were some $40-45 per ton higher than previous tender (conducted in August 2013), in which the TCP finalised deal for the import of 150,000 tons. The delay decision of urea import will cost millions of dollars additional burden on the national exchequer as the commodity prices in the world market are on higher side, they added. As the lowest bid was conforming to technical specifications and terms and conditions of the tender the offer was accepted by the TCP and the contract for the supply of 100,000 tons was awarded to the lowest bidder accordingly.

Four more tenders are lined up for the import of 0.4 million tons of urea. Next tender will be opened on November 11, 2013 (today) for import of 100,000 tons of urea, while the rest tenders will be opened on 18th, 20th and 22nd of this month. 

Copyright Business Recorder, 2013

Agriculture input prices witness 80 to 100 percent increase

The prices of different agricultural inputs have registered an increase of 70 percent to 100 percent during the last five years as compared to 40 percent to 45 percent increase in agriculture produce prices, said Hasan Ali Chaniho, director of Farmers Associates Pakistan and former agriculture minister of Sindh, while speaking at a function arranged by the Agricultural Journalists Association at the Lahore Chamber of Commerce and Industry.

“There is an urgent need to bring down agriculture input costs as high prices discourage the use of fertilisers, pesticides and quality seeds in required quantities, thus negatively impacting per acre yield,” he said.

“Bringing down prices would help increase per acre yield, which would lead towards strengthening the national economy and enhancing GDP, increasing growers’ incomes and poverty eradication from the rural areas.”

Chaniho discussed the various factors impeding agricultural growth in Pakistan, including the mushroom growth of seed companies leading to provision of impure and poor quality of different seeds. Farmers could get the same crop’s seed from Rs100 per kg to 1,000 per kg, while there is no guarantee of quality. He called for regulating the seed sector.

“BT cotton has replaced rice and sugarcane in Thatta, Badin and Tando Muhammad Adam. However, issues of various pest attacks, including armyworm last year and pink bollworm this year are still being faced,” he said.

“Such attacks pose a grave threat to crops that could be avoided by ensuring the availability of certified BT cotton seed.” The most important input in the agriculture sector was water, he added, but in Pakistan the provinces situated at the tail of the water network were raising the issue of shortage, while those in the upper riparian zone were complaining about water wastage into the sea, he added. However, he said, there was a dire need for judicious use of water. A significant amount of water could be saved from canals to farm gates and in fields. About 50 percent of river water actually reaches the farm gate through the network of canals and we lose 10 percent to 15 percent water in the field due to seepage and obsolete irrigation practices, he observed.

Original Article Here

Sell excess wheat, share profit with farmers, says CACP

NEW DELHI: The government should liquidate wheat stocks through exports and sales in the open market and share the proceeds with farmers to raise their income levels, a government panel suggested. In its latest report to the agriculture ministry, the Commission for Agricultural Costs and Prices (CACP), which recommends a minimum support price (MSP) for agriculture crops, is said to have maintained that there is no reason to lift the suggested freeze on wheat MSP, a source said. 

The Union Cabinet had asked the CACP to review its earlier recommendation of not raising the MSP after the agriculture ministry suggested an upward revision to Rs 1,400 per quintal from the existing floor price of Rs 1,285 per quintal. The review was sought in the wake of an increase in input cost such as diesel prices. 

"The commission has a view that the wheat's cost of production is very well covered within the earlier recommended unchanged MSP of Rs 1,285 per quintal. Even the rise in diesel prices makes no difference. The market price of wheat is above the MSP and the need is to sell the swelling wheat stock and share the profit with farmers to benefit them," the source said. 

According to CACP, the all-India weighted average cost of production is Rs 1,085 per quintal. The MSP returns for wheat over the cost of production would be about 17% at all-India level and it would cover the cost of almost 95% of wheat production. CACP chairman Ashok Gulati refused to comment on the fresh recommendation. 

