Earn Glass is still half full for flush American farmers

Earn Glass is still half full for flush American farmers WASHINGTON (Reuters) - Brian Roach scrawled a simple outlook for corn prices in a spiral notebook, with a line diving from the upper left hand corner to the lower right. Sitting in a hotel ballroom at the U.S. Department of Agriculture's annual Agricultural Outlook Forum last week, the commodity broker predicted increasing supplies and weakening demand would slow a boom in the farm economy that has fattened growers' wallets and pushed up food prices. 'Nothing is telling me to think any different right now,' said Roach, president of the Florida-based commodity business Roach Ag Marketing. For the first time in years at the conference that traditionally kicks off the year for America's agri-business sector, forecasters said the seemingly endless upward trajectory on everything from crop prices to farmer income was coming to an end. The price of corn, the big daddy of the major U.S. crops, could fall 20 percent this year and because of expanding production globally, the corn stockpile would double. It is a significant shift after corn prices reached a record high near $8 a bushel last summer on concerns about strong demand draining inventories. The surge in prices is expected to encourage an expansion in planting of crops this year. Farmers are becoming 'very pragmatic about the investments they're making in machinery, equipment and input costs' after spending freely following last autumn's profitable harvest, said Thomas Dorr, president of the U.S. Grains Council. Many built new storage bins and upgraded their tractors and combines. Moving forward, 'the mood is one of caution,' Dorr said. To be sure, farmers are flush with cash after farm income topped $100 billion for the first time in 2011 as the rural economy rebounded from the pothole of the global recession. Even if income slumps to $96.3 billion this year due to larger world and domestic supplies as predicted by the government, farmers and ranchers would be looking at their second-best year ever. Income would remain well above the 10-year average. 'Prospects for U.S. agriculture continue to be strong with record income in 2011 and a strong balance sheet,' said Joe Glauber, the USDA chief economist. Still, there was a sense of deja vu of 2008 at the conference that attracts some 2,000 attendees. That year, farmers enjoyed sky high prices for their crops but marching in lockstep, was the price of crude oil. The recent spike in fuel prices could again add pressure to the farm economy. Energy costs squeeze farmer margins because they depend heavily on tractors, combines, pesticides and fertilizers -- which track the price of fuel -- to get most out of their land. 'Energy costs to a farmer are obviously a serious concern,' said David Berg, president of the American Crystal Sugar Company, based in Moorhead, Minn. 'It's almost like a few years ago where everyone was in a state of panic.' He said sugar beet farmers in Minnesota and North Dakota are doing well but a double whammy of lower prices on the market for the commodity and higher energy prices would be hard to swallow for a number of growers. 'The price of sugar is high enough so that an increase in energy costs is a negative for them, but it's not going to put them under water,' Berg said. 'If the price of sugar goes down from where it is today, it will very likely put some of them under water.' Tyson Foods also is worried about rising fuel costs, with Chief Executive Donnie Smith warning the recent jump in gas prices could dent demand for beef by reducing disposable income of consumers. Beef prices have reached record levels due to a historic drought that reduced cattle herds in the southern Plains and high prices for corn that is fed to livestock. 'You're not moving as much volume of meat but you're paying more for it,' Smith told reporters at the conference. A drop in demand for meat could hurt livestock producers even as increased grain production would cut their feed costs. Farmers are expected to go all out to get their seeds in the ground this spring, especially with the mild winter that is now coming to a close. The USDA estimates they will plant 94 million acres (38 million hectares) of corn, about 2 million acres more than last year and the largest area since 1944. Still, Jon Caspers, a producer of about 8,000 hogs a year in Iowa, is not breathing a sigh of relief due to high gasoline prices and lingering uncertainty about demand. He's also unsure farmers will plant as much corn as expected. Last year, heavy spring rains dashed their plans to plant from fence post to fence post. 'A lot of producers are waiting to see if it really happens,' he said. (Additional reporting by Charles Abbott; Writing by Russ Blinch; Editing by Marguerita Choy)

