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?"

Coffee Weather Woes Spread to Central America -- WSJ Blog

Leslie Josephs

Weather woes are mounting for coffee growers and coffee lovers.

  Drought has taken hold in Central America, adding to worries over a drop in global production that

has already driven up prices for consumers.

  The most-actively traded arabica-coffee futures contract rose above $2 a pound on Wednesday, as

coffee production in the region appeared poised for another drop.

  While Central America produces about 10% of the world's coffee, growers there are already battling

a fungus that has reduced output. Meanwhile, the world's top coffee grower, Brazil, was hit with its

own crop-damaging drought.

  "The cherries are not filling up because of the lack of rain," said Nils Leporowski, president of

the Guatemalan Coffee Association, known as Anacafe, following a visit to coffee farms in the

country. The Guatemalan government declared a state of emergency in 16 of the country's 22 provinces

earlier this week as a result of the drought.

  A lack of water stunts the development of coffee cherries, which contain the seeds that are

roasted and ground to make coffee beverages. Often following a drought, the cherries will appear

healthy, turning a deep red color, but contain no seeds.

  The next harvest starts in October, and moisture during the traditionally rainy months in Central

America is key to the crop's maturation process.

  Exports of arabica beans from Latin America, excluding Brazil, are down 3.2% since this season

began last year, according to Anacafe, with double-digit drops in Guatemala, El Salvador, Nicaragua

and Mexico.

  The dry weather could push prices even higher, analysts say. Guatemala "could be just like

Brazil," said Jack Scoville, a vice president at Chicago brokerage Price Futures Group, adding that

prices could reach $2.20 a pound in the coming weeks. "The potential for lower crops this year and

next are decent."

Arabica-coffee prices are up more than 80% this year, a rally ignited by Brazil's drought.

  Growers in Brazil, the source of one-third of the world's coffee supply, will harvest between 5%

and 10% less coffee this year, according to trade groups and exporters.

  That will likely tip the world into its first supply deficit in three years in the 2014-15 season,

which starts in October, according to the International Coffee Organization.

World Coffee Weather

Brazil Slightly Cooler, Restricted Rainfall Into Weekend

By Andy Karst

           Kansas City, August 27 (World Weather, Inc.) – Some cooling was noted in Parana and southernmost Sao Paulo, Brazil Tuesday and the cooler air will advance northward during the balance of this week. Very little rain of significance will accompany the cooling trend, but there will be some precipitation mostly near the coast. Espirito Santo, Rio de Janeiro, Zona de Mata and eastern Bahia will be most vulnerable to showers Friday and Saturday with today and Thursday’s precipitation a little further south. Most interior coffee areas will not be impacted by much meaningful rain. Showers will return in southern crop areas next week and they may be more significant in the middle and latter part of the week, but not likely great enough for flowering.  A tropical disturbance located east of the Greater Antilles will move across the Caribbean Sea during the next several days and should not have much of an impact on coffee in the Greater Antilles other than a brief increase in shower and thunderstorm activity.  Another round of rain occurred in the Central Highlands of Vietnam Tuesday and conditions for coffee should continue to improve as additional rain is expected during the next week.  Beneficial rain fell on nearly all of Ivory Coast and Ghana Tuesday.

BRAZIL

            Mostly dry weather occurred in Brazil coffee areas Tuesday. The only rain noted was at the port city of Sao Paulo where 2 millimeters and east-central Bahia resulted. High temperatures Tuesday were in the middle and upper 20s Celsius in Parana and southwestern Sao Paulo and in the upper 20s to lower 30s in most other areas. Extreme highs of 34 to 36 occurred from northern Minas Gerais to central Bahia.  Lows this morning were 10 to 17 most often with readings of 18 to 22 in some northern and eastern areas. 

            Today’s forecast has not changed much from that of Tuesday. Totally dry weather is not likely through the weekend, but the few showers that occur periodically are most likely near the Atlantic coast and will generate 1 to 8 millimeters of rain most often with an infrequent occurrence of amounts to 15 millimeters. Friday and Saturday may be wettest from Espirito Santo to eastern Bahia. Most interior coffee areas will not be impacted by meaningful rain prior to next week.

            A more unstable atmosphere may evolve in southern Brazil coffee areas next week. Showers will begin in Parana and coastal Sao Paulo Monday and increase September 2-6 while spreading northeast to Rio de Janeiro.  A few showers may reach into Zona de Mata and Espirito Santo. Most of the daily rainfall will continue light varying from 3 to 10 millimeters with a rare occurrence of 15-20 millimeters. Most of the advertised rainfall is not expected to be great enough to change crop or soil conditions, but there will be more showers during that period of time than during any day this week.

                        Some additional cooling is expected today into the coming weekend in southern coffee production areas. The cooling trend will lower daily high temperatures to the lower and middle 20s south while staying mostly in the middle and upper 20s to lower 30s in the north. Lowest morning temperatures will be in the range of 8 to 15 in the south and 10 to 18 with a few readings over 20 in the north. In contrast, today will generate many highs in the upper 20s through the middle 30s with extreme highs of 35-37 in northern Minas Gerais and central Bahia.

Arabica-Coffee Futures Climb Above $2/lb

Leslie Josephs

  NEW YORK--Arabica-coffee futures rose above $2 a pound Wednesday as dry weather from Brazil to

Guatemala fed concerns over the world's supply of coffee.

  Arabica for December delivery on the ICE Futures U.S. exchange was up 2.1% at $2.0150 a pound, the

highest since Aug. 1.

  On Tuesday, the government of Guatemala, Central America's second-largest coffee grower after

Honduras, declared a state of emergency because of extreme drought.