"The domestic and international prices of wheat are ruling much above the minimum support price. If the government wants to benefit farmers, it should focus on liquidating the stocks and share the benefits with farmers. The government should offload at least 15-20 million tonne of grains from the godowns in the open market and export freely in the global market where prices are hovering around $314-320 per tonne," he said. 

There is good demand for Indian wheat in Bangladesh followed by South Korea, Thailand, Vietnam, Indonesia, Yemen and Oman. Seven lakh tonne of government stock has been shipped out of the 11.5 lakh tonne contracted after the government allowed export of 2 million tonne from its stocks in July this year. The commission had earlier suggested a 10% bonus above the MSP for farmers if the export had been banned. 

The commission has asked the Centre to review its policy of open-ended procurement and limit its purchases especially from states which levy high taxes. 

Haryana and Punjab, the wheat basket of the country, levy taxes ranging from 11.5% to 14.5% while emerging wheat producing states like Madhya Pradesh and Bihar and Gujarat levy taxes between 4.5% and 6.5%. The commission has also suggested that the government review hiving off of food grains as a separate group from the purview of taxation to keep market prices lower. 

Meanwhile, wheat sowing has taken off to a slow start due to late monsoon withdrawal and delayed harvesting of summer crops in most parts of the country.

Original Article Here

Palm oil recovers

Malaysian palm oil futures recovered after falling to their lowest in three years on Monday, as a rise in Malaysian palm oil stocks in October missed market expectations and signalled a slowdown in inventory build-up. Prices fell to 2,220 ringgit ($725) per tonne before the midday break, a level last seen in November 2009, tracking steep drops in Dalian soybean oil and US soybeans after a larger-than-expected production forecast from the US Department of Agriculture (USDA) on Friday. 

But the benchmark January contract on the Bursa Malaysia Derivatives Exchange closed up 0.4 percent at 2,324 ringgit after industry regulator the Malaysian Palm Oil Board reported a 1.1 percent increase in palm oil stocks to a record 2.51 million tonnes. The rise missed market expectations that stocks in the world's No 2 palm oil producer likely climbed 7.5 percent to 2.67 million tonnes. 

"It is very bullish. Nobody expected this figure. Nobody. We were expecting a bigger glut than usual in stocks," said a trader with a foreign commodities brokerage in Malaysia. Total traded volumes stood at 48,969 lots of 25 tonnes each, much higher than the usual 25,000 lots despite expectations for a quiet market ahead of the Diwali and Awal Muharram holidays in Malaysia this week. 

Market participants will be looking out for Malaysia's November 1-10 exports data from Societe Generale de Surveillance later, after another cargo surveyor Intertek Testing Services reported on Saturday a 16 percent rise from the previous month. In other vegetable oil markets, US soyoil for December delivery was down 0.7 percent in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 3.9 percent lower, after earlier hitting its 4-percent daily limit. 

Copyright Reuters, 2012

Agriculture: Food produce speculation remains niche area

By Lucy Warwick-Ching
Crop speculation by traders is back in the spotlight after food prices rose by an average of 6 per cent globally in July and critics argue speculation heaps further pressure on the world’s poorest people.

A number of European banks have bowed to pressure and have withdrawn products that enable investors to speculate on food prices after campaigners said these investment vehicles play a significant role in pushing up prices globally.
The recent rises in agricultural commodity prices have raised concerns about supply shocks, as well as the effect on food inflation around the world over the next 12 months.

“The worst drought since 1956 in the US has sent corn yields plunging and price soaring which has forced farmers across the US to make the choice between feeding their livestock at elevated prices, and slaughtering them, as they become too expensive to keep,” says Michael Hewson, senior market strategist at CMC Markets.

“While this has sent beef prices lower, the rise in prices has also illustrated how sensitive the food chain is around the world to even the slightest supply shock.“

There are still ways for small traders to speculate on crop prices without buying the assets directly – via spread bets. Spread betting firms routinely offer prices on a range of the leading agricultural commodities, including wheat, corn, sugar, coffee, cocoa, oats and soya produce. You can either spread bet on the commodity itself, or, in some cases, on the exchange-traded product linked to it.