Earn Mexico says G20 to look at smoothing capital flows

Earn Mexico says G20 to look at smoothing capital flows Mexican Finance Minister Jose Antonio Meade speaks during an interview with Reuters in Mexico City February 14, 2012. REUTERS/Henry RomeroView Photo Mexican Finance Minister Jose Antonio Meade speaks during an interview with Reuters in Mexico City February 14, 2012. REUTERS/Henry Romero MONTEVIDEO (Reuters) - Mexico will include possible steps to blunt the impact of sharp capital flows on the Group of 20's policy agenda after discussions with Latin American neighbors, Finance Minister Jose Antonio Meade said on Sunday. Mexico, which holds the G20's rotating presidency this year, hosted a seminar about G20 priorities on the sidelines of meetings of Inter-American Development Bank. The bloc's only Latin American members are Brazil, Mexico and Argentina. Meade said via his Twitter account that suggestions from the region would help to enrich the work of the G20, including a push to ease the impact of capital inflows and outflows and tools to administer flows better. One suggestion Mexico would take on board was to 'develop a better capacity to absorb financial flows in domestic financial systems,' he said. Many delegates at the IADB meeting have expressed concern about a recent move toward protectionism, particularly by Brazil, which last week pushed Mexico to curb auto exports over the next three years to boost its industrial sector, hit by an appreciating currency. Brazil blames loose monetary policy in developed economies for the foreign cash flows that have pushed up the real and unleashed a flood of cheap imports, hurting the competitiveness of Brazilian industries. Officials present at the Montevideo meeting said Uruguay, Paraguay and other countries had pushed for Mexico to make sure the G20 addressed currencies and trade barriers. 'Mexico was asked to raise issues of protectionism, exchange rates and capital flows,' Paraguay Economy Minister Dionisio Borda said. Meade told Reuters the G20 remained committed to combating protectionism and there was no intention to change this. 'In every G20 meeting what we have done is reconfirm the promise to combat protectionism, recognizing that this is a measure which does not contribute to global growth,' he said. In the G20 leaders' November communiqué, the group said multilateral trade was important as a way to avoid protectionism and called for more exchange rate flexibility. Protectionism and capital flows were not specifically mentioned in the communiqué following the G20 finance ministers' meeting in Mexico City in March, but Mexico has said one of its G20 priorities is economic stabilization. (Reporting by Krista Hughes and Guido Nejamkis; Editing by Maureen Bavdek)

Earn Mexico says G20 to look at smoothing capital flows

Earn Mexico says G20 to look at smoothing capital flows Mexican Finance Minister Jose Antonio Meade speaks during an interview with Reuters in Mexico City February 14, 2012. REUTERS/Henry RomeroView Photo Mexican Finance Minister Jose Antonio Meade speaks during an interview with Reuters in Mexico City February 14, 2012. REUTERS/Henry Romero MONTEVIDEO (Reuters) - Mexico will include possible steps to blunt the impact of sharp capital flows on the Group of 20's policy agenda after discussions with Latin American neighbors, Finance Minister Jose Antonio Meade said on Sunday. Mexico, which holds the G20's rotating presidency this year, hosted a seminar about G20 priorities on the sidelines of meetings of Inter-American Development Bank. The bloc's only Latin American members are Brazil, Mexico and Argentina. Meade said via his Twitter account that suggestions from the region would help to enrich the work of the G20, including a push to ease the impact of capital inflows and outflows and tools to administer flows better. One suggestion Mexico would take on board was to 'develop a better capacity to absorb financial flows in domestic financial systems,' he said. Many delegates at the IADB meeting have expressed concern about a recent move toward protectionism, particularly by Brazil, which last week pushed Mexico to curb auto exports over the next three years to boost its industrial sector, hit by an appreciating currency. Brazil blames loose monetary policy in developed economies for the foreign cash flows that have pushed up the real and unleashed a flood of cheap imports, hurting the competitiveness of Brazilian industries. Officials present at the Montevideo meeting said Uruguay, Paraguay and other countries had pushed for Mexico to make sure the G20 addressed currencies and trade barriers. 'Mexico was asked to raise issues of protectionism, exchange rates and capital flows,' Paraguay Economy Minister Dionisio Borda said. Meade told Reuters the G20 remained committed to combating protectionism and there was no intention to change this. 'In every G20 meeting what we have done is reconfirm the promise to combat protectionism, recognizing that this is a measure which does not contribute to global growth,' he said. In the G20 leaders' November communiqué, the group said multilateral trade was important as a way to avoid protectionism and called for more exchange rate flexibility. Protectionism and capital flows were not specifically mentioned in the communiqué following the G20 finance ministers' meeting in Mexico City in March, but Mexico has said one of its G20 priorities is economic stabilization. (Reporting by Krista Hughes and Guido Nejamkis; Editing by Maureen Bavdek)

