SARNIA, ON, Aug. 31, 2006 (Canada NewsWire via COMTEX) -- New Suncor Facility Means More Jobs, Opportunities For Ontario Families
Ontario Premier Dalton McGuinty today helped officially open Suncor's new ethanol plant, which will help attract investment, create jobs and lead to a cleaner environment for Ontario families.
"The start of production at this world-class facility marks a major step forward for Ontario's emerging ethanol industry," said Premier McGuinty. "It will attract investment, create jobs and open up new markets for our farmers."
The St. Clair Ethanol Plant is the largest ethanol production facility in Canada with an expected production volume of 200 million litres per year. The plant has 38 full-time employees and is expected to use 20 million bushels of corn per year, creating ongoing opportunities for corn growers.
The plant has been supported by the signing of the Ethanol Manufacturer's Agreement between Ontario and Suncor. Designed to provide a stable environment for investment in ethanol, the agreement will provide the Suncor plant with a projected $36 million over the next three years.
The government is encouraging the construction of more ethanol plants in Ontario by investing up to $520 million in the 12-year Ontario Ethanol Growth Fund. The fund supports ethanol producers and independent retailers selling ethanol blends and promotes research and innovation.
The McGuinty government is also committed to reducing greenhouse gas emissions by increasing the use of ethanol in gasoline. In November 2004, the government announced a Renewable Fuels Standard, requiring an average of five per cent ethanol in all gasoline sold in Ontario by January 1, 2007.
"The growth of Ontario's ethanol industry is bringing exciting new opportunities to our rural communities," said Leona Dombrowsky, Minister of Agriculture, Food and Rural Affairs. "Our ethanol plan is part of our strategy to help farmers innovate, pursue new markets and stabilize their incomes so they can prosper."
"Suncor's new ethanol plant here in Sarnia is great news for families in this community," said Caroline Di Cocco, MPP for Sarnia-Lambton. "It will strengthen the local economy and bring unprecedented investment to the area."
Investing in alternative fuels is just one way the McGuinty government is working on the side of businesses and families to strengthen Ontario's economy.
Other initiatives include:
<<
- Encouraging strong job creation, with more than 283,000 net new jobs
since taking office
- Helping to generate almost $7 billion in automotive investments that
retain and create thousands of high-value jobs
- Launching a $500-million Advanced Manufacturing Investment Strategy
to help manufacturers develop cutting-edge technologies.
>>
"By supporting the production of ethanol in Ontario, we're helping to make Ontario a world leader in the bio-fuels industry," said Premier McGuinty. "We're going to continue working with our industry partners to ensure Ontario remains the best place to invest in the years to come."
Disponible en francais
<<
www.ontario.ca/premier
www.strongontario.ca
>>
SOURCE: Office of the Premier of Ontario
Thursday, August 31, 2006
Global Realty Development Corp. To Acquire Unique Biofuels Company U.S. Sustainable Energy Corp.
CORAL SPRINGS, Fla., Aug 30, 2006 (PRIMEZONE via COMTEX) -- Global Realty Development Corp. (OTCBB:GRLY) today announced that it has executed a Memorandum of Understanding to acquire United States Sustainable Energy Corp. of Mississippi, "USSEC" subject to due diligence and certain events.
U.S. Sustainable Energy Corp. of Mississippi ("USSEC" or "the Company") comprises a family of patent and patent-pending technologies that focus on the development of Green alternative Biofuels energy from sustainable biomass sources, such as soybean and corn, and the conversion of waste into alternative energy or other usable products.
USSEC has signed an MOU with Cofitral Holding S.p.A. proposing a joint venture to license the technology for the European Union paying a license fee to USSEC for $1,000,000 in 30 days. Cofitral designs, implements and manages business in the environment, agriculture, energy, transportation and logistics sectors. The Joint Venture will be owned 85% by USSEC and 15% by Cofitral. John Rivera, Chairman of USSEC stated, "The Company's process yields in excess of five gallons of Biofuels from 60 pounds of beans or one bushel of raw soybean. It takes 8.5 minutes from bean to fuel. The yield of 5 gallons of Biofuels per bushel is approximately more than twice as great as the yield of Biodiesel from the same input. Variations of the Biofuels have been used to operate all engines including diesel generators, automobiles, trucks, railroads and jet airplanes. The Company can use many different biomass materials including corn, rapeseed, jatropha, palm oil, etc. to produce its Biofuels."