But it is still a niche area for investors. “Soft commodities have never been a major market for Capital Spreads’ clients,” says Simon Denham, head of the firm. “While clients do tend to like ‘volatile’ instruments, the information flow is so opaque, and the consequent price action so violent, that investors have been rather put off.”

Mr Denham adds that in the past investors have generally needed a reason to be involved – for example, if they are a producer, supplier or broker – and have tended to “need deep pockets and nerves of steel”.

Agricultural commodities tend to cost more to spread bet, than, say, equities, warn experts. To trade corn, the difference between bid and offer prices could be several times that on the FTSE 100. And the spread for something less mainstream, such as oat prices, would be even wider.

But experts say shot-term traders can benefit from the continuing price fluctuations.

“Agricultural commodity products are likely to have wild swings as they become politicised coming into the November US elections,” says Joe Rundle, head of trading at ETX Capital.

“The increased headlines will draw in a new breed of speculator who has not traditionally traded agricultural products – ETX has seen a 200 per cent increase in trading in December wheat prices. The speculators will add to the volatility in the short term as they chase the market.”

So, what has been driving prices? Part of the problem surrounding food price volatility, says Mr Hewson, and something that will continue to be so, has in part been the scarcity of available arable land. When set against rising food needs, this is likely to make future price shocks “a fact of life,” he warns.

He argues that this will be compounded by the rise of a growing middle class in emerging market economies. “The growth in countries such as Brazil, India and China will probably see demand for these food staples rise in the coming years and governments will have to make hard decisions about how they meet the needs of their populations in a world that appears to be growing rapidly, while susceptible to ever-growing extreme weather conditions,” he notes.

Predictions vary widely among experts as to which way food prices will go. For those traders still keen to take a punt the question is, which way to bet.

Matt Weller, technical analyst at GFT Markets, says that with a growing global middle class and continuing demand from agricultural crops being used as biofuels, “the long-term trajectory for soft commodities appears set to remain upward”.

But he says much of these rises are linked to institutional speculators putting pressure on prices to rise. “As such, although it may to too early to call a top to this rally, it would seem foolish to imagine that the gains can be guaranteed from this point in,” he adds.

“In fact, long-term seasonality patterns suggest that many soft commodities tend to drop over the September and October period as the supply glut around harvest time hits the market.”

However, Mr Denham argues that the temporary run up in prices dues to the possible failure of this year’s US harvests will probably not have a long-term impact on prices because, in the end, the segments with the power in the food price chain “are the processors and supermarkets, not the farmers”.

Original Article Here

News Summary: Agriculture prices rise, oil falls

By The Associated Press 

THE ISAAC EFFECT: Prices for wheat, corn and soybeans rose. That was partly from Hurricane Isaac. Its rain might be welcome after a drought, but it's unlikely to have much effect on crops that have been suffering all summer. It will also cut into harvesting time in the Southeast.

THE ISAAC EFFECT, PART 2: Oil prices fell, despite Isaac's forcing some Gulf Coast rigs to temporarily shut down. Investors seemed more swayed by a government report that inventories of crude oil rose last week for the first time in a month.

NOT-HEAVY METALS: Major metals all fell slightly. Precious metals like gold and silver were down, and so were industrial metals like copper and palladium.

Original Article Here

Strategies for investing in agriculture

By Russell Pearlman

High crop prices could be a boon to farmers and investors alike. Here are ways to buy into the world’s growing demand for food.

Play it safe: farming equipment

The world’s population is growing fast, but the amount of land to grow food is not. So, as simple supply and demand economics would dictate, food prices are rising.

According to the United Nations, grain prices have more than doubled since 2003, and some analysts expect them to continue rising for the foreseeable future. That trend could be a boon to American farmers, and when farmers feel rich, they often shop for new equipment.

Gary Bradshaw, a portfolio manager for the Hodges family of mutual funds, likes Titan Machinery TITN -0.99% , a distributor of tractors in the Great Plains. Titan’s 2011 net income was $44 million, nearly double what it was in 2010.

