Olam in Talks to Sell Asset Stakes After Missing Cash Flow Goal
2014-08-29 07:36:43.725 GMT
Yuriy Humber

Aug. 29 (Bloomberg)  - Olam International Ltd. is in talks
to sell more assets and will shift focus to beefing up profit
margins over sales volumes in a drive to free up cash, said the
Singapore-based food commodities trader.
The company, controlled by state investment arm Temasek
Holdings Pte., missed its target to generate more cash than it
spent in the fiscal year ended June 30, Chief Executive Officer
Sunny Verghese said today. Olam is in talks to sell stakes in
assets, including a fertilizer project in Gabon, he said.
“Watch this space” for more divestments and partnerships,
Verghese said at a briefing in Singapore. “We are not focused
on growing volumes any more, but rather on growing our profit
pool.” Olam’s net income plunged 44 percent to S$31.8 million
($25 million) last quarter, compared with S$56.8 million a year
earlier, it said today in a statement.
Olam’s earnings were “disappointing” and the shift in
strategy to profit margin over volume has yet to yield results,
said Ephrem Ravi, an analyst with Barclays Plc in a report
today. The margins for food businesses were down 60 percent on
the previous three months, even as they rose on a year-earlier
basis, Ravi said.
“The September quarter is even weaker from a seasonality
perspective; hence the incremental datapoints for the stock are
unlikely to improve in the near term,” Ravi said.

Seeking Investors

One of the world’s top three coffee and rice traders, Olam
is seeking investors, such as Mitsubishi Corp., as a rise in
global food demand adds to the attraction of agriculture. A lack
of cash flow was one of the issues raised in a 2012 report by
short-seller Muddy Waters LLC, which caused Olam’s stock to
plummet.
Mitsubishi said in June it will buy a controlling stake in
Olam’s Australian grain unit, while the Tokyo-based trading
house’s Sanyo Foods Co. agreed this month to purchase 25 percent
of Olam’s packaged food division.
Olam lost Tata Chemicals Ltd. as a partner in Gabon after
the Indian company announced it would not proceed with buying a
25.1 percent stake in the ammonia-urea fertilizer project, the
Singapore trader said in March. Talks with a couple of companies
that could replace Tata are ongoing, Verghese said. He declined
to name them.
Olam’s revenue slipped 11.4 percent to S$5.76 billion in
the three months ended June 30, while the volume of sold
commodities declined 18.6 percent to 3.5 million metric tons.
This and one-time charges from “impairment” at a cashew
facility in Nigeria, the sale of a Gabon timber unit, and the
early repayment of high-interest loans were factors in the poor
profit performance.
Operating profit after tax and minority interest rose 1.5
percent to S$48.5 million.

--With assistance from Chanyaporn Chanjaroen in Singapore.

To contact the reporter on this story:
Yuriy Humber in Tokyo at +81-3-3201-3521 or
yhumber@bloomberg.net
To contact the editors responsible for this story:
Jason Rogers at +81-3-3201-8479 or
jrogers73@bloomberg.net
Peter Langan

clima

Sumário :
A frente fria avança pela costa do Espírito Santo e ainda gera muitas nuvens na parte leste de Minas Gerais, área que inclui a região da zona da Mata. Nessa faixa, ainda podemos ter algumas chuvas fracas hoje. No fim de semana, o tempo abre no sábado, mas no domingo novas áreas de instabilidade chegam ao sul do Brasil e voltam a trazer chuva para a parte sul do cinturão produtor de café, que se espalham pelo Sudeste na segunda-feira. Chamamos a atenção a partir de agora para a variação nas previsões de chuva. Em períodos de transição, é comum muita oscilação nas previsões de distribuição e volume, pois os modelos atmosféricos estão saindo de uma condição seca (inverno), e ajustando-se para uma condição de chuva (verão). É o período de menor previsibilidade, quando devemos desconsiderar previsões muito longas, pois são as que mais variam. 

http://www.benzinga.com/markets/commodities/14/08/4812247/global-demand-for-coffee-expected-to-hit-record-highs-will-prices-

Global Demand For Coffee Expected To Hit Record Highs: Will Prices At Starbucks Rise?

August 28, 2014 3:45 PM

Coffee prices are now pushing $2 a pound.

Starbucks (NASDAQ: SBUX) has more exposure to milk prices than coffee, so that morning latte won’t be getting more expensive. However, that doesn’t make coffee’s 70 percent YTD gains any less impressive.

In fact, considering the fundamentals, this rally could just be getting started. At this point, many agriculture analysts conclude that prices have peaked, but there is still big money potential for those owning coffee. The coffee market will likely finish 2014 with its first supply deficit in three years, and it could stay there through 2017.

Brazil, which produces one third of the world’s coffee supply, has been hampered all year by extreme drought. The Brazilian government estimates its coffee crop will decline 10 percent Y/Y in 2014; an extremely optimistic forecast.

The lack of rain in Brazil has been so severe that tree roots have now separated from the soil and won’t absorb moisture properly even when rains return. The damage done over the past nine months will likely have supply repercussions at least through 2017.