ABOUT USSEC
USSEC is an international producer of American Biofuels solutions through its proprietary and patent pending processes, Biofuels products and molecular structure of the Biofuels. From its testing plant in Mississippi, USSEC has produced various Biofuels which have been used to operate all engines including diesel generators, automobiles, trucks, railroads and jet airplanes. The Company can use many different biomass materials including corn, rapeseed, jatropha, palm oil, etc., to produce its Biofuels. USSEC can also utilize its Biofuels to co-generate electricity. USSEC is dedicated to building Biofuels facilities to produce Green Power. If USSEC produces Green Power in any state in the United States that have a Green Power program or any country signed as a member of the Kyoto Convention then USSEC will generate Green certificates known as "Green Tags". Green tags, also known as Renewable Energy Credits (RECs) or Tradable Renewable Certificates (TRCs), are a market mechanism that represent the environmental benefits associated generating electricity from renewable energy sources. Rather than functioning as a tax on pollution-causing electricity generators, as traditional carbon emissions trading programs do, green tags function as a non-governmental subsidy on pollution-free electricity generators.
In states which have a green tag program, a green energy provider, such as USSEC, is credited with one green tag for every 1000kWh of electricity it produces. A certifying agency gives each green tag a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying green tag can then be sold on the open market.
U.S. Sustainable Energy Corp. of Mississippi ("USSEC" or "the Company") comprises a family of patent and patent-pending technologies that focus on the development of Green alternative Biofuels energy from sustainable biomass sources, such as soybean and corn, and the conversion of waste into alternative energy or other usable products.
USSEC has signed an MOU with Cofitral Holding S.p.A. proposing a joint venture to license the technology for the European Union paying a license fee to USSEC for $1,000,000 in 30 days. Cofitral designs, implements and manages business in the environment, agriculture, energy, transportation and logistics sectors. The Joint Venture will be owned 85% by USSEC and 15% by Cofitral. John Rivera, Chairman of USSEC stated, "The Company's process yields in excess of five gallons of Biofuels from 60 pounds of beans or one bushel of raw soybean. It takes 8.5 minutes from bean to fuel. The yield of 5 gallons of Biofuels per bushel is approximately more than twice as great as the yield of Biodiesel from the same input. Variations of the Biofuels have been used to operate all engines including diesel generators, automobiles, trucks, railroads and jet airplanes. The Company can use many different biomass materials including corn, rapeseed, jatropha, palm oil, etc. to produce its Biofuels."
ABOUT USSEC
USSEC is an international producer of American Biofuels solutions through its proprietary and patent pending processes, Biofuels products and molecular structure of the Biofuels. From its testing plant in Mississippi, USSEC has produced various Biofuels which have been used to operate all engines including diesel generators, automobiles, trucks, railroads and jet airplanes. The Company can use many different biomass materials including corn, rapeseed, jatropha, palm oil, etc., to produce its Biofuels. USSEC can also utilize its Biofuels to co-generate electricity. USSEC is dedicated to building Biofuels facilities to produce Green Power. If USSEC produces Green Power in any state in the United States that have a Green Power program or any country signed as a member of the Kyoto Convention then USSEC will generate Green certificates known as "Green Tags". Green tags, also known as Renewable Energy Credits (RECs) or Tradable Renewable Certificates (TRCs), are a market mechanism that represent the environmental benefits associated generating electricity from renewable energy sources. Rather than functioning as a tax on pollution-causing electricity generators, as traditional carbon emissions trading programs do, green tags function as a non-governmental subsidy on pollution-free electricity generators.
In states which have a green tag program, a green energy provider, such as USSEC, is credited with one green tag for every 1000kWh of electricity it produces. A certifying agency gives each green tag a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying green tag can then be sold on the open market.
Texas getting another ethanol plant
DALLAS, Aug 29, 2006 (UPI via COMTEX) -- Panda Ethanol Inc. will build a 100-million-gallon-per-year ethanol plant in Sherman County, Texas.
The facility will annually refine about 40 million bushels of corn and milo and generate the steam used in the process by gasifying more than 1 billion pounds of cattle manure a year, PEI said Tuesday.
The Sherman facility is the fourth 100-million-gallon ethanol project announced by Panda, and the third to be powered by cattle manure.
Panda's Sherman refinery will be located on a 1,200-acre site 3 miles northwest of Stratford, Texas. Construction will take about 18 months.