For a more international bet on farming, Bradshaw also likes Deere DE -1.50% . The Moline, Ill., maker of giant green tractors and other big-ticket farm equipment grew its net income by 56% in four years, from $1.8 billion in 2007 to $2.8 billion last year.

Go for broke: a chicken run

If the rest of the world is going to eat more food, it surely will eat more chicken, right? U.S. chicken-piece prices have risen anywhere from 2% (breasts) to more than 120% (wings) from a year ago.

But buying into poultry is a lot riskier than taking a flier on most other farm-related businesses.

Because prices have been so good, chicken firms could produce a lot more birds. “The danger is you drive prices lower,” says Heather Jones, a managing director at BB&T Capital Markets.

Plus, higher crop prices pose a problem: Sanderson Farms, the nation’s No. 3 chicken producer, says its feed costs (primarily corn and soybeans) were nearly 40% higher last year than in 2010.

Still, chicken producers have made their operations more efficient, and they’ve steadily increased exports to Asia and Europe. Bradshaw says he’d consider buying Pilgrim’s Pride, another major chicken producer, if its stock price dipped. 

Original Article here

No relief in forecast for rise in food prices

WASHINGTON — The Agriculture Department said Friday that consumers can still expect higher food prices next year, but the expected increase was unchanged from last month, even as extreme heat in the Farm Belt continues to reduce the grain harvest and increase feed prices for livestock.

According to the latest Agriculture Department consumer food price index, overall food prices are expected to increase 3 percent to 4 percent next year largely because of the drought, the same as last month's forecast.

“The data out this morning shows that nothing much has changed,” said Ephrain Leibtag, deputy director of research at the Economic Research Service at the Agriculture Department.

The price of beef and veal will see the largest increases next year, the report said, almost entirely because of higher costs for feed, which is made from corn and other grains. Beef and veal prices are expected to increase 4 percent to 5 percent. The most immediate impact of the drought will be seen in poultry prices, the government predicted.

The Agriculture Department said consumers will see higher poultry prices this year because chickens consume feed more quickly than other livestock.

Government forecasters reiterated their projection of a 3.5 percent to 4.5 percent jump in chicken and turkey prices this year. The prices are expected to rise a bit less next year, in the range of 3 percent to 4 percent, the government said.

About 40 percent of the corn crop is used to feed livestock. Feed costs account for 50 percent to 70 percent of livestock and poultry production, according to the American Feed Industry Association, a trade group.

The increase in feed prices has caused many cattle producers to sell off or cull their herds. Cattle sales are up nearly 30 percent over last year, said Sara Baker, a spokeswoman for Sageworks, a financial information company based in New York that tracks the sales.

Ironically, the Agriculture Department said the reduction in the number of cows could result in a temporary decline in beef prices this year as a surplus of cattle is sold and more meat enters the market.

Cheese and milk products are expected to increase 3.5 percent to 4.5 percent next year, unchanged from last month's forecast. Egg prices will also be affected, with prices forecast to rise 3 percent to 4 percent next year.

A government estimate released earlier this month said that because of worsening drought conditions, farmers would produce about 10.6 billion bushels of corn this year, down from what was projected at the beginning of the year to be a record 15 billion bushels. The reduction in corn and soybean supplies has pushed up their prices to record levels.

The Agriculture Department said this week that 85 percent of this year's corn crop was in drought-impacted areas, and 83 percent of the soybean crop was threatened.

As of Monday, just 23 percent of the corn crop was rated in good or excellent condition, while 31 percent of soybeans were rated good or excellent.

Original Article Here

Thailand rice prices fall as government liquidates surplus

By : AHN

Thailand (IRIN) – Almost a year after the government promised Thailand’s farmers a fixed price for their rice harvest, concerns that the system would push up world rice prices may be unwarranted, as experts now forecast lower financial returns.

The government recently announced it was selling 753,000 tons of surplus rice, stockpiled under the programme, in an open bid set to end on 28 August, according to international media.