Forex Analysis: Oil price rise raises specter of global recession

Forex Analysis: Oil price rise raises specter of global recession LONDON (Reuters) - A jump in energy prices is jamming the slow-turning cogs of an economic recovery in the West, but that may be nothing compared to the economic shock an Israeli attack on Iran would cause. Oil rose to a 10-month high above $125 a barrel Friday, prompting responses from policymakers around the world including U.S. President Barack Obama, watching U.S. gasoline prices follow crude to push toward $4 a gallon in an election year. Europe may have more to fear as its fragile economic growth falters and Greece, Italy and Spain look for alternative sources to the crude they currently import from Iran, where an EU oil embargo, intended to make Iran abandon what the West fears are efforts to develop nuclear weapons, comes into force in June. In euro terms, Brent crude rose to an all-time high of 93.60 euros this week, topping its 2008 record. 'The West's determination to prevent Iran acquiring nuclear weapons is coming at a price - a price that might include a second global recession triggered by an oil shock,' said David Hufton from the oil brokerage PVM. In dollar terms, oil prices are still some $20 a barrel short of their 2008 record of $147. But the latest Reuters monthly survey will Monday show oil analysts revising up their predictions for Brent crude by $3 since the previous month. Such a change is big in a poll of over 30 analysts, and last happened at the peak of the Libyan war in May. Ian Taylor, head of the world's biggest oil trading house Vitol, told Reuters this week prices could spike as high as $150 a barrel if Iran's arch-enemy Israel launched a strike at its nuclear facilities - an option Israel has declined to rule out. 'I used to think this would never happen,' Taylor said, 'but everyone you speak to says the Israelis will have a go at striking at Iranian nuclear sites. 'The day that happens, you have to believe the Iranians throw a few mines in the Strait of Hormuz and, for a few hours at least or maybe more, I cannot see a scenario where prices would not be at that sort of level ($150).' The U.N. nuclear watchdog said Friday Iran had sharply stepped up its uranium enrichment, which Iran insists is solely for civilian purposes. Israel has warned that, by putting much of its nuclear program underground, Iran is approaching a 'zone of immunity,' but it has also said any decision to attack is 'very far off.' Wall Street bank Merrill Lynch said this week that oil prices could climb to $200 over the next five years. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> So far this year, dollar prices for Brent crude have risen by more than 15 percent, pushed up mainly by fears about Iran. The loss of supply from three small and mid-sized producers suffering internal turmoil - Syria, Yemen and South Sudan - has added to the supply worries. WEAK GROWTH, HIGH PRICES A stabilization of the U.S. economy may explain some of the rise in oil prices, but the global economy is growing far more slowly now than at this time last year, yet crude prices are just as high. World equities and oil have typically been closely correlated since 2008 because both were driven by global demand. However, as oil prices start to respond to supply problems, the correlation is evaporating, and the global economy is already paying a high price. Data published this week showed unexpectedly weak activity in Europe's most powerful economy, Germany, and in France, sparking fresh worries that the region could tip into recession. Few have forgotten that in 2008, within six months of hitting its all-time high, oil plunged as low as $35 a barrel with the onset of the global credit crisis. In the United States, demand for refined oil products is close to its lowest level in nearly 15 years, indicating that motorists are cutting back their mileage. 'The price spike is going to be a challenge for politicians in the West running for re-election,' said Olivier Jakob from the Petromatrix consultancy. He said developed countries would find it hard to justify a release of strategic oil stocks similar to what they did in 2011. Unlike a year ago, when Libyan oil exports were disrupted by a war, this year 'there is ... instead a voluntary restriction on buying from a specific country,' said Jakob. Other than a release of oil stocks, developed countries could resort to yet another round of monetary easing, to which emerging markets will respond with quantitative tightening, price controls and subsidies, said analysts from HSBC. 'In terms of fiscal health, it would seem that Asia is better placed than other regions to deal with an oil price shock,' HSBC said in a note last week.

Forex U.S. did not call for strategic oil release: G20 sources

Forex U.S. did not call for strategic oil release: G20 sources U.S. Treasury Secretary Timothy Geithner (C) and Chairman of Grupo Financiero Banorte Guillermo Ortiz (L) arrive to a meeting of Group of Twenty (G20) leading economies' finance ministers and central bankers in Mexico City February 25, 2012. REUTERS/Tomas Bravo MEXICO CITY, Reuters (Feb 25) - The United States did not openly call for a release of countries' strategic oil reserves during Group of 20 meetings this weekend, Group of 20 sources said on Saturday. Treasury Secretary Timothy Geithner said on Friday the United States is considering a release from its strategic oil reserves as rising tensions between Iran and the West over its disputed nuclear program fueled a rise in oil prices. At meeting of G20 economies on Saturday, two people familiar with the discussion said finance officials had discussed the risk to the world economy from oil prices, which rose above $125 a barrel on Friday, but the United States did not push for a release of strategic reserves. Countries hold oil reserves as a buffer against sudden drops in supply. A draft communique for the G20 meeting, which is still under discussion, said high oil prices were a risk to the global economy, the sources said, although the outlook was cautiously optimistic. 'The communique says that there are some positive signs in the global economy, coming especially from the U.S. economy, but they are tentative,' one G20 official said. (Reporting by Francesca Landini and Dave Graham; Writing by Krista Hughes)