The facility will annually refine about 40 million bushels of corn and milo and generate the steam used in the process by gasifying more than 1 billion pounds of cattle manure a year, PEI said Tuesday.
The Sherman facility is the fourth 100-million-gallon ethanol project announced by Panda, and the third to be powered by cattle manure.
Panda's Sherman refinery will be located on a 1,200-acre site 3 miles northwest of Stratford, Texas. Construction will take about 18 months.
RUSSIA HARVESTED LESS CORN THAN LAST YEAR
ST.PETERSBURG, RUSSIA, Aug 28, 2006 (A&G News via COMTEX) -- By the beginning of August Russia harvested 18,3 million tones of corn, that is by 2,4 million tones less than in the same period of the last year. As far as Rosstat informed on Monday, the part of wheat was 14,2 million tones of all the volume of the corn gathered. According to the data of the Minister of Agriculture, the gross corn harvest this year will come to 70-73 million tones. The MEDT forecasts the harvest at the volume of 75 million tones. Last year Russia gathered 78,2 million tones of corn.
Tuesday, August 29, 2006
Vietnam Coffee-Heat and looting threaten crop quality
By Ho Binh Minh
HANOI, Aug 29 (Reuters) - The threat of looting posed by high coffee prices and sunny September weather may lead to poorer bean quality as Vietnamese coffee farmers start harvesting early to protect the crop and cash in, traders said on Tuesday.
They said the looters will be active in the key coffee-growing Central Highlands as long as prices in the world's top producer of robusta stay around 20,000 dong ($1.25) per kilogram, near a five-year high.
A kilogram of robusta beans eased to 20,600 dong ($1.29) on Tuesday from 21,500 dong on Aug. 23, which is the highest since global coffee prices crashed in 2001.
"Prices are so good now and if they remain above 20,000 dong, looting is inevitable," said a Ho Chi Minh City trader.
Another trader said it was common when prices were high for hired labourers to loot the same farm they worked for at night.
"The weather has been very good now and if sunny days come in September, the harvest could start early because some cherries are ripe," he said while en route to survey the crop.
Cherries ripened early as rains falling during the previous October-January harvest resulted in an early blossom.
The mid-October start of Vietnam's harvest follows the arrival of the -dry season. Growers said rainfall was good after a drought ended early last year.
But an early harvest that takes place while coffee cherries are green, coupled with hasty picking to avoid looting, will make it difficult to process coffee and raise the ratio of black beans. Unripened cherries tend to be disqualified during processing because the high moisture content in the cherries spoil the beans in them.
Black beans are regarded as defective and may affect the selling price.
LOSSES
Deputy Agriculture Minister Diep Kinh Tan told a coffee quality seminar last Thursday that harvesting unripened cherries could mean losses of 100,000 tonnes each crop.
Vietnamese industry officials said farmers were aware of the quality problem, but they often chose to harvest early rather than leave them unprotected on the farm.
About 80 percent of Vietnam's coffee is grown by 600,000 farmer families, making it difficult for the state to control crop production and ensure stable quality.
"It is the farmers' call and no power can interfere," the first trader told Reuters.
Vietnamese robusta, which is used to make instant coffee and which is priced lower than aromatic arabica, is sold at discounts to London futures contracts partly because of its lower quality.
On Tuesday, Vietnamese exporters, aware of a possible dearth of good quality beans in November due to numerous committed shipments, have reduced making offers. The London market's closure for a public holiday on Monday also contributed to Vietnam's slow trade.
But traders said robusta grade 2, 5 percent black and broken was recently quoted at $70 to $90 a tonne to the LIFFE November contract, or $1,400 free on board at Saigon Port . The quotation is on par with the export price on April 2, 1999.
Prices in Vietnam then fell gradually to $290 in early October 2001, when world prices plunged to 30-year lows.
The government has estimated coffee exports will rise 9.7 percent to 835,000 tonnes, or 13.9 million 60-kg bags, between October 2005 and August 2006, over the same period in the previous crop year.
($1=15,976 dong)
HANOI, Aug 29 (Reuters) - The threat of looting posed by high coffee prices and sunny September weather may lead to poorer bean quality as Vietnamese coffee farmers start harvesting early to protect the crop and cash in, traders said on Tuesday.
They said the looters will be active in the key coffee-growing Central Highlands as long as prices in the world's top producer of robusta stay around 20,000 dong ($1.25) per kilogram, near a five-year high.