In an effort to boost farmer incomes, in 2011 the government started paying paddy farmers 15,000 baht (US$420) per ton – a 60 percent increase over 2010. Thailand exported less in 2012 because at the higher price its rice was less competitive.

Since 2005, Thailand’s rice reserves have grown to more than 10 million tons, but the government has committed to paying above-market prices for the 2012 paddy crop to be harvested in October.

“Now that the government is to release part of these stocks, prices may fall, especially if the 753,000-ton tender is followed by [others],” Concepción Calpe, a senior economist with the UN Food and Agriculture Organization (FAO), told IRIN. “When there is a supply surplus, normally, prices have to fall so as to stimulate demand and consumption, and bring the market back into balance.”

A year ago, Samarendu Mohanty, head of the Social Sciences Division at the Philippines-based International Rice Research Institute (IRRI), forecast increased global rice prices as a result of Thailand’s scheme, on the assumption that stockpiling would decrease the supply of rice on the market, which would then increase demand and prices. But India lifted its four-year-old rice export restrictions in 2011, which stabilized the amount of rice on the market – and prices – Mohanty said.

In July 2012, FAO reported that international rice prices were “surprisingly stable”. “A drop in international rice prices would be a great relief for the world, especially as maize and wheat supplies have thinned,” Calpe noted.

The US, the world’s largest producer of maize, is expected to bring in its smallest crop since 2006/07, the US Department of Agriculture said in its August forecast. Prices for yellow maize, used mainly as feed for livestock, are already above US$300 per ton, and are now projected to exceed $350 per ton in the coming months and into 2013. Maize prices climbed by 23 percent in July alone, according to FAO. A drought in Kazakhstan and Russia, two of the world’s largest producers and exporters of wheat, threatens to drive up wheat prices.

The World Bank has noted that although food prices are higher, they are nowhere near the record levels of 2007/08.

Where prices will go from August 2012 onward is still uncertain, according to FAO, and depends in part on whether the Indian government reinstates export restrictions. The agency noted that such restrictions contributed to the 2008 price hike.

rg/pt/he

– Provided by Integrated Regional Information Networks.

Article © AHN – All Rights Reserved

Agriculture experts give props to crops

Farmers are already out harvesting
crops thanks to the mild weather.
CTV Calgary 

Alberta farmers are already out in the fields harvesting crops and many experts are predicting this to be a bumper year.

For some, the harvest started almost two weeks early this year because a warm winter allowed for earlier seeding. That factor combined with a wet spring and warm summer has enabled many to get an early start bringing in their crops.

This type of weather is almost perfect for growing the kind of crops we see in southern Alberta.

To top it off, a drought in the United States has driven prices way up and that means farmers here could see near record profits off their land.

Ken Weber is harvesting his barley crop near Mossleigh and says better crops mean better equipment.

“What you'll see is increased purchases by farmers of extra equipment. That's one thing we like to do when we have extra cash is buy a better tool and you’ll see more of that,” said Weber.

Weber’s crop is dong well and he is optimistic.

“The barley right now is yielding 80 to ninety bushes an acre which is a very good yield. I’ve heard pea crops at 50 to 60 bushels an acre so not only do we have great prices we have great yields,” said Weber.

Once his bills are paid, Weber expects to net about $100 for every acre on his 2400 acre farm.

The downside is that the high prices paid for the crops will be passed onto consumers.

Most of the barley grown in the province is used for feed and so it is likely that the price of beef will also increase.

Original Article Here

Agriculture Department unveils new steps to stop food stamp fraud

by Jim Abrams 

WASHINGTON -- The Agriculture Department says it is going to impose tougher penalties on stores that violate food stamp rules and give states new tools to root out applicants who are ineligible for the benefit program that now covers about 1 out of every 7 Americans.

The move to shore up integrity in the program comes as Congress struggles to pass a $100billion-a-year bill that will fund food stamps and determine farm policy for the next five years. Some 80percent of the money in the farm and nutrition bill goes to the food stamp program.

