Farmers co-operative wins Tesco rapeseed oil contract
Berwickshire News -- A local farmers co-operative is supplying Tesco with rapeseed oil just two years after starting production. Already known locally for its Oleifera rapeseed oil, the group of farmers is this week stocking more than 40 Tescos with its product, sold under the name of Border Fields Rapeseed Oil.
Eventually the oil will sell in 125 Tesco stores throughout Scotland and the north of England.
The co-operative's chairperson, Jill McGregor, said: "Rapeseed oil is growing in popularity as it offers a significant number of health benefits and we are delighted to be working with Tesco to make this product available to a wider market."
The group was started by Coldstream Mains farmers Jill and her husband Colin, about two and a half years ago. A further 12 other Borders, Berwickshire and north Northumberland farmers joined the entrepreneurs.
Mrs McGregor said: "We wanted to add value to a crop that we were growing and this obviously helps us by giving us a better return."
She first tried the Coldstream Mains homegrown oil squeezed from a small batch press ."I was thrilled," she said.
"It was really good to cook with and incredibly versatile. My children were happy to eat anything cooked with it and, knowing the health benefits, I was especially pleased."
Rapeseed oil is said to have half the saturated fat of olive oil and 10 times the level of Omega 3. It has a natural balance of Omegas 6 and 9 and high levels of vitamin E. It is also a very stable oil with a high burning point of 230 degrees centigrade.
Knowledge about the oil had gradually spread. While not many people appreciated it as a culinary oil two years ago, much of that has changed with celebrity chefs now recommending it for its health benefits, but also because it cooks to a much higher temperature than olive oil.
Lauded Scottish chef Nick Nairn is known to use Oleifera, the company's other brand, which sells in Sainsbury's and Asda.
The oil is all cold-pressed at a purpose-built production plant near Belford in north Northumberland and its shelf life is a year. It takes one tonne of oilseed rape to produce 300 litres of oil.
Sarah Mackie, head of Tesco Scotland, said: "We are delighted to launch oil that is produced from the oilseed rape that we see so often in Scotland, and we are delighted that our customers will be able now be able to purchase Border Fields oil from our stores."
HSBC profit drops 29% as bad debt charges soar
LONDON (MarketWatch) -- HSBC Holdings on Monday reported a 29% drop in first-half net profit as bad debt charges surged to over $10 billion, though the bank still lifted its interim dividend payment.
Net profit for the period fell to $7.72 billion from $10.9 billion a year earlier and was broadly in line with market expectations. Loan impairment charges and other provisions jumped 58% to $10 billion.
HSBC said it remained profitable in all regions with the exception of North America, where its personal financial services business lost $2.2 billion due to the higher bad debt charges.
Chairman Stephen Green said financial markets "will not and should not," return to the situation they were in before the credit crisis.
"Ultimately, the real economy will recover from this crisis, although it may get worse before it gets better," he said.
Volley of criticism means shaky outlook for EU biofuels
FWi -- It has been an eventful few weeks for biofuels in Europe. Each week has brought another volley of criticism. Like a punch-drunk boxer, the biofuel industry is still there fighting, but to take the analogy further, a stumbling fighter attracts fewer bets.
It is no wonder that potential investors are looking elsewhere for better prospects, a development that could leave Europe dependent on imported biofuels, removing one of their main advantages. So what has led to this situation?
First we had the publication of the Renewable Energy Strategy and the Gallagher Review into the indirect effects of biofuel production. Both of these were reasonably balanced documents, and while I have a few queries about some of the assumptions made by Gallagher (particularly the different treatment of set-aside and unproductive land), overall they provide a sound framework that will still allow the European industry to move forward.
OPEC claims dismissed
Further mud was flung at biofuels by the oil cartel OPEC, which claimed that 40% of the price of crude oil could be attributed to bioethanol. The main European, Brazilian and North American bioethanol trade associations quickly responded in an open letter which politely suggested that OPEC president Chakib Khelil was talking out of his bottom. Since you, as head of OPEC, provide no explanation for what in our view constitutes a self-serving and misleading statement that goes counter to any independent analysis of the fuels market today, one can only conclude that OPEC views competition with biofuels as a direct threat, they wrote.