A kilogram of robusta beans eased to 20,600 dong ($1.29) on Tuesday from 21,500 dong on Aug. 23, which is the highest since global coffee prices crashed in 2001.
"Prices are so good now and if they remain above 20,000 dong, looting is inevitable," said a Ho Chi Minh City trader.
Another trader said it was common when prices were high for hired labourers to loot the same farm they worked for at night.
"The weather has been very good now and if sunny days come in September, the harvest could start early because some cherries are ripe," he said while en route to survey the crop.
Cherries ripened early as rains falling during the previous October-January harvest resulted in an early blossom.
The mid-October start of Vietnam's harvest follows the arrival of the -dry season. Growers said rainfall was good after a drought ended early last year.
But an early harvest that takes place while coffee cherries are green, coupled with hasty picking to avoid looting, will make it difficult to process coffee and raise the ratio of black beans. Unripened cherries tend to be disqualified during processing because the high moisture content in the cherries spoil the beans in them.
Black beans are regarded as defective and may affect the selling price.
LOSSES
Deputy Agriculture Minister Diep Kinh Tan told a coffee quality seminar last Thursday that harvesting unripened cherries could mean losses of 100,000 tonnes each crop.
Vietnamese industry officials said farmers were aware of the quality problem, but they often chose to harvest early rather than leave them unprotected on the farm.
About 80 percent of Vietnam's coffee is grown by 600,000 farmer families, making it difficult for the state to control crop production and ensure stable quality.
"It is the farmers' call and no power can interfere," the first trader told Reuters.
Vietnamese robusta, which is used to make instant coffee and which is priced lower than aromatic arabica, is sold at discounts to London futures contracts partly because of its lower quality.
On Tuesday, Vietnamese exporters, aware of a possible dearth of good quality beans in November due to numerous committed shipments, have reduced making offers. The London market's closure for a public holiday on Monday also contributed to Vietnam's slow trade.
But traders said robusta grade 2, 5 percent black and broken was recently quoted at $70 to $90 a tonne to the LIFFE November contract
Prices in Vietnam then fell gradually to $290 in early October 2001, when world prices plunged to 30-year lows.
The government has estimated coffee exports will rise 9.7 percent to 835,000 tonnes, or 13.9 million 60-kg bags, between October 2005 and August 2006, over the same period in the previous crop year.
($1=15,976 dong)
Brazil Coffee - Growers meet in bullish mood
By Peter Blackburn
RIO DE JANEIRO, Brazil, Aug 29 (Reuters) - Brazilian coffee producers, with more than 85 percent of an excellent crop harvested, were gathering in Belo Horizonte on Tuesday feeling bullish about the market outlook.
Nestor Osorio, executive director of the International Coffee Organization, will open the three-day meeting in the capital of Brazil's biggest coffee producing state against a backdrop of tight stocks and much smaller crop next year.
"We want to discuss the sector's future and to improve coffee policy planning," said Mauricio Miarelli, president of the producers National Coffee Council (CNC).
An exceptionally dry Brazilian winter fanned speculation that coffee trees, tired after a large harvest, would produce a poor flowering in September for next year's crop.
However, traders said that lack of autumnal rain in March and April and higher than normal winter temperatures were mainly responsible for stressing coffee trees.
Last Friday, the government as expected slightly revised up its estimate of the current harvest to 41.57 million 60-kg tags, a 26 percent increase on last year.
Light rain last weekend in coffee areas of Minas Gerais and other parts of the southeastern coffee belt dampened speculation about a poor September flowering and triggered a decline in New York Board of Trade (NYBOT) futures.
As a result, domestic physical trading was subdued.
"Producers are only selling enough coffee to settle their bills," said Santos-based broker Eduardo Carvalhaes.
HIGHER AUG SHIPMENTS
But despite a shortage of containers and disputes over shipping and handling charges, export registrations between Aug. 1 and 28 totaled 2.32 million bags, 41 percent higher than 1.65 million bags at the same time last month and up 13 percent from 2.06 million bags in August 2005.
Swedish quality arabicas for Sept/Dec shipment were unchanged at -20/-18 cents a 1b under New York futures.
"Even when it's quiet a lot of business gets done," Carvalhaes said.
A Rio de Janeiro based broker added, "It's stalemate. Producers are confident that prices will rise while buyers refuse to pay up because they believe there's a lot of selling to come."
Despite the harvest, good quality, hard cup arabicas were quoted at 245/250 reais per 60-kg bag, up 5 reais from last week.