Department Undersecretary Kevin Concannon stressed that the Supplemental Nutrition Assistance Program already has one of the best track records among federal programs in fighting violations, with a trafficking or abuse rate of only about 1percent of total transactions.

But in a program where even a small amount of abuse can amount to millions of dollars, "we are very mindful of public confidence" that only those who qualify for benefits will receive them, he said. That confidence is particularly important now because of growing pressure on Congress to pass a farm bill that includes the food stamp and other nutrition programs.

The farm bill, which sets policy on crop subsidies and conservation, has made it through Congress in the past because the link with food stamps has made it popular for lawmakers with both rural and urban constituents. With the bill set to expire, the Senate passed a new bill and the House Agriculture Committee approved a similar version.

But House GOP leaders have declined to bring the bill to the floor for a vote, fearing that disputes over food stamps would lead to its defeat. The House bill would cut current food stamp spending by about 2percent, or $1.6billion, a year, mainly by cracking down on policies making it easier for states to bestow benefits. But House conservatives are demanding further cuts in the program while some Democrats say they are excessive, resulting in several million people being removed from food stamp rolls. The farm bill reduced food stamp spending by about $400million a year.

The food stamp program has seen participation climb from 28million at the start of the recession to 46million today and has become a focus of fiscally conservative lawmakers critical of government spending.

The new sanctions announced by the Agriculture Department on Thursday would allow the department to both disqualify a retailer who traffics and assess a monetary fine proportional to the amount of business the store does with the Supplemental Nutrition Assistance Program. Currently the department cannot do both and too often the penalties "may have been viewed as a slap on the wrist," Concannon said.

States would also be required to check a database to verify that applicants haven't been disqualified in other states and confirm from Social Security Administration records that the applicant is not in jail or deceased.

The Agriculture Department says that the trafficking rate has fallen from about 4cents to the dollar in 1993 to about 1cent in the 2006-2008 period and that in 2010 only 3percent of payments went to ineligible households or to eligible households in excessive amounts.

Concannon said that in the third quarter of this budget year the department fined or temporarily disqualified some 574 stores for violating rules and permanently disqualified 1,016 stores for trafficking in benefits.

The department has also sent letters to the heads of Craigslist, Ebay, Facebook and Twitter to seek their help in preventing the illegal sale of food stamps online and proposed rules giving states the option to contact recipients when there have been an excessive number of requests for electronic benefit transfer cards.

Original Article Here

Sugar and coffee jump

Raw sugar futures on ICE settled at a three-month high in choppy dealings on Thursday, while coffee surged on spillover support from gains in agriculture commodities. Cocoa futures also moved higher. "The rise in soft commodities is primarily on the back of higher agricultural markets," said Sudakshina Unnikrishnan, a soft commodities analyst with Barclays Capital.

The Thomson Reuters-CRB index, a benchmark for global commodities, jumped 1.9 percent to a 2-1/2-month high at 304.85. Sugar's higher close followed an up and down session, with funds buying early. "The (raw sugar) market tried to go up this morning when we had the funds buying. Very fast we ran out of steam and then we just fell like a rock," said Alex Oliveira, Newedge USA analyst.

Oliveira noted that sugar turned negative as corn futures fell from their highs. Raw sugars later turned up again, to close at a three-month high on the coattails of the firm commodity complex. Benchmark October sugar futures on ICE gained 0.30 cent, or 1.3 percent, to close at 23.25 cents a lb, the highest settlement for the spot contract since April 13.

The sugar market was underpinned by the prospect that weak monsoon rains may reduce production in top consumer and No. 2 global producer India, dealers said. Rains in Australia have also slowed the flow of supplies from the world's third-largest raw sugar exporter. The sugar market got a boost from news on Wednesday that Copersucar, a leading sugar and ethanol trader in top producer Brazil, said rains forced 42 percent of its associate mills to stop crushing and it may turn to buying the sweetener.