Next, the Organisation for Economic Co-operation and Development (OECD) published a report on 16 July which concluded that biofuels are currently highly dependent on public funding to be viable. The OECD says US, Canada and the European Union government support for the supply and use of biofuels is expected to rise to around $25bn a year by 2015 from about $11bn in 2006.
'The reduction of greenhouse gas emissions is a primary reason for current biofuel policies, but the savings are limited. Ethanol from sugar cane - the main feedstock used in Brazil - reduces greenhouse gas emissions by at least 80% compared to fossil fuels. But emission reductions are much smaller from biofuels based on feedstocks used in Europe and North America.'
Second, far larger wave of U.S. mortgage defaults is building
International Herald Tribune -- The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is building with alarming speed.
After two years of upward spiraling defaults, the problems with mortgages made to people with weak, or subprime, credit are showing the first, tentative signs of leveling off.
But with the U.S. economy struggling, homeowners with better credit are now falling behind on their payments in growing numbers. The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A, or alt-A, mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.
While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.
Defaults are likely to accelerate because many homeowners' monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks are tightening their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are alt-A loans, many of which were made to people with good credit scores without proof of their income or assets.
Much will depend on the course of the economy, particularly unemployment. A weaker job market would push more homeowners toward the financial brink. The U.S. Labor Department reported Friday that the unemployment rate climbed to a four-year high in July. Other downbeat reports last week documented another drop in home prices, slower economic growth than expected and a huge loss at General Motors.
"Subprime was the tip of the iceberg," said Thomas Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. "Prime will be far bigger in its impact."
During a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple and described the outlook for them as "terrible."
Delinquencies on mortgages tend to peak three to five years after loans are made, said Mark Fleming, the chief economist at First American CoreLogic, a research firm. Not surprisingly, subprime loans from 2005 appear closer to the end than those made in 2007, for which default rates continue to rise steeply.
"We will hit those points in a few years and that will help in many ways," Fleming said, referring to the loans made later in the housing boom. "We just have to survive through this part of the cycle."
What will sting borrowers more than rising interest rates, analysts say, is having to pay interest and principal every month after spending several years paying only interest or sometimes even less than that. Such loan terms were popular during the boom with alt-A and prime borrowers and made sense while home prices were rising and interest rates were low.
But now, payments could jump 50 percent or more for some borrowers, and they may not be able to sell their properties for as much as they owe.
Prime and alt-A borrowers typically had a five- or seven-year grace period before having to start making payments toward their principal. By contrast, subprime loans had a two- to three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights.
"More delinquencies look like they are on the horizon because so few of them have reset," Watts said about alt-A mortgages.
Overnight developments - beans down heavily
Soybeans have taken up Monday morning where they left off Friday, sharply lower on concern China's imports may slow.
China, the world's biggest soybean importer, likely cut purchases of the oilseed for a second week as domestic demand lagged behind supply, Shanghai JC Intelligence Co. said on Aug. 1.
Traders may have ordered one to two cargoes of soybeans in the five days to Aug. 1 compared with as many as 20 shipments in the preceding two weeks, according to Shanghai JC.
Wilmar, China's biggest vegetable-oil supplier, lost as much as 13 Singapore cents, or 3 percent, to S$4.20, and traded at S$4.23 on the Singapore Stock Exchange.
Soybeans traded around 30c lower Monday, adding to losses of around 38-39 cents Friday.
Corn has followed beans lower closing around 22 cents lower Friday and adding another 5-6c to that so far this morning.
Wheat is still trying to divorce itself from beans & corn as it's price slide started much earlier. Wheat is currently around 2c easier on eCBOT.
France's Malteurop Says Buys ADM's Malting Unit
French malting group Malteurop said on Friday it had bought the malting division of U.S. agriculture giant Archer Daniels Midland for an undisclosed sum.
Malteurop, which is controlled by the French farm cooperative group Champagne Cereales, and ADM Malting both specialise in processing barley into malt, which in turn is a key ingredient of beer and some other beverages.
"This operation assures Malteurop of the leading position in the malt industry worldwide, with a strong presence on the three leading beer markets," Malteurop said in a statement.
It added that it would also make it the biggest supplier of malt to international brewers. The French group is currently the number three malt producer worldwide, with a production of 1.2 million tonnes and sales of 407 million euros ($633.7 million), Malteurop said.
ADM Malting produces 742,000 tonnes of malt, Malteurop said.