RIO DE JANEIRO, Brazil, Aug 29 (Reuters) - Brazilian coffee producers, with more than 85 percent of an excellent crop harvested, were gathering in Belo Horizonte on Tuesday feeling bullish about the market outlook.
Nestor Osorio, executive director of the International Coffee Organization, will open the three-day meeting in the capital of Brazil's biggest coffee producing state against a backdrop of tight stocks and much smaller crop next year.
"We want to discuss the sector's future and to improve coffee policy planning," said Mauricio Miarelli, president of the producers National Coffee Council (CNC).
An exceptionally dry Brazilian winter fanned speculation that coffee trees, tired after a large harvest, would produce a poor flowering in September for next year's crop.
However, traders said that lack of autumnal rain in March and April and higher than normal winter temperatures were mainly responsible for stressing coffee trees.
Last Friday, the government as expected slightly revised up its estimate of the current harvest to 41.57 million 60-kg tags, a 26 percent increase on last year.
Light rain last weekend in coffee areas of Minas Gerais and other parts of the southeastern coffee belt dampened speculation about a poor September flowering and triggered a decline in New York Board of Trade (NYBOT) futures.
As a result, domestic physical trading was subdued.
"Producers are only selling enough coffee to settle their bills," said Santos-based broker Eduardo Carvalhaes.
HIGHER AUG SHIPMENTS
But despite a shortage of containers and disputes over shipping and handling charges, export registrations between Aug. 1 and 28 totaled 2.32 million bags, 41 percent higher than 1.65 million bags at the same time last month and up 13 percent from 2.06 million bags in August 2005.
Swedish quality arabicas for Sept/Dec shipment were unchanged at -20/-18 cents a 1b under New York futures.
"Even when it's quiet a lot of business gets done," Carvalhaes said.
A Rio de Janeiro based broker added, "It's stalemate. Producers are confident that prices will rise while buyers refuse to pay up because they believe there's a lot of selling to come."
Despite the harvest, good quality, hard cup arabicas were quoted at 245/250 reais per 60-kg bag, up 5 reais from last week.
Monday, August 28, 2006
Brazil govt revises up 2006/07 coffee crop 2.5 pet
By Andrea Welsh
BRASILIA, Brazil, Aug 25 (Reuters) - Brazil's 2006/07 (July/June) coffee crop is seen 2.5 percent higher at 41.57 million 60-kg bags, compared with 40.62 million bags estimated in April, the agriculture ministry said on Friday.
The world's biggest coffee grower and exporter will produce 26 percent more coffee than the 32.94 million bags in 2005/06.
In its third 2006/07 crop estimate, the government put arabica bean output at 32.06 million bags, up from 31.02 million bags seen in April, whilst robusta output was estimated at 9.51 million bags, against 9.60 million bags previously.
Brazil produced 23.82 million bags of arabicas and 9.13 million bags of robustas in 2005/06. "There's not much change in the general scenario (from the previous estimate)," Vilmondes Olegario da Silva, the ministry's director of coffee, told a news briefing.
Higher prices encouraged increased crop care, such as more fertilizer, pesticide and pruning, which resulted in a slight upwards revision of the crop. An upturn this year in arabica's biennial production cycle also boosted this year's crop.
Average yield was estimated at 19.43 bags per hectare, up 31 percent from last year, but the total productive area was 3.5 percent smaller at 2.14 million hectares, versus 2.22 million hectares in 2005/06.
Yields were excellent at 23 bags per hectare in south Minas and " the center-west of Minas Gerais state, which produce about 55 percent of the coffee in Brazil's No. 1 coffee state.
But yields were disappointing in forested coffee areas and in the robusta producing state of Rondonia.
An estimated 86 percent of Brazil's coffee crop will have been harvested by the end of August, Vilmondes said.
Looking ahead to next year's crop, he said that the winter had been extremely dry and trees were stressed.
"There's no reason to be alarmist, but we have already exceeded the level at which trees are vulnerable to drought," Vilmondes said.
He noted that the moisture deficit was now 220 millimeters (8.7 inches) and that trees are vulnerable at 150 mm.
"It's difficult to forecast...if it rains there could be recovery," he said.
Vilmondes forecast that Brazil would export 26 million bags of green and soluble coffee in 2006, after shipping 13.7 million bags between January and July.
He said stocks had declined since the end of March, when 9.7 million bags of coffee were stored privately and 2.6 million bags were held by the government's National Coffee Development Fund (Funcafe).