Forex Greece, creditors laboriously piece together debt deal

Forex Greece, creditors laboriously piece together debt deal ReutersReuters – 1 hour 26 minutes ago Companies: Thomson Reuters Corporation RELATED QUOTES Symbol Price Change TRI 27.82 -0.10 By Renee Maltezou and Lefteris Papadimas ATHENS (Reuters) - Greece and its private creditors head back to the negotiating table on Saturday to put together the final pieces of a long-awaited debt swap agreement needed to avert an unruly default. After weeks of muddling through round after round of inconclusive talks, the negotiations appear to be in their final phase, with both sides hoping to secure a preliminary deal before Monday's European Union summit. Prime Minister Lucas Papademos was expected to meet bankers' chief negotiator Charles Dallara at around 1330 GMT (8:30 a.m. EST) on Saturday, before meeting inspectors from the 'troika' of foreign lenders pressing Athens to step up painful reforms. 'Today will be another tough day,' said George Karatzaferis, leader of the far-right LAOS party, one of three parties in Papademos's emergency coalition government. 'We will see whether we can bear the burden that lies ahead.' The debt swap, in which private creditors are to take a 50 percent cut in the nominal value of their Greek bond holdings in exchange for cash and new bonds, is a prerequisite for the country to secure a 130-billion-euro rescue package. Papademos told Reuters in an interview on Friday he expected the debt talks to be concluded within days. 'We made significant progress over the last few weeks and in the last few days in particular. We are trying to conclude the discussions as quickly as possible. I am quite optimistic an agreement will be reached in the coming days,' he said. But concern has grown that the deal may not do enough to get the country's debt reduction plan back on track, and that Greece's European partners will be forced to stump up funds to cover the shortfall. The German news magazine Der Spiegel reported on Saturday that Greece's international lenders thought Athens would need 145 billion euros of public money from the euro zone for its second bailout rather than the planned 130 billion euros. The magazine said the extra money was needed because of the deteriorating economic situation in Greece, echoing a Reuters report on Thursday. Athens also faces problematic talks with the 'troika' of foreign lenders - the European Commission, IMF and European Central Bank - who have warned it needs to do more to drive through painful reforms before they dole out any more money. 'It's all very dense, difficult and crucial,' a Greek finance ministry official said. 'There is optimism because the country needs to survive and we need to protect its citizens because they have suffered a lot.' Athens and its creditors have broadly agreed that new bonds under the swap would probably have a 30-year maturity and a progressive interest rate. The deal is aimed at chopping 100 billion euros off Greece's crushing 350-billion-euro debt load. But they have wrangled for weeks over the interest rate Greece must pay on the new bonds and pressure has grown in recent days on the European Central Bank and other public creditors to accept a cut in the value of their Greek bond holdings like the private sector creditors. A debt deal must be sealed in about three weeks as Greece has to repay 14.5 billion euros of debt on March 20. Otherwise Greece will sink into an uncontrolled default that might spread turmoil across the euro zone. Papademos promised on Friday this would not happen. 'Greece will not default,' he said. International Monetary Fund Managing Director Christine Lagarde said on Saturday that euro zone members were making progress to overcome their crisis but must do more to strengthen their financial firewall, adding that the IMF was ready to help. 'There is progress as we see it,' Lagarde told a panel discussion at the World Economic Forum in Davos. 'But it is critical that the euro zone members actually develop a clear, simple, firewall that can operate both to limit the contagion and to provide this sort of act of trust in the euro zone so that the financing needs of that zone can actually be met.' Senior euro zone officials have expressed optimism on the Greek debt deal, though previous predictions of an imminent agreement have failed to become reality. Greece is in its fifth year of recession, and hopes of an end to the crisis in the near term have virtually gone, because of the combination of squabbling politicians, rising social anger and its inability to get its debt load under control. Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday. Greece said such a move was out of the question, adding that a similar proposal had been made in the past by a Dutch minister without getting anywhere. 'There is no way we would accept such a thing,' a Greek government official told Reuters. (Additional reporting by Renee Maltezou, Writing by Deepa Babington; editing by Tim Pearce)