US Midwest Weather
Freese Notis -- A look back at the month of July shows that it was a favourable month of weather with regards to corn pollination for the bulk of the Corn Belt. Certainly temperatures were not a concern, with most of the Corn Belt region recording temperatures that were just a "smidge" below their normal levels.
Rainfall was the most notable feature of the month, and as has been the case since the growing season began it was a case of "too much of a good thing" in some places (especially northern Missouri and southern Iowa where there were a lot of places recording two to as much as four times their normal July totals). Below normal rainfall in July was most prevalent in Minnesota (and thus rains there yesterday were very beneficial, though very strong winds accompanying that rain likely put a lot of corn on the ground), Ohio, and northeastern Indiana.
Going forward into August of course is a hot start to the month. The worst of the heat still looks be in area west and south of the Missouri River, where there could be some places reaching 100 degrees Sunday and Monday. The least amount of heat in the Corn Belt will be in Ohio, as Tuesday may be their only day with high temperatures above the 95 degree mark. Delta crop areas look to really sizzle, with places there getting to 100 degrees today, 100-plus degree temperatures there through Tuesday, and any real notable cooling their holding off until about August 8.
The heat is going to break in the Corn Belt as we head into the middle of next week, with temperatures likely averaging a bit below normal in much of the region for August 7 to August 10. With the cool-down will come a rainfall threat for all of the Nation's midsection. That rain starts in the far northwestern Corn Belt by no later than Tuesday morning, and stays in the northern Corn Belt through Wednesday morning. The rain shifts to the central Plains, southern Corn Belt and Delta for the second half of next week, with weather models today suggesting that these will be the areas to see the best amounts and coverage.
Review of the week
August CBOT soybean contracts plunged 41 cents during the week, retreating from one-week highs, during an abrupt Friday freefall. "Mostly favourable weather in the Midwest is helping the (region's corn/soy) crop," said Doane Agricultural Services. "While some hot and dry weather is expected in the Midwest, the heat wave is forecast to be temporary, and soil moisture levels remain adequate."
September CBOT corn futures closed with losses of 12 1/4 cents, after late-week losses erased two-week highs achieved Wednesday. "There continues to be much debate regarding the final results of late-planted crops," said MF Global. "Most traders are looking for yield estimates sharply higher than previous USDA numbers ... as a result of near-perfect weather through the month of July."
September CBOT wheat lost 17 cents on the week despite a modest rally Friday. "There are no signs that cash wheat prices will go back to the $9-$10 level," said Oklahoma State University extension farm economist Kim Anderson. "Substantially higher wheat prices require lower-than-expected U.S. corn production, U.S. spring wheat production, or foreign wheat production. At the present time, this does not appear very likely."
November London feed wheat closed the week with a loss of £3.25/tonne on harvest pressure and reports of largely favourable yields across much of the EU.
As Gleadell note in their weekly report the volumes coming out of Bulgaria, Romania and the Ukraine are sizeable and are setting the benchmark for not just the Spanish Mediterranean market but also North Spain – both traditional UK markets. More worryingly, aggressive offers are being made into Brittany and ‘any origin’ feed wheat (eastern European origin) has traded into North Germany.
EU wheat production could rise well over the current estimate of 131 mln t – possibly to 134 mln t say Gleadell. This would give the EU an exportable surplus of approaching 20 mln t, and to compete on the export market at the moment our prices must move lower.
August Paris-based milling wheat closed the week with losses of just EUR0.50/tonne. These are some concerns that rains throughout June & July may adversely affect wheat quality in France, Germany, the UK and Ukraine. This is helping widen the differential between feed and milling grade wheats.
August Paris corn lost EUR9 on the week pressured by ideas that there is likely to be more feed grade wheat around in Europe this year than originally anticipated.
The Paris November rapeseed future lost EUR4.50 during the course of the week, largely due to harvest pressure. The UK harvest is seen around 40% complete and the word "variable" seems to be being widely used to describe it. The French and German crops however are reckoned to be around 90% done and yields and quality there are much better.
As with wheat the Ukraine has had a bumper rapeseed harvest & will be an aggressive exporter in the coming season.
September crude oil finished the week 37 cents higher than it ended the previous Friday. A volatile week saw it trade around $4 either side of the close with a low for the week of $120.42 and a high of $128.60/barrel.