Traders and analysts expected a slight upward revision in the crop due to excellent harvesting conditions during an extremely dry Brazili an winter.
In June, the U.S. Department of Agriculture (USDA) put the Brazilian crop at 44.8 million bags -- the top end of trade guesstimates ranging from 42 million to 45 million bags.
BRASILIA, Brazil, Aug 25 (Reuters) - Brazil's 2006/07 (July/June) coffee crop is seen 2.5 percent higher at 41.57 million 60-kg bags, compared with 40.62 million bags estimated in April, the agriculture ministry said on Friday.
The world's biggest coffee grower and exporter will produce 26 percent more coffee than the 32.94 million bags in 2005/06.
In its third 2006/07 crop estimate, the government put arabica bean output at 32.06 million bags, up from 31.02 million bags seen in April, whilst robusta output was estimated at 9.51 million bags, against 9.60 million bags previously.
Brazil produced 23.82 million bags of arabicas and 9.13 million bags of robustas in 2005/06. "There's not much change in the general scenario (from the previous estimate)," Vilmondes Olegario da Silva, the ministry's director of coffee, told a news briefing.
Higher prices encouraged increased crop care, such as more fertilizer, pesticide and pruning, which resulted in a slight upwards revision of the crop. An upturn this year in arabica's biennial production cycle also boosted this year's crop.
Average yield was estimated at 19.43 bags per hectare, up 31 percent from last year, but the total productive area was 3.5 percent smaller at 2.14 million hectares, versus 2.22 million hectares in 2005/06.
Yields were excellent at 23 bags per hectare in south Minas and " the center-west of Minas Gerais state, which produce about 55 percent of the coffee in Brazil's No. 1 coffee state.
But yields were disappointing in forested coffee areas and in the robusta producing state of Rondonia.
An estimated 86 percent of Brazil's coffee crop will have been harvested by the end of August, Vilmondes said.
Looking ahead to next year's crop, he said that the winter had been extremely dry and trees were stressed.
"There's no reason to be alarmist, but we have already exceeded the level at which trees are vulnerable to drought," Vilmondes said.
He noted that the moisture deficit was now 220 millimeters (8.7 inches) and that trees are vulnerable at 150 mm.
"It's difficult to forecast...if it rains there could be recovery," he said.
Vilmondes forecast that Brazil would export 26 million bags of green and soluble coffee in 2006, after shipping 13.7 million bags between January and July.
He said stocks had declined since the end of March, when 9.7 million bags of coffee were stored privately and 2.6 million bags were held by the government's National Coffee Development Fund (Funcafe).
Traders and analysts expected a slight upward revision in the crop due to excellent harvesting conditions during an extremely dry Brazili an winter.
In June, the U.S. Department of Agriculture (USDA) put the Brazilian crop at 44.8 million bags -- the top end of trade guesstimates ranging from 42 million to 45 million bags.
Sunday, August 27, 2006
London coffee sets 7-yr peak on stock suspension
London coffee sets 7-yr peak on stock suspension
By Eleanor Wason
LONDON, Aug 22 (Reuters) - World robusta coffee futures closed up on Tuesday but off a fresh seven-year high hit on the back of news on damage to stocks in Italy just as supplies from top producer Vietnam start to run out.
Dealers said weakness in New York pulled the market off the day's peak.
The benchmark November contract closed up $35, or 2.3 percent, to settle at $1,570 after trading between $1,586 and $1,535. Total volume was a strong 23,562 lots.
"We thought New York would be supported by London. It didn't happen and then London came down because of New York," one dealer said.
September coffee settled up over 7 percent at $1,745, the top price for a nearby contract since January 2000. Its premium over November rose to as much as $175.
Euronext.liffe said late on Monday it suspended 3,098 five-tonne lots of coffee stored in the port of Trieste, potentially cutting the amount of robusta available to be delivered against the exchange's futures contracts by as much as 16 percent.
"The catalyst was the announcement by the exchange. It has fanned the -fire and coincides with problems we had already with the drawdown of stocks," a trader said.
Inventories certified by Euronext.liffe stood at 19,428 lots as of mid-August, already the lowest in six years.
Robusta is largely used to make soluble coffee and is already in short supply after a drought-induced drop in Vietnamese production in the 2005/06 season. The better-quality arabica variety trades in New York and mainly grows in Brazil.