At the same time, Central America, which produces 10 percent of global supply, is battling a devastating “coffee rust” fungus that has caused more than $1 billion in damages already. These supply issues are occurring while demand surges. According to the US Department of Agriculture, global demand for coffee is expected to hit a record this year.

On top of that, the International Coffee Organization sees consumption in Brazil, Vietnam and Columbia, which produce 60 percent of global supply, growing at double the rate of coffee importers. This development will restrict the available exports and likely be a major boon for prices. Conveniently for those looking to make money, owning coffee is not a crowded trade!

The Daily Sentiment Index shows coffee at a pedestrian 38 (0 = max bearish, 100 = max bullish). Typically, a rally in commodities doesn’t stop until sentiment reaches 80 or higher. Speculative CFTC long positions in coffee have been moving higher, but futures are difficult to hold for the long haul. Instead, the iPath DJ-UBS Coffee ETF (NYSE: JO) offers un-leveraged exposure to coffee with minimal fees.

iPath DJ-UBS Coffee ETF (NYSE: JO)

Prior to this year’s explosion to the upside, coffee had been stuck in a three year bear market. Under a scenario where growing conditions decline for the next three years, it will take much higher prices before record breaking demand is curbed.

With a long-term perspective over the next several years, it’s reasonable to believe that coffee prices could double from here.

Read more: http://www.benzinga.com/markets/commodities/14/08/4812247/global-demand-for-coffee-expected-to-hit-record-highs-will-prices-#ixzz3Bj2CjejP

Brazil's coffee farmers balk at investing in crops even as prices rally

Reuters - Reese Ewing  -  SAO PAULO  Thu Aug 28, 2014 3:24pm EDT

Three years ago, a record surge in arabica prices spurred a wave of investment across coffee plantations in top grower Brazil, as farmers scrambled to fill a supply gap left by Central America after heavy rains damaged crops.

The following year, in 2012, Brazil's output rose by 19 percent, hitting a record 38 million bags.

But a surge in prices this year is not having a similar effect. While benchmark bean prices have rallied more than 90 percent from the seven-year lows hit last November, they remain at least 20 percent below where farmers say would consider plowing more money into fertilizer or expanding acreage.

A Reuters survey of nine cooperatives and producers in Minas Gerais, Sao Paulo and Parana states found that farmers in Brazil's southeast, the region worst hit by a drought that ranks as the worst in five decades and which has caused the run-up in prices, have no plans to invest more than usual this year to boost output.

The drought, which peaked in the crucial January through March period and robbed farmers of as much as 30 percent of their crop, has weakened appetite to invest, especially with the debts that farmers already are carrying after painfully low prices in 2013.

"You're not going to see a lot of enthusiasm to invest after the drought. There are 30 types of businesses with better returns than coffee right now," producer Luis Hafers said. "For now, my investments are on hold."

Without investment in crop nutrients over the next few months, it could take years for the country's coffee trees to recover, potentially hurting global supplies of arabica.

The official estimate from the Agriculture Ministry in May put Brazil's arabica harvest, which was ravaged by the drought, at 32 million bags, down 16 percent from last year. Many fear output in 2015 may be even lower.

ROILED BY ROYA, BULKING AT FERTILIZER

A devastating leaf rust in Central American and war and logistical challenges in Africa will make it harder for other producers of quality arabicas to fill the vacuum that will be left by Brazil in the coming years.

"We're getting 400 reais a bag ($1.33/lb) for good cup arabica, but we need to see 500 reais to consider planting more or additional fertilizer," said Walter Dutra, co-owner of a 300-hectare farm in Minas Gerais, Brazil's main coffee state.

Most of the representatives of Brazil's coffee industry who spoke with Reuters said they need to see prices to rise by a quarter before they would consider new investment.

Futures prices for arabicas have rallied almost 30 percent since mid-July, hitting $2.00 per lb this week, but they are still 8 percent from April highs of $2.15/lb and down more than a third from 2011 highs above $3.

"Producers are making money finally, but not enough," Anderson Oliveira de Souza, manager at the Cocatrel cooperative said. In 2011/12, Cocatrel sold 40,000 tonnes of fertilizer to coffee producers on the farms in the Tres Pontas area of Minas Gerais, but in the last two years it sold only 26,000 tonnes.

"We'll be lucky to sell that this year because producers' debts are restricting their access to credit," Souza said.

Application of nitrogen, phosphorus and potassium will start in September and continue through April, but the effects will not be seen until the 2016 harvest.

Over the first half of 2014, fertilizer sales to the coffee sector have been up 1.2 percent, according to Brazil's largest coffee cooperative, Cooxupe, in southern Minas Gerais, the state that produces half the country's coffee.

"After selling coffee at below cost in 2013, we lacked capital, so we cut back on fertilizer," said Marco Antonio Jacob, producer in Sao Paulo state.

"Now, the drought took 30 to 40 percent of our crop, so again, where are we supposed to get this money to invest?"