White sugar futures on Liffe also soared in choppy dealings. The October contract jumped $11.60, or 1.9 percent, to end at $636.30 per tonne. Arabica coffee futures jumped on a combination of chart-based strength after the benchmark contract managed to close above its 100-day moving average at $1.7899 on Wednesday, and as the firm commodity complex provided support, dealers said.

Arabica coffee futures on ICE soared with September jumping 6.80 cents, or 3.7 percent, to settle at $1.8895 per lb. Robusta coffee futures on Liffe also rallied, with September settling up $81, or 3.8 percent, at $2,192 a tonne, the highest since May 31. The benchmark US cocoa futures contract climbed as it triggered buy stops above $2,220, then filled the technical gap between $2,250-$2,270, before consolidating slightly, dealers said. ICE September cocoa futures rose $26, or 1.2 percent, to settle at $2,230 a tonne. London September cocoa finished up 31 pounds, or 2.1 percent, at 1,532 pounds per tonne.

Copyright Reuters, 2012

Philippines rice import deal fails to lift prices

Demand from the Philippines failed to lift Asian rice prices which are already weighed down by the prospect of rising supplies from major exporting countries and record high stocks held by the Thai government, traders said on Wednesday.The Philippines's National Food Authority (NFA) said it was seeking government approval to award a 100,000-tonne rice import deal to Vietnam, but traders said the deal was too small to affect the market.

--- Vietnam ups 2012 rice export forecast 16pc on higher output

"The deal has no impact on the rice market. I think it is too small to push up prices and demand elsewhere remains thin," said a Bangkok-based trader.The 5 percent Vietnamese broken rice eased to $420-$425 a tonne, free on board Saigon Port, from $420-$440 last Wednesday.The 25-percent broken grade edged up at $385-$390 a tonne, FOB basis, from $380-$390 a week ago. "Buyers are not around and there have been no transactions on the market to get a benchmark price, so offers are only based on domestic prices," an exporter in Ho Chi Minh City said.Thai rice prices also fell amid thin trade. The benchmark 100 percent B grade Thai white rice was at $610 per tonne on Wednesday, down from last week's $630, traders said.

RISING SUPPLY Supplies of rice in Thailand and Vietnam, the world's biggest and the second-biggest exporters, are expected to rise significantly over the next few weeks, traders said.Thailand was due to harvest an off-season rice crop, which farmers in some well-irrigated areas normally grow after they reap the second crop."We expect to have around 3 million tonnes of extra rice output from the crop, which is due to be harvested in the next few weeks and supply is likely to peak in July," said a senior Agriculture Ministry official.The Thai government is also holding record high rice stocks of 13.9 million tonnes of paddy, which kept prices lower, traders said.

HANOI: Vietnam, the world's second-biggest rice exporter, is forecast to export 6.25 million tonnes of rice this year, the Agriculture Ministry said on Wednesday, an increase of nearly 16 percent from an earlier projection of 5.4 million. Higher domestic output and higher demand are likely to spur the increase in exports, the ministry said in a monthly report released on Wednesday."The import demand for Vietnamese rice from countries such as China, Malaysia, Ivory Coast and Senegal rises from 2011," the report said, without giving any breakdown of the demand.It forecast Vietnam's rice export revenues this year could reach $3 billion, down 17.6 percent from $3.64 billion in 2011.

Last month, China displaced Indonesia from its March position to become the biggest buyer of Vietnamese rice, having bought nearly 680,000 tonnes in the first four months of 2012, the farm ministry said in a separate report, marking a more than three-fold increase from 153,000 tonnes a year ago.Malaysia took second place, with the four-month delivery volume rising nearly 27 percent from a year ago to 258,000 tonnes, the ministry said.

The reports made no reference to comments by Agriculture Minister Cao Duc Phat on March 15 that Vietnam aimed to match last year's record shipment of 7.2 million tonnes. China is expected to increase rice imports about four-fold to more than 2 million tonnes in 2012, on track to become the world's third-largest buyer after Indonesia and Nigeria.

Copyright Reuters, 2012