Euronext.liffe suspended the coffee because of moisture damage. It had already reduced Trieste's stocks to 3,796 lots after withdrawing 2,021 lots for the same reason earlier this month. The port held the second largest pile of certified coffee after Antwerp, home to two-thirds of the exchange's supply.
VIETNAM HARVEST
Robusta has risen about 32 percent since the start of the year amid fears about Vietnamese production, which accounts for almost a third of world robusta supply, as well as a surge of interest from investment funds.
Traders and analysts declined to predict how much further prices could rise.
"Whenever you get into a situation driven by short-term supply problems, pricing the top of the market is a dangerous business," said Fortis analyst Jonathan Parkman.
Market players agreed prices are likely to remain volatile for the next few months until Vietnam starts to harvest its 2006/07 crop.
The pricing of contracts reflected these concerns with coffee to be delivered in September, November and January all commanding a premium.
Normally, in a well-supplied market contracts further forward are more expensive.
Traders in Germany, Europe's biggest coffee market, said the Trieste stock problems contributed to a virtual standstill in physical robusta trade.
"It came as a rather a surprise," one said. "You do not expect damage on this sort of scale in modern warehousing operations and people are waiting for more information."
Dealers said it was important to find out how much of the coffee would be a total loss and how much could be re-certified.
Longer-term, analysts are divided on the effect higher prices will have on production. Fortis's Parkman said farmers, particularly in Vietnam, are likely to be encouraged to expand output.
German analyst F.O. Licht said in a report last week though that there were few signs of significant expansion.
Producers are likely to be wary of overexpanding after a surge in output, mainly by Vietnam, sent robusta tumbling to 30-year lows of under $400 a tonne in 2001.
By Eleanor Wason
LONDON, Aug 22 (Reuters) - World robusta coffee futures closed up on Tuesday but off a fresh seven-year high hit on the back of news on damage to stocks in Italy just as supplies from top producer Vietnam start to run out.
Dealers said weakness in New York pulled the market off the day's peak.
The benchmark November contract
"We thought New York would be supported by London. It didn't happen and then London came down because of New York," one dealer said.
September coffee
Euronext.liffe said late on Monday it suspended 3,098 five-tonne lots of coffee stored in the port of Trieste, potentially cutting the amount of robusta available to be delivered against the exchange's futures contracts by as much as 16 percent.
"The catalyst was the announcement by the exchange. It has fanned the -fire and coincides with problems we had already with the drawdown of stocks," a trader said.
Inventories certified by Euronext.liffe stood at 19,428 lots as of mid-August, already the lowest in six years.
Robusta is largely used to make soluble coffee and is already in short supply after a drought-induced drop in Vietnamese production in the 2005/06 season. The better-quality arabica variety trades in New York and mainly grows in Brazil.
Euronext.liffe suspended the coffee because of moisture damage. It had already reduced Trieste's stocks to 3,796 lots after withdrawing 2,021 lots for the same reason earlier this month. The port held the second largest pile of certified coffee after Antwerp, home to two-thirds of the exchange's supply.
VIETNAM HARVEST
Robusta has risen about 32 percent since the start of the year amid fears about Vietnamese production, which accounts for almost a third of world robusta supply, as well as a surge of interest from investment funds.
Traders and analysts declined to predict how much further prices could rise.
"Whenever you get into a situation driven by short-term supply problems, pricing the top of the market is a dangerous business," said Fortis analyst Jonathan Parkman.
Market players agreed prices are likely to remain volatile for the next few months until Vietnam starts to harvest its 2006/07 crop.
The pricing of contracts reflected these concerns with coffee to be delivered in September, November and January all commanding a premium.
Normally, in a well-supplied market contracts further forward are more expensive.
Traders in Germany, Europe's biggest coffee market, said the Trieste stock problems contributed to a virtual standstill in physical robusta trade.
"It came as a rather a surprise," one said. "You do not expect damage on this sort of scale in modern warehousing operations and people are waiting for more information."
Dealers said it was important to find out how much of the coffee would be a total loss and how much could be re-certified.
Longer-term, analysts are divided on the effect higher prices will have on production. Fortis's Parkman said farmers, particularly in Vietnam, are likely to be encouraged to expand output.
German analyst F.O. Licht said in a report last week though that there were few signs of significant expansion.
Producers are likely to be wary of overexpanding after a surge in output, mainly by Vietnam, sent robusta tumbling to 30-year lows of under $400 a tonne in 2001.