  It is the latest threat to coffee production, which was already hit this year by a severe drought

in top grower Brazil. Industry groups and exporters have lowered their estimates for output this

year, which has sent prices to two-year highs, prompting roasters such as Folgers maker J.M. Smucker

Co. and Starbucks Corp. to raise prices. Arabica-coffee futures are up 81% this year.

  Guatemala "could be just like Brazil," said Jack Scoville, a vice president at Chicago brokerage

Price Futures Group. "The potential for lower crops this year and next are decent."

  Brazil's weather continues to fuel worries over coffee supplies. Early rains there followed by

current dry weather could cause coffee trees to abort flowers that opened early, said Rodrigo Costa,

coffee director at brokerage Newedge.

  That process would prevent coffee cherries, which contain the seeds that are roasted and ground to

make coffee beverages, from developing.

  In other markets, raw sugar for October delivery was up 1.1% at 15.88 cents a pound, following an

estimate showing the world's sugar surplus slipping next year.

  Global sugar production is likely to outpace demand by 1.3 million metric tons by Sept. 30, 2015,

the London-based said Tuesday. While that would be the fifth consecutive surplus, it is about a

quarter of the surplus the ISO has forecast for the current year.

  November orange-juice concentrate was up 0.2% at $1.5195 a pound, while December cocoa was 0.5%

lower at $3,199 a ton. December cotton was 0.1% lower at 66.83 cents a pound.

Produção de café do Brasil terá maior queda desde 1965

A produção do Brasil, maior produtor do mundo, pode cair 18 por cento quando a colheita terminar no mês que vem

Bloomberg  

A seca prolongada no Brasil já custou metade da colheita do café de José Francisco Pereira. No ano que vem pode ser ainda pior e o país está a caminho da primeira queda de três anos na produção desde 1965.

"Todos estão rezando pela chuva", disse Pereira, diretor-geral da Monte Alegre Coffees, uma produtora dona de 2.500 hectares com sede em Alfenas, Minas Gerais, que previu uma colheita de 45.000 sacas nesta safra, abaixo das 82.000 da temporada passada.

A produção do Brasil, maior produtor do mundo, pode cair 18 por cento quando a colheita terminar no mês que vem, para 40,1 milhões de sacas, estima o Conselho Nacional do Café, após um declínio de 3,1 por cento no ano passado. Com a piora dos danos antes do início da primavera no Hemisfério Sul, o conselho disse que os agricultores poderão colher menos de 40 milhões de sacas em 2015, criando a queda mais longa em três décadas.

O Citigroup Inc. previu em 21 de agosto que o déficit global na produção pode durar até 2016 por causa da escassez no Brasil, que no ano passado respondeu por 36 por cento da oferta mundial.

Os contratos futuros, que se valorizaram mais que os de qualquer outra commodity neste ano, podem subir mais 19 por cento até o fim de dezembro, para US$ 2,25 a libra-peso (454 gramas), mostrou uma consulta da Bloomberg a 18 analistas. O incremento está forçando compradores como a J.M. Smucker Co., produtora da Folgers, a marca mais vendida dos EUA, a elevar os preços no varejo.

"O mercado está vulnerável ao incremento devido a todos os problemas no Brasil", disse ontem Donald Selkin, que ajuda a gerenciar US$ 3 bilhões como estrategista-chefe de mercado da National Securities Corp. em Nova York. "As pessoas estão prevendo ofertas mais apertadas e esperando evoluções climáticas mais drásticas".

Commodity sobe
O café arábica subiu 71 por cento neste ano, para US$ 1,892, na ICE Futures U.S., o maior ganho entre 22 matérias-primas no índice Bloomberg Commodity, que caiu 0,1 por cento. O índice de ações MSCI All-Country World subiu 5,4 por cento no mesmo período. O índice Bloomberg Treasury Bond teve um incremento de 4,1 por cento.

O Brasil está enfrentando sua pior seca em décadas. Os reservatórios das regiões Sudeste e Centro-Oeste, onde está a maioria das plantações de café do país, estavam em menos de 32 por cento de sua capacidade em 24 de agosto, contra a média de 59,3 por cento em agosto nos 13 anos anteriores, segundo a Operadora Nacional do Sistema Elétrico, a ONS. O Brasil gera cerca de 70 por cento de sua energia com usinas hidrelétricas.

Agravando os danos à colheita deste ano, em julho chuvas torrenciais inesperadas levaram ao florescimento prematuro de árvores cujos frutos já haviam sido colhidos. Quando o clima seco retornou neste mês, as flores murcharam e caíram, prejudicando ainda mais o rendimento potencial para 2015.

Demanda crescente
A colheita menor do Brasil e o consumo crescente redundarão em um déficit da produção global de até 10 milhões de sacas no ano que começa em 1º de outubro, disse a Organização Internacional do Café, em Londres, em 1º de agosto. A Volcafé Ltd., operadora de commodities da ED&F Man Holdings Ltd., estimou o déficit em 11,3 milhões de sacas. Cerca de 58 por cento da produção mundial é de café arábica, o grão preferido pela Starbucks, enquanto o restante é da variedade robusta, usada em café instantâneos e nos blends.

Muito do dano para a colheita da próxima safra pode já ter sido feito no Brasil.

"O crescimento foi muito lento", disse Alemar Braga Rena, pesquisador independente e professor de Agronomia aposentado da Universidade Federal de Viçosa, em Minas Gerais. "As raízes são o cérebro da planta e elas foram prejudicadas pelo calor e pela falta de água, o que as tornou incapazes de absorver nutrientes".