Outlook for Frozen Orange Juice Remains Bullish for Long Term
Outlook for Frozen Orange Juice Remains Bullish for Long Term
By James Cordier and Michael Gross
19 Aug 2006 at 07:50 AM EDT
TAMPA, Fla. (Liberty Trading Group) -- While major news events can often cause immediate knee-jerk reactions in the markets, the longer term fallout of such events is often not known for months, or even years. The series of devastating hurricanes that struck the U.S. Gulf coast over the last two years are examples of how prices of certain commodities such as oil, natural gas, cotton, soybeans and even sugar can be affected in the immediate aftermath of such an occurrence. With the possible exception of natural gas, these commodities have long since recovered, replaced or repaired any storm related supply losses or damage to production or shipping facilities.
There is, however, one glaring exception. In the hurricanes of 2004 and 2005, there was one market that had its infrastructure damaged so severely that its impact will be felt for years to come. The market to which we are referring is frozen concentrate orange juice (FCOJ).
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When storms with names such as Charlie and Francis roared through Florida’s growing regions in 2004, the FCOJ market, like many other commodities markets, immediately began pricing the damage to the current supply. When a second round of storms battered central Florida the following year, the market again raced to new highs to account for orange production loss to the 2005 crop. What was not immediately known was the longer term damage done to Florida orange trees and its impact on future production.
What was not known then is now becoming clear. Florida groves suffered substantial long term damage, having lost thousands of trees. And the Florida orange industry is in no immediate hurry to replace them. This fact is clearly evident in the production estimates for the upcoming 2006/2007 crop.
But before we discuss current production, one must first understand what type of production occurred before the storms took place. In the five years prior to the summer of 2004, Florida produced an average of 226.2 million boxes of oranges per year (1999-2003). The storm in 2004 damaged crop produced only 149.6 million boxes of oranges; 2005 faired only moderately better, producing 151 million boxes of oranges. This means that for two years running, Florida groves have produced roughly 34% less oranges than their previous 5-year average. This shortfall in supply has resulted in one of the most sustained bull markets in all of commodities over the last two years. On Thursday of this week, FCOJ prices at the New York Board of Trade hit a new 16 year high, topping out at over $1.87 per pound.
Those that thought the bull market was nearing completion and that 2006 would bring more “normal” production back to Florida may want to check again. Largely due to the loss of trees, commercial firm Louis Dreyfus pegged the 2006/2007 crop at only 160 million boxes. This estimate does not, of course, take into account any possible storms that could affect Florida this hurricane season. Another private analyst, Elizabeth Steger, has the crop pegged at a stunning 123 million boxes.
Liberty Trading’s estimate is closer to Dreyfus at 145 million boxes for 2006/2007 production. We believe Florida growers will probably grow close to 160 million boxes of oranges. However, what many in the trade fail to consider is that many groves in the most heavily damaged regions will only yield 30%-50% of their pre-storm production. At these low yields, the cost of harvesting the oranges becomes less than the revenues they would produce. In other words, it is more cost efficient for growers to forego harvesting. We project that this “lost” production will reduce the 2006 crop an additional 10-15 million boxes of oranges.
The fact that growers have been slow to replant trees does not bode well for future orange production. With Florida’s bulging population, land hungry developers are making some attractive offers to Florida growers and many are accepting. With production down and land prices skyrocketing, many growers figure this is a good time to sell. However their gain is the market’s loss and the FCOJ contract will have to rely more heavily than ever on Brazilian oranges to fill the void. However, not only can Brazil not cover the entire shortfall, their oranges are more expensive to ship (they must be imported into the U.S.), and they are harvested at a different time of year.
If October’s USDA estimate is anywhere near Dreyfus’s estimate of 160 million boxes, we think $2.00 OJ is fundamentally justified. Another storm blowing through central Florida before then could probably drive prices near the $2.20 range.
Many traders talk of trading with the trend but few find it easy to do so, instead seeking fast and sizable rewards by trying to pick tops and bottoms. We advise against this. As we state repeatedly in our book and our columns, selling options in favor of the trend is one of the highest probability trades an investor can execute. Though currently a bit overbought, the uptrend in juice is solidly entrenched and has a sound fundamental justification.
At the very least, it is our opinion that it will be difficult for FCOJ to reverse trend and head substantially lower facing the third strait year of anemic production and heading into the heart of hurricane season. For this reason, we think a correction next week will provide opportunities to sell put premium below the market.
Copyright © Liberty Trading Group 